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Accounting Policies of Enkei Wheels (India) Ltd. Company

Mar 31, 2015

1.1 Basis of accounting and preparation of financial statements

a. These financial statements have been prepared under historical cost convention and are presented in Indian Rupees.

b. The financial statements have been prepared from the books of account maintained on an accrual basis (unless stated otherwise hereinafter) and comply in all material respects with the accounting principles generally accepted in India, the Accounting Standards, to the extent applicable, issued by the Institute of Chartered Accountants of India and referred to in Section 133 of the Companies Act, 2013 ('the Act') of India read with Rule 7 of the Companies (Accounts) Rules, 2014.

c. All assets and liabilities have been classified as current or non current as per the Company's operating cycle and other criteria set out in Schedule III to the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current - non current classification of assets and liabilities.

d. The accounting policies adopted in the preparation of financial statements by the Company are consistent with those of the earlier years unless stated otherwise hereinafter.

2.2 Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) in India requires that the Company's management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities as at the date of the financial statements and the reported amount of revenue and expenses during the reported period. Actual results could differ from those estimates. Difference between the actual results and estimates are recognized in the period in which the results are known / materialised.

2.3 Inventories

a. Raw Materials and Traded goods

Inventory of Raw materials is valued at cost. Cost represents purchase price, net of recoverable taxes and is determined on weighted average basis.

b. Work-In-Progress/Semi-Finished goods

Inventory of Work-In-Progress/Semi-Finished goods is valued at lesser of cost or net realisable value. Cost comprises of material cost and conversion cost. Conversion cost includes cost of consumables, direct labour, variable overheads and fixed cost in respect of production facilities.

c. Consumables. Stores and Spares

Consumables, Stores and Spares are valued at cost. Cost represents purchase price, net of recoverable taxes, and is determined on First In First Out basis.

2.4 Depreciation and amortisation

a. Depreciation on Tangible Fixed Assets has been provided on Straight Line Method in the manner provided under of Schedule II to the Companies Act, 2013 on the basis of the useful lives of the assets prescribed under Part C of Schedule II to the Companies Act, 2013. The period of useful life of asset is reviewed periodically and excess /short amount of depreciation, if any provided earlier, is written back/ off to the revenue as the case may be.

b. Depreciation on additions during the year has been provided on pro-rata basis from the date of acquisition or from the date(s) on which commercial production is obtained, particularly in case of plant and machineries, with fair degree of

regularity and not only on the basis of the assets are ready to put to use, as the case may be.

c. Individual asset costing less than RS. 5,000/- each is fully depreciated in the year of its purchase.

d. The period of useful life of asset is reviewed periodically and excess /short amount of depreciation, if any provided earlier, is written back/ off to the revenue as the case may be.

e. Intangible assets in the nature of computer software & functional software are amortised over a period of five years.

f. The estimated useful life of the intangible assets and the amortisation period are reviewed at the end of each financial year and if there is a significant change in the expected pattern of economic benefits from the asset, the amortisation method is revised to reflect the changed/ actual pattern.

2.5 Revenue recognition

a. Revenue is recognised only when it can be reliably measured and it is reasonable to expect ultimate collection based upon negotiations with the customers for price escalations and price settlements.

b. Sale of goods

Revenue from sale of goods are recognised on despatch of goods by the Company from its factory premises and are accounted in the books net of returns and trade discounts.

c. Income from services

Revenues from contracts priced on a time and material basis are recognised when services are rendered and related costs are incurred.

d. Other operating revenue

Other operating revenue represents income earned from the Company's principal activities and is recognised when the right to receive the income is established as per the terms of the contract.

2.6 Other income

Interest income is recognised on time proportion basis taking into account the amount of term deposits held and applicable rate of interest.

2.7 Expenditure

Purchases and Expenses, net of taxes recoverable, are accounted on accrual basis and once liability is determined for goods, services & value received.

2.8 Tangible Fixed Assets

a) Fixed assets, except Land are carried at cost less accumulated depreciation and impairment losses, if any. The cost represents purchase price (net of recoverable of taxes) and all other direct expenses including financing cost in respect of acquisition or construction of fixed assets for the period up to the date of bringing the asset to its working condition for its intended use or for the period till commencement of commerical production respectively. Machinery spares which can be used only in connection with an item of fixed asset and whose use is expected to be irregular are capitalised and depreciated over the useful life of the principal item of the relevant assets. Subsequent expenditure relating to fixed assets is capitalised only if such expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance.

2.9 Intangible assets

a. Intangible Assets are recognized only if it is probable that the future economic benefits that are attributable to the assets will flow to the enterprises and the cost of the assets can be measured reliably.

b. Intangible assets are carried at cost less accumulated amortisation and impairment losses, if any. The cost of an intangible asset comprises its purchase price (net of recoverable of taxes) and expenses directly attributable for bringing the asset to its working condition for its intended use.

2.10 Foreign currency transactions and translations

a. Transactions denominated in foreign currencies are recorded in the books at the exchange rate prevailing on the date transactions or that approximates the actual rate at the date of transaction.

b. Monetary items denominated in foreign currencies at the year end are restated at exchange rates prevailing as at end of the year.

c. As per the option available under paragraph 46 of the Accounting Standard (AS-ll)-'The Effects of changes in Foreign Exchange Rates' and exercised by the Company, the exchange differences on account of depreciable fixed assets are capitalised as part of the asset to which differences relate and depreciated over the remaining useful life of such assets. In other cases, exchange differences are accumulated in a 'Foreign Currency Monetary Item Translation Difference Account' amortisable equally over the period of 8 years starting with the year in which the option is first exercised.

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

e. In case of monetary items, which are covered by forward exchange contracts, the premium or discount arising at the inception of such a forward exchange contract is amortised as an expense or income, as the case may be over the life of the contract.

2.11 Investments

All Long-term investments, which are unquoted, are stated at cost. Current investments are stated at lower of cost and fair value.

2.12 Employee benefits

Employee benefits include provident fund, pension fund, gratuity fund, compensated absences and medical benefits. Defined contribution plans

The Company's contribution to provident fund and pension fund are considered as defined contribution plans and are charged to the statement of profit and loss as and when those are incurred.

Defined benefit plans

For defined benefit plans in the form of gratuity fund , the cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each Balance Sheet date. Actuarial gains and losses are recognised in the Statement of Profit and Loss in the period in which they occur. Past service cost is recognised immedi- ately to the extent that the benefits are already vested and otherwise is amortised on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognised in the Balance Sheet represents the present value of the defined benefit obligation as adjusted for unrecognised past service cost, as reduced by the fair value of scheme assets.

'Short-term employee benefits

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised during the year when the employees render the service. These benefits include performance incentive, bonus, ex-gratia and compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service.

Long-term employee benefits

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognised as a liability at the present value of the defined benefit obligation as at the Balance Sheet date less the fair value of the plan assets out of which the obligations are expected to be settled.

2.13 Borrowing costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. All other borrowing costs incurred and which are not identified to the particular qualifying assets is charged to the revenue. Qualifying assets are those that necessarily take a substantial period of time to get ready for their

indented use. A longer period than period of twelve months has been considered as a substantial period of time in exceptional and unforeseen circumstances.

2.14 Leases

a) Operating Leases : In respect of assets acquired on leases, rentals are charged to the Statement of Profit and Loss on Straight line basis and with reference to lease terms and other considerations.

b) Finance Leases : In respect of the assets acquired under leases, the lower of the fair value of the assets and present value of the minimum lease rentals is capitalised as fixed assets with corresponding amount shown as a lease liability. The principal component in the lease rental is adjusted against the lease liability and the interest component is charged to the Statement of Profit and Loss.

2.15 Taxes on income

a. Tax expense comprises of current tax and deferred tax.

b. Current tax is the amount of tax due & payable on the taxable income as determined in accordance with the provisions of the Income Tax Act, 1961.""Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset. Accordingly, MAT is recognised as an asset in the Balance Sheet when the asset can be measured reliably and it is probable that the future economic benefit associated with it will flow to the Company. "

c. Deferred tax is recognised subject to the consideration of prudence, on timing differences between accounting income and taxable income that originate in one period and are likely to reverse in one or more subsequent periods. Deferred tax assets and liabilities are measured using the tax rates and tax laws than have been enacted or substantially enacted by the balance sheet date.

d. Deferred tax assets in respect of unabsorbed depreciation, carry forward of losses etc. are recognised only to the extent of Deferred tax liabilities, if it has legally enforceable right and those relate to taxes on income levied by the same governign taxation laws. In case of others, deferred tax assets are not recognised.

2.16 Impairment of assets

a. An asset is treated as impaired when the carrying amount of the asset exceeds it recoverable amount. An impairment loss, if any is charged to the statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognised in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

b. Assets/facilities retired from active use and held for re-work/disposal are classified separately as 'Assets held for Disposal'. In such situations, impairment loss is charged to the statement of Profit and Loss, in the year in which the loss is crystalised and quantified with ease.

2.17 Provisions, contingencies and commitments

a. Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources.

b. Contingent Liabilities are not recognised but are disclosed in the notes to accounts. Contingent Assets are neither recognised nor disclosed in the financial statements.


Mar 31, 2014

1.1 Basis of accounting and preparation of financial statements

The financial statements of the Company are prepared under the historical cost convention, on an accrual basis of accounting in accordance with Generally Accepted Accounting Principles in India (Indian GAAP) and the Accounting Standards notified under the Companies Act, 1956 (''the Act'') and the accounting standard issued by the Institute of Chartered Accountants of India to extent it does not contradict any other accounting standard notified under the Act, read with the General Circular 15/2013 dated 13.09.2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013.

All assets and liabilities have been classified as current or noncurrent as per the Company''s operating cycle and other criteria set out in the Revised Schedule VI to the Companies Act, 1956. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current-not current classification of assets and liabilities.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous years.

1.2 Use of estimates

The preparation of the financial statements in conformity with Indian GAAP requires the management to make jujdgements, estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the period in which the results are known / materialised.

1.3 Inventories

Raw Materials and Traded goods

Inventory of Raw materials is valued at cost. Cost represents purchase price, net of recoverable taxes and is determined on weighted average basis.

Work-In-Progress/Semi-Finished goods

Inventory of Work-In-Progress/Semi-Finished goods is valued at lesser of cost of net realisable value. Cost comprises of material cost and conversion cost. Conversion cost includes cost of consumables, direct labour, variable overheads and fixed cost in respect of production facilities.

Consumables, Stores and Spares

Consumables, Stores and Spares are valued at cost. Cost represents purchase price, net of recoverable taxes, and is determined on First In First Out basis.

1.4 Depreciation and amortisation

Depreciation of fixed assests is provided on the straight-line method as per the rates prescribed in Schedule XIV to the Companies Act, 1956 except in respect of the following class of assets. Depreciation charged on plant & machineries is from the date(s) on which commercial production is obtained with fair degree of regularity and not only on the basis of the assets are ready to put to use. The policy and the rates at which depreciation is charged are the same as being followed over the years.

Individual asset costing less than Rs. 5,000/- each is fully depreciated in the year of its purchase.

Intangible assets in the nature of computer software & functional software are amortised over a period of five years.

The estimated useful life of the intangible assets and the amortisation period are reviewed at the end of each financial year and if there is a significant change in the expected pattern of economic benefits from the asset, the amortisation method is revised to reflect the changed/ actual pattern.

1.5 Revenue recognition

Revenue is recognised only when it can be reliably measured and it is reasonable to expect ultimate collection based upon negotiations with the customers including one for price/escalation.

Sale of goods

Revenue from sale of goods are recognised on despatch of goods by the Company from its factory premises and are accounted in the books net of returns and trade discounts.

Income from services

Revenues from contracts priced on a time and material basis are recognised when services are rendered and related costs are incurred.

Other operating revenue

Other operating revenue represents income earned from the Company''s principal activities and is recognised when the right to receive the income is established as per the terms of the contract.

1.6 Other income

Interest income is recognised on time proportion basis taking into account the amount of deposits held and applicable rate.

1.7 Tangible Fixed Assets

Fixed assets, except Land are carried at cost less accumulated depreciation and impairment losses, if any. The cost represents purchase price (net of reoverable of taxes) and all other direct expenses including financing cost in respect of acquisition or construction of fixed assets for the period up to the date the asset is ready for its intended use or for the period till commencement of commerical production respectively. Machinery spares which can be used only in connection with an item of fixed asset and whose use is expected to be irregular are capitalised and depreciated over the useful life of the principal item of the relevant assets. Subsequent expenditure relating to fixed assets is capitalised only if such expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance.

The project cost including attributable borrowing cost incurred in respect of facilities not commenced/expanded is accounted as ''Capital Work-In-Progress''.

1.8 Intangible assets

Intangible Assets are recognized only if it is probable that the future economic benefits that are attributable to the assets will flow to the enterprises and the cost of the assets can be measured reliably.

Intangible assets are carried at cost less accumulated amortisation and impairment losses, if any. The cost of an intangible asset comprises its purchase price (net of reoverable of taxes) and expenses directly attributable on making the asset ready for its intended use.

1.9 Foreign currency transactions and translations

Foreign currency transactions are recorded on initial recognition in the reporting currency, using the exchange rate prevailing on the date of transaction.

The exchange differences arising on settlement of foreign currency monetary transactions are recorded in the statement of profit and loss of the year.

Foreign currency monetary assets and liabilities, including that of long-term nature and payables to group companies are restated at year-end exchange rates.

As per the option under paragraph 46 of the Accounting Standard (AS-11)-''The Effects of changes in Foreign Exchange Rates'' exercised by the Company in earlier year, the exchange differences on account of depreciable fixed assets are capitalised as part of the asset to which differences relate and depreciated over the remaining life of such assets. In other cases, exchange differences are accumulated in a ''Foreign Currency Monetary Item Translation Difference Account'' to amortisable equally over the period of 8 years starting with the year in which the option is first exercised.

In case of monetary items, which are covered by forward exchange contracts, the premium or discount arising at the inception of such a forward exchange contract is amortised as an expense or income, as the case may be over the life of the contract.

1.10 Investments

All Long-term investments, which are unquoted, are stated at cost. Current investments are stated at lower of cost and fair value.

1.11 Employee benefits

Employee benefits include provident fund, pension fund, gratuity fund, compensated absences and medical benefits. Defined contribution plans The Company''s contribution to provident fund and pension fund are considered as defined contribution plans and are charged to the statement of profit and loss as and when those are incurred.

Defined benefit plans

For defined benefit plans in the form of gratuity fund , the cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each Balance Sheet date. Actuarial gains and losses are recognised in the Statement of Profit and Loss in the period in which they occur. Past service cost is recognised immedi- ately to the extent that the benefits are already vested and otherwise is amortised on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognised in the Balance Sheet represents the present value of the defined benefit obligation as adjusted for unrecognised past service cost, as reduced by the fair value of scheme assets.

Short-term employee benefits

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised during the year when the employees render the service. These benefits include performance incentive, bonus, ex-gratia and compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service.

Long-term employee benefits

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognised as a liability at the present value of the defined benefit obligation as at the Balance Sheet date less the fair value of the plan assets out of which the obligations are expected to be settled.

1.12 Borrowing costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. All other borrowing costs incurred and which are not identified to the particular qualifying assets is charged to the revenue. Qualifying assets are those that necessarily take a substantial period of time to get ready for their intended use. A longer period than period of twelve months has been considered as a substantial period of time in exceptional and unforeseen circumstances.

1.13 Leases

a) Operating Leases : In respect of assets acquired on leases, rentals are charged to the Statement of Profit and Loss on accrual basis and with reference to lease terms and other considerations.

b) Finance Leases : In respect of the assets acquired under leases, the lower of the fair value of the assets and present value of the minimum lease rentals is capitalised as fixed assets with corresponding amount shown as a lease liability. The principal component in the lease rental is adjusted against the lease liability and the interest component is charged to the Statement of Profit and Loss.

1.14 Segment Reporting

The Company has single business segment viz. that of automotive castings of Alloy Wheels. Accordingly, disclosure re- quirements as per Accounting Standard 17 "Segment Reporting" specified in the Companies (Accounting Standard) Rules 2006 are not applicable to the Company

1.15 Taxes on income

Tax expense comprises of current tax and deferred tax.

Current tax is the amount of tax due & payable on the taxable income as determined in accordance with the provisions of the Income Tax Act, 1961. Current tax is net of credit for entitlement for Minimum Alternate Tax (MAT).

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company.

During the year, the Company has reviewed MAT credit entitlement accounted earlier where the amount was limited to the extent of deferred tax charge provided. MAT credit entitlement as on the balance sheet represents credit in respect of all taxes paid till the balance sheet date. The management of the Company is quite confident and hopeful that the Company will be able to utilise the credit in near future.

Deferred tax is recognised subject to the consideration of prudence, on timing differences for the year between accounting income and taxable income that originate in one period and are capable of reversal in one or more subsequent periods.

Deferred tax assets in respect of unabsorbed depreciation, carry forward of losses etc. are recognised in the books, but only to the extent of Deferred tax liabilities. This is change in accounting policy followed in earlier years where deferred tax assets were never recognised in the absence of virtual certainty.

1.16 Impairment of assets

An asset is treated as impaired when the carrying amount of the asset exceeds its recoverable amount. An impairment loss, if any is charged to the statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognised in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

Assets/facilities retired from active use and held for re-work/disposal are classified separately as ''Assets held for Disposal''. In such scenario, impairment loss is charged to the statement of Profit and Loss, in the year in which the loss is crystalised and quantified with ease.

The asset verification, determination of their useful lives, identification of impaired assets, if any has remained to be carried out by the Company on an extensive basis covering all assets. The Company has planned the exercise in current financial year.

1.17 Provisions, contingencies and commitments

Provisions involving substantial degree of estimation in measurement are recognised 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 recognised but are disclosed in the notes to accounts. Contingent Assets are neither recognised nor disclosed in the financial statements.


Mar 31, 2013

1.1 Basis of accounting and preparation of financial statements

The financial statements of the Company have been prepared in accordance with Generally Accepted Accounting Principles in India (Indian GAAP), the provisions of the Companies Act, 1956 and the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) from time to time except as otherwise stated below. The financial statements have been prepared on an accrual basis and under the historical cost convention except as otherwise stated below.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous years.

1.2 Use of estimates

The preparation of the financial statements in conformity with Indian GAAP requires the management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the period in which the results are known / materialised.

1.3 Inventories

Raw Materials and Traded goods

Inventory of Raw materials is valued at cost. Cost represents purchase price, net of recoverable taxes and is determined on weighted average basis.

Work-In-Progress/Semi-Finished goods

Inventory of Work-In-Progress/Semi-Finished goods is valued at lesser of cost of net realisable value. Cost comprises of material cost and conversion cost. Conversion cost includes cost of consumables, direct labour, variable overheads and fixed cost in respect of production facilities.

Consumables, Stores and Spares

Consumables, Stores and Spares are valued at cost. Cost represents purchase price, net of recoverable taxes, and is determined on First In First Out basis.

1.4 Depreciation and amortisation

Depreciation of fixed assests is provided on the straight-line method as per the rates prescribed in Schedule XIV to the Companies Act, 1956 except in respect of the following class of assets.

Individual asset costing less than RS. 5,000/- each is fully depreciated in the year of its purchase.

Intangible assets in the nature of computer & functional software are amortised over a period of 5 years.

The estimated useful life of the intangible assets and the amortisation period are reviewed at the end of each financial year and if there is a significant change in the expected pattern of economic benefits from the asset, the amortisation method is revised to reflect the changed/ actual pattern.

1.5 Revenue recognition

Revenue is recognised only when it can be reliably measured and it is reasonable to expect ultimate collection based upon negotiations with the customers and also price fluctuations.

Sale of goods

Revenue from sale of goods are recognised on despatch of goods by the Company from its factory premises and are accounted in the books net of returns and trade discounts.

Sale Returns

Sales returns are accounted for only upon physical receipt of the rejected goods at the factory premises.

Income from services

Revenues from contracts priced on a time and material basis are recognised when services are rendered and related costs are incurred.

Other operating revenue

Other operating revenue represents income earned from the Company''s principal activities and is recognised when the right to receive the income is established as per the terms of the contract.

1.6 Other income

Interest income is recognised on time proportion basis taking into account the amount of deposits held and applicable rate.

1.7 Tangible Fixed Assets, Capital Work-in-Progress and Assets held for Disposal

Fixed assets, except Land are carried at cost less accumulated depreciation and impairment losses, if any. The cost represents purchase price (net of reoverable of taxes) and all other direct expenses including financing cost in respect of acquisition or constrction of fixed assets for the period up to the date the asset is ready for its intended use or for the period till commencement of commerical production respectively. Machinery spares which can be used only in connection with an item of fixed asset and whose use is expected to be irregular are capitalised and depreciated over the useful life of the principal item of the relevant assets. Subsequent expenditure relating to fixed assets is capitalised only if such expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance.

The project cost including attributable borrowing cost incurred in respect of facilities not commenced/expanded has been accounted as ''Capital Work-in-Progress''.

Fixed assets/facilities retired from active use and held for re-work/disposal have been classified separately as ''Assets held for Disposal'' in the Balance Sheet and depreciation has not been charged on the same. The Company has not worked out deterioriation, if any, in the value there of and thus are stated at the values appearing in the books.

1.8 Intangible assets

Intangible assets are carried at cost less accumulated amortisation and impairment losses, if any. The cost of an intangible asset comprises its purchase price (net of reoverable of taxes) and any directly attributable expenditure on making the asset ready for its intended use.

1.9 Foreign currency transactions and translations

Foreign currency transactions are recorded on initial recognition in the reporting currency, using the exchange rate prevailing at the date of transaction.

The exchange differences arising on settlement of foreign currency monetary transactions are recorded in the state- ment of profit and loss.

"During the year, the Company has exercised the option available under paragraph 46 of the Accounting Standard (AS- ll)-''The Effects of changes in Foreign Exchange Rates'' and accordingly, Foreign currency monetary liabilities of long- term nature including loans, payables to group companies, have been restated at exchange rates prevailing as on the date of the balance sheet. The exchange differences on account of depreciable fixed assets are capitalised as part of the asset to which differences relate and depreciated over the remaining life of such assets. In other cases, exchange differences are accumulated in a ''Foreign Currency Monetary Item Translation Difference Account'' to be amortised equally over the period of 8 years starting with the year 2012-13, in accordance with the provisions of the relevant paragraph of the AS-11 read with the notification(s) issued.

Earlier, i.e. for all accounting periods prior to 01.04.2012, foreign currency monetary liabilities of long-term nature were never restated at the exchange rates prevailing as at the date of individual balance sheets. During the year 2012-13, since all payables to group companies have been reconciled, the Company has restated its long term liabilities as required under AS-11. The change in accounting policy is as required by the law and is in compliance with AS-11. Had there been no such change, the profit before tax reported for the year would have been more by Rs 24,866,936/-.

The exchange differences on restatement of liabilities which are of short term nature have been dealt with as usual in the statement of profit and loss.

1.10 Investments

All Long-term investments, which are unquoted, are stated at cost. Current investments are stated at lower of cost and fair value.

1.11 Employee benefits

Employee benefits include provident fund, pension fund, gratuity fund, compensated absences and medical benefits.

DefinedjxwlrihiiliQrLpkms

The Company''s contribution to provident fund and pension fund are considered as defined contribution plans and are charged to the statement of profit and loss as and when those are incurred.

For defined benefit plans in the form of gratuity fund , the cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each Balance Sheet date. Actuarial gains and losses are recognised in the Statement of Profit and Loss in the period in which they occur. Past service cost is recognised immediately to the extent that the benefits are already vested and otherwise is amortised on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognised in the Balance Sheet represents the present value of the defined benefit obligation as adjusted for unrecognised past service cost, as reduced by the fair value of scheme assets.

''Short-term employee benefits

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised during the year when the employees render the service. These benefits include perfor- mance incentive, bonus, ex-gratia and compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service.

Long-term employee benefits

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognised as a liability at the present value of the defined benefit obligation as at the Balance Sheet date less the fair value of the plan assets out of which the obligations are expected to be settled.

1.12 Borrowing costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. All other borrowing costs incurred and which are not identified to the particular qualifying assets is charged to the revenue. Qualifying assets are those that necessarily take a substantial period of time to get ready for their indented use. A longer period than period of twelve months has been considered as a substantial period of time in exceptional and unforeseen circumstances.

1.13 Leases

a) Operating Leases : In respect of assets acquired on leases, rentals are charged to the Statement of Profit and Loss on accrual basis and with reference to lease terms and other considerations.

b) Finance Leases : In respect of the assets acquired under leases, the lower of the fair value of the assets and present value of the minimum lease rentals is capitalised as fixed assets with corresponding amount shown as a lease liability. The principal component in the lease rental is adjusted against the lease liability and the interest compo nent is charged to the Statement of Profit and Loss.

1.14 Segment Reporting

The Company has single business segment viz. that of automotive castings of Alloy Wheels. Accordingly, disclosure requirements as per Accounting Standard 17 "Segment Reporting" specified in the Companies (Accounting Standard) Rules 2006 are not applicable to the Company

1.15 Taxes on income

Current tax for the current periods is the amount of tax due on the taxable income as determined in accordance with the provisions of the Income Tax Act, 1961.""Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company. In the context, MAT credit available is accounted for only to the extent of deferred tax charge for the year, as per policy followed from the earlier years.

Deferred tax is recognised subject to the consideration of prudence, on timing differences for the year between accounting income and taxable income that originate in one period and are capable of reversal in one or more subsequent periods.

Deferred tax assets in respect of unabsorbed depreciation, carry forward of losses etc. are not recognised in the books.

Deferred tax assets/liabilities are not extensively reviewed on a cumulative basis.

1.16 Impairment of assets

An asset is treated as impaired when the carrying amount of the asset exceeds it recoverable amount. An impairment loss is charged to the statement of Profit and Loss in the year in which assets is identified as impaired unless and untill there is unamortised balance available under'' Business Construction Reserve'' against which the asset can be written of either in full or part. The impairment loss recognised in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

1.17 Provisions, contingencies and commitments

Provisions involving substantial degree of estimation in measurement are recognised 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 recognised but are disclosed in the notes to accounts. Contingent Assets are neither recognised nor disclosed in the financial statements.


Mar 31, 2012

1.1 Basis of accounting and preparation of financial statements

The financial statements of the Company have been prepared in accordance with Generally Accepted Accounting Principles in India (Indian GAAP), the provisions of the Companies Act, 1956 and the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) from time to time except as otherwise stated below. The financial statements have been prepared on an accrual basis and under the historical cost convention except as otherwise stated below.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year/s).

1.2 Use of estimates

The preparation of the financial statements in conformity with Indian GAAP requires the management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the period in which the results are known / materialised.

1.3 Inventories

Raw Materials and Traded goods

Inventory of Raw materials is valued at cost. Cost represents purchase price, net of recoverable taxes and is determined on weighted average basis.

Work-ln-Proeress/Semi-Finished goods

Inventory of Work-ln-Progress/Semi-Finished goods is valued at lesser of cost of net realisable value. Cost comprises of material cost and conversion cost. Conversion cost includes cost of consumables, direct labour, variable overheads and fixed cost in respect of production facilities.

Consumables. Stores and Spares

Consumables, Stores and Spares are valued at cost. Cost represents purchase price, net of recoverable taxes, and is determined on First In First Out basis.

1.4 Depreciation and amortisation

Depreciation of fixed assests is provided on the straight-line method as per the rates prescribed in Schedule XIV to the Companies Act, 1956 except in respect of the following class of assets.

Individual asset costing less than Rs. 5,000/- each is fully depreciated in the year of its purchase.

Intangible assets in the nature of computer & functional software are amortised over a period of 5 years.

The estimated useful life of the intangible assets and the amortisation period are reviewed at the end of each financial year and if there is a significant change in the expected pattern of economic benefits from the asset, the amortisation method is revised to reflect the changed/actual pattern.

1.5 Revenue recognition

Revenue is recognised only when it can be reliably measured and it is reasonable to expect ultimate collection based upon negotiations with the customers and also price fluctuations.

Sale of goods

Revenue from sale of goods are recognised on despatch of goods by the Company from its factory premises and are accounted in the books net of returns and trade discounts.

Sale Returns

Sales returns are accounted for only upon physical receipt of the rejected goods at the factory premises.

Income from services

Revenues from contracts priced on a time and material basis are recognised when services are rendered and related costs are incurred. Other operating revenue

Other operating revenue represents income earned from the Company's principal activities and is recognised when the right to receive the income is established as per the terms of the contract.

1.6 Other income

Interest income is recognised on time proportion basis taking into account the amount of deposits held and applicable rate.

1.7 Tangible Fixed Assets, Capital Work-ln-Progress and Assets held for Disposal

Fixed assets, except Land are carried at cost less accumulated depreciation and impairment losses, if any. The cost represents purchase price (net of reoverable of taxes) and all other direct expenses including financing cost in respect of acquisition or constrction of fixed assets for the period up to the date the asset is ready for its intended use or for the period till commencement of commerical production respectively. Machinery spares which can be used only in connection with an item of fixed asset and whose use is expected to be irregular are capitalised and depreciated over the useful life of the principal item of the relevant assets. Subsequent expenditure relating to fixed assets is capitalised only if such expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance.

The project cost including attributable borrowing cost incurred in respect of facilities not commenced/expanded has been accounted as 'Capital Work-ln-Progress', unless the project takes substantial period to commence and where assets are separately identifiable.

Fixed assets/facilities retired from active use and held for re-work/disposal are stated at the lower of their net book value and net realisable value and have been classified as 'Assets held for Disposal' in the Balance Sheet.

1.8 Intangible assets

Intangible assets are carried at cost less accumulated amortisation and impairment losses, if any. The cost of an intangible asset comprises its purchase price (net of reoverable of taxes) and any directly attributable expenditure on making the asset ready for its intended use.

1.9 Foreign currency transactions and translations

Foreign currency transactions are recorded on initial recognition in the reporting currency, using the exchange rate prevailing at the date of transaction.

The exchange differences arising on settlement of foreign currency monetary transactions are recorded in the statement of profit and loss.

However, foreign currency monetary liabilities including loans, payable to group companies have not been restated by the year-end closing rate. The Company does not expect these liabilities to be settled in the medium term and consequently considers it inappropriate to restate these liabilities at interim dates until settlement. This treatment is not strictly in compliance of the provisions of the Accounting Standard (AS-ll)-'The Effects of changes in Foreign Exchange Rates'. The effect of non-compliance with the provisions AS- 11 on the statement of profit and loss of the Company has not been quantified.

1.10 Investments

All Long-term investments, which are unquoted, are stated at cost. Current investments are stated at lower of cost and fair value.

1.11 Employee benefits

Employee benefits include provident fund, pension fund, gratuity fund, compensated absences and medical benefits.

Defined contribution plans

The Company's contribution to provident fund and pension fund are considered as defined contribution plans and are charged to the statement of profit and loss as and when those are incurred.

Defined benefit plans

For defined benefit plans in the form of gratuity fund , the cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each Balance Sheet date. Actuarial gains and losses are recognised in the Statement of Profit and Loss in the period in which they occur. Past service cost is recognised immediately to the extent that the benefits are already vested and otherwise is amortised on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognised in the Balance Sheet represents the present value of the defined benefit obligation as adjusted for unrecognised past service cost, as reduced by the fair value of scheme assets.

Short-term employee benefits

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised during the year when the employees render the service. These benefits include performance incentive, bonus, ex-gratia and compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service.

Long-term employee benefits

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognised as a liability at the present value of the defined benefit obligation as at the Balance Sheet date less the fair value of the plan assets out of which the obligations are expected to be settled.

1.12 Borrowing costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as a part of the cost of such assets. All other borrowing costs incurred and which are not identified to the particular qualifying assets is charged to the revenue.

1.13 Leases

a) Operating Leases : In respect of assets acquired on leases, rentals are charged to the Statement of Profit and Loss on accrual basis and with reference to lease terms and other considerations.

b) Finance Leases : In respect of the assets acquired under leases, the lower of the fair value of the assets and present value of the minimum lease rentals is capitalised as fixed assets with corresponding amount shown as a lease liability. The principal component in the lease rental is adjusted against the lease liability and the interest component is charged to the Statement of Profit and Loss.

1.14 Segment Reporting

The Company has single business segment viz. that of automotive castings of Alloy Wheels. Accordingly, disclosure requirements as per Accounting Standard 17 "Segment Reporting" specified in the Companies (Accounting Standard) Rules 2006 are not applicable to the Company

1.15 Taxes on income

Current tax for the current periods is the amount of tax due on the taxable income as determined in accordance with the provisions of the Income Tax Act, 1961.Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company. In the context, MAT credit available is accounted for only to the extent of deferred tax charge for the year, as per policy followed from the earlier years."

Deferred tax is recognised subject to the consideration of prudence, on timing differences for the year between accounting income and taxable income that originate in one period and are capable of reversal in one or more subsequent periods.

Deferred tax assets in respect of unabsorbed depreciation, carry Forward of losses etc. are not recognised in the books.

Deferred tax assets/liabilities are not extensively reviewed on a cumulative basis.

1.16 Impairment of assets

An asset is treated as impaired when the carrying amount of the asset exceeds it recoverable amount. An impairment loss is charged to the statement of Profit and Loss in the year in which assets is identified as impaired

unless and untill there is unamortised balance available under 'Business Construction Reserve' against which the asset can be written of either in full or part. The impairment loss recognised in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

1.17 Provisions, contingencies and commitments

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will bean outflow of resources. Contingent Liabilities are not recognised but are disclosed in the notes to accounts. Contingent Assets are neither recognised nor disclosed in the financial statements


Mar 31, 2010

1. Basis of preparation of financial statements

The financial statements are prepared under the historical cost convention, on accrual basis and are in accordance with the Indian Generally Accepted Accounting Principals ('GAAP'), the provisions of the Companies Act, 1956 and the Accounting Standards notified under Companies (Accounting Standard), Rules, 2006 as amended from time to time except as otherwise stated.

However, post-demerger, the Company has revalued its land forming part of its fixed assets not intended for sale during the ordinary course of its business activities. The excess of fair market value over cost of the land has been credited to 'Business Construction Reserve' in the books of the Company

2. Use of Estimates

Estimates and Assumptions used in the preparation of the financial statements are based upon management's evaluation of the relevant facts and circumstances as of the date of the financial statements, which may differ from the actual results at a subsequent date.

3. Revenue Recognition

i. All material items of revenue and expenditure are recognised on accrual basis except as otherwise stated.

ii. Sales are recognised on despatch of goods by the Company from its factory premises The Sales are reflected in the accounts net of excise duty, sales tax, and other levies.

iii. Sales returns are accounted for only upon physical receipts of the rejected goods at the factory premises.

4. Price Escalation Claims/Negotiations

The effect of price amendments is accounted for on the basis of agreement with the customers from time to time. However, escalation and other claims, which are not ascertainable/ acknowledged by customers, are not taken into account.

5. Purchases

All purchases of raw materials, stores and spares are accounted in the system once Goods Received Note (GRN) is prepared. GRN is prepared only after goods are inspected and tested for qualities after the receipt at the factory gate.

6. Fixed Assets & Depreciation

i. Fixed Assets are stated at cost less accumulated depreciation and impairment loss if any. The cost represents purchase price (net of recoverable taxes) and all other direct expenses including financing cost in respect of acquisition or construction of fixed assets incurred for the period till commencement of commercial production.

ii. Fixed Assets other than Dies and Moulds are depreciated on Straight Line Method at the rates prescribed in schedule XIV to the Companies Act, 1956.

iii. Dies and Moulds are depreciated at Written Down Value at the rates prescribed in schedule XIV to the Companies Act, 1956.

iv. Depreciation on additions during the year is provided on pro-rata basis from the middle of the quarter in which capitalisation takes place.

v. Where CENVAT is claimed on capital goods, the relevant excise duty under CENVAT has been deducted from the value of the asset for claiming depreciation.

vi. In case of new production facilities, the project costs incurred are capitalised from the date the facilities are commenced and trial production is obtained successfully. The project costs incurred till year-end and relatable/identified to/for particular project/production facilities are debited to individual fixed asset The project cost incurred in respect of facilities not commenced/expanded and/or which has not been identified/allocated to individual fixed assets have been accounted under 'Capital Work-in-Process'.

7. Intangible Assets

Intangible Assets are recognized only if it is probable that the future economic benefits that are attributable to the assets will flow to the enterprises and the cost of the assets can be measured reliably. The intangible assets are recorded at cost and are carried at cost less accumulated amortisation and accumulated impairment losses, if any.

8. Impairment of Assets

An asset is treated as impaired when the carrying amount of the asset exceeds it recoverable amount. An impairment loss is charged to the Profit and Loss Account in the year in which an asset is identified as impaired. The impairment loss recognised in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

During the year, the management of the Company has reviewed the recoverability of its intangible assets received from ECL/ Demerged Company on demerger. In the opinion of management, the assets are impaired and there is no value in use to EWIL/Resulting Company. Accordingly, post-demerger and in accordance with Part IV of the Scheme of demerger, intangible assets with book value of Rs.1004.02 lakhs have been written off to 'Business Reconstruction Reserve'

9. Investments

All Long-term investments, which are unquoted, are stated at cost.

10. Inventories

i. Raw Materials and Bought-out Components

Inventory of Raw materials are valued at cost. Cost represents purchase price, net of recoverable taxes, determined with reference to last purchases.

ii. Semi-Finished goods-

Inventory of Semi-finished goods are valued at lesser of cost of net realisable value. Cost comprises of material cost and conversion cost. Conversion cost includes cost of consumables, direct labour, and variable overheads in proportion to direct labour and fixed cost in respect of production facilities.

iii. Consumables, Stores and Spares

Consumables Stores and Spares are valued at cost. Cost represents purchase price, net of recoverable taxes, and is determined on FIFO basis.

iv. Inter-division Transfers

Interdivisional transfers are valued, either at ex-factory cost of the transfer or unit/division, net of recoverable taxes and are recorded on physical receipt.

11. Transaction in Foreign Currencies

Foreign currency transactions are recorded at the exchange rate prevailing as at the date of transaction.

The exchange differences arising on restatement of long term foreign currency monetary items in so far as the relate to acquisition depreciable capital assets are adjusted to the cost of such assets to be depreciated over the balance life of the fixed assets.

The exchange differences arising on restatement of long term foreign currency monetary items other than depreciable capital assets are adjusted and accumulated to 'Foreign Currency Monetary Item Translation Difference Account' for being amortised over the balance period of such long term asset/liability but not beyond March 31, 2011.

All exchange differences arising on restatement of all other monetary foreign currency assets and liabilities (other than above) are credited or debited, as the case may be, to the Profit and Loss Account.

12. Taxes on income

Income tax expense comprises current tax and deferred tax charge /credit.

Current tax is the amount of tax payable on the taxable income for the year determined in accordance with the provisions of the Income Tax act, 1961.

Deferred tax is recognised subject to the consideration of prudence, on timing differences between accounting income and taxable income that originate in one period and are capable of reversal in one or more subsequent periods.

Deferred tax assets, if any, are recognised, only when there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

13. Employee Benefits

Defined contribution plans

Contributions to defined contribution approved Provident Fund and Pension Fund, defined contribution schemes, are made at pre-determined rates and charged to the Profit and Loss Account, as incurred.

Post-employment benefit plans

Contributions to defined contribution retirement benefit schemes are recognised as an expense when employees have rendered services entitling them to contributions using Projected Unit Credit Method, with actuarial valuations being carried out by an independent valuer. Actuarial gains and losses have been recognised in full in the profit and loss account for the year. Past service cost has also been recognised to the extent that the benefits are already vested. The retirement benefit obligation recognised in the balance sheet represents the present value of the defined benefit obligation as adjusted for as reduced by the fair value of scheme assets.

Short-term employee benefits

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees is recognised during the period when the employee renders the service. These benefits include compensated absences such as paid leave, performance incentives, bonus, ex-gratia etc.

Long-term employee benefits

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognised as an actuarial liability determined by an independent valuer being the present value of the defined benefit obligation at the balance sheet date.

The liability towards Workmen Compensation is also funded with New India Insurance and contribution made towards this is charged to the Profit and Loss Account.

14. Borrowing Costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as a part of the cost of such assets. All other borrowing costs incurred and which are not identified to the particular qualifying assets is charged to revenue.

15. Leases

The Company's significant leasing arrangements are in respect of operating leases for guest-house premises and computers. The arrangements in respect of use of guest-house premises normally range between eleven months to twenty-two months renewable by mutual consent on agreed terms. The arrangements in respect of use of computers are long term and continue to remain in force till the period foreign specialists continues to remain deployed.

16. Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognised 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 recognised but are disclosed in the notes to accounts. Contingent Assets are neither recognised nor disclosed in the financial statements.

 
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