Accounting Policies of Enkei Wheels (India) Ltd. Company

Mar 31, 2019

1.1 Significant Accounting Policies

i) Inventories

a) Inventories are valued at the lower of cost and net realisable value. The net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and estimated costs necessary to make the sale.

b) Cost of finished goods and work-in-progress comprises of all costs of direct material, conversion costs and other costs (net of recoverable taxes/eligible credits) incurred in bringing the inventories to their respective present location and condition.

c) Cost of raw materials includes cost of purchase and other costs (net of recoverable taxes/eligible credits) incurred in bringing the inventories to their respective present location and condition. Costs are determined on weighted average basis.

d) Cost of consumables, stores and spares, packing materials are determined on First In First Out basis.

ii) Depreciation and amortisation

a) Depreciation on property, plant and equipment has prima-facie 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. Freehold land is not depreciated.

b) Depreciation on additions during the period 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 equipment with fair degree of regularity and not only on the basis of the assets which are ready to put to use, as the case may be.

c) Depreciation methods, useful lives and residual values are reviewed periodically including at each financial year. The estimated useful lives of property, plant and equipment as as follows.

iii) Revenue recognition

a) Revenue from sale of goods is recognised on dispatch of goods and when the significant risks and rewards of ownership and substantial control over the goods have been transferred to the buyer/customer, there is no continuing managerial involvement with the goods and the amount of revenue can be measured reliably and it is reasonable to expect ultimate collection based upon price/(s) specified in contracts with the customers and agreed with them.

b) Revenue is measured at fair value of the consideration received or receivable, after deducting/excluding any trade discounts and taxes or duties collected on behalf of the government such as goods and services tax. A receivable is recognised when the goods are despatched to the buyer/customer. The consideration receivable is not conditional as the buyer /customer is going to pay in all eventualities once the payment is due, as agreed and which in any case does not exceed a period of twelve months from the date the goods are delivered. Accordingly, adjustment of the transaction prices for the time value of money is unwarrnted.

The Company has applied new Indian Accounting Standard, i.e. Ind AS 115 -”Revenue from contracts with customers” effective April 01 2018. Ind AS 115 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaced earlier Ind AS 18 - “Revenue”, Ind AS 11 - “Construction Contracts” and related interpretations. Under Ind AS 115, revenue is recognised when a customer obtains control of the goods or services. The Company has adopted Ind AS 115 using the cumulative effect method, with the effect of applying this standard recognised at the date of application i.e. from April 01 2018. Accordingly, the information presented for the year ended March 31, 2018 has not been restated - i.e. it is presented, as previously reported, under Ind AS 18, Ind AS 11 and related interpretations. Additionally, the disclosure requirements in Ind AS 115 have not been applied to comparative information.

After evaluation of the contracts with the customers in force as on April, 01 2018 there is no material impact on application of Ind AS 115 on the financial statements of the Company.

c) Other operating revenue represents income earned from the Company’s principal activities and is recognised when the income is accrued as per the terms agreed with the parties.

iv) Other income Interest income

Other income primarily comprises of Interest income. Interest income is in respect of short-term deposits (with less than 3 months of maturity) placed with the bank, which is recognised as per the rate notified by the bank which is none, but the Effective rate of interest, as there is not time value of money considering the short term maturity of term deposits.

v) Expenditure

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

vi) Financial instruments

As per Ind AS -109, a financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

i) Financial Assets

A. Initial recognition and measurement

All financial assets are initially recognized at fair value except for trade receivables which are initially measured at transaction price. Its transaction costs are recognised in the Statement of Profit and Loss. Transaction costs that are directly attributable to the acquisition or issue of financial assets, which are not classified at fair value through profit or loss, are adjusted to the fair value on initial recognition.

B. Subsequent measurement

a) Financial assets carried at amortised cost (AC)

A financial asset is measured at amortised cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

b) Financial assets measured at fair value through other comprehensive income (FVTOCI)

A financial asset is measured at FVTOCI if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

c) Financial assets at fair value through profit or loss (FVTPL)

A financial asset which is not classified in any of the above categories are measured at FVTPL.

C. Impairment of financial assets

In accordance with Ind AS 109, the Company uses ‘Expected Credit Loss’ (ECL) model, for evaluating impairment of financial assets other than those measured at fair value through profit and loss (FVTPL).

Expected credit losses are measured through a loss allowance at an amount equal to:

- The 12-months expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date); or

- Full lifetime expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument)

For trade receivables, the Company applies ‘simplified approach’ which requires expected lifetime losses to be recognised from initial recognition of the receivables. The Company uses historical default rates to determine impairment loss on the portfolio of trade receivables. At every reporting date, these historical default rates are reviewed and changes in the forward looking estimates are analysed.

For other assets, the Company uses 12 month ECL to provide for impairment loss where there is no significant increase in credit risk. If there is significant increase in credit risk, full lifetime ECL is used.

ii) Financial Liabilities

A. Initial recognition and measurement

All financial liabilities are recognized at fair value and in case of loans, net of directly attributable cost. Fees of recurring nature are directly recognised in the Statement of Profit and Loss as finance cost.

B. Subsequent measurement

Financial liabilities are carried at amortised cost using the effective interest method. For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.

The Company uses derivative financial instruments, such as forward currency contracts to hedge its foreign currency risk. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Any changes therein are recognised in the statement of profit and loss. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.

iii) ’Derecognition of Financial Instruments:

The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the financial asset and the transfer qualifies for derecognition under Ind AS 109.

A financial liability is derecognised when the obligation specified in the contract is discharged, cancelled or expired.

iv) ’The Company has disclosed financial instruments such as cash and cash equivalents, other bank balances, trade receivables, trade payables, short-term borrowings at carrying value because their carrying amounts are a reasonable approximation of the fair values due to their short-term nature. Loans have fair values that approximate to their carrying amounts, as it is based on the net present value of the anticipated future cash flows using rates currently available for debt on similar terms, credit risk, remaining maturities and other terms.

vii) Property, plant and equipment

a) Freehold land is carried at historical cost. All other items of property, plant and equipment are carried at cost, less accumulated depreciation and impairment, if any. The cost represents purchase price (net of recoverable of taxes) and all other direct attributable expenses (including borrowing cost in respect of acquisition or construction of qualifying asset) for the period up to the date of bringing the asset to its location and working condition /(the asset is ready for its intended use) necessary for it to be capable of operating in the manner intended by the Company’s management.

b) Subsequent expenditure relating to property, plant and equipment is included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with these will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance costs are charged to the Statement of Profit and Loss in the period in which those are incurred.

c) Advances paid for the acquisition of property, plant and equipment, that remained outstanding at each balance sheet date is classified as ‘capital advances’ under “noncurrent assets”. The cost of property, plant and equipment, net of income earned during the project development stage, which are not ready for intended use are shown under ‘Capital work-in-progress’.

d) Gains or losses arising on retirement or disposal of property, plant and equipment are recognised in the Statement of Profit and Loss.

viii)Foreign currency transactions and translations

a) Transactions denominated in foreign currencies are recorded at functional currency using 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 and which are outstanding as at end of the reporting period are translated at exchange rates prevailing as at end of the reporting period.

c) Exchange gains or losses on foreign currency liabilities prior to April 1, 2016 which are related to the acquisition or construction of qualifying assets are adjusted in the carrying cost of such assets. In case of foreign currency borrowings/trade liabilities which are long-term in nature, 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 was first exercised.

Balance in ‘Foreign Currency Monetary Item Translation Difference Account’ is shown as a separate line item under the head “Reserves and Surplus” as per ICAI Announcement on “Presentation of Foreign Currency Monetary Item Translation Difference Account”

d) The gains or losses on account of exchange differences either on settlement or on translations are recognised in the Statement of Profit and Loss.

ix) Employee benefits

Employee benefits include provident fund, pension fund, gratuity fund, labour welfare fund, employees state insurance scheme, compensated absences and medical benefits.

a) Defined contribution plans

Both, the eligible employee and the company make monthly contributions to the provident fund plan equal to a specified percentage of the covered employee’s salary.’ The Company’s contribution to provident fund, pension fund, employees state insurance scheme etc., are considered as defined contribution plans. The contributions are recognised as employee benefit expenses as and when those are due in the period in which employees render their services.

b) Defined benefit plans

For defined benefit plans, such as gratuity fund (which is administered by the LIC of India), the cost of providing benefits is determined with actuarial valuations being carried out at each Balance Sheet date. Past service cost is recognised immediately to the extent that the benefits are already vested or otherwise is amortised on a straight-line basis over the average period until the benefits become vested. The obligation is measured at the present value of the estimated future cash flows. The discount rates used for determining the present value of the obligation under defined benefit plans, is based on the market yields on government securities as at the reporting date, having maturity periods approximating to the terms of related obligations. 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.

The costs of accruing employee benefits promised to employees over the period and the costs of individual events such as past/future service benefit changes and settlements are recognised under “Employee benefit expenses”in the statement of Profit and Loss. The actuarial gains and losses (excluding interest), any differences between the interest income on plan assets and the return actually achieved, and any changes in the liabilities over the period to changes in actuarial assumptions or experience adjustments within the plans, are recognised immediately in ‘Other comprehensive income’ and subsequently not reclassified to the Statement of Profit and Loss.etc. The amount of net interest expense calculated by applying the liability discount rate to the net defined benefit liability or asset is charged or credited to ‘Finance costs’ in the Statement of Profit and Loss.

All defined benefit plans obligations are determined based on valuations, as at the Balance Sheet date, made by independent actuary using the projected unit credit method. The classification of the Company’s net obligation into current and non-current is as per the actuarial valuation report.

c) Short-term employee benefits :

A liability is recognised for benefits accruing to employees in respect of salaries, wages, performance incentives, medical benefits and other short term benefits in the period the related service is rendered, at the undiscounted amount of the benefits expected to be paid in exchange for that service.

d) Other Long-term employee benefits Compensated absences which are not expected to occur /settle within twelve months after the end of the period in which the employee renders the related services are recognised as a liability determined by the projected unit credit method under actuarial valuation, 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. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating the terms of the related obligation. Remeasurements as a result of experience adjustments and change in actuarial assumptions are recognised in the Statement of Profit and Loss. The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.

x) Borrowing costs

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

Borrowing costs that are directly attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. All other borrowing costs are expensed in the period in which those are incurred. 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.

xi) Leases

a) Finance Leases : Leases under which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Such assets, when acquired, are capitalised at fair value of the asset or present value of the minimum lease payments at the inception of the lease whichever is lower. 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.

b) Operating Leases : Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor, are recognised as operating leases. Lease payments under operating leases are recognised as an expense and are charged to the Statement of Profit and Loss on a straight line basis over the lease term in line with the contractual terms. The operating lease arrangements are renewable on a periodic basis.

xii) Operating Segments

Operating segments are reported in a manner consistent with the internal reporting within the entity using Management Approach. The Company has single operating segment viz. that of Automotive Wheels. Accordingly, disclosure requirements as per Indian Accounting Standard (Ind AS 108)- “Operating Segment “ are not applicable to the Company.

xiii)Taxes on income

a) Income Tax expense comprises of current tax and deferred tax. Tax is recognised in Statement of Profit and Loss, except to the extent that it relates to items recognised in—other comprehensive income or in equity.

b) Current tax is the amount expected to be paid (or recovered) to/(from) the tax authorities using the tax rates and tax laws that have been enacted or substantially enacted at the balance sheet date. It also includes adjustment to taxes in respect of previous periods.

c) Deferred tax expense (or credit) are recognised subject to the consideration of prudence, on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding amounts used for taxation purposes. 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 liabilities are recognised based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities. Deferred tax assets are recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax liabilities and assets are measured using tax rates enacted or substantively enacted by the end of the reporting period. The carrying amount of deferred tax liabilities and assets are reviewed at the end of each reporting period. Deferred tax assets and liabilities are classified as non-current assets and liabilities.

e) Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle the asset and the liability on a net basis. Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities; and the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority.

xiv)Impairment of Non-Financial Assets -Property Plant and Equipment

a) The Company assesses at each reporting date as to whether there is any indication that any Property, Plant and Equipment or group of Assets, called Cash Generating Units (CGU) may be impaired. If any such indication exists, or impariment testing of asset or CGU is required, the recoverable amount of an asset or CGU is estimated to determine the extent of impairment, if any.

b) An impairment loss is recognised in the Statement of Profit and Loss to the extent, asset’s carrying amount exceeds its recoverable amount. The recoverable amount is higher of an asset’s fair value less cost of disposal and value in use. Value in use is based on the estimated future cash flows, discounted to their present value using pre-tax discount rate that reflects current market assessments of the time value of money and risk specific to the assets.

c) The impairment loss recognised in prior accounting period is reversed in the Statement of Profit and Loss, if there has been a change in the estimates used to determine the recoverable amount. However, the reversal is limited so that the carrrying amount of the asset does not exceed its recoverable amount. Not it does exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior periods.

xv) Provisions, contingencies and commitments

a) Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of past events and it is probable that outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

b) If the effect of the time value of money is material, provisions are discounted to reflect its present value using a current pre-tax rate that reflects the current market assessments of the time value of money and the risks specific to the obligation. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

c) Contingent Liabilities are not recognised but are disclosed in the financial statements. Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation.

d) Contingent assets are not recognised in financial statements, unless they are virtually certain. However,contingent assets are disclosed where inflow of economic benefits are probable. Provisions, contingent liabilities and contingent assets are reviewed at each balance sheet date.

xvi)Statement of cash flows and cash and cash equivalents

Cash flows are reported using the indirect method, whereby profit /(loss) for the year is adjusted for the effects of transactions of non-cash nature, deferrals or accurals of past or future operating receipts/(payments) and items of income/ (expenses) associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated.

Cash and cash equivalents in the balance sheets comprises of, cash at banks and cash on hand and short-term deposits with an orgiinal maturity of three months or less, which are subject to an insignificant risk of changes in value.

xvii) Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

- In the principal market for the asset or liability, or

- In the absence of a principal market, in the most advantageous market for the asset or liability

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

- Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities

- Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

- Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

(c) The Company has one class of equity shares of face value of Rs. 5/-each. Each shareholder is eligible for one vote per share held. In the event of liquidation of the Company, the equity shareholders will be entitled to receive any of the remaining assets of the Company in proportion to their shareholding after distribution of all preferential amounts.

Revenue from operations for the year ended March 31, 2018, includes and is gross up of Excise Duty of Rs. 13,75,42,810/- for three months ended June 30, 2017, which is not there for the year 2018-19 post implementation of GST effective from 1 July 2017.

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Mar 31, 2018

1 Significant accounting policies

1.1 Basis of preparation of financial statements and measurement

a) These financial statements have been prepared on accrual and going concern basis and are presented in Indian Rupees, the functional currency of the Company.

b) These financial statements have been prepared in accordance with the Indian Accounting Standards (herein after referred to as the ‘Ind AS’ as notified by the Ministry of Corporate Affairs pursuant to section 133 of the Companies Act, 2013 (‘the Act’) read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016 except and to the extent otherwise stated hereinafter.

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 Division 11 of 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 except and to the extent stated otherwise hereinafter.

e) These financial statements are prepared under the historical cost convention unless and to the extent stated otherwise hereinafter.

f) The Company has first time adopted Ind AS with transition date of April 01 2016 with comparatives being restated. Accordingly the impact of transition has been provided in the Opening Reserves as at 1st April 2016. The figures for the previous period have been restated, regrouped and reclassified wherever required to comply with the requirement of Ind AS and Schedule III.

1.2 Use of estimates

The preparation of financial statements requires the Company’s management to make judgments, estimates and assumptions in the application of accounting policies that affect the reported balances of assets, liabilities income and expense and disclosures relating to contingent liabilities as at the date of the financial statements. Examples of such estimates inter alia, include determination of the useful lives of property, plant and equipment, employee benefits, allowance for doubtful receivables, provision for income taxes. Actual results may differ as a result of changes in the estimates. Revisions to accounting estimates are recognised propspectively.

1.3 Inventories

a) Inventories are valued at the lower of cost and net realisable value. Cost of finished goods and work-in-progress comprises of all costs of purchases, conversion costs and other costs (net of recoverable taxes) incurred in bringing the inventories to their respective present location and condition. The net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and estimated costs necessary to make the sale.

b) Cost of raw materials are determined on weighted average basis.

c) Cost of consumables, stores and spares, packing materials are determined on First In First Out basis.

1.4 Depreciation and amortisation

a) Depreciation on property, plant and equipment 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.

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 equipment 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.

1.5 Revenue recognition

a) Revenue from sale of goods is recognised on dispatch of goods and when the significant risks and rewards of ownership have been transferred to the buyer, there is no continuing managerial involvement with the goods and the amount of revenue can be measured reliably and it is reasonable to expect ultimate collection based upon negotiations with the customers for price escalations and price settlements.

b) Revenue is measured at fair value of the consideration received or receivable, after deducting/excluding any trade discounts and taxes or duties collected on behalf of the government such as sales tax, value added tax, goods and services tax, etc.

c) 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 Interest income

Interest income from a financial asset is recognised using effective interest rate method.

1.7 Expenditure

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

1.8 Financial instruments

i) Financial Assets

A. Initial recognition and measurement

All financial assets are initially recognized at fair value. Its transaction cost are recognised in the statement of profit and loss.. Transaction costs that are directly attributable to the acquisition or issue of financial asset,which are not at fair value through profit or loss, are adjusted to the fair value on initial recognition.

“‘B. Subsequent measurement”

a) Financial assets carried at amortised cost (AC)

A financial asset is measured at amortised cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

b) Financial assets at fair value through other comprehensive income (FVTOCI

A financial asset is measured at FVTOCI if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

c) Financial assets at fair value through profit or loss (FVTPL)

A financial asset which is not classified in any of the above categories are measured at FVTPL.

C. Impairment of financial assets

In accordance with Ind AS 109, the Company uses ‘Expected Credit Loss’ (ECL) model, for evaluating impairment of financial assets other than those measured at fair value through profit and loss (FVTPL).

Expected credit losses are measured through a loss allowance at an amount equal to:

- The 12-months expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date); or

- Full lifetime expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument)

For trade receivables Company applies ‘simplified approach’ which requires expected lifetime losses to be recognised from initial recognition of the receivables. The Company uses historical default rates to determine impairment loss on the portfolio of trade receivables. At every reporting date these historical default rates are reviewed and changes in the forward looking estimates are analysed.

For other assets, the Company uses 12 month ECL to provide for impairment loss where there is no significant increase in credit risk. If there is significant increase in credit risk full lifetime ECL is used.

ii) Financial Liabilities

A. Initial recognition and measurement

All financial liabilities are recognized at fair value and in case of loans, net of directly attributable cost. Fees of recurring nature are directly recognised in the Statement of Profit and Loss as finance cost.

“ B. Subsequent measurement”

Financial liabilities are carried at amortized cost using the effective interest method. For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.

iii) ’Derecognition of Financial Instruments:

The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the contractual rights to receive the cash flows from the asset.

iv) ’Derecognition of Financial Instruments:

The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the contractual rights to receive the cash flows from the asset.

A financial liability is derecognised when the obligation specified in the contract is discharged, cancelled or expired.

v) ’The Company has disclosed financial instruments such as cash and cash equivalents, other bank balances, trade receivables,trade payables, short term borrowings at carrying value because their carrying amounts are a reasonable approximation of the fair values due to their short term nature. Loans have fair values that approximate to their carrying amounts as it is based on the net present value of the anticipated future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities.

1.9 Property, plant and equipment

a) Property, plant and equipment 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 property, plant and equipment for the period up to the date of bringing the asset to its location and condition necessary for it to be capable of operating in the manner intended by the Company’s management.

b) Subsequent expenditure relating to property, plant and equipment is included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with these will flow to the Company and the cost of the item can be measured reliably.

c) Property, plant and equipment includes investment in land which is intended to be occupied for use by /in the operations of the Company, though actual use may have been pro-longed. Property, plant and equipment does not include spares and equipment which do not meet the definition of property, plant and equipment, though they are expected to be used for a longer period.

d) Advances paid for the acquisition of property, plant and equipment, that remained outstanding at each balance sheet date is classified as ‘capital advances’ under “non-current assets”. Property, plant and equipment, net of income earned during the project development stage, whch are not ready for intended use are shown under ‘Capital work-in-progress’.

e) Gains or losses arising on retirement or disposal of property, plant and equipment are recognised in the Statement of Profit and Loss.

f) The Company has elected to measure items of property, plant and equipment at its carrying value at the transition date, which is 01.04.2016 as deemed cost.

1.10Foreign 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 translated into the functional currently, which is Indian Rupee at exchange rates prevailing as at the Balance sheet date.

c) Exchange gains or losses on foreign currency liabilities prior to April 1, 2016 which are related to the acquisition or construction of qualifying assets are adjusted in the carrying cost of such assets. In case of foreign currency borrowings/trade liabilities which are long-term in nature, 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 was first exercised.

Balance in ‘Foreign Currency Monetary Item Translation Difference Account’ is shown as a separate line item under the head “Reserves and Surplus” as per ICAI Announcement on “Presentation of Foreign Currency Monetary Item Translation Difference Account”

d) The gains or losses on account of exchange differences either on settlement or on translations are recognised in the Statement of Profit and Loss.

1.11Employee benefits

Employee benefits include provident fund, pension fund, gratuity fund, labour welfare fund, employees state insurance, compensated absences and medical benefits.

Defined contribution plans

Both, the eligible employee and the company make monthly contributions to the provident fund plan equal to a specified percentage of the covered employee’s salary.’ The Company’s contribution to provident fund, pension fund, employees state insurance etc.,are considered as defined contribution plans.

For defined benefit plans, such as 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 of the period in which they occur. Past service cost is recognised immediately to the extent that the benefits are already vested or 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.

“For defined benefit plans, the amount recognised as ‘Employee benefit expenses’ in the Statement of Profit and Loss is the cost of accruing employee benefits promised to employees over the year and the costs of individual events such as past/future service benefit changes and settlements (such events are recognised immediately in the Statement of Profit and Loss). The amount of net interest expense calculated by applying the liability discount rate to the net defined benefit liability or asset is charged or credited to ‘Finance costs’ in the Statement of Profit and Loss. Any differences between the interest income on plan assets and the return actually achieved, and any changes in the liabilities over the year due to changes in actuarial assumptions or experience adjustments within the plans, are recognised immediately in ‘Other comprehensive income’ and subsequently not reclassified to the Statement of Profit and Loss.

The defined benefit plan surplus or deficit on the Balance Sheet date comprises fair value of plan assets less the present value of the defined benefit liabilities (using a discount rate by reference to market yields on government bonds at the end of the reporting period).

All defined benefit plans obligations are determined based on valuations, as at the Balance Sheet date, made by independent actuary using the projected unit credit method. The classification of the Company’s net obligation into current and non-current is as per the actuarial valuation report.

Employee Separation Costs

Compensation to employees who have opted for retirement under the voluntary retirement scheme of the Company is payable in the year of exercise of option by the employee. The Company recognises the employee separation cost when the scheme is announced and the Company is demonstrably committed to it.

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 a liability determined by actuarial valuation, 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 Finance 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 : Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor, are recognised as operating leases. Lease payments under operating leases are recognised as an expense and are charged to the Statement of Profit and Loss on a straight line basis over the lease term in line with the contractual terms.

b) Finance Leases : Leases under which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Such assets acquired are capitalised at fair value of the asset or present value of the minimum lease payments at the inception of the lease whichever is lower. 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 operating segment viz. that of Automotive Wheels. Accordingly, disclosure requirements as per Indian Accounting Standard (Ind AS 108)-”Operating Segment “ are not applicable to the Company.

1.15 Taxes on income

a) Income Tax expense comprises of current tax and deferred tax. Tax is recognised in Statement of Profit and Loss, except to the extent that it relates to items recognised in the comprehensive income or in equity.

b) Current tax is the amount expected to be paid (or recovered) to/from the tax authorities using the tax rates and tax laws that have been enacted or substantially enacted at the balance sheet date. It also includes adjustment to taxes in respect of previous years.

c) Deferred tax expense (or credit) are recognised subject to the consideration of prudence, on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding amounts used for taxation purposes. 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 liabilities are recognised based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities. Deferred tax assets are recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax liabilities and assets are measured using tax rates enacted or substantively enacted by the end of the reporting period. The carrying amount of deferred tax liabilities and assets are reviewed at the end of each reporting period.

e) Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle the asset and the liability on a net basis. Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities; and the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority.

1.16 Impairment of Non-Financial Assets -Property Plant and Equipment

a) The Company assesses at each reporting date as to whether there is any indication that any Property, Plant and Equipment or group of Assets, called Cash Generating Units (CGU) may be impaired. If any such indication exists, the recoverable amount of an asset or CGU is estimated to determine the extent of impairment, if any. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the CGU to which the asset belongs.

b) ”An impairment loss is recognised in the Statement of Profit and Loss to the extent, asset’s carrying amount exceeds its recoverable amount. The recoverable amount is higher of an asset’s fair value less cost of disposal and value in use. Value in use is based on the estimated future cash flows, discounted to their present value using pre-tax discount rate that reflects current market assessments of the time value of money and risk specific to the assets.The impairment loss recognised in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.”

c) In the considered view of the the Company’s management there is indication of impairment of any Property, Plant and Equipment or group of Assets which would result into loss -actual or potential, over and above the amount already provided in the books under the head ‘Depreciation’.

1.17 Provisions , contingencies and commitments

a) Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of past events and it is probable that outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

b) If the effect of the time value of money is material, provisions are discounted to reflect its present value using a current pre-tax rate that reflects the current market assessments of the time value of money and the risks specific to the obligation. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

c) Contingent Liabilities are not recognised but are disclosed in the financial statements. Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events. Contingent Assets are neither recognised nor disclosed in the financial statements.

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Mar 31, 2017

1 Corporate information

Enkei Wheels (India) Limited ("the Company") is public limited company incorporated and domiciled in India and has its works and registered office are in Pune. The Company is listed on the Bombay Stock Exchange Limited.

The Company manufactures aluminum alloy casting wheels (''''products'''') which are being used in automotive segment of the industry in India.

Note 2 Significant accounting policies

2.1 Basis of accounting and preparation of financial statements

a) These financial statements have been prepared under historical cost convention on the accrual basis and are presented in Indian Rupees.

b) The financial statements have been prepared from the books of account maintained on an accrual basis and comply in all material respects with the accounting principles generally accepted in India (''Indian GAAP''), the Accounting Standards specified under Section 133 of the Companies Act, 2013 (the Act) read with Rule 7 of the Companies (Accounts) Rules, 2014, duly amended by the Companies (Accounting Standards) Amendment Rules, 2016 except and to the extent otherwise stated hereinafter.

c) All assets and liabilities have been classified as current or noncurrent 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 realization in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current noncurrent 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 except and to the extent 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 balances of assets and liabilities, disclosures relating to contingent liabilities as at the date of the financial statements and reported amounts of income and expense during the reported period. Examples of such estimates include the useful lives of depreciable assets, employee benefits, provision for doubtful receivables, provision for income taxes. Future results could differ as a result of changes in the estimates. Difference between the actual results and estimates are recognized in the period in which the results are known / materialize.

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 realizable 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 amortization

a. Depreciation on property, plant and equipment 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.

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 equipment 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. The Company has not reviewed useful lives of its assets. The Company has also not determined useful lives of significant components of its principal assets(s) separately as required under amended Accounting Standard (AS) -10, Property, Plant and Equipment notified and duly amended under the Companies (Accounting Standard), Amendment Rules, 2016, in its entirety, as useful lives of only some of the assets have been reviewed and depreciation has been provided accordingly.

2.5 Revenue recognition

a. Revenue is recognized 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 recognized on dispatch of goods by the Company from its factory premises and are accounted in the books net of returns and trade discounts.

c. Other operating revenue

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

2.6 Other income

Interest income is recognized on time proportion basis taking into account the amount of term deposits held and applicable rate of interest. During the year, the Company has also accounted interest income (both - realized and unrealized) on security deposits placed with the MSEB. Till last year, interest income was accounted on cash basis though was not shown separately.

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 Property, Plant and Equipment

a. Property, plant and equipment 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 property, plant and equipment for the period up to the date of bringing the asset to its location and condition necessary for it to be capable of operating in the manner intended by the Company''s management.

b. Property, plant and equipment includes investment in land which is intended to be occupied for use by /in the operations of the Company, though actual use may have been pro-longed. Property, plant and equipment does not include spares and equipment which do not meet the definition of property, plant and equipment, though they are expected to be used for a longer period.

c. Advances paid for the acquisition of property, plant and equipment, that remained outstanding at each balance sheet date is classified as ''capital advances'' under "non-current assets". The cost of assets not put to use before the intended date are shown under ''Capital work-in-progress''. Subsequent expenditure relating to property, plant and equipment is capitalized only when it is probable that future economic benefits associated with these will flow to the Company and the cost of the item can be measured reliably.

2.9 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 yearend are translated into the functional currently, which is Indian Rupee at exchange rates prevailing as at the Balance sheet date.

c. As per the option available under paragraph 46 of the Accounting Standard (AS-11) 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'' amortizable equally over the period of 8 years starting with the year in which the option is first exercised.

Balance in ''Foreign Currency Monetary Item Translation Difference Account'' is shown as a separate line item under the head "Reserves and Surplus" as per ICAI Announcement on "Presentation of Foreign Currency Monetary Item Translation Difference Account"

d. The gains or losses on account of exchange differences either on settlement or on translations are recognized 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 amortized as an expense or income, as the case may be over the life of the contract.

2.10 Investments

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

2.11 Employee benefits

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

Defined contribution plans

Both, the eligible employee and the company make monthly contributions to the provident fund plan equal to a specified percentage of the covered employee''s salary.'' 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, such as 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 recognized in the Statement of Profit and Loss of the period in which they occur. Past service cost is recognized immediately to the extent that the benefits are already vested or otherwise is amortized on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognized in the Balance Sheet represents the present value of the defined benefit obligation as adjusted for unrecognized 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 recognized during the period when the employees render the service. These benefits include compensated absences such as paid annual leave ,bonus, and performance incentives.

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 recognized as a liability determined by actuarial valuation, 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.

2.12 Borrowing costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized 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.

2.13 Leases

a. Operating Leases : Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor, are recognized as operating leases. Lease payments under operating leases are recognized as an expense and are charged to the Statement of Profit and Loss on a straight line basis over the lease term.

b. Finance Leases : Leases under which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Such assets acquired are capitalized at fair value of the asset or present value of the minimum lease payments at the inception of the lease whichever is lower. 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.

2.14 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, which continue to apply under section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules 2014.

2.15 Taxes on income

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

b. Current income tax for current period is recognized at the amount expected to be paid (or recovered) from the tax authorities using the tax rates and tax laws that have been enacted or substantially enacted by the balance sheet date.

c. Current income tax for prior periods is recognized to cover shortfall /(excess) provisions of earlier years and which may not necessarily expected to be paid or recovered from the tax authorities.

d. Minimum Alternate Tax (MAT) paid and recognized as an asset earlier has been fully utililsed by the Company for payment/ settlement of income tax demand under the normal provisions of the Act and thus there is no such asset as at the balance sheet date.

e. Deferred tax expense (or credit) are recognized subject to the consideration of prudence, on timing differences between accounting income and taxable income that originate in one period and are likely to be reversed 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.

f. Deferred tax assets in respect of unabsorbed depreciation, carry forward of losses etc. are recognized, only when there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realized. At times, these are recognized 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 governing taxation laws.

g. Deferred tax assets in respect of others are recognized, only when there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

2.16 Impairment of assets

a. The management of the Company periodically assesses using external and internal sources, whether there is an indication that an asset may be impaired. An asset is treated as impaired when the carrying amount of the asset exceeds it recoverable value. 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 recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

b. The significant portion of the Company''s assets have remained to be tested for impairment, as the Company s management believes that there is no indication of potential impairment loss as of the March 31, 2017.

2.17 Provisions, contingencies and commitments

a. Provisions involving substantial degree of estimation in measurement are recognized when there is a present legal or constructive obligation as a result of past events and it is probable that outflow of economic benefits will be required to settle the obligation.

b. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of time value of money and the risks specific to the liability.

c. Contingent Liabilities are not recognized but are disclosed in the financial statements. Contingent Assets are neither recognized nor disclosed in the financial statements. 59

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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.

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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.

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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.

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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

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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.