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Accounting Policies of Facor Steels Ltd. Company

Mar 31, 2015

(a) Basis of Preparation of Financial Statements

The Company's operating results continue to be materially affected by various factors particularly poor market conditions and deep recession in the steel market and general economic slow down. The accumulated losses of the company as at 31.03.2015 stand at ' 8854.15 lacs against the paid up Share capital of ' 5343.24 lacs. The current liabilities as at 31.03.2015 exceeded the current assets by ' 4145.83 lacs. The company has referred to the Board for Industrial & Financial Reconstruction (BIFR) under section 15 of the Sick Industrial Companies (special provisions) Act, 1985, which has been registered by BIFR vide case No. 74/2014. The company has declared a consensus lockout w.e.f. 30.05.2014 due to lack of demand of its products and the lockout is still in force.

These conditions indicate the existence of material uncertainty that may cast significant doubt about the company's ability to continue as going concern, which is dependent on the company estabilishing the profitable operations and sustaining cash flow. While the management is exploring various options and is in the process for restructuring the operations of the company, it is also hopeful that BIFR will prepare the revival scheme with the help of Operating Agency in due course of time. Accordingly, the company's financial statements have been prepared on a going concern basis whereby the value of assets and liabilities are expected to be realized in the normal course of business.The accounts have been prepared under the historical cost convention on accrual basis of accounting in accordance with the generally accepted accounting principles in the provisions of companies Act, 2013, as adopted consistently by the company.

(b) Fixed Assets :

All fixed assets are valued at cost net of recoverable taxes less depreciation. Roll-over charges on forward exchange contracts and loss or gain on conversion of foreign currency liabilities for acquisition of fixed assets are added to or deducted from the cost of fixed assets.

(c) Intangible asset :

Intangible asset acquired seperately are measured at cost less amortisation and impairment losses, if any. Intangible assets are amortised on a straight line basis over the estimated useful life.

(d) Depreciation :

Depreciation on Tangible Fixed Assets has been provided on the basis of life at rates prescribed in Schedule II to the Companies Act,2013. Straight line method as per useful life prescribed in shcedule II to the companies Act 2013.

(e) Foreign Exchange Transactions :

(i) Transactions in foreign exchange are translated to Indian Rupees at the rate of exchange ruling on the date of transaction.

(ii) All foreign currency liabilities related to acquisition of Fixed Assets remaining unsettled at the end of the year are converted at contract rates, where covered by foreign exchange contracts and at year end rates in other cases and the difference in translation is adjusted in the carrying cost of such assets.

(iii) Other outstanding foreign currency liabilities and receivables are translated at the year end rates and the difference in translation is recognized in the Statement of Profit and Loss.

(f) Investments :

Long term investments are stated at cost and provision for diminution is made, if such diminution is other than temporary in nature.

(g) Current Assets :

Finished Goods and Stock-in-Progress are valued at cost or net realisable value whichever is lower. Other inventories are valued at cost. All other items of current assets are stated after provisions for any diminution in value.

(h) Revenue Recognition :

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Sales comprise sale of goods and services, conversion charges, exports. Sales are recognised when the significant risks and rewards of ownership of the goods have passed to the buyer. Sales are inclusive of excise duty but net of trade discounts and VAT. However, excise duty relating to sales is reduced from gross turnover for disclosing net turnover. Export benefits are recognised on accrual basis as per schemes specified in Foreign Trade Policy, as amended from time to time. Interest income is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

(i) Employee Benefits :

(i) Short-term employee benefits are recognised as an expense at the undiscounted amount in the Statement of Profit and Loss for the year in which the related service is rendered.

(ii) Post employment and other long term employee benefits are recognised as an expense in the Statement of Profit and Loss for the year in which the employee has rendered services. The gratuity expense is recognised at the present value of the amounts payable determined using acturial valuation techniques. Acturial gains and losses in respect of gratuity benefits are charged to the Statement of Profit and Loss.

(j) Borrowing Costs :

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur.

(k) Provision for Current and deferred Tax :

Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income Tax Act, 1961. Deferred tax resulting from "timing differences "between taxable and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted as on the Balance Sheet date. The deferred tax asset is recognised and carried forward only to the extent that there is a virtual certainty that the asset will be realised in future.

(l) Contingent liabilities :

Contingent Liabilities are not recognised but are disclosed in the notes.


Mar 31, 2014

(a) Corporate Information

Facor Steels Limited ("The Company") is a Public Limited Company incorporated in India under the Companies Act, 1956. It is part of Worldwide reputed FACOR Group of Industries. The Company is listed at Bombay Stock Exchange. The Company, is one of the leading Producers of Carbon/Alloy steel/Stainless and special steel. The products are manufactured at its works in Nagpur and caters both domestic and international market.The products are meant for critical industrial application.

(b) Basis of Preparation of Financial Statements

The company''s operating results continue to be materially affected by various factors particular poor market conditions and depression in the sale market and general economic slow down. The company is taking various steps for improving operational efficiencies - expanding its market reach and other cost control measures to improve operating results and cash flow. The company continue to explore various options to raise funds to meet their short term obligations with promoters infusion of funds in the current year to provide necessary operational funding support. Accordingly the company''s financial statement have been prepared as going concern basis whereby results of assets and liabilities are expected to be realise in the normal course of business. These accounts have been prepared under the historical cost convention on accrual basis of accounting in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 1956, as adopted consistently by the Company.

(c) Fixed Assets :

All fixed assets are valued at cost net of recoverable taxes less depreciation. Roll-over charges on forward exchange contracts and loss or gain on conversion of foreign currency liabilities for acquisition of fixed assets are added to or deducted from the cost of fixed assets.

(d) Intangible asset :

Intangible asset acquired seperately are measured at cost less amortisation and impairment losses, if any, Intangible assets are amortised on a straight line basis over the estimated useful life.

(e) Depreciation :

Depreciation is provided on different fixed assets on the basis of ''straight line method'' and ''written down value method'' at rates prescribed in Schedule XIV to the Companies Act,1956.

(f) Foreign Exchange Transactions :

(i) Transactions in foreign exchange are translated to Indian Rupees at the rate of exchange ruling on the date of transaction.

(ii) All foreign currency liabilities related to acquisition of Fixed Assets remaining unsettled at the end of the year are converted at contract rates, where covered by foreign exchange contracts and at year end rates in other cases and the difference in translation is adjusted in the carrying cost of such assets.

(iii) Other outstanding foreign currency liabilities and receivables are translated at the year end rates and the difference in translation is recognized in the Statement of Profit and Loss.

(g) Investments :

Long term investments are stated at cost and provision for diminution is made, if such diminution is other than temporary in nature.

(h) Current Assets :

Finished Goods and Stock-in-Process are valued at cost or net realisable value whichever is lower. Other inventories are valued at cost. All other items of current assets are stated after provisions for any diminution in value.

(i) Revenue Recognition :

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.Sales comprise sale of goods and services, conversion charges and exports.Sales are recognised when the significant risks and rewards of ownership of the goods have passed to the buyer. Sales are inclusive of excise duty but net of trade discounts and VAT. However, excise duty relating to sales is reduced from gross turnover for disclosing net turnover.Export benefits are recognised on accrual basis as per schemes specified in Foreign Trade Policy, as amended from time to time. Interest income is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

(j) Employee Benefits :

(i) Short-term employee benefits are recognised as an expense at the undiscounted amount in the Statement of Profit and Loss for the year in which the related service is rendered.

(ii) Post employment and other long term employee benefits are recognised as an expense in the Statement of Profit and Loss for the year in which the employee has rendered services. The gratuity expense is recognised at the present value of the amounts payable determined using acturial valuation techniques. Acturial gains and losses in respect of gratuity benefits are charged to the Statement of Profit and Loss.

(k) Borrowing Costs :

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur.

(l) Provision for Current and Deferred Tax :

Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income Tax Act, 1961. Deferred tax resulting from "timing differences " between taxable and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted as on the Balance Sheet date. The deferred tax asset is recognised and carried forward only to the extent that there is a virtual certainty that the asset will be realised in future.

(m) Contingent liabilities :

Contingent Liabilities are not recognised but are disclosed in the notes.


Mar 31, 2013

(a) Basis of Preparation of Financial Statements

These accounts have been prepared under the historical cost convention on accrual basis of accounting in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 1956, as adopted consistently by the Company.

(b) Fixed Assets :

All fixed assets are valued at cost net of recoverable taxes less depreciation. Roll-over charges on forward exchange contracts and loss or gain on conversion of foreign currency liabilities for acquisition of fixed assets are added to or deducted from the cost of fixed assets.

(c) Intangible asset :

Intangible asset acquired seperately are measured at cost less amortisation and impairment losses, if any. Intangible assets are amortised on a straight line basis over the estimated useful life.

(d) Depreciation :

Depreciation is provided on different fixed assets on the basis of ''straight line method'' and ''written down value method'' at rates prescribed in Schedule XIV to the Companies Act,1956.

(e) Foreign Exchange Transactions :

(i) Transactions in foreign exchange are translated to Indian Rupees at the rate of exchange ruling on the date of transaction.

(ii) All foreign currency liabilities related to acquisition of Fixed Assets remaining unsettled at the end of the year are converted at contract rates, where covered by foreign exchange contracts and at year end rates in other cases and the difference in translation is adjusted in the carrying cost of such assets.

(iii) Other outstanding foreign currency liabilities and receivables are translated at the year end rates and the difference in translation is recognized in the Statement of Profit and Loss.

(f) Investments :

Long term investments are stated at cost and provision for diminution is made, if such diminution is other than temporary in nature.

(g) Current Assets :

Finished Goods and Stock-in-Progress are valued at cost or net realisable value whichever is lower. Other inventories are valued at cost. All other items of current assets are stated after provisions for any diminution in value.

(h) Revenue Recognition :

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Sales comprise sale of goods and services, conversion charges, exports. Sales are recognised when the significant risks and rewards of ownership of the goods have passed to the buyer. Sales are inclusive of excise duty but net of trade discounts and VAT. However, excise duty relating to sales is reduced from gross turnover for disclosing net turnover. Export benefits are recognised on accrual basis as per schemes specified in Foreign Trade Policy, as amended from time to time. Interest income is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

(i) Employee Benefi ts :

(i) Short-term employee benefits are recognised as an expense at the undiscounted amount in the Statement of Profit and Loss for the year in which the related service is rendered.

(ii) Post employment and other long term employee benefits are recognised as an expense in the Statement of Profit and Loss for the year in which the employee has rendered services. The gratuity expense is recognised at the present value of the amounts payable determined using acturial valuation techniques. Acturial gains and losses in respect of gratuity benefits are charged to the Statement of Profit and Loss.

(j) Borrowing Costs :

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur.

(k) Provision for Current and deferred Tax :

Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income Ta x Act, 1961. Deferred tax resulting from "timing differences " between taxable and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted as on the Balance Sheet date. The deferred tax asset is recognised and carried forward only to the extent that there is a virtual certainty that the asset will be realised in future.

(l) Contingent liabilities :

Contingent Liabilities are not recognised but are disclosed in the notes.


Mar 31, 2012

(a) Corporate Information

Facor Steels Limited ("The Company") is a Public Limited Company incorporated in India under the Companies Act, 1956. It is part of Worldwide reputed FACOR Group of Industries. The Company is listed at Bombay Stock Exchange . The Company, is one of the leading Producers of Carbon/Alloy steel/Stainless and special steel. The products are manufactured at its works in Nagpur and caters both domestic and international market. The products are meant for critical industrial application.

(b) Basis of Preparation of Financial Statements

These accounts have been prepared under the historical cost convention on accrual basis of accounting in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 1956, as adopted consistently by the Company.

(c) Fixed Assets

All fixed assets are valued at cost net of recoverable taxes less depreciation. Roll-over charges on forward exchange contracts and loss or gain on conversion of foreign currency liabilities for acquisition of fixed assets are added to or deducted from the cost of fixed assets.

(d) Intangible asset

Intangible asset acquired seperately are measured at cost less amortisation and impairment losses, if any, Intangible assets are amortised on a straight line basis over the estimated useful life.

(e) Depreciation

Depreciation is provided on different fixed assets on the basis of 'straight line method' and 'written down value method' at rates prescribed in Schedule XIV to the Companies Act,1956.

(f) Foreign Exchange Transactions

(i) Transactions in foreign exchange are translated to Indian Rupees at the rate of exchange ruling on the date of transaction.

(ii) All foreign currency liabilities related to acquisition of Fixed Assets remaining unsettled at the end of the year are converted at contract rates, where covered by foreign exchange contracts and at year end rates in other cases and the difference in translation is adjusted in the carrying cost of such assets.

(iii) Other outstanding foreign currency liabilities and receivables are translated at the year end rates and the difference in translation is recognized in the Statement of Profit and Loss.

(g) Investments

Long term investments are stated at cost and provision for diminution is made, if such diminution is other than temporary in nature.

(h) Current Assets

Finished Goods and Stock-in-Process are valued at cost or net realisable value whichever is lower. Other inventories are valued at cost. All other items of current assets are stated after provisions for any diminution in value.

(i) Revenue Recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Sales comprise sale of goods and services, conversion charges and exports. Sales are recognised when the significant risks and rewards of ownership of the goods have passed to the buyer. Sales are inclusive of excise duty but net of trade discounts and VAT. However, excise duty relating to sales is reduced from gross turnover for disclosing net turnover. Export benefits are recognised on accrual basis as per schemes specified in Foreign Trade Policy, as amended from time to time. Interest income is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

(j) Employee Benefits

(i) Short-term employee benefits are recognised as an expense at the undiscounted amount in the Statement of Profit and Loss for the year in which the related service is rendered.

(ii) Post employment and other long term employee benefits are recognised as an expense in the Statement of Profit and Loss for the year in which the employee has rendered services. The gratuity expense is recognised at the present value of the amounts payable determined using acturial valuation techniques. Acturial gains and losses in respect of gratuity benefits are charged to the Statement of Profit and Loss.

(k) Borrowing Costs

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur.

(l) Provision for Current and Deferred Tax

Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income Tax Act, 1961. Deferred tax resulting from "timing differences " between taxable and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted as on the Balance Sheet date. The deferred tax asset is recognised and carried forward only to the extent that there is a virtual certainty that the asset will be realised in future.

(m) Contingent liabilities

Contingent Liabilities are not recognised but are disclosed in the notes.


Mar 31, 2011

(a) Accounting Concepts : The accounts of the Company are prepared under the historical cost convention using the accrual method of accounting in accordance with the generally accepted accounting principles in India, mandatory accounting standards as specified in the Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act, 1956.

(b) Use of Estimates : The preparation of financial statements in confirmity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosures of contingent liabilities as at the date of financial statements and the results of operations during the reported period. Although, these estimates are based upon management's best knowledge of current events and actions,actual results could differ from these estimates.

(c) Fixed Assets : All fixed assets are valued at cost less depreciation. Roll-over charges on forward exchange contracts and loss or gain on conversion of foreign currency liabilities for acquisition of fixed assets are added to or deducted from the cost of fixed assets.

(d) Depreciation : Depreciation is provided on different fixed assets on the basis of 'straight line method' and 'written down value method' at rates prescribed in Schedule XIV to the Companies Act,1956, as clarified in Note to Schedule 'E' to the Accounts.

(e) Investments : Long term investments are stated at cost and provision for diminution is made, if such diminution is other than temporary in nature.

(f) Current Assets : Finished Goods and Work-in-Process are valued at cost or net realisable value whichever is lower. Other inventories are valued at cost. All other items of current assets are stated after provisions for any diminution in value. Inventories are measured using Weighted Average method.

(g) Borrowing Cost : Borrowing costs that are directly attributable to the acquisition or construction of a qualifying asset are capitalized as part of the cost of that asset. The amount of borrowing costs eligible for capitalization are determined in accordance with Accounting Standard 16 on “Borrowing Costs”. Other borrowing costs are recognized as an expense in the period in which they are incurred.

(h) Revenue Recognition:

Revenue is recongnized to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured.

Sale of Goods:

Sale is recognized,when the significant risks and rewards of ownership of the goods is passed to the buyer, which is generally on

despatch of goods to customers except in case of consignment sales, Sales exclude excise duty and VAT and is net of discounts and

incentives to the customers. (i) Employees Retirement Benefits :

(a) Short-term employee benefits are recognised as an expense at the undiscounted amount in the profit and loss account of the year in which the related service is rendered.

(b) Post employment and other long term employee benefits are recognised as an expense in the Profit and Loss account for the year in which the employee has rendered services. The expense is recognised at the present value of the amounts payable determined using acturial valuation techniques. Acturial gains and losses in respect of post employment and other long tern benefits are charged to the Profit and Loss account.

(j) Foreign Exchange Transactions :

(a) Transactions in foreign exchange are translated to Indian Rupees at the rate of exchange ruling on the date of transaction.

(b) All foreign currency liabilities related to acquisition of Fixed Assets remaining unsettled at the end of the year are converted at

contract rates, where covered by foreign exchange contracts and at year end rates in other cases and the difference in translation is adjusted in the carrying cost of such assets.

(c) Other outstanding foreign currency liabilities and receivables are translated at the year end rates and the difference in translation is recognized in the Profit & Loss A/c.

(k) Provision for Current and Deferred Tax:

Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income Ta x Act,1961. Deferred tax resulting from "timing differences"between taxable and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted as on the balance sheet date. The deferred tax assets/liabilities is recognised and carried forward only to the extent that there is a virtual certainty that the asset will be realised in future.

(l) Research and Development :

Research and Development costs (other than cost of fixed assets acquired) are charged as expenses in the year in which they are incurred.

(m) Cash Flow Statement :

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

(n) Provisions and Contingent Liabilities :

A provision is recognized if, as a result of a past event,the company has a present legal obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by the best estimate of the outflow of economic benefits required to settle the obligation at the reporting date. Where no reliable estimate can be made, a disclosure is made as contingent liability. A disclosure for a contingent liability is also made when there is a possible obligation or a present obligation that may, but probably will not,require an outflow of resources. Where there is a possible obligation or a present obligation in respect of which the likelyhood of outflow of resources is remote, no provision or disclosure is made.


Mar 31, 2010

(a) Accounting Concepts :

(i) These accounts have been prepared under the historical cost convention on accrual basis of accounting in accordance with the generally accepted Accounting Standards and the provisions of the Companies Act, 1956, as adopted consistently by the Company.

(ii) Accounting policy not specifically referred to otherwise are consistent and in consonance with the generally accepted accounting principles followed by the Company.

(b) Sales :

Sales comprise sale of goods and services, Inter-unit transfers and exports.

(c) Research and Development :

Research and Development costs (other than cost of fixed assets acquired) are charged as expenses in the year in which they are incurred.

(d) Employees Retirement Benefits :

Companys contribution to Provident Fund and Superannuation Fund is charged to Profit and Loss Account. Liability for Gratuity and unutilised leave benefits to employees is provided on the basis of Actuarial Valuation.

(e) Fixed Assets :

All fixed assets are valued at cost less depreciation. Roll-over charges on forward exchange contracts and loss or gain on conversion of foreign currency liabilities for acquisition of fixed assets are added to or deducted from the cost of fixed assets.

(f) Depreciation :

Depreciation is provided on different fixed assets on the basis of straight line method and written down value method at rates prescribed in Schedule XIV to the Companies Act,1956, as clarified in Note (a) to Schedule E to the Accounts.

(g) Current Assets :

Finished Goods and Work-in-Process are valued at cost or net realisable value whichever is lower. Other inventories are valued at cost.

All other items of current assets are stated after provisions for any diminution in value.

(h) Investments :

Long term investments are stated at cost and provision for diminution is made, if such diminution is other than temporary in nature.

(i) Foreign Exchange Transactions :

(a) Transactions in foreign exchange are translated to Indian Rupees at the rate of exchange ruling on the date of transaction.

(b) All foreign currency liabilities related to acquisition of Fixed Assets remaining unsettled at the end of the year are converted at contract rates, Where covered by foreign exchange contracts and at year end rates in other cases and the difference in translation is adjusted in the carrying cost of such assets.

(c) Other outstanding foreign currency liabilities and receivables are translated at the year end rates and the difference in translation is recognized in the Profit & Loss A/c.

(j) Provision for Current and Deferred Tax:

Provision for current tax is made after taking into consideration benfits admissible under the provisions of the Income Ta x Act,1961. Deferred tax resulting from "timing differences"between taxable and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted as on the balance sheet date. The deferred tax assets is recognised and carried forward only to the extent that there is a virtual certainty that the asset will be realised in future.

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