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Accounting Policies of GEI Industrial Systems Ltd. Company

Mar 31, 2014

A. Basis of Preparation of Financial Statements

The financial statements have been prepared as of a going concern on historical cost convention and on accrual method 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. Use of Estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates, if any, are recognised in the period in which the results are known/materialized.

C. Fixed Assets

Fixed Assets are stated at cost net of recoverable taxes and includes amounts added on revaluation, less accumulated depreciation and impairment loss, if any. All costs, including financing costs till commencement of commercial production/ upto the date the asset is put to use, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the fixed assets are capitalised. The gross block of fixed assets includes Rs. 132549291 on account of revaluation of fixed assets consequent to the said revaluation there is an additional charge of depriciation of Rs.3310092 and and equivalent amount has been withdrawn from revaluation reserve and credited to the Profit & Loss Account.

D. Intangible Assets

Intangible assets are stated at cost of acquisition net of recoverable taxes less accumulated amortisation/depletion. All costs, including costs till commencement of commercial production net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the intangible assets are capitalised.

E. Depreciation and Amortisation

Depreciation on fixed assets is provided to the extent of depreciable amount on written Straight Line Method (SLM) at the rates and in the manner prescribed in Schedule XIV to the Companies Act. 1956. Depreciation on intangible assets and software is provided @ 10% on Straight Line Method and is amortized over a period of 10 Years.

F. Impairment of Assets

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

G. Foreign Currency Transactions

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

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

(c) Non monetary foreign currency items are carried at cost.

(d) Any income or expenses on account of exchange difference either on settlement or on translation is recognised in the Profit and Loss account except in case of long term liabilities, where they relate to acquisition of fixed assets, in which case they are adjusted to the carrying cost of such assets.

H. Investment

Current investment are carried at cost . Long Term investments are stated at cost. Provision for diminution in the value of investments is made only if such a decline is other than temporary.

I. Inventories

Items of inventories are measured at lower of cost and net realisable value after ( providing for obsolescence, if any. Cost of inventories comprises of cost of purchase, cost of conversion and costs including manufacrturing overheads incurred in bringing them to their respective present location and condition. Scrap material is valued at net realisable value.

Work in Progress

Project and construction related work-in-progress at percentage of job completed and at realizable value thereafter.

J. Revenue Recognition

Revenue is recognized only when it can be reliably measured and it is reasonable to expect ultimate collection. Revenue from operation includes sale of goods, services, sales tax, service tax and excise duty adjusted for discount (net) and Value Added Tax (VAT). Dividend income is recognised when right to receive is established. Interest income is recognized on time proportion basis taking into account the amount outstanding and rate applicable or as certified by financilal institution.

Project related activity and contracts are recognised by applying percentage completion to the contract value determined as a proportion of the cost incurred to- date to the total estimated cost

K. Employee Benefits

(i) Short-term employee benefites are recoginsed as an expenses at the undiscounted amount in the profit and loss account in the year in which the related service is rendred and as per the policy consitently followed by the Company.

(ii) The gratuity liability in respect of employees of the company has been covered through LIC policy, the annual premium paid/ payable for such policy is accounted for as a revenue expenditure.

L. Claims by/against the Company

(i) Claims for liquidated damages against the Company are recognised in accounts based on management''s assessment of the probable outcomes with reference to the available information suplimented by experience of similar transactions.

(ii) Claims for export incentives/duty drawbacks/duty refunds and insurance claims etc., if any, are taken into account on accrual basis.

(iii) Amounts due in respect of price escalation claims and/or variation in contract work are recognised as revenue only when there are conditions in the contracts for such claims or variations and/or evidence of the acceptability of the same from customers. However, escalation is restricted to intrinsic value.

M. 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. A qualifying asset is one that necessarily takes substantial period of time to get ready for the intended use. All other borrowing costs are charged to profit and loss account.

N. 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 difference" 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. Deferred tax asset is recognised and carried forward only to the extent that is a virtual certainty that the asset will be realised in future.

O. Provisions, Contingent Liabilities and Contingent Assets

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

ii) Liability on account interest on various borrowings from financial institutions and ICDS which has not been provided for in the accounts on account of litigation or classification as NPA is disclosed under contigent liabilities on estimate basis.

P. Deferred Revenue Expenses

Deferred Revenue Expenditures are amortized over a period of 5 years, comencing from the year next to the year of expenditure except in cases mentioned otherwise in the notes on account.


Mar 31, 2013

A. Basis of Preparation of Financial Statements

The financial statements have been prepared as of a going concern on historical cost convention and on accrual method 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. Use of Estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates, if any, are recognised in the period in which the results are known/materialized.

C. Fixed Assets ,

Fixed Assets are stated at cost net of recoverable taxes and includes amounts added on revaluation, less accumulated depreciation and impairment loss,'' if any. All costs, including financing costs till commencement of commercial production/ upto the date the asset is put to use, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the fixed assets are capitalised. The gross block of fixed assets includes Rs.132549291 on account of revaluation of fixed assets consequent to the said revaluation there is an additional charge of depriciation of Rs.3310092 and and equivalent amount has been withdrawn from revaluation reserve and credited to the Profit & Loss Account.

D. Intangible Assets

Intangible assets are stated at cost of acquisition net of recoverable taxes less accumulated amortisation/depletion. All costs, including costs till commencement of commercial production net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the intangible assets are capitalised.

E. Depreciation and Amortisation

Depreciation on fixed assets is provided to the extent of depreciable amount on written Straight Line Method (SLM) at the rates and in the manner prescribed in Schedule XIV to the Companies Act.1956. Depreciation on intangible assets and software is provided @ 10% on Straight Line Method and is amortized over a period of 10 Years.

F. Impairment of Assets

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

G. Foreign Currency Transactions

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

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

(c) Non monetary foreign currency items are carried at cost.

(d) Any income or expenses on account of exchange difference either on settlement or on translation is recognised in the Profit and Loss account except in case of long term liabilities, where they relate to acquisition of fixed assets, in which case they are adjusted to the carrying cost of such assets.

H. Investment ? ¦ . ''

Current investment are carried at cost . Long Term investments are ,stated at cost. Provision for diminution in the value of investments is made only if such a decline is other than temporary.

I. Inventories

Items of inventories are measured at lower of cost and net realisable value after providing for obsolescence, if any. Cost of inventories comprises of cost of purchase, cost of conversion and costs including manufacrturing overheads incurred in bringing them to their respective present location and condition. Scrap material is valued at net realisable value.

Work in Progress

Project and construction related work-in-progress at percentage of job completed and at realizable value thereafter.

J. Revenue Recognition

Revenue is recognized only when it can be reliably measured and it is reasonable to expect ultimate collection. Revenue from operation includes sale of goods, services, sales tax, service tax and excise duty adjusted for discount (net) and Value Added Tax (VAT). Dividend income is recognised when right to receive is established. Interest income is recognized on time proportion basis taking into account the amount outstanding and rate applicable or as certified by financilal institution.

Project related activity and contracts are recognised by applying percentage completion to the contract value determined as a proportion of the cost incurred to- date to the total estimated cost

K. Employee Benefits

(i) Short-term employee benefites are recoginsed as an expenses at the undiscounted amount in the profit and loss account in the year in which the related service is rendred and as per the policy consitently followed by the Company.

(ii) The gratuity liability in respect of employees of the company has been covered through LIC policy, the annual premium paid/ payable for such policy is accounted for as a revenue expenditure.

L. Claims by/against the Company

(i) Claims for liquidated damages against the Company are recognised in accounts based on management''s assessment of the probable outcomes with reference to the available information suplimented by experience of similar transactions.

(ii) Claims for export incentives/duty drawbacks/duty refunds and insurance claims etc., if any, are taken into account on accrual basis.

(iii) Amounts due in respect of price escalation claims and/or variation in contract work are recognised as revenue only when there are conditions in the contracts for such claims or variations and/or evidence of the acceptability of the same from customers. However, escalation is restricted to intrinsic value.

M. 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. A qualifying asset is one that necessarily takes substantial period of time to get ready for the intended use. All other borrowing costs are charged to profit and loss account.

N. 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 difference" 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. Deferred tax asset is recognised and carried forward only to the extent that is a virtual certainty that the asset will be realised in future.

O. Provisions, Contingent Liabilities and Contingent Assets

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

P. Deferred Revenue Expenses

Deferred Revenue Expenditures are amortized over a period of 5 years, comencing from the year next to the year of expenditure except in cases mentioned otherwise in the notes on account.


Mar 31, 2012

A. Basis of Preparation of Financial Statements

The financial statements have been prepared as of a going concern on historical cost convention and on accrual method 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. Use of Estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates, if any, are recognised in the period in which the results are known/materialized.

C. Fixed Assets

Fixed Assets are stated at cost net of recoverable taxes and includes amounts added on revaluation, less accumulated depreciation and impairment loss, if any. All costs, including fnancing costs till commencement of commercial production/ upto the date the asset is put to use, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the fixed assets are capitalised. The gross block of fixed assets includes Rs. 132549291 on account of revaluation of fixed assets consequent to the said revaluation there is an additional charge of depreciation of Rs. 3310092 and equivalent amount has been withdrawn from revaluation reserve and credited to the Profit & Loss Account.

D. Intangible Assets

Intangible assets are stated at cost of acquisition net of recoverable taxes less accumulated amortisation/ depletion. All costs, including costs till commencement of commercial production net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the intangible assets are capitalised.

E. Depreciation and Amortisation

Depreciation on fixed assets is provided to the extent of depreciable amount on Written Straight Line Method (SLM) at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956. Depreciation on intangible assets and software is provided @ 10% on Straight Line Method and is amortized over a period of 10 Years.

F. Impairment of Assets

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

G. Foreign Currency Transactions

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

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

(c) Non monetary foreign currency items are carried at cost.

(d) Any income or expenses on account of exchange difference either on settlement or on translation is recognised in the Profit and Loss account except in case of long term liabilities, where they relate to acquisition of fixed assets, in which case they are adjusted to the carrying cost of such assets.

H. Investment

Current investment are carried at cost. Long Term investments are stated at cost. Provision for diminution in the value of investments is made only if such a decline is other than temporary.

I. Inventories

Items of inventories are measured at lower of cost and net realisable value after providing for obsolescence, if any. Cost of inventories comprises of cost of purchase, cost of conversion and costs including manufacturing overheads incurred in bringing them to their respective present location and condition. Scrap material is valued at net realisable value.

Work-in-Progress

Project and construction related work-in-progress at percentage of job completed and at realizable value thereafter.

J. Revenue Recognition

Revenue is recognized only when it can be reliably measured and it is reasonable to expect ultimate collection. Revenue from operation includes sale of goods, services, sales tax, service tax and excise duty adjusted for discount (net) and Value Added Tax (VAT). Dividend income is recognised when right to receive is established. Interest income is recognized on time proportion basis taking into account the amount outstanding and rate applicable or as certified by financial institution.

Project related activity and contracts are recognised by applying percentage completion to the contract value determined as a porportion of the cost incurred to-date to the total estimated cost.

K. Employee benefits

(a) Short-term employee benefits are recognised as an expenses at the undiscounted amount in the Profit and loss account in the year in which the related service is rendered and as per the policy consistently followed by the Company.

(b) The gratuity liability in respect of employees of the Company has been covered through LIC policy, the annual premium paid/ payable for such policy is accounted for as a revenue expenditure.

L. Claims by/against the Company

(a) Claims for liquidated damages against the Company are recognised in accounts based on management's assessment of the probable outcomes with reference to the available information supplemented by experience of similar transactions..

(b) Claims for export incentives/duty drawbacks/duty refunds and insurance claims etc., if any, are taken into account on accrual basis.

(c) Amounts due in respect of price escalation claims and/or variation in contract work are recognised as revenue only when there are conditions in the contracts for such claims or variations and/or evidence of the acceptability of the same from customers. However, escalation is restricted to intrinsic value.

M. 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. A qualifying asset is one that necessarily takes substantial period of time to get ready for the intended use. All other borrowing costs are charged to Profit and loss account.

N. 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 difference" 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. Deferred tax asset is recognised and carried forward only to the extent that is a virtual certainty that the asset will be realised in future.

O. Provisions, Contingent Liabilities and Contingent Assets

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

P. Deferred Revenue Expenses

Deferred Revenue Expenditures are amortized over a period of 5 years, commencing from the year next to the year of expenditure except in cases mentioned otherwise in the notes on account.


Mar 31, 2011

A. Accounting Conventions

i) The accounts are prepared under the historical cost convention in accordance with generally accepted accounting principles and the provisions of the Companies Act, 1956 as adopted consistently by the Company.

ii) The Company follows mercantile system of accounting and recognizes income and expenditure on accrual basis.

b. Sales

The revenue from :

i) Sales of Goods are recognised at the point of despatch of finished goods to the customers.

ii) Project related activity and contracts are recognised by applying percentage completion to the contract value determined as a proportion of the cost incurred to- date to the total estimated cost.

iii) The export sales are converted at the exchange rate prevailing at the time of transaction.

c. Foreign Currency Transaction

i) Transactions in foreign currencies are normally recorded at the exchange rate prevailing at the time of the transactions.

ii) Any income or expense on account of exchange difference either on settlement or on translation is recognised in the profit & loss account except in the case of capital expenditure where they are adjusted against the cost of relevant assets.

d. Employee Benefits

i) Short term employee benefits

Employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits and are recognized in the period in which the employee renders the related service

ii) Post employment benefits ( defined benefit plans)

The employees' gratuity scheme is defined benefit plan .The Gratuity liability in respect of the employees of the Company has been covered through LIC Policy. The premium paid for such policy is treated as revenue expenditure.

iii) Post employment benefits (defined contribution plans)

Contribution to the Provident Fund is made in accordance with the provisions of the Provident Fund Act, 1952 and is charged to revenue account.

iv) Long term employee benefits

Long term employee benefits comprise of Leave Encashment. Leave balances in respect of all employees as on 31st March, 2011 have been accounted on the basis of last salary drawn by the employee and charged to revenue account.

e. Fixed Assets

Fixed Assets are stated at historical cost less depreciation.

The gross block of Fixed Assets includes Rs 132549291 on account of revaluation of Fixed Assets consequent to the said revaluation there is an additional charge of depreciation of Rs. 3310092 and an equivalent amount has been withdrawn from Revaluation Reserve and credited to the Profit & loss Account.

f. Depreciation

i) Depreciation on fixed Assets has been provided on straight line method in accordance with the provisions of section 205 (2) (b) of the Companies Act, 1956 at the rate and in manner specified in schedule XIV to the Companies Act, 1956.

ii) Depreciation of intangible assets and software is provided @ 10% on straight-line method and is amortized over a period of 10 years.

g. Investments

Long term investments are stated at cost.

h. Inventories

Raw-materials, stores, spares and consumables are valued at cost, Semi-finished goods are valued at cost of raw-material and the cost incurred in the normal course of business in bringing the goods upto the present condition on estimate basis or at realisable value, which ever is lower. Finished goods are valued at selling price.

Work-in-progress

Project and construction related work-in-progress at percentage of job completed and at realizable value thereafter.

i. Deferred Revenue Expenses

Deferred Revenue Expenditure are amortised over a period of 5 years, commencing from the year next to the year of expenditure except in cases mentioned otherwise in the notes on accounts.

 
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