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Accounting Policies of HBL Power Systems Ltd. Company

Mar 31, 2015

A Basis for preparation of financial statements:

The financial statements have been prepared under the Historical Cost convention and on a Going Concern basis to comply, in all material aspects, with the Accounting Principles Generally Accepted in India (GAAP) including the Accounting Standards specified under Section 133 of the Companies Act, 2013 ('Act') read with Rule 7 of the Companies (Accounts) Rules, 2014 and other relevant provisions of the Act.

B Use of Estimates:

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

C Tangible Assets and Depreciation:

1. Tangible Assets are stated at original cost, net of recoverable taxes and duties, less cumulative depreciation and impairment. Administrative and other general overheads including borrowing costs that are specifically attributable to acquisition of Assets or bringing Fixed Assets into their working condition are allocated / apportioned and capitalised as part of cost of the Asset. Premium paid for acquiring Leasehold Lands along with directly related expenditure is considered as tangible asset.

2. Depreciation on Tangible Assets including those on leasehold premises is provided under straight line method over the useful life of assets specified in Part 'C' of Schedule II to the Companies Act, 2013 and in the manner specified there in, except in respect of Dies and Moulds used and 'Secured Land Filling' (used for disposal of Lead slag) which are depreciated over their estimated useful lives of 5 years and 10 years respectively on Straight Line Method. Assets costing less than Rs.5,000/- are fully depreciated in the year of purchase. Cost of acquisition of Leasehold Land is amortised over the lease period.

D Intangible Assets and Amortisation:

1. Intangible Asset is recognised when it is probable that future economic benefits that are attributable to the asset will flow to the enterprise and the cost of the asset can be measured reliably. Expenditure incurred for creating infrastructure facilities where the ownership does not rest with the company and where the benefits from it accrue over a future period is also considered as Intangible Asset.

2. New product development expenditure, software licences, technical know-how fee, infrastructure and logistic facilities, etc. are recognised as Intangible Assets upon completion of development and commencement of commercial production.

3. Expenditure capitalised under 'Intangible Assets' is amortised over a period of 60 months from the month of commencement of commercial production/utilisation of facility.

4. Amortisation on impaired intangible assets is adjusted in the future periods in such a manner that the revised carrying amount of the asset is allocated over its remaining useful life.

E Capital Work in Progress (CWIP) and Assets under Development

1. Tangible CWIP includes Plant and Equipment under erection, Civil works in progress and preoperative expenses pending allocation to the related assets.

2. Intangible Assets Under Development include

a) New Product Expenditure where development is in progress

b) Payments made towards fees for software licences, technical know-how, Infrastructure/logistic facilities etc., and also include all related expenditure incurred up to absorption of technology and completion of Development.

F Impairment of Assets:

An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value. An impairment loss is recognised when an asset is identified as impaired. Conversely, the impairment loss, recognised in prior accounting period, is reversed if there is an upward revision in the estimate of recoverable amount.

G Foreign Currency Transactions:

Transactions relating to non-monetary items and Purchase and Sale of goods/services denominated in foreign currency are recorded at the exchange rate prevailing or a rate that approximates the actual rate on the date of transaction. Assets & Liabilities in the nature of monetary items denominated in foreign currencies are translated and restated at prevailing exchange rates at the Balance sheet date. Income or expense arising on account of exchange rate difference either on settlement or on translation is recognised in the Statement of Profit & Loss. H Investments:

a) Investments classified as "Long Term Investments(Non-Current)" are carried at cost and provision for diminution, if any, is made to recognise the decline, other than temporary, in the value of the Investments. Such reduction is determined and made for each investment individually.

b) Investment classified as 'Current Investments' are carried at the lower of cost and fair value determined on individual investment basis.

I Income Recognition:

a) Sales Revenue is recognised on despatch to customers as per the terms of the order. Sales are disclosed at net of returns/trade discounts and inclusive of Excise duty billed to customers. Inter Divisional Transfers are not recognised as Revenue.

b) Service Income is recognised on the basis of bills submitted as per the terms of the order.

c) Revenue from Short Term contracts involving Supply and Service, where price breakup is available, is recognised -

i) In respect of Supplies when goods are delivered to customers unconditionally; and

ii) In respect of Service on completion of Service and bills submitted as per terms of the order.

d) In case of contracts (Long Term) for complex equipment/systems/development orders where the normal cycle time for completion is spread over two or more accounting periods, revenue is recognised, subject to provision for anticipated losses, based on percentage of completion as certified by technical committee/customers' acceptance wherever applicable.

e) Dividends are recognised as income when the right to receive the dividend is established.

f) Income from interest bearing deposits with Banks and others is recognised on accrual basis.

g) Interest on Income tax refunds is recognised on determination or on receipt whichever is earlier. h) Subsidies from Government are recognised when received.

- Cost of Material is net of CENVAT/VAT availed on all items.

- Stock of Finished Goods at Factories and at Branches are inclusive of Excise Duty.

- Customs Duty payable on Bonded Stock/ in transit is provided for and is included in the value of such stocks.

- Inventory arising out of inter divisional transfers is valued at cost to the transferring division after eliminating unrealised profit, if any.

K Provisions, Contingent Liabilities and Contingent Assets:

a) Provision for liabilities is recognised if :

i) the Company has a present obligation as a result of a past event

ii) a probable outflow of resources is expected to settle the obligation and

iii) the amount of obligation can be reliably estimated

b) Reimbursement of expenditure is recognised only upon virtual certainty of receipt.

c) Contingent liability is disclosed but is not provided for, in respect of a present obligation or a possible obligation which do not require an out flow of resources or where the likelihood of such out flow is remote.

d) Contingent assets are neither recognised nor disclosed.

e) Provisions and contingent liabilities are reviewed at each Balance sheet date and are adjusted to reflect the current best estimate.

L Taxes on Income/Deferred Tax:

a) Current Tax on Income is determined and provided on the basis of taxable income computed in accordance with the provisions of the Income Tax Act, 1961. In the year in which 'Minimum Alternative Tax ' (MAT) on book profits is applicable and paid, eligible MAT credit equal to the excess of MAT paid over and above the normally computed tax, is recognised as an asset to be carried forward for set off against regular tax liability when it is probable that future economic benefit will flow to the Company within the MAT credit Entitlement period as specified under the provisions of Income Tax Act, 1961. The carrying amount of MAT Credit entitlement is reviewed and adjusted wherever required at each Balance Sheet date.

b) Deferred tax resulting from timing differences between accounting Income and taxable Income is recognised and 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 reasonable certainty that the Asset will be realised in future. The carrying amount of 'Deferred Tax Asset' is reviewed and adjusted at each Balance Sheet date

M Assets taken under leases:

a) In respect of Equipment taken under finance leases, the fair value of the leased asset is recognised as an asset and corresponding liability is created. The finance charges are allocated to the period over the lease term and are charged off.

b) In respect of Equipment taken under operating lease, lease payments are recognised as expense over the period of lease term.

N Employee Benefits:

a) Short term Benefits:

All employee benefits falling due wholly within twelve months of rendering the service are classified as short term employee benefits. The cost of the benefits like salaries, wages, medical, leave travel assistance, short term compensated absences, bonus, exgratia, etc. is recognised as an expense in the period in which the employee renders the related service.

b) Post-employment benefits:

(i) Defined contribution plans:

The contribution paid/payable under Provident Fund Scheme, ESI Scheme and Employee Pension Scheme is recognised as expenditure in the period in which the employee renders the related service.

(ii) Defined benefit plans:

The Company's obligation towards Gratuity is a defined benefit plan. The present value of the estimated future cash flows of the obligation under such plan is determined based on actuarial valuation using the Projected Unit Credit method. Actuarial gains and losses are recognised immediately in the Profit & Loss statement. The contribution made is recognised as expense.

c) Long Term employee benefits:

The obligation for long term employee benefits such as long term compensated absences, is determined and recognised in the similar manner stated in the defined benefit plan.

O Cash Flow statement:

Cash Flow statement is reported using 'Indirect Method' as per Accounting Standard, (AS)-3.

P Prior period and Extra-ordinary items/Exceptional items:

a) Items of Prior period Income and Expenditure are disclosed distinctly.

b) Items of Income/ Expense/Loss which are exceptional and non-recurring in nature are considered as Exceptional/Extraordinary items and are disclosed distinctly for determination of net profit/loss for the period.


Mar 31, 2014

A Basis for preparation of financial statements:

The financial statements have been prepared under the Historical Cost convention and on a Going Concern basis to comply, in all material aspects, with Generally Accepted Accounting Principles in India, the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006, (as amended) prescribed by the Central Government and the relevant provisions of the Companies Act, 1956.

B Use of Estimates:

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

C Tangible Assets and Depreciation:

1. Tangible Assets are stated at original cost, net of recoverable taxes and duties, less cumulative depreciation and impairment. Administrative and other general overheads including borrowing costs that are specifically attributable to acquisition of Assets or bringing Fixed Assets into their working condition are allocated / apportioned and capitalised as part of cost of the Asset. Premium paid for acquiring Leasehold Lands along with directly related expenditure is considered as tangible asset.

2. Depreciation on Tangible Assets including those on leasehold premises is provided under straight line method at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956 except in respect of Dies and Moulds used and ''Secured Land Filling'' (used for disposal of Lead slag) which are depreciated at 20% and 10% respectively on Straight Line Method. Assets costing less than Rs.5,000/- are fully depreciated in the year of purchase. Cost of acquisition of Leasehold Land is amortised over the lease period.

D Intangible Assets and Amortisation:

1. Intangible Asset is recognised when it is probable that future economic benefits that are attributable to the asset will flow to the enterprise and the cost of the asset can be measured reliably. Expenditure incurred for creating infrastructure facilities where the ownership does not rest with the company and where the benefits from it acccrue over a future period is also considered as Intangible Asset.

2. New product development expenditure, software licences,technical knowhoe fee,infrastructure and logistic facilities, etc. are recognised as Intangible Assets upon completion of development and commencement of commercial production.

3. Expenditure capitalised under ''Intangible Assets'' is amortised over a period of 60 months from the month of commencement of commercial production/utilisation of facility.

4. Amortisation on impaired intangible assets is adjusted in the future periods in such a manner that the revised carrying amount of the asset is allocated over its remaining useful life.

E Capital Work in Progress (CWIP) and Assets under Development

1. Tangible CWIP includes Plant and Equipment under erection, Civil works in progress and preoperative expenses pending allocation to the related assets.

2. Intangible Assets Under Development includes

a) New Product Expenditure where development is in progress

b) Payments made towards fees for software licences, technical knowhow, Infrastruture/logistic facilities etc., and also includes all related expenditure incurred upto absorption of technology and completion of Development.

F Impairment of Assets:

An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value. An impairment loss is recognised when an asset is identified as impaired. The impairment loss recognised in prior accounting period is reversed if there is a change in the estimate of recoverable amount.

G Foreign Currency Transactions:

Transactions relating to non-monetary items and Purchase and Sale of goods/services denominated in foreign currency are recorded at the exchange rate prevailing or that approximates actual rate on the date of transaction. Assets & Liabilities in the nature of monetary items denominated in foreign currencies are translated and restated at prevailing exchange rates at the Balance sheet date. Income or expense arrising on account of exchange rate difference either on settlement or on translation is recognised in the Statement of Profit & Loss.

H Investments:

a) Investments classified as "Long Term Investments(Non-Current)" are carried at cost and provision for diminution is made to recognise the decline, other than temporary, in the value of the Investments. Such reduction is determined and made for each investment individually.

b) Investment classified as ''Current Investments'' are carried at the lower of cost and fair value determined on individual investment basis.

I Income Recognition:

a) Sales Revenue is recognised on dispatch to customers as per the terms of the order. Gross sales are net of returns/trade discounts and inclusive of Excise duty billed to customers. Inter Divisional Transfers are not recognised as turnover.

b) Service Income is recognised on the basis of bills submitted as per the terms of the order.

c) Short Term contracts involving Supply and Service where price breakup is available, Revenue in respect of Supplies are recognised when goods are delivered to customers unconditionally and Service income is recognised on completion of Service and bills submitted as per terms of the order.

d) In case of contracts (Long Term) of complex equipment/systems/development order where the normal cycle time for completion is spreading over two or more accounting periods, revenue is recognised, subject to provision of anticipated losses, based on percentage completion as certified by technical committee/ customers acceptance wherever applicable.

e) Dividends are recognised as income when the right to receive the dividend is established.

f) Income from interest bearing deposits with Banks and others is recognised on accrual basis.

g) Interest on Income tax refunds is recognised on determination or on receipt basis whichever is earlier.

h) Subsidies from Government are recognised when received.

J Inventories:

Inventories at the yearend are valued as under:

Raw Materials, Components, Consumables and Stores & Spares.

At lower of weighted average cost and net realisable value.

Work In Progress and Finished goods.

At lower of net realisable value and weighted average cost of materials plus cost of conversion and other costs incurred in bringing them to the present location and condition.

Long Term contract work in progress (where the income is not eligible for recognition as per Income recognition policy stated above).

At direct and attributable costs incurred in relation to such contracts .

Stock In Trade At lower of cost and net realisable value

Consumable Tools At cost less amount charged off (which is at 1/3rd of

value each year).

- Cost of Material is net of Cenvat/VAT availed on all items.

- Excise Duty payable on Stock of Finished Goods and Customs Duty payable on Bonded Stock/ in transit(in case of imports) is provided for and included in the value of such stocks.

- Stocks at Branches are inclusive of Duty paid at the time of dispatch from Factories.

- Inventory arising out of inter divisional transfers is valued at cost to the transferring division after eliminating unrealised profit, if any.

K Provisions, Contingent Liabilities and Contingent Assets:

Provisions are recognised for liabilities that can be measured only by using a substantial degree of estimation, if

a) the Company has a present obligation as a result of a past event

b) a probable outflow of resources is expected to settle the obligation and

c) the amount of obligation can be reliably estimated

Reimbursement expected in respect of expenditure is recognised only when it is virtually certain that the reimbursement will be received.

Contingent liability is not provided for but is disclosed in the case of :

a) present obligation arising from a past event, when it is not probable that an outflow of resources will be required to settle the obligation

b) a possible obligation, unless the probability of outflow of resources is remote.

Contingent assets are neither recognised nor disclosed.

Provisions and contingent liabilities are reviewed at each Balance sheet date.

L Taxes on Income/Deferred Tax:

Current Tax on Income is determined and provided on the basis of taxable income computed in accordance with the provisions of the Income Tax Act, 1961. In the year in which ''Minimum Alternative Tax '' (MAT) on book profits is applicable and paid, eligible MAT credit equal to the excess of MAT paid over and above the normally computed tax, is recognised as an asset to be carried forward for set off against regular tax liability when it is probable that future economic benefit will flow to the Company within the MAT credit Entitlement period as specified under the provisions of Income Tax Act, 1961. The carrying amount of MAT Credit entitlement is reviewed and adjusted wherever required at each Balance Sheet date.

Deferred tax resulting from timing differences between accounting Income and taxable Income is recognised and 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 reasonable certainty that the Asset will be realised in future. The carrying amount of ''Deferred Tax Asset'' is reviewed at each Balance Sheet date

M Assets taken under leases:

a) In respect of Equipment taken under finance leases, the fair value of the leased asset is recognised as an asset and corresponding liability is created. The finance charges are allocated to the period over the lease term and are charged off.

b) In respect of Equipment taken under operating lease, lease payments are recognised as expense on a straight line basis over the lease term.

N Employee Benefits:

a) Short term Benefits:

All employee benefits falling due wholly within twelve months of rendering the service are classified as short term employee benefits. The cost of the benefits like salaries, wages, medical, leave travel assistance, short term compensated absences, bonus, exgratia, etc. is recognised as an expense in the period in which the employee renders the related service.

b) Post-employment benefits:

(i) Defined contribution plans:

The contribution paid/payable under Provident Fund Scheme, ESI Scheme and Employee Pension Scheme is recognised as expenditure in the period in which the employee renders the related service.

(ii) Defined benefit plans:

The Company''s obligation towards Gratuity is a defined benefit plan. The present value of the estimated future cash flows of the obligation under such plan is determined based on actuarial valuation using the Projected Unit Credit method. Actuarial gains and losses are recognised immediately in the Profit & Loss statement. The contribution made is recognised as expense.

c) Long Term employee benefits:

The obligation for long term employee benefits such as long term compensated absences, is determined and recognised in the similar manner stated in the defined benefit plan.

O Cash Flow statement:

Cash Flow statement is reported using indirect method as per Accounting Standard, AS-(3).

P Prior period and Extra-ordinary items/Exceptional items:

Items of Prior period Income and Expenditure are disclosed distinctly.

Items of Income/ Expense/Loss which are exceptional and non recurring in nature are considered as Exceptional/ Extraordinary items and are disclosed distinctly for determination of net profit/loss for the period.


Mar 31, 2013

A Basis for preparation of financial statements:

The financial statements have been prepared under the Historical Cost convention and on a Going Concern basis to comply, in all material aspects, with Generally Accepted Accounting Principles in India, the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006, (as amended) prescribed by the Central Government and the relevant provisions of the Companies Act, 1956.

B Use of Estimates:

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

C Tangible Assets and Depreciation:

Tangible Assets are stated at original cost, net of recoverable taxes and duties, less cumulative depreciation and impairment. Administrative and other general overheads including borrowing costs that are specifically attributable to acquisition of Assets or bringing Fixed Assets into their working condition are allocated / apportioned and capitalised as part of cost of the Asset.

Depreciation:

Depreciation on Tangible Assets is provided under straight line method at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956 except in respect of Dies and Moulds used and ''Secured Land Filling'' (used for disposal of Lead slag) which are depreciated at 20% and 10% respectively on Straight Line Method. Assets costing less than Rs.5,000/- are fully depreciated in the year of purchase.

D Intangible Assets and Amortisation:

Intangible Asset is recognised when it is probable that future economic benefits that are attributable to the asset will flow to the enterprise and the cost of the asset can be measured reliably. Expenditure incurred for creating infrastructure facilities where the ownership does not rest with the company and where the benefits from it acccrue over a future period is also considered as Intangible Asset.

Expenditure capitalised under ''Intangible Assets'' is amortised over a period of 60 months from the month of commencement of commercial production/utilisation of facility.

Amortisation on impaired intangible assets is adjusted in the future periods in such a manner that the revised carrying amount of the asset is allocated over its remaining useful life.

E Capital Work in Progress (CWIP):

CWIP includes Plant and Equipment under erection, Civil works in progress and preoperative expenses pending allocation on the assets to be acquired/commissioned, capitalised. Also include payments made for technical know-how fee and for development of prototypes including for related software, pending to be capitalised upon absorption of technology and completion of development/commercial production.

F Intangible Assets Under Development

New Product Development expenditure, where development is completed and awaiting commercial production or where development is in progress, is classified as ''Intangible Assets under development'' to be capitalised and amortised upon commencement of commercial production.

G Impairment of Assets:

An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value. An impairment loss is recognised when an asset is identified as impaired. The impairment loss recognised in prior accounting period is reversed if there is a change in the estimate of recoverable amount.

H Foreign Currency Transactions:

Transactions relating to non-monetary items and Purchase and Sale of goods/services denominated in foreign currency are recorded at the exchange rate prevailing or that approximates actual rate on the date of transaction. Assets & Liabilities in the nature of monetary items denominated in foreign currencies are translated and restated at prevailing exchange rates at the Balance sheet date. Income or expense arrising on account of exchange rate difference either on settlement or on translation is recognised in the Statement of Profit & Loss.

I Investments:

a) Investments classified as "Long Term Investments(Non-Current)" are carried at cost and provision for diminution is made to recognise the decline, other than temporary, in the value of the Investments. Such reduction is determined and made for each investment individually.

b) Investment classified as ''Current Investments'' are carried at the lower of cost and fair value determined on individual investment basis.

J Income Recognition:

a) Sales Revenue is recognised on dispatch to customers as per the terms of the order. Gross sales are net of returns/trade discounts and inclusive of Excise duty billed to customers. Inter Divisional Transfers are not recognised as turnover.

b) Service Income is recognised on the basis of bills submitted as per the terms of the order.

c) Short Term contracts involving Supply and Service where price breakup is available, Revenue in respect of Supplies are recognised when goods are delivered to customers unconditionally and Service income is recognised on completion of Service and bills submitted.

d) In case of contracts (Long Term) of complex equipment/systems/development order where the normal cycle time for completion is spreading over two or more accounting periods, revenue is recognised, subject to provision of anticipated losses, based on percentage completion as certified by technical committee/ customers acceptance wherever applicable.

e) Dividends are recognised as income when the right to receive the dividend is established.

f) Income from interest bearing deposits with Banks and others is recognised on accrual basis.

g) Interest on Income tax refunds, if any, is recognised on determination or on receipt basis whichever is earlier. h) Subsidies from Government are recognised when received.

K Inventories:

Inventories at the year end are valued as under:

Raw Materials, Components, Consumables and Stores & Spares.

At lower of weighted average cost and net realisable value. Work In Progress and Finished goods. At lower of net realisable value and weighted average cost of materials plus cost of conversion and other costs incurred in bringing them to the present location and condition.

Long Term contract work in progress (where the income its not eligible for recognition as per Income recognition policy stated above).

At direct and attributable costs incurred in relation to such contracts

Stock In Trade At lower of cost and net realisable value

Consumable Tools At cost less amount charged off (which is at 1/3rd of value each year).

* Cost of Material is net of Cenvat/VAT availed on all items.

* Excise/Custom Duty payable on Stock of Finished Goods and Bonded Stocks is provided for and included in the value of stocks.

* Stocks at Branches are inclusive of Duty paid at the time of dispatch from Factories.

* Inventory arising out of inter divisional transfers is valued at cost to the transferring division after eliminating unrealised profit, if any.

L Provisions, Contingent Liabilities and Contingent Assets:

Provisions are recognised for liabilities that can be measured only by using a substantial degree of estimation, if

a) the Company has a present obligation as a result of a past event

b) a probable outflow of resources is expected to settle the obligation and

c) the amount of obligation can be reliably estimated

Reimbursement expected in respect of expenditure is recognised only when it is virtually certain that the reimbursement will be received.

Contingent liability is not provided for but is disclosed in the case of:

a) present obligation arising from a past event, when it is not probable that an outflow of resources will be required to settle the obligation

b) a possible obligation, unless the probability of outflow of resources is remote. Contingent assets are neither recognised nor disclosed.

Provisions and contingent liabilities are reviewed at each Balance sheet date.

M Taxes on Income/Deferred Tax:

Current Tax on Income is determined and provided on the basis of taxable income computed in accordance with the provisions of the Income Tax Act, 1961. In the year in which ''Minimum Alternative Tax'' (MAT) on book profits is applicable and paid, eligible MAT credit equal to the excess of MAT paid over and above the normally computed tax, is recognised as an asset to be carried forward for set off against regular tax liability when it is probable that future economic benefit will flow to the Company within the MAT credit Entitlement period as specified under the provisions of Income Tax Act, 1961.

Deferred tax resulting from timing differences between accounting Income and taxable Income is recognised and 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 reasonable certainty that the Asset will be realised in future. The carrying amount of ''Deferred Tax Asset'' is reviewed at each Balance Sheet date

N Assets taken under leases:

a) In respect of Equipment taken under finance leases, the fair value of the leased asset is recognised as an asset and corresponding liability is created. The finance charges are allocated to the period over the lease term and are charged off.

b) In respect of Equipment taken under operating lease, lease payments are recognised as expense on a straight line basis over the lease term.

O Employee Benefits:

a) Short term Benefits:

All employee benefits falling due wholly within twelve months of rendering the service are classified as short term employee benefits. The cost of the benefits like salaries, wages, medical, leave travel assistance, short term compensated absences, bonus, exgratia, etc. is recognised as an expense in the period in which the employee renders the related service.

b) Post-employment benefits:

(i) Defined contribution plans:

The contribution paid/payable under Provident Fund Scheme, ESI Scheme and Employee Pension Scheme is recognised as expenditure in the period in which the employee renders the related service.

(ii) Defined benefit plans:

The Company''s obligation towards Gratuity is a defined benefit plan. The present value of the estimated future cash flows of the obligation under such plan is determined based on actuarial valuation using the Projected Unit Credit method. Actuarial gains and losses are recognised immediately in the Profit & Loss statement. The contribution made is recognised as expense.

c) Long Term employee benefits:

The obligation for long term employee benefits such as long term compensated absences, is determined and recognised in the similar manner stated in the defined benefit plan.


Mar 31, 2011

1. Basis for preparation of accounts:

The accounts have been prepared under the historical cost convention and on a going concern basis to comply in all material aspects with applicable accounting principles in India, the Accounting Standards under the companies (Accounting Standards) Rules, 2006 prescribed by the Central Government and the relevant provisions of the Companies Act, 1956.

2. Use of Estimates:

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

3. Fixed Assets and Depreciation:

Fixed Assets are stated at original cost net of tax/duty credits availed, if any, less cumulative depreciation and impairment. Administrative and other general overheads including borrowing costs that are specifically attributable to acquisition of Fixed Assets or bringing Fixed Assets to working condition are allocated and capitalised as part of cost of the Fixed Assets.

Depreciation:

Depreciation on Fixed Assets is provided on straight line method at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956 except in respect of Dies and Moulds used and 'Secured Land Filling' used for disposal of Lead slag which are depreciated at 20% and 10% respectively on SLM. Assets costing less than Rs. 5,000/- are depreciated fully in the year of purchase.

4. Intangible Assets and Amortisation:

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

Product development expenditure incurred on new products are capitalised under' Intangible Assets' and are amortised over a period of 5 years from the year of commencement of commercial production.

Amortisation on impaired assets is adjusted in the future periods in such a manner that the revised carrying amount of the asset is allocated over its remaining useful life.

Intangible Assets are stated at cost net of amortisation.

5. Capital Work in Progress (CWIP):

CWIP includes Plant and Equipment under erection, Civil works in progress, advances made to suppliers/ contractors for capital items and preoperative expenses pending allocation on the assets to be acquired/ commissioned, capitalised. Also include payments made for technical know-how fee and for development of prototypes including for related software, pending to be capitalised upon absorption of technology and completion of development.

6. Impairment of Assets:

An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value. An impairment loss is recognised when an asset is identified as impaired. The impairment loss recognised in prior accounting period is reversed if there is a change in the estimate of recoverable amount.

7. Foreign Currency Transactions:

Transactions relating to Purchase and Sale of goods/services denominated in foreign currency are recorded at the exchange rate prevailing on the date of transaction or that approximates at actual rate on the date of transaction. Assets & Liabilities in the nature of monetary items at the Balance sheet date denominated in foreign currencies are translated and restated at prevailing exchange rates. Income or expense on account of exchange difference either on settlement or on translation is recognised in the Profit & Loss account.

8. Investments:

a) Investments classified as "Long Term Investments" are carried at cost and provision for diminution is made to recognise the decline, other than temporary, in the value of the Investments. Such reduction is determined and made for each investment individually.

b) Investment classified as' Current lnvestments' are carried at the lower of cost and fair value determined on individual investment basis.

9. Inventories:

Inventories at the year end are valued as under:

Raw Materials, Components, At lower of weighted average Consumables cost and net and Stores & Spares. realisable value.

Semi-finished and Finished At lower of weighted average cost of goods materials plus cost of conversion and other costs incurred in bringing them to the present location and condition and net realisable value.

Consumable Tools At cost less amount charged off (which is at 1/3rd of value each year).

- Cost of Material is net of Cenvat/VAT availed on all items.

- Excise/Custom Duty payable on Stock of Finished Goods and Bonded Stocks is provided and included in the value of stocks.

- Inventory arising out of inter divisional transfers is valued at cost to the transferring division after eliminating unrealised profit, if any.

- Stocks at Branches are inclusive of Duty paid at the time of despatch from Factories.

10. Income Recognition:

a) Sales revenue is recognised on despatch to customers as per terms of order. Gross sales are net of returns/discounts and inclusive of Excise duty, central sales tax and service tax billed to customers. Service income, works contract revenue are recognised on the basis of bills submitted and accepted by the customers. Inter divisional transfers are not recognised as turnover.

b) Dividends are recognised as income when the right to receive the dividend is established.

c) Income from interest bearing deposits with Banks and others is recognised on accrual basis.

d) Interest on Income tax refunds, if any, is recognised on determination or on receipt basis whichever is earlier.

e) Subsidies from Government are recognised when received.

11. Provisions, Contingent Liabilities and Contingent Assets:

Provisions are recognised for liabilities that can be measured only by using a substantial degree of estimation, if

a) the Company has a present obligation as a result of a past event

b) a probable outflow of resources is expected to settle the obligation and

c) the amount of obligation can be reliably estimated

Reimbursement expected in respect of expenditure required to settle a provision is recognised only when it is virtually certain that the reimbursement will be received.

Contingent liability is not provided but disclosed in the case of

a) present obligation arising from a past event, when it is not probable that an outflow of resources will be required to settle the obligation

b) a possible obligation, unless the probability of outflow of resources is remote. Contingent assets are neither recognised nor disclosed.

Provisions, contingent liabilities and contingent assets are reviewed at each Balance sheet date.

12. Taxes on Income/Deferred Tax:

Tax on Income for the current period is determined and provided on the basis of taxable income computed in accordance with the provisions of the Income Tax Act, 1961.

Deferred tax resulting from timing differences between accounting Income and taxable Income is recognised and 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 reasonable certainty that the Asset will be realised in future.

13. Assets taken under leases:

a) In respect of Equipment taken under finance leases, the fair value of the leased asset is recognised as an asset and corresponding liability is created. The finance charges are allocated to periods during the lease term and charged to revenue.

b) In respect of Equipment taken under operating lease, lease payments are recognised as expenses on straight line basis over the lease term.

14. Employee Benefits:

a) Short term Benefits:

All employee benefits falling due wholly within twelve months of rendering the service are classified as short term employee benefits. The benefits like salaries, wages, medical, leave travel assistance, short term compensated absences etc. and the cost of bonus, exgratia are recognised in the period in which the employee renders the related services.

b) Post-employment benefits:

(i) Detailed contribution plans:

The contribution paid/payable under Provident Fund Scheme, ESI Scheme and Employee Pension Scheme is recognised as expenditure during the period in which the employee renders the related service.

(ii) Defined benefit plans:

The Company's obligation towards Gratuity is a definite benefit plan. The present value of the obligation under such defined benefit plan is determined based on acturial valuation using the Projected Unit Credit method. The obligation is measured at the present value of the estimated future cash flows. Acturial gains and losses are recognised immediately in the profit & loss account. The contribution made is recognised at expenses.

c) Long Term employee benefits:

The obligation for long term employee benefits such as long term compensated absences is recognised in the similar manner as in the case of defined benefit plans as mentioned in (b)(ii) above.

15. Cash Flow statement:

Cash Flow statement is reported using indirect method as per Accounting Standard, AS-3.

16. Prior period and Extra-ordinary items:

Prior period and Extra-ordinary/exceptional items of Income and Expenditure are reported distinctively and included in the determination of net profit or loss for the current period.

 
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