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Accounting Policies of IFGL Refractories Ltd. Company

Mar 31, 2014

1.1 Basis of Preparation

The Financial Statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under Section 211(3C) of the Companies Act, 1956 (''the 1956 Act'') [which continue to be applicable in respect of Section 133 of the Companies Act, 2013 (''the 2013 Act'') in terms of General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs] and the relevant provisions of the 1956 Act/2013 Act, as applicable. The Financial Statements have been prepared on accrual basis under the Historical Cost Convention. The accounting policies adopted in the preparation of the Financial Statements are consistent with those followed in the previous year.

All Assets and Liabilities have been classified as current/non-current as per the Company''s normal operating cycle and other criteria set out in the Schedule VI. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current/non-current classification of Assets and Liabilities.

2.2 Use of Estimates

The preparation of Financial Statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of Assets and Liabilities (including Contingent Liabilities) and the reported Income and Expenses during the year. The Management believes that the estimates used in preparation of the Financial Statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known/materialise.

2.3 Fixed Assets (including intangible assets) are stated at cost less accumulated depreciation (including amortisation). The Company capitalises all costs (Net of CENVAT Credit) relating to acquisition and installation of Fixed Assets. An impairment loss is recognised wherever the carrying value of the Fixed Assets exceeds its recoverable amount i.e. net selling price or value in use, whichever is higher.

2.4 Depreciation and Amortisation on Fixed Assets (other than Leasehold Land, Computers and Vehicles) is calculated on Straight Line Method at applicable rates and the manner prescribed in Schedule XIV of the 1956 Act. Leasehold Land is amortised over the period of lease. Computers are depreciated over a period of three years. Vehicles are depreciated over Straight Line Method at 20% as determined based on their useful lives. These rates are higher than the rates prescribed under Schedule XIV of the 1956 Act. Intangible Assets (other than Goodwill arising on Amalgamation fully amortised in earlier years and Computer Software which are amortised over a period of two to five years) are amortised on Straight Line Method over a period of five years. Spares that can be used only with particular items of Plant and Machinery and such usage is expected to be irregular are depreciated over a period not exceeding the useful lives of Plant and Machinery with which such spares can be used.

2.5 Inventories are valued at lower of Cost and Net Realisable Value after providing for obsolescence and other losses, where considered necessary. Cost is determined on the Weighted Average basis. Cost comprises expenditure incurred in the normal course of business in bringing such inventories to its present location and condition and includes, where applicable, appropriate overheads.

2.6 Revenue from sale of products are exclusive of Sales Tax and returns and are recognised when significant risk and rewards of ownership of the goods is transferred to the buyer and the revenue is measurable at the time of sale and it is reasonable to expect ultimate collection of the sale consideration. Revenue from services are recognised when services are rendered and related costs are incurred. Export benefits are accounted for in the year of exports based on eligibility and when there is no uncertainity in receiving the same. Interest Income is accounted for on accrual basis.

(Rs. in lacs)

2.7 Current Investments are stated at lower of Cost and Fair Value. Non-current investments are stated at cost less provision for diminution, other than temporary, if any, in value.

2.8 Current Tax is determined as the amount of tax payable in respect of taxable income for the year based on applicable tax rates and laws. Deferred Tax is recognised, subject to consideration of prudence in respect of Deferred Tax Asset, on timing differences, being the difference between taxable income and accounting income that originates in one period and are capable of reversal in one or more subsequent periods and is measured using tax rates and laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred Tax Assets are periodically reviewed to reassess realisation thereof.

2.9 Transactions in Foreign Currencies are recognised at the rates existing at the time of such transactions. Gain or losses resulting from the settlement of such transactions are recognised in the Statement of Profit and Loss. Year end balances of monetary Assets and Liabilities denominated in Foreign Currencies are translated at applicable year end rates and the resultant differences is recognised in the Statement of Profit and Loss. Non monetary items at the Balance Sheet date are stated at Historical Cost. In case of Forward Exchange Contracts which are entered into to hedge the Foreign Currency risk of a trade receivable/trade payable recognised in these Financial Statements, premium or discount on such contracts are amortised over the life of the contract and exchange differences arising thereon in the reporting period are recognised in the Statement of Profit and Loss. Forward Exchange Contracts which are arranged to hedge the Foreign Currency risk of a firm commitment or a highly probable forecast transaction is marked to market at the year end and the resulting losses, if any, are charged to the Statement of Profit and Loss. The net gain, if any, based on the above evaluation, is not accounted for.

2.10 Borrowing Cost that are attributable to acquisition, construction or production of qualifying assets (assets which require substantial period of time to get ready for its intended use) are capitalised as part of cost of such assets. All other borrowing costs are recognised as expenses in the period they are incurred.

2.11 Employee Benefits :

i) The undiscounted amount of Short-Term Employee Benefits (i.e. benefits payable within one year) is recognised in the period in which employee services are rendered.

ii) Contributions towards Provident Fund are recognised as expense. Provident Fund contributions in respect of employees are made to Trust administered by the Company; the interest rate payable to the members of the Trust is not lower than the rate of interest declared annually by the Central Government under the Employees'' Provident Funds and Miscellaneous Provisions Act, 1952 and shortfall, if any, is to be made good by the Company.

iii) Contribution under Employees'' Pension Scheme is made as per statutory requirements and charged as expenses for the year.

iv) Contribution to Superannuation (Defined Contribution Plan) is made as per the approved Scheme and charged as expenses for the year.

v) The Company also contributes to the Central Government administered Employees'' State Insurance Scheme for its eligible employees which is a Defined Contribution Plan.

vi) Liability towards Gratuity, Superannuation (Defined Benefit Plan) covering eligible employees, is provided and funded on the basis of year end actuarial valuation.

vii) Accrued liability towards Compensated Absence, covering eligible employees, evaluated on the basis of year end actuarial valuation is recognised as a charge.

viii) Actuarial gains/losses arising under Defined Benefit Plans are recognised immediately in the Statement of Profit and Loss as income/expense for the year in which they occur.

2.12 Provisions and Contingencies

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

3.2 Terms/Rights attached to Equity Shares

The Company has only one class of Equity Shares having a face value of Rs. 10/- each. Each holder of Equity Shares is entitled to one vote per Share. In the event of liquidation of the Company, the Equity Shareholders will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts, in proportion to their Shareholding. The Company in the General Meeting may declare dividends, but no dividend shall exceed the amount recommended by the Board.

3.3 Terms/Rights attached to Redeemable Non Cumulative Preference Shares (RNCPS)

The 5% Redeemable Non Cumulative Preference Shares are redeemable at par at the end of ten years from the date of allotment (i.e. 3rd September 2010) or any earlier date at the option of the Company except that the said Shares shall not be redeemed within the initial period of three years from the date of allotment. In the event of liquidation of the Company, the Preference Shareholders will have priority over Equity Shares in the payment of dividend and repayment of capital.

Every member holding Preference Share Capital shall have the right to vote in respect of all resolutions placed before the Company which directly affect the rights attached to Preference Shares.

5.1 Nature of Security and Terms of Repayment of Secured Borrowings :

a) From The Hongkong and Shanghai Banking Corporation Limited

Secured by first charge over movable Fixed Assets of the Company with an asset cover of 1.5 times of the Term Loan facility and also secured by second pari passu charge over Current Assets with State Bank of India.

Repayable in 8 equated quarterly installments of Rs. 62.50 from April 2014 (including current maturities of Long Term Debt refer Note 10 "Other Current Liabilities"), at interest rate of 10.50% per annum.

b) Vehicle Loans from Axis Bank Limited, ICICI Bank Limited and Yes Bank Limited

Vehicle Loans are secured by hypothecation of respective vehicles. Repayable over 1-3 Years at interest rate of 9.10% - 10.99%.

8.1 The Loans from State Bank of India and The Hongkong and Shanghai Banking Corporation Limited is secured by hypothecation of stocks of raw materials, stock-in-process, finished goods, consumables, spares, stores, receivables and other current assets on pari passu basis and by a second charge over all Fixed Assets of the Company, situated at Sectors ''A'' and ''B'' of Kalunga Industrial Estate, near Rourkela, on pari passu basis.

9.1 Dues to the Micro, Small and Medium Enterprises

Information as required to be disclosed under The Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company. The Disclosures relating to Micro and Small Enterprises as at 31st March 2014 are as under :

10.1 There are no amounts due for payment to the Investor Education and Protection Fund under Section 205C of the 1956 Act as at the year end.

13.1 Technical Know-how represents technical drawings, designs etc. relating to manufacture of the Company''s products and acquired pursuant to various agreements conferring the right to usage only.

27.1 The Company has recognised in the Statement of Profit and Loss for the year ended 31st March 2014 an amount of Rs. 275.34 (31.03.2013 : Rs. 218.76) as expenses under Defined Contribution Plans.

27.2 Provident Fund (Funded)

Provident Fund contributions in respect of employees are made to Trust administered by the Company and it has the liability to Fund any shortfall on the yield of the Trust''s investments over the administered interest rates on an annual basis. These administered interest rates are determined annually predominantly considering the social rather than economic factors. The contribution by the employer and employee together with the interest accumulated thereon are payable to the employees at the time of their separation from the Company or retirement, whichever is earlier. The benefits vests immediately on rendering of the services by the employee. Based on the final guidance for measurement of Provident Fund liabilities issued by the Actuarial Society of India, the Company''s liability at the year end ofRs. 19.76 (31.03.2013 : Rs. NIL) has been actuarially determined by an independent actuary and provided for.

27.3 Gratuity (Funded)

The Company provides for gratuity, a Defined Benefit Retirement Plan covering eligible employees. As per the Scheme, the Gratuity Trust Fund makes payments to vested employees on retirement, death, incapacitation or termination of employment. For employees joining after 1st April 2003, the amount is based on the respective employee''s eligible salary (half month''s salary) depending on the tenure of the service subject to a maximum amount as per the Payment of Gratuity Act, 1972. For employees joining before 1st April 2003, the amount is calculated similarly as per the Payment of Gratuity Act, 1972 or the Company''s Scheme, whichever is higher. Vesting occurs on completion of five years of service. Liabilities with regard to the Gratuity plan are determined by actuarial valuation as set out in Note 2.11 (vi), based on which the Company makes contribution to the Fund. The most recent actuarial valuation of the Fund was carried out as at 31st March 2014.

27.4 Superannuation (Funded)

In keeping with the Company''s Superannuation Scheme (applicable to employees joined before 31st March 2004), employees are entitled to superannuation benefit on retirement/death/incapacitation/termination. Superannuation Scheme was amended from Defined Benefit Plan to Defined Contribution Plan effective 1st April 2004 and the benefits under the Defined Benefit Plan were frozen as on 31st March 2004. Necessary formalities/approvals have been complied with/obtained. Also refer Notes 2.11 (iv) and (vi) for accounting policy relating to Superannuation.

27.5 Compensated Absence (Unfunded)

The Company provides for accumulated leave benefit for eligible employees (i.e. workmen) at the time of retirement, death, incapacitation or termination of employment, subject to a maximum of one hundred and twenty days based on the last drawn salary. Liabilities are determined by actuarial valuation as set out in Note 2.11 (vii).

The basis used to determine overall Expected Return on Assets and the major categories of Plan Assets are as follows :

The major portion of the assets is invested in units of Insurers and Government Bonds. Based on the asset allocation and prevailing yield rates on these asset classes, the Long-Term estimate of the Expected Rate of Return on the Fund have been arrived at. Assumed Rate of Return on assets is expected to vary from year to year reflecting the returns on matching Government Bonds.

The estimate of future salary increases takes into account inflation, seniority, promotion and other relevant factors.


Mar 31, 2013

1.1 Basis of Preparation

These Financial Statements are prepared under the Historical Cost Convention on an accrual basis of accounting to comply in all material aspects with all the applicable accounting principles in India, the applicable Accounting Standards notified under Section 211(3C) of the Companies Act, 1956 (the ''Act'') and the relevant provisions of the Act.

All Assets and Liabilities have been classified as current/non-current as per the Company''s normal operating cycle and other criteria set out in the Schedule VI. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current/non-current classification of Assets and Liabilities.

1.2 Use of Estimates

The preparation of Financial Statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of Assets and Liabilities (including Contingent Liabilities) and the reported Income and Expenses during the year. The Management believes that the estimates used in preparation of the Financial Statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known/materialise.

1.3 Fixed Assets (including intangible assets) are stated at cost less accumulated depreciation (including amortisation). The Company capitalises all costs (Net of CENVAT Credit) relating to acquisition and installation of Fixed Assets. An impairment loss is recognised wherever the carrying value of the Fixed Assets exceeds its recoverable amount i.e. net selling price or value in use, whichever is higher.

1.4 Depreciation and Amortisation on Fixed Assets (other than Leasehold Land, Computers and Vehicles) is calculated on Straight Line Method at applicable rates and the manner prescribed in Schedule XIV of the Companies Act, 1956. Leasehold Land is amortized over the period of lease. Computers are depreciated over a period of three years. Vehicles are depreciated over Straight Line Method at 20% as determined based on their useful lives. These rates are higher than the rates prescribed under Schedule XIV of the Companies Act, 1956. Intangible Assets (other than Goodwill arising on Amalgamation fully amortized in earlier years and Computer Software which are amortized over a period of two to five years) are amortized on Straight Line Method over a period of five years. Spares that can be used only with particular items of Plant and Machinery and such usage is expected to be irregular are depreciated over a period not exceeding the useful lives of Plant and Machinery with which such spares can be used.

1.5 Inventories are valued at lower of Cost and Net Realisable Value. Cost is determined on the Weighted Average basis. Cost comprises expenditure incurred in the normal course of business in bringing such inventories to its present location and condition and includes, where applicable, appropriate overheads.

1.6 Revenue from sale of products are exclusive of Sales Tax and returns and are recognised when significant risk and rewards of ownership of the goods is transferred to the buyer and the revenue is measurable at the time of sale and it is reasonable to expect ultimate collection ofthe sale consideration. Revenue from services are recognised when services are rendered and related costs are incurred. Export benefits are accounted for in the year of exports based on eligibility and when there is no uncertainty in receiving the same.

1.7 Current Investments are stated at lower of Cost and Fair Value. Non-current investments are stated at cost less provision for diminution, other than temporary, if any, in value.

1.8 Current Tax is determined as the amount of tax payable in respect of taxable income for the year based on applicable tax rates and laws. Deferred Tax is recognised, subject to consideration of prudence in respect of Deferred Tax Asset, on timing differences, being the difference between taxable income and accounting income that originates in one period and are capable of reversal in one or more subsequent periods and is measured using tax rates and laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred Tax Assets are periodically reviewed to reassess realisation thereof.

1.9 Transactions in Foreign Currencies are recognised at the rates existing at the time of such transactions. Gain or losses resulting from the settlement of such transactions are recognised in the Statement of Profit and Loss. Year end balances of monetary Assets and Liabilities denominated in Foreign Currencies are translated at applicable year end rates and the resultant differences is recognised in the Statement of Profit and Loss. Non monetary items at the Balance Sheet date are stated at Historical Cost. In case of Forward Exchange Contracts which are entered into to hedge the Foreign Currency risk of a trade receivable/trade payable recognized in these Financial Statements, premium or discount on such contracts are amortised over the life of the contract and exchange differences arising thereon in the reporting period are recognized in the Statement of Profit and Loss. Forward Exchange Contracts which are arranged to hedge the Foreign Currency risk of a firm commitment or a highly probable forecast transaction is marked to market at the year end and the resulting losses, if any, are charged to the Statement of Profit and Loss. The net gain, if any, based on the above evaluation, is not accounted for.

1.10 Borrowing Cost that are attributable to acquisition, construction or production of qualifying assets (assets which require substantial period of time to get ready for its intended use) are capitalized as part of cost of such assets. All other borrowing costs are recognized as expenses in the period they are incurred.

1.11 Employee Benefits:

i) The undiscounted amount of Short-term Employee Benefits (i.e. benefits payable within one year) is recognized in the period in which employee services are rendered.

ii) Contributions towards Provident Fund are recognised as expense. Provident Fund contributions in respect of employees are made to Trust administered by the Company; the interest rate payable to the members of the Trust is not lower than the rate of interest declared annually by the Central Government under the Employees'' Provident Funds and Miscellaneous Provisions Act, 1952 and shortfall, if any, is to be made good by the Company.

iii) Contribution under Employees'' Pension Scheme is made as per statutory requirements and charged as expenses for the year.

iv) Contribution to Superannuation (Defined Contribution Plan) is made as per the approved Scheme and charged as expenses for the year.

v) The Company also contributes to the Central Government administered Employees'' State Insurance Scheme for its eligible employees which is a Defined Contribution Plan.

vi) Liability towards Gratuity, Superannuation (Defined Benefit Plan) covering eligible employees, is provided and funded on the basis of year end actuarial valuation.

vii) Accrued liability towards Compensated Absence, covering eligible employees, evaluated on the basis of year end actuarial valuation is recognised as a charge.

viii) Actuarial gains/losses arising under Defined Benefit Plans are recognised immediately in the Statement of Profit and Loss as income/expense for the year in which they occur.

1.12 Provisions and Contingencies

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


Mar 31, 2012

1.1 BASISOFPREPARATION

These Financial Statements are prepared under the Historical Cost Convention on an accrual basis of accounting to comply in all material aspects with all the applicable accounting principles in India, the applicable Accounting Standards notified under Section 211(3C) of the Companies Act, 1956 (the 'Act') and the relevant provisions of the Act.

All Assets and Liabilities have been classified as current or non-current as per the Company's normal operating cycle and other criteria set out in the Schedule VI. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current/non-current classification of Assets and Liabilities.

1.2 USEOFESTIMATES

The preparation of Financial Statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of Assets and Liabilities (including Contingent Liabilities) and the reported Income and Expenses during the year. The Management believes that the estimates used in preparation of the Financial Statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognized in the periods in which the results are known/materialize.

1.3 Fixed Assets (including intangible assets) are stated at cost less accumulated depreciation (including amortization). The Company capitalizes all costs (net of CENVAT credit) relating to acquisition and installation of Fixed Assets. An impairment loss is recognized wherever the carrying value of the Fixed Assets exceeds its recoverable amount i.e. net selling price or value in use, whichever is higher. Spares that can be used only with particular items of Plant and Machinery and such usage is expected to be irregular are capitalized.

1.4 Depreciation on Tangible Assets (other than Leasehold Land and Computers) is calculated on Straight Line Method at applicable rates and the manner prescribed in Schedule XIV of the Companies Act, 1956. Leasehold Land is amortized over the period of lease. Computers are depreciated over a period of three years. Intangible Assets (other than Goodwill arising on Amalgamation fully amortized in earlier years and Computer Software which are amortized over a period of two to five years) are amortized on Straight Line Method over a period of five years. Spares capitalized are depreciated over a period not exceeding the useful lives of Plant and Machinery with which such spares can be used.

1.5 Inventories are valued at lower of Cost and Net Realizable Value. Cost is determined on the Weighted Average basis. Cost comprises expenditure incurred in the normal course of business in bringing such inventories to its present location and condition and includes, where applicable, appropriate overheads.

1.6 Revenue from sale of products are exclusive of sales tax and returns and are recognized when significant risk and rewards of ownership of the goods is transferred to the buyer and the revenue is measurable at the time of sale and it is reasonable to expect ultimate collection of the sale consideration. Revenue from services are recognized when services are rendered and related costs are incurred. Export benefits are accounted for in the year of exports based on eligibility and when there is no uncertainity in receiving the same.

1.7 Current Investments are stated at lower of Cost and Fair Value. Non-current investments are stated at cost less provision for diminution, other than temporary, if any, in value.

1.8 Current Tax is determined as the amount of tax payable in respect of taxable income for the year based on applicable tax rates and laws. Deferred Tax is recognized, subject to consideration of prudence in respect of Deferred Tax Asset, on timing differences, being the difference between taxable income and accounting income that originates in one period and are capable of reversal in one or more subsequent periods and is measured using tax rates and laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred Tax Assets are periodically reviewed to reassess realization thereof.

1.9 Transactions in Foreign Currencies are recognized at the rates existing at the time of such transactions. Gain or losses resulting from the settlement of such transactions are recognized in the Statement of Profit and Loss. Year end balances of monetary Assets and Liabilities denominated in Foreign Currencies are translated at applicable year end rates and the resultant differences is recognized in the Statement of Profit and Loss. In case of forward exchange contracts which are entered into to hedge the Foreign Currency risk of a trade receivable/trade payable recognized in these Financial Statements, premium or discount on such contracts are amortized over the life of the contract and exchange differences arising thereon in the reporting period are recognized in the Statement of Profit and Loss. Forward Exchange contracts which are arranged to hedge the Foreign Currency risk of a firm commitment or a highly probable forecast transaction is marked to market at the year end and the resulting losses, if any, are charged to the Statement of Profit and Loss. The net gain, if any, based on the above evaluation, is not accounted for.

1.10 Borrowing Cost that are attributable to acquisition, construction or production of qualifying assets (assets which require substantial period of time to get ready for its intended use) are capitalized as part of cost of such assets. All other borrowing costs are recognized as expenses in the period they are incurred.

1.11 Employee Benefits:

i) The Undiscounted amount of Short-term Employee Benefits (i.e. benefits payable within one year) is recognized in the period in which employee services are rendered.

ii) Contributions towards Provident Fund are recognized as expense. Provident Fund contributions in respect of employees are made to Trust administered by the Company; the interest rate payable to the members of the Trust is not lower than the rate of interest declared annually by the Central Government under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 and shortfall, if any, is to be made good by the Company.

iii) Contribution under Employees' Pension Scheme is made as per statutory requirements and charged as expenses for the year.

iv) Contribution to Superannuation (Defined Contribution Plan) is made as per the approved Scheme and charged as expenses for the year.

v) The Company also contributes to the Central Government administered Employees' State Insurance Scheme for its eligible employees which is a defined contribution plan.

vi) Liability towards Gratuity, Superannuation (Defined Benefit Plan) covering eligible employees, is provided and funded on the basis of year end actuarial valuation.

vii) Accrued liability towards Compensated Absence, covering eligible employees, evaluated on the basis of year end actuarial valuation is recognized as a charge.

viii) Actuarial gains/losses arising under Defined Benefit Plans are recognized immediately in the Statement of Profit and Loss as income/expense for the year in which they occur.

1.12 Provisions and Contingencies : 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 there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the Notes . Contingent Assets are neither recognized nor disclosed in the Financial Statements.


Mar 31, 2011

A) These Financial Statements are prepared under the historical cost convention on an accrual basis of accounting to comply in all material aspects with all the applicable accounting principles in India, the applicable accounting standards notified under Section 211 (3C) of the Companies Act, 1956 (the 'Act') and the relevant provisions of the Act.

b) Fixed Assets (including intangible items) are stated at cost less accumulated depreciation (including amortisation). The Company capitalises all costs (net of CENVAT credit) relating to acquisition and installation of Fixed Assets. An impairment loss is recognised wherever the carrying value of the fixed assets exceeds its recoverable amount i.e. net selling price or value in use, whichever is higher.

Spares that can be used only with particular items of plant and machinery and such usage is expected to be irregular are capitalised.

c) Depreciation on tangible assets (other than Leasehold Land and Computers) is calculated on straight-line method at applicable rates and the manner prescribed in Schedule XIV of the Companies Act, 1956. Leasehold Land is amortised over the period of lease. Computers are depreciated over a period of three years. Intangible assets (other than Goodwill arising on amalgamation fully amortised in earlier years and Computer Software which are amortised over a period of two to five years) are amortised on straight-line method over a period of five years.

Spares capitalised are depreciated over a period not exceeding the useful lives of Plant and Machinery with which such spares can be used.

Assets individually costing Rs. 5,000 or less are fully depreciated in the year of acquisition.

d) Inventories are valued at lower of cost and net realisable value. Cost is determined on the weighted average basis. Cost comprises expenditure incurred in the normal course of business in bringing such inventories to its present location and condition and includes, where applicable, appropriate overheads.

e) Sales are exclusive of sales tax and returns and are recognised when significant risk and rewards of ownership of the goods is transferred to the buyer and the revenue is measurable at the time of sale and it is reasonable to expect ultimate collection of the sale consideration.

Export incentive under Duty Entitlement Pass Book Scheme is recognised on accrual basis.

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

f) Current investments are stated at lower of cost and fair value. Long term investments are stated at cost less provision for diminution, other than temporary, if any, in value.

g) Current tax is determined as the amount of tax payable in respect of taxable income for the year based on applicable tax rates and laws. Deferred tax is recognised, subject to consideration of prudence in respect of deferred tax asset, on timing differences, being the difference between taxable income and accounting income that originates in one period and are capable of reversal in one or more subsequent periods and is measured using tax rates and laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred tax assets are periodically reviewed to reassess realisation thereof.

h) Transactions in foreign currencies are recognised at the rates existing at the time of such transactions. Gain or losses resulting from the settlement of such transactions are recognised in the Profit and Loss Account. Year end balances of monetary assets and liabilities denominated in foreign currencies are translated at applicable year-end rates and the resultant differences is recognised in the Profit and Loss Account.

In case of forward exchange contracts which are entered into to hedge the foreign currency risk of a receivable/ payable recognised in these financial statements, premium or discount on such contracts are amortised over the life of the contract and exchange differences arising thereon in the reporting period are recognised in the Profit and Loss Account.

Forward exchange contracts which are arranged to hedge the foreign currency risk of a firm commitment or a highly probable forecast transaction is marked to market at the year-end and the resulting losses, if any, are charged to the profit and loss account. The net gain, if any, based on the above evaluation, is not accounted for.

i) Borrowing cost that are attributable to acquisition, construction or production of qualifying assets (assets which require substantial period of time to get ready for its intended use) are capitalised as part of cost of such assets. All other borrowing costs are recognised as expenses in the period they are incurred.

j) Employee Benefits:

i) The undiscounted amount of Short-term Employee Benefits (i.e. benefits payable within one year) is recognised in the period in which employee services are rendered.

ii) Contributions towards provident fund are recognised as expense. Provident fund contributions in respect of employees are made to Trust administered by the Company; the interest rate payable to the members of the Trust is not lower than the rate of interest declared annually by the Central Government under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 and shortfall, if any, is to be made good by the Company. (Also refer note 10A below).

iii) Contribution under Employees' Pension Scheme is made as per statutory requirements and charged as expenses for the year.

iv) Contribution to Superannuation (Defined Contribution Plan) is made as per the approved Scheme and charged as expenses for the year (Refer Note 10C below).

v) The Company also contributes to the Central Government administered Employees' State Insurance Scheme for its eligible employees which is a defined contribution plan.

vi) Liability towards Gratuity, Superannuation (Defined Benefit Plan) covering eligible employees, is provided and funded on the basis of year-end actuarial valuation (Refer Note 10B andl OC below).

vii) Accrued liability towards leave encashment benefits, covering eligible employees, evaluated on the basis of year-end actuarial valuation is recognised as a charge.

viii) Actuarial gains/losses arising under Defined Benefit Plans are recognised immediately in the Profit and Loss Account as income/expense for the year in which they occur.

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


Mar 31, 2010

1. Summary of Significant Accounting Policies (All figures are in Rs. in lacs)

a) These Financial Statements are prepared to comply in all material aspects with all the applicable accounting principles in India, the applicable accounting standards notified under Section 211 (3C) of the Companies Act, 1956 (the Act) and the relevant provisions of the Act.

b) Fixed Assets (comprising both tangible and intangible items) are stated at cost less accumulated depreciation (including amortisation). The Company capitalises all costs (net of CENVAT credit) relating to acquisition and installation of Fixed Assets. An impairment loss is recognised wherever the carrying value of the fixed assets exceeds its market value or value in use, whichever is higher.

c) Depreciation on tangible assets (other than Leasehold Land and computers) is calculated on straight-line method at applicable rates prescribed in Schedule XIV of the Companies Act, 1956. Leasehold Land is amortised over the period of lease. Computers are depreciated over a period of three years, Intangible assets (other than Goodwill arising on amalgamation fully amortised in earlier years and Computer Software which are amortised over a period of two to five years) are amortised on straight-line method over a period of five years.

d) Inventories are valued at lower of cost and net realisable value. Cost is determined on the weighted average basis. Cost comprises expenditure incurred in the normal course of business in bringing such inventories to its location and includes, where applicable, appropriate overheads.

e) Sales are exclusive of sales tax and returns and are recognised when significant risk and rewards of ownership of the goods is transferred to the buyer and the revenue is measurable at the time of sale and it is reasonable to expect ultimate collection of the sale consideration.

f) Current investments are stated at lower of cost and fair value determined on an individual investment basis. Long term investments are stated at cost less provision for permanent diminution, if any.

g) Current tax is determined as the amount of tax payable in respect of taxable income for the year based on applicable tax rates and laws. Deferred tax is recognised, subject to consideration of prudence in respect of deferred tax asset, on timing differences, being the difference between taxable income and accounting income that originates in one period and are capable of reversal in one or more subsequent periods and is measured using tax rates and laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred tax assets are periodically reviewed to reassess realisation thereof.

h) Transactions in foreign currencies are recognised at the rates existing at the time of such transactions. Gain or losses resulting from the settlement of such transactions are recognised in the Profit and Loss Account. Year end balances of monetary items are translated at applicable forward contract/year-end rates and the resultant differences is recognised in the Profit and Loss Account.

i) Derivatives losses/gains are accounted for in the period in which they occur. All outstanding Derivative Contracts at the Balance Sheet date are marked-to-market. Losses, if any, are measured by either marking-to-market or determining mark- up, as the case may be, and the resulting losses are provided for. The net gain, if any, based on the above evaluation, is not accounted for.

j) Borrowing cost that are attributable to acquisition, construction or production of qualifying assets (assets which require substantial period of time to get ready for its intended use) are capitalised as part of cost of such assets. All other borrowing costs are recognised as expenses in the period they are incurred. k) Employee Benefits:

i) Short-Term Employee Benefits

The Undiscounted amount of Short-term Employee Benefits (i.e. benefits payable within one year) are recognised in the period in which employee services are rendered.

ii) Post Employment Benefit Plans

Contributions towards provident funds are recognised as expense. Provident fund contributions in respect of employees are made to Trust administered by the Company; the interest rate payable to the members of the Trust is not lower than the rate of interest declared annually by the Central Government under the Employees Provident Funds and Miscellaneous Provisions Act, 1952 and shortfall, if any, is to be made good by the Company. (Also Refer Note 10A below).

Contribution under Employees Pension Scheme is made as per statutory requirements and charged as expenses for the year.

Contribution to Superannuation (Defined Contribution Plan) is made as per the approved Scheme and charged as expenses for the year (Refer Note 10C below).

Liability towards gratuity, superannuation (Defined Benefit Plan) covering eligible employees, is provided and funded on the basis of year-end actuarial valuation (Refer Note 10B and 10C below).

Actuarial gains/losses arising under Defined Benefit Plans are recognised immediately in the Profit and Loss Account as income/expense for the year in which they occur.

iii) Other Long term

Employees Benefits (Leave encashment) - Unfounded

Accrued liability towards leave encashment benefits, covering eligible employees, evaluated on the basis of year-end actuarial valuation is recognised as a charge.

 
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