Mar 31, 2015
2.1 Basis of preparation of financial statements
The financial statements of the Company have been prepared and
presented in accordance with Indian Generally Accepted Accounting
Principles (Indian GAAP) under the historical cost convention on the
accrual basis. Indian GAAP comprises accounting standards notified by
the Central Government of India under section 133 of the Companies Act,
2013, read with rule 7 of Companies (Account) Rules 2014, other
pronouncements of Institute of Chartered Accountants of India, the
provisions of Companies Act, 2013 and guidelines issued by Securities
and Exchange Board of India.
The Company has prepared these financial statements as per the format
prescribed in Schedule III to The Companies Act, 2013.
The Company's operating results continue to be materially affected by
various factors, particularly high interest cost, pricing pressures
from competition and general economic slowdown. The Company has
incurred a net loss of Rs. 21,348.26 Lacs during the year ended March
31, 2015, and as of that date, the Company's total liabilities exceeded
its total assets by Rs. 16,559.19 Lacs.
The Company is implementing various long-term measures to improve its
product offering and enhancing customer base. The Company has
undertaken a comprehensive review of its current network to maximize
profitability and improve efficiency in its operations. The Company is
also implementing various measures to optimize plant utilization,
improving operational efficiencies, renegotiation of contracts and
other cost control measures to improve the Company's operating results
and cash flows.
The promoters continue to be committed to providing the required
operational and financial support to Company in the foreseeable future.
During the year, the Promoters have infused Rs 2519.06 Lacs by way of
promoter's contribution. The release of the short term working capital
funds by the bankers as per their commitments to the terms of the
Corporate Debt Restructuring scheme will significantly improve the
company's working Capital position
In view of the foregoing, the Company's financial statements have been
prepared on a going concern basis whereby the realization of assets and
discharge of liabilities are expected to occur in the normal course of
business.
2.2 Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires the management to make judgments, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities, at the end of
the reporting period. Although these estimates are based on the
management's best knowledge of current events and actions, uncertainty
about these assumptions and estimates could result in the outcomes
requiring a material adjustment to the carrying amounts of assets or
liabilities in future periods.
2.3 Revenue recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the company and the revenue can be
reliably measured.
Revenue from sale of goods is recognized when all the significant risks
and rewards of ownership of the goods have been passed to the buyer,
usually on delivery of the goods. Excise duty deducted from revenue
[gross) is the amount that is included in the revenue [gross) and not
the entire amount of liability arising during the year and are recorded
inclusive of incentives received from State Government, excise duty,
net of trade discounts, rebates, price adjustments, rejections and
shortage in transit
Dividends are recorded when the right to receive is established.
Interest income is recognized on a time proportion basis taking into
account the amount outstanding and the applicable interest rate.
Export benefits are accrued when it is reasonably certain that those
will get realised.
2.4 Tangible assets
Tangible assets are stated at historical cost, net of accumulated
depreciation and accumulated impairment losses, if any. The cost
comprises purchase price, borrowing costs if capitalization criteria
are met and directly attributable costs of bringing the asset to its
working condition for the intended use. Trade discounts and rebates are
deducted in arriving at the purchase price.
Subsequent expenditure related to an item of tangible asset is added to
its book value only if it increases the future benefits from the
existing asset beyond its previously assessed standard of performance.
All other expenses on existing tangible assets, including day-to-day
repair and maintenance expenditure and cost of replacing parts, are
charged to the statement of profit and loss for the period during which
such expenses are incurred.
Gains or losses arising from de-recognition of fixed assets are
measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognized in the statement of
profit and loss when the asset is derecognized.
2.5 Capitalisation of foreign exchange
In accordance with MCA notification on Accounting Standard (AS 11), in
respect of long term foreign currency loan taken for acquisition of
assets, the exchange difference arising on reporting of said loan is
adjusted to the cost of the assets, which was earlier been recognised
as income or expense in the statement of Profit and Loss.
2.6 Depreciation
Depreciation on tangible assets, which has been depredated over
estimated useful life, is provided on the straight line method,
pro-rata to the period of use. The rates of depreciation prescribed in
Schedule II to the Companies Act, 2013 have been adopted by the
Company, which in view of the management reflect the useful lives of
related fixed assets except in case of one vehicle where the management
estimates its useful life as 7 years.
Capital work-in-progress includes the cost of fixed assets that are not
ready for intended use as at the Balance Sheet date.
Building and other constructions on leasehold land are depreciated over
the lease term or the useful life, whichever is shorter.
Pursuant to Companies Act 2013 (the Act) becoming effective from April
1, 2014, the Company has re-worked depreciation with reference to the
estimated useful lives of fixed assets prescribed under Schedule II to
the Act or as per technical evaluation and componentization.
2.7 Intangible assets and amortisation
Intangible assets are recognised when the asset is identifiable, is
within the control of the Company, it is probable that the future
economic benefits that are attributable to the asset will flow to the
Company and cost of the asset can be reliably measured.
Acquired intangible assets consisting of technical know-how, patents
and software, are recorded at acquisition cost and amortised on
straight-line basis based on the following useful lives.
Pursuant to Companies Act 2013 (the Act) becoming effective from April
1, 2014, the Company has re-worked amortisations with reference to the
estimated useful lives of intangible assets prescribed under Schedule
II to the Act or as per technical evaluation and componentization.
2.8 Borrowing costs
Borrowing cost includes interest, amortization of ancillary costs
incurred in connection with the arrangement of borrowings and exchange
differences arising from foreign currency borrowings to the extent they
are regarded as an adjustment to the interest cost Borrowing costs
directly attributable to the acquisition, construction or production of
an asset that necessarily takes a substantial period of time to get
ready for its intended use or sale are capitalized as part of the cost
of the respective asset. All other borrowing costs are expensed in the
period they occur.
2.9 Impairment of tangible and intangible assets
The carrying amounts of the Company's assets including intangible
assets are reviewed at each Balance Sheet date to determine whether
there is any indication of impairment. If any such indications exist,
the assets recoverable amount is estimated, as the higher of the net
selling price and the value in use. An impairment loss is recognised
whenever the carrying amount of an asset or its cash generating unit
exceeds its recoverable amount If at the Balance Sheet date, there is
an indication that a previously assessed impairment loss no longer
exists, the recoverable amount is reassessed and the asset is
reinstated at the recoverable amount subject to a maximum of
depreciable historical cost
2.10 Investments
Investments, which are readily realizable and intended to be held for
not more than one year from the date on which such investments are
made, are classified as current investments. All other investments are
classified as long-term investments. On initial recognition, all
investments are measured at cost The cost comprises purchase price and
directly attributable acquisition charges such as brokerage, fees and
duties.
Current investments are carried in the financial statements at lower of
cost and fair value determined on an individual investment basis.
Long-term investments are carried at cost. However, provision for
diminution in value is made to recognize a decline other than temporary
in the value of the investments.
On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is charged or credited to the
statement of profit and loss.
2.11 Inventories
Raw materials, components, stores and spares are valued at lower of
cost and net realizable value. However, materials and other items held
for use in the production of inventories are not written dowm below
cost if the finished products in which they will be incorporated are
expected to be sold at or above cost. Cost of raw materials, components
and stores and spares is determined on a weighted average basis.
Work-in-progress and finished goods are valued at lower of cost and net
realizable value. Cost includes direct materials and labour and a
proportion of manufacturing overheads based on norma! operating
capacity. Cost of finished goods includes excise duty and is determined
on a weighted average basis.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
2.12 Foreign currency transactions Initial recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
Conversion
Foreign currency monetary items are retranslated using the exchange
rate prevailing at the reporting date. Non-monetary items, which are
measured in terms of historical cost denominated in a foreign currency,
are reported using the exchange rate at the date of the transaction.
Non-monetary items, which are measured at fair value or other similar
valuation denominated in a foreign currency, are translated using the
exchange rate at the date when such value was determined.
The premium or discount arising at the inception of forward exchange
contract is amortized and recognized as an expense/income over the life
of the contract. Any profit or loss arising on cancellation or renewal
of such forward exchange contract is also recognized as income or as
expense for the period.
2.13 Leases
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased term, are classified as
operating leases. Operating lease payments are recognized as an expense
in the Profit and Loss account on a straight line basis over the lease
term.
2.14 Employee benefits
a) Contribution to Provident Fund
Retirement benefit in the form of provident fund is a defined
contribution scheme. The contributions to the provident fund are
charged to the statement of profit and loss for the year when the
contributions are due. The company has no obligation, other than the
contribution payable to the provident fund.
b) Gratuity
The company has gratuity as a defined benefit liability. The cost of
providing benefits under this plan is determined on the basis of
actuarial valuation at each year-end. Actuarial valuation is carried
out using the projected unit credit method. Actuarial gains and losses
for defined benefit plan is recognized in full in the period in which
they occur in the statement of profit and loss.
c) Leave encashment
Accumulated leave, which is expected to be utilized within the next 12
months, is treated as short-term employee benefit. The company measures
the expected cost of such absences as the additional amount that it
expects to pay as a result of the unused entitlement that has
accumulated at the reporting date.
2.15 Income taxes
Tax expense comprises current and deferred tax. Current income-tax is
measured at the amount expected to be paid to the tax authorities in
accordance with the Income-tax Act, 1961.
Deferred income taxes reflect tire impact of timing differences
between, taxable income and accounting income originating during the
current year and reversal of timing differences for the earlier years.
Deferred tax is measured using the tax rates and the tax laws enacted
or substantively enacted at the reporting date. Deferred income tax
relating to items recognized directly in equity is recognized in equity
and not in the statement of profit and loss.
Deferred tax liabilities are recognized for all taxable timing
differences. Deferred tax assets are recognized for deductible timing
differences only to the extent that there is reasonable certainty that
sufficient future taxable income will be available against which such
deferred tax assets can be realized. In situations where the company
has unabsorbed depredation or carry forward tax losses, all deferred
tax assets are recognized only if there is virtual certainty supported
by convincing evidence that they can be realized against future taxable
profits.
At each reporting date, the company re-assesses unrecognized deferred
tax assets. It recognizes unrecognized deferred tax asset to the extent
that it has become reasonably certain or virtually certain, as the case
may be, that sufficient future taxable income will be available against
which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each
reporting date. The company writes-down the carrying amount of deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realized. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
Deferred tax assets and deferred tax liabilities are offset, if a
legally enforceable right exists to set-off current tax assets against
current tax liabilities and the deferred tax assets and deferred taxes
relate to the same taxable entity and the same taxation authority.
Minimum alternate tax (MAT) paid in a year is charged to the statement
of profit and loss as current tax. The company recognizes MAT credit
available as an asset only to the extent that there is convincing
evidence that the company will pay normal income tax during the
specified period, i.e., the period for which MAT credit is allowed to
be carried forward. In the year in which the company recognizes MAT
credit as an asset in accordance with the Guidance Note on Accounting
for Credit Available in respect of Minimum Alternative Tax under the
Income-tax Act, 1961, the said asset is created by way of credit to the
statement of profit and loss and shown as "MAT Credit Entitlement." The
company reviews the "MAT credit entitlement" asset at each reporting
date and writes down the asset to the extent the company does not have
convincing evidence that it will pay normal tax during the specified
period.
2.16 Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period. The
weighted average number of equity shares outstanding during the period
is adjusted for events such as bonus issue, bonus element in a rights
issue, share split, and reverse share split (consolidation of shares)
that have changed the number of equity shares outstanding, without a
corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
2.17 Cash and cash equivalents
Cash and cash equivalents for the purposes of cash flow statement
comprise cash at bank and in hand and short-term investments with an
original maturity of three months or less.
2.18 Government Grants and Subsidies
Revenue grants and subsidies from the government are recognized when
there is reasonable assurance that the grant/subsidy will be received
and all attaching conditions will be complied with.
2.19 Identification of segments
The company's operating businesses are organized and managed separately
according to the nature of products and services provided, with each
segment representing a strategic business unit that offers different
products and serves different markets.
i. The nature of the products,
ii. The related risk and returns, and
iii. The internal financial reporting systems.
The analysis of geographical segments is based on the areas in which
major operating divisions of the company operate.
Allocation of common costs
Common allocable costs are allocated to each segment according to the
relative contribution of each segment to the total common costs.
Unallocated items
Unallocated items include general corporate income and expense items
which are not allocated to any business segment.
Segment accounting policies
The company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the company as a whole. '
2.20 Provisions:
A provision is recognized when the company has a present obligation as
a result of past event, it is probable that an outflow of resources
embodying economic benefits will be
required to settle the obligation and a reliable estimate can be made
of the amount of the obligation. Provisions are not discounted to their
present value and are determined based on the best estimate required to
settle the obligation at the reporting date. These estimates are
reviewed at each reporting date and adjusted to reflect the current
best estimates.
2.21 Contingent liabilities
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be
required to settle the obligation. A contingent liability also arises
in extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably. The company does not
recognize a contingent liability but discloses its existence in the
financial statements.
Mar 31, 2014
1 Basis of preparation of financial statements
The financial statements of the company have been prepared in
accordance with generally accepted accounting principles in India
(Indian GAAP). The company has prepared these financial statements to
comply in all material respects with the accounting standards notified
under the Companies (Accounting Standards) Rules, 2006, (as amended)
and the relevant provisions of the Companies Act, 1956. The financial
statements have been prepared on an accrual basis and under the
historical cost convention.
The accounting policies adopted in the preparation of financial
statements are consistent with those of previous year.
2 Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires the management to make judgments, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities, at the end of
the reporting period. Although these estimates are based on the
management''s best knowledge of current events and actions, uncertainty
about these assumptions and estimates could result in the outcomes
requiring a material adjustment to the carrying amounts of assets or
liabilities in future periods.
3 Revenue recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the company and the revenue can be
reliably measured.
Revenue from sale of goods is recognized when all the significant risks
and rewards of ownership of the goods have been passed to the buyer,
usually on delivery of the goods. Excise duty deducted from revenue
(gross) is the amount that is included in the revenue (gross) and not
the entire amount of liability arising during the year and are recorded
inclusive of incentives received from State Government, excise duty,
net of trade discounts, rebates, price adjustments, rejections and
shortage in transit.
Dividends are recorded when the right to receive is established.
Interest income is recognized on a time proportion basis taking into
account the amount outstanding and the applicable interest rate.
Export benefits are accrued when it is reasonably certain that those
will get realised.
4 Tangible assets
Tangible assets are stated at historical cost, net of accumulated
depreciation and accumulated impairment losses, if any. The cost
comprises purchase price, borrowing costs if capitalization criteria
are met and directly attributable costs of bringing the asset to its
working condition for the intended use. Trade discounts and rebates are
deducted in arriving at the purchase price.
Subsequent expenditure related to an item of tangible asset is added to
its book value only if it increases the future benefits from the
existing asset beyond its previously assessed standard of performance.
All other expenses on existing tangible assets, including day-to-day
repair and maintenance expenditure and cost of replacing parts, are
charged to the statement of profit and loss for the period during which
such expenses are incurred.
Gains or losses arising from de-recognition of fixed assets are
measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognized in the statement of
profit and loss when the asset is derecognized.
5 Capitalisation of foreign exchange
In accordance with MCA notification on Accounting Standard (AS 11), in
respect of long term foreign currency loan taken for acquisition of
assets, the exchange difference arising on reporting of said loan is
adjusted to the cost of the assets, which was earlier been recognised
as income or expense in the statement of Profit and Loss. (Also refer
note 36 below.)
6 Depreciation
Depreciation on tangible assets except items mentioned below is
provided on the straight line method, pro-rata to the period of use.
The rates of depreciation prescribed in Schedule XIV to the Companies
Act, 1956 have been adopted by the Company, which in view of the
management reflect the useful lives of related fixed assets.
In case of the Auto Division, accelerated rates of depreciation have
been adopted by the Company as the management is of the view that the
same reflects the useful life of certain fixed assets.
Asset Rates as per Depreciation
Schedule XIV Rate Used
Plant & Machinery 10.34% 14.28%
Electrification 4.75% 14.28%
Assets costing individually, Rs. 5,000 or less are depreciated at the
rate of 100%.
Capital work-in-progress includes the cost of fixed assets that are not
ready for intended use as at the Balance Sheet date.
Building and other constructions on leasehold land are depreciated over
the lease term or the useful life, whichever is shorter.
7 Intangible assets and amortisation
Intangible assets are recognised when the asset is identifiable, is
within the control of the Company, it is probable that the future
economic benefits that are attributable to the asset will flow to the
Company and cost of the asset can be reliably measured.
The Company acquired intangible assets consisting of technical
know-how, patents and software, which are recorded at acquisition cost
and amortised on straight-line basis based on the following useful
lives, which in management''s estimate represents the period during
which economic benefits will be derived from their use.
Software is to be amortised over the period 5 years.
Pilgering Process Patent is to be amortised over a period of 10 years.
Product development Costs are to be amortised over a period of 10
years.
Patent and Trademark Costs are to be amortised over a period of 10
years.
8 Borrowing costs
Borrowing cost includes interest, amortization of ancillary costs
incurred in connection with the arrangement of borrowings and exchange
differences arising from foreign currency borrowings to the extent they
are regarded as an adjustment to the interest cost. Borrowing costs
directly attributable to the acquisition, construction or production of
an asset that necessarily takes a substantial period of time to get
ready for its intended use or sale are capitalized as part of the cost
of the respective asset. All other borrowing costs are expensed in the
period they occur.
9 Impairment of tangible and intangible assets
The carrying amounts of the Company''s assets including intangible
assets are reviewed at each Balance Sheet date to determine whether
there is any indication of impairment. If any such indications exist,
the assets recoverable amount is estimated, as the higher of the net
selling price and the value in use. An impairment loss is recognised
whenever the carrying amount of an asset or its cash generating unit
exceeds its recoverable amount. If at the Balance Sheet date, there is
an indication that a previously assessed impairment loss no longer
exists, the recoverable amount is reassessed and the asset is
reinstated at the recoverable amount subject to a maximum of
depreciable historical cost.
10 Investments
Investments, which are readily realizable and intended to be held for
not more than one year from the date on which such investments are
made, are classified as current investments. All other investments are
classified as long-term investments. On initial recognition, all
investments are measured at cost. The cost comprises purchase price and
directly attributable acquisition charges such as brokerage, fees and
duties.
Current investments are carried in the financial statements at lower of
cost and fair value determined on an individual investment basis.
Long-term investments are carried at cost. However, provision for
diminution in value is made to recognize a decline other than temporary
in the value of the investments.
On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is charged or credited to the
statement of profit and loss.
11 Inventories
Raw materials, components, stores and spares are valued at lower of
cost and net realizable value. However, materials and other items held
for use in the production of inventories are not written down below
cost if the finished products in which they will be incorporated are
expected to be sold at or above cost. Cost of raw materials, components
and stores and spares is determined on a weighted average basis.
Work-in-progress and finished goods are valued at lower of cost and net
realizable value. Cost includes direct materials and labour and a
proportion of manufacturing overheads based on normal operating
capacity. Cost of finished goods includes excise duty and is determined
on a weighted average basis.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
12 Foreign currency transactions
Initial recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
Conversion
Foreign currency monetary items are retranslated using the exchange
rate prevailing at the reporting date. Non-monetary items, which are
measured in terms of historical cost denominated in a foreign currency,
are reported using the exchange rate at the date of the transaction.
Non-monetary items, which are measured at fair value or other similar
valuation denominated in a foreign currency, are translated using the
exchange rate at the date when such value was determined.
The premium or discount arising at the inception of forward exchange
contract is amortized and recognized as an expense/income over the life
of the contract. Any profit or loss arising on cancellation or renewal
of such forward exchange contract is also recognized as income or as
expense for the period.
13 Leases
Leases, where the lessor effectively retains substantially all the
risks and benefits of ownership of the leased term, are classified as
operating leases. Operating lease payments are recognized as an expense
in the Profit and Loss account on a straight line basis over the lease
term.
14 Employee benefits
a) Contribution to Provident Fund
Retirement benefit in the form of provident fund is a defined
contribution scheme. The contributions to the provident fund are
charged to the statement of profit and loss for the year when the
contributions are due. The company has no obligation, other than the
contribution payable to the provident fund.
b) Gratuity
The company has gratuity as a defined benefit liability. The cost of
providing benefits under this plan is determined on the basis of
actuarial valuation at each year-end. Actuarial valuation is carried
out using the projected unit credit method. Actuarial gains and losses
for defined benefit plan are recognized in full in the period in which
they occur in the statement of profit and loss.
c) Leave encashment
Accumulated leave, which is expected to be utilized within the next 12
months, is treated as short-term employee benefit. The company measures
the expected cost of such absences as the additional amount that it
expects to pay as a result of the unused entitlement that has
accumulated at the reporting date.
The company treats accumulated leave expected to be carried forward
beyond twelve months, as long-term employee benefit for measurement
purposes. Such long-term compensated absences are provided for based on
the actuarial valuation using the projected unit credit method at the
year-end. Actuarial gains/losses are immediately taken to the statement
of profit and loss and are not deferred.
15 Income taxes
Tax expense comprises current and deferred tax. Current income-tax is
measured at the amount expected to be paid to the tax authorities in
accordance with the Income-tax Act, 1961.
Deferred income taxes reflect the impact of timing differences between
taxable income and accounting income originating during the current
year and reversal of timing differences for the earlier years. Deferred
tax is measured using the tax rates and the tax laws enacted or
substantively enacted at the reporting date. Deferred income tax
relating to items recognized directly in equity is recognized in equity
and not in the statement of profit and loss.
Deferred tax liabilities are recognized for all taxable timing
differences. Deferred tax assets are recognized for deductible timing
differences only to the extent that there is reasonable certainty that
sufficient future taxable income will be available against which such
deferred tax assets can be realized. In situations where the company
has unabsorbed depreciation or carry forward tax losses, all deferred
tax assets are recognized only if there is virtual certainty supported
by convincing evidence that they can be realized against future taxable
profits.
At each reporting date, the company re-assesses unrecognized deferred
tax assets. It recognizes unrecognized deferred tax asset to the extent
that it has become reasonably certain or virtually certain, as the case
may be, that sufficient future taxable income will be available against
which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each
reporting date. The company writes-down the carrying amount of deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realized. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available
Deferred tax assets and deferred tax liabilities are offset, if a
legally enforceable right exists to set-off current tax assets against
current tax liabilities and the deferred tax assets and deferred taxes
relate to the same taxable entity and the same taxation authority.
Minimum alternate tax (MAT) paid in a year is charged to the statement
of profit and loss as current tax. The company recognizes MAT credit
available as an asset only to the extent that there is convincing
evidence that the company will pay normal income tax during the
specified period, i.e., the period for which MAT credit is allowed to
be carried forward. In the year in which the company recognizes MAT
credit as an asset in accordance with the Guidance Note on Accounting
for Credit Available in respect of Minimum Alternative Tax under the
Income-tax Act, 1961, the said asset is created by way of credit to the
statement of profit and loss and shown as "MAT Credit Entitlement." The
company reviews the "MAT credit entitlement" asset at each reporting
date and writes down the asset to the extent the company does not have
convincing evidence that it will pay normal tax during the specified
period.
16 Cash and cash equivalents
Cash and cash equivalents for the purposes of cash flow statement
comprise cash at bank and in hand and short-term investments with an
original maturity of three months or less.
17 Government Grants and Subsidies
Revenue grants and subsidies from the government are recognized when
there is reasonable assurance that the grant/subsidy will be received
and all attaching conditions will be complied with.
18 Identification of segments
The company''s operating businesses are organized and managed separately
according to the nature of products and services provided, with each
segment representing a strategic business unit that offers different
products and serves different markets.
I. The nature of the products,
II. The related risk and returns, and
III. The internal financial reporting systems.
The analysis of geographical segments is based on the areas in which
major operating divisions of the company operate.
Allocation of common costs
Common allocable costs are allocated to each segment according to the
relative contribution of each segment to the total common costs.
Unallocated items
Unallocated items include general corporate income and expense items
which are not allocated to any business segment.
Segment accounting policies
The company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the company as a whole.
19 Earning Per Share
Basic earning per share is calculated by dividing the net profit or
loss for the period attributable to Equity Shareholders by the weighted
average number of equity shares outstanding during the period.
For the purpose of calculating diluted earning per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
20 Provisions:
A provision is recognized when the company has a present obligation as
a result of past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of the obligation.
Provisions are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
reporting date. These estimates are reviewed at each reporting date and
adjusted to reflect the current best estimates.
21 Contingent liabilities
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be
required to settle the obligation. A contingent liability also arises
in extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably. The company does not
recognize a contingent liability but discloses its existence in the
financial statements.
Mar 31, 2012
1.1 Basis of preparation of financial statements
The financial statements of the company have been prepared in accordance
with generally accepted accounting principles in India (Indian GAAP).
The company has prepared these financial statements to comply in all
material respects with the accounting standards notified under the
Companies (Accounting Standards) Rules, 2006, (as amended) and the
relevant provisions of the Companies Act, 1956. The financial
statements have been prepared on an accrual basis and under the
historical cost convention, except for change in accounting policy as
stated below in Note 2.2.
1.2 Capitalisation of foreign exchange
In accordance with MCA notification on Accounting Standard (AS 11), in
respect of long term foreign currency loan taken for acquisition of
assets, the exchange difference arising on reporting of said loan is
adjusted to the cost of the assets, which was hitherto being recognised
as income or expense in the statement of Profit and Loss. (Also refer
note 37 below.)
1.3 Presentation and disclosure of financial statements
During the year ended March 31, 2012, the revised Schedule VI notified
under the Companies Act 1956, has become applicable to the company, for
preparation and presentation of its financial statements. The adoption
of revised Schedule VI does not impact recognition and measurement
principles followed for preparation of financial statements. However,
it has significant impact on presentation and disclosures made in the
financial statements. The company has also reclassified the previous
year figures in accordance with the requirements applicable in the
current year.
1.4 Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires the management to make judgments, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities, at the end of
the reporting period. Although these estimates are based on the
management's best knowledge of current events and actions, uncertainty
about these assumptions and estimates could result in the outcomes
requiring a material adjustment to the carrying amounts of assets or
liabilities in future periods.
1.5 Revenue recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the company and the revenue can be
reliably measured.
Revenue from sale of goods is recognized when all the significant risks
and rewards of ownership of the goods have been passed to the buyer,
usually on delivery of the goods. Excise duty deducted from revenue
(gross) is the amount that is included in the revenue (gross) and not
the entire amount of liability arising during the year and are recorded
inclusive of incentives received from State Government, excise duty,
net of trade discounts, rebates, price adjustments, rejections and
shortage in transit.
Dividends are recorded when the right to receive is established.
Interest income is recognized on a time proportion basis taking into
account the amount outstanding and the applicable interest rate.
Export benefits are accrued when it is reasonably certain that those
will get realised.
1.6 Tangible assets
Tangible assets are stated at historical cost, net of accumulated
depreciation and accumulated impairment losses, if any. The cost
comprises purchase price, borrowing costs if capitalization criteria
are met and directly attributable costs of bringing the asset to its
working condition for the intended use. Trade discounts and rebates are
deducted in arriving at the purchase price.
Subsequent expenditure related to an item of tangible asset is added to
its book value only if it increases the future benefits from the
existing asset beyond its previously assessed standard of performance.
All other expenses on existing tangible assets, including Day-to-day
repair and maintenance expenditure and cost of replacing parts, are
charged to the statement of profit and loss for the period during which
such expenses are incurred.
Gains or losses arising from de-recognition of fixed assets are
measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognized in the statement of
profit and loss when the asset is derecognized.
1.7 Depreciation
Depreciation on tangible assets except items mentioned below is
provided on the straight line method, pro-rata to the period of use.
The rates of depreciation prescribed in Schedule XIV to the Companies
Act, 1956 have been adopted by the Company, which in view of the
management reflect the useful lives of related fixed assets.
In case of the Auto Division, accelerated rates of depreciation have
been adopted by the Company as the management is of the view that the
same reflects the useful life of certain fixed assets.
Assets costing individually, f 5,000 or less are depreciated at the
rate of 100%.
Capital work-in-progress includes the cost of fixed assets that are not
ready for intended use as at the Balance Sheet date.
Building and other constructions on leasehold land are depreciated over
the lease term or the useful life, whichever is shorter.
1.8 Intangible assets and amortisation
Intangible assets are recognised when the asset is identifiable, is
within the control of the Company, it is probable that the future
economic benefits that are attributable to the asset will flow to the
Company and cost of the asset can be reliably measured.
Acquired intangible assets consisting of technical know-how, patents
and software, are recorded at acquisition cost and amortised on
straight-line basis based on the following useful lives, which in
management's estimate represents the period during which economic
benefits will be derived from their use.
Software is amortised over the period 5 years.
1.9 Borrowing costs
Borrowing cost includes interest, amortization of ancillary costs
incurred in connection with the arrangement of borrowings and exchange
differences arising from foreign currency borrowings to the extent they
are regarded as an adjustment to the interest cost. Borrowing costs
directly attributable to the acquisition, construction or production of
an asset that necessarily takes a substantial period of time to get
ready for its intended use or sale are capitalized as part of the cost
of the respective asset. All other borrowing costs are expensed in the
period they occur.
1.10 Impairment of assets
The carrying amounts of the Company's assets including intangible assets
are reviewed at each Balance Sheet date to determine whether there is
any indication of impairment. If any such indications exist, the assets
recoverable amount is estimated, as the higher of the net selling price
and the value in use. An impairment loss is recognised whenever the
carrying amount of an asset or its cash generating unit exceeds its
recoverable amount. If at the Balance Sheet date, there is an
indication that a previously assessed impairment loss no longer exists,
the recoverable amount is reassessed and the asset is reinstated at the
recoverable amount subject to a maximum of depreciable historical cost.
1.11 Investments
Investments, which are readily realizable and intended to be held for
not more than one year from the date on which such investments are
made, are classified as current investments. All other investments are
classified as long-term investments.
On initial recognition, all investments are measured at cost. The cost
comprises purchase price and directly attributable acquisition charges
such as brokerage, fees and duties.
Current investments are carried in the financial statements at lower of
cost and fair value determined on an individual investment basis.
Long-term investments are carried at cost. However, provision for
diminution in value is made to recognize a decline other than temporary
in the value of the investments.
On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is charged or credited to the
statement of profit and loss.
1.12 Inventories
Raw materials, components, stores and spares are valued at lower of
cost or net realizable value. However, materials and other items held
for use in the production of inventories are not written down below
cost if the finished products in which they will be incorporated are
expected to be sold at or above cost. Cost of raw materials, components
and stores and spares is determined on a weighted average basis.
Work-in-progress and finished goods are valued at lower of cost and net
realizable value. Cost includes direct materials and labour and a
proportion of manufacturing overheads based on normal operating
capacity. Cost of finished goods includes excise duty and is determined
on a weighted average basis.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
1.13 Foreign currency transactions
Initial recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
Conversion
Foreign currency monetary items are retranslated using the exchange
rate prevailing at the reporting date. Non-monetary items, which are
measured in terms of historical cost denominated in a foreign currency,
are reported using the exchange rate at the date of the transaction.
Non-monetary items, which are measured at fair value or other similar
valuation denominated in a foreign currency, are translated using the
exchange rate at the date when such value was determined.
The premium or discount arising at the inception of forward exchange
contract is amortized and recognized as an expense/income over the life
of the contract. Any profit or loss arising on cancellation or renewal
of such forward exchange contract is also recognized as income or as
expense for the period.
1.14 Leases
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased term, are classified as
operating leases. Operating lease payments are recognized as an expense
in the Profit and Loss account on a straight line basis over the lease
term.
1.15 Employee benefits
a) Contribution to Provident Fund: Retirement benefit in the form of
provident fund is a defined contribution scheme. The contributions to
the provident fund are charged to the statement of profit and loss for
the year when the contributions are due. The company has no obligation,
other than the contribution payable to the provident fund.
b) Gratuity: The company has gratuity as a defined benefit liability.
The cost of providing benefits under this plan is determined on the
basis of actuarial valuation at each year-end. Actuarial valuation is
carried out using the projected unit credit method. Actuarial gains and
losses for defined benefit plan is recognized in full in the period in
which they occur in the statement of profit and loss.
c) Leave encashment: Accumulated leave, which is expected to be
utilized within the next 12 months, is treated as short- term employee
benefit. The company measures the expected cost of such absences as the
additional amount that it expects to pay as a result of the unused
entitlement that has accumulated at the reporting date.
The company treats accumulated leave expected to be carried forward
beyond twelve months, as long-term employee benefit for measurement
purposes. Such long-term compensated absences are provided for based on
the actuarial valuation using the projected unit credit method at the
year-end. Actuarial gains/losses are immediately taken to the statement
of profit and loss and are not deferred.
1.16 Provisions and Contingencies
A provision is recognised when the Company has present obligation as a
result of past event and it is probable that an outflow of resources
will be required to settle the obligation, in respect of which reliable
estimate can be made. Provisions (excluding retirement benefits) are
not discounted to its present value and are determined based on the
best estimate required to settle the obligation at the Balance Sheet
date.
A disclosure for a contingent liability is made when there is a
possible obligation or a present obligation that may, but probably will
not, require an outflow of resources. When there is a possible
obligation or a present obligation in respect of which the likelihood
of outflow of resources is remote, no provision or disclosure is made.
Contingent assets are neither recognized nor disclosed in the financial
statements.
1.17 Income taxes
Tax expense comprises current and deferred tax. Current income-tax is
measured at the amount expected to be paid to the tax authorities in
accordance with the Income-tax Act, 1961.
Deferred income taxes reflect the impact of timing differences between
taxable income and accounting income originating during the current
year and reversal of timing differences for the earlier years. Deferred
tax is measured using the tax rates and the tax laws enacted or
substantively enacted at the reporting date. Deferred income tax
relating to items recognized directly in equity is recognized in equity
and not in the statement of profit and loss.
Deferred tax liabilities are recognized for all taxable timing
differences. Deferred tax assets are recognized for deductible timing
differences only to the extent that there is reasonable certainty that
sufficient future taxable income will be available against which such
deferred tax assets can be realized. In situations where the company
has unabsorbed depreciation or carry forward tax losses, all deferred
tax assets are recognized only if there is virtual certainty supported
by convincing evidence that they can be realized against future taxable
profits.
At each reporting date, the company re-assesses unrecognized deferred
tax assets. It recognizes unrecognized deferred tax asset to the extent
that it has become reasonably certain or virtually certain, as the case
may be, that sufficient future taxable income will be available against
which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each
reporting date. The company writes-down the carrying amount of deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realized. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
Deferred tax assets and deferred tax liabilities are offset, if a
legally enforceable right exists to set-off current tax assets against
current tax liabilities and the deferred tax assets and deferred taxes
relate to the same taxable entity and the same taxation authority.
Minimum alternate tax (MAT) paid in a year is charged to the statement
of profit and loss as current tax. The company recognizes MAT credit
available as an asset only to the extent that there is convincing
evidence that the company will pay normal income tax during the
specified period, i.e., the period for which MAT credit is allowed to
be carried forward. In the year in which the company recognizes MAT
credit as an asset in accordance with the Guidance Note on Accounting
for Credit Available in respect of Minimum Alternative Tax under the
Income-tax Act, 1961, the said asset is created by way of credit to the
statement of profit and loss and shown as "MAT Credit Entitlement." The
company reviews the "MAT credit entitlement" asset at each reporting
date and writes down the asset to the extent the company does not have
convincing evidence that it will pay normal tax during the specified
period.
1.18 Earning per share
Basic earning per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period. The
weighted average number of equity shares outstanding during the period
is adjusted for events such as bonus issue, bonus element in a rights
issue, share split, and reverse share split (consolidation of shares)
that have changed the number of equity shares outstanding, without a
corresponding change in resources.
For the purpose of calculating diluted earning per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
1.19 Cash and cash equivalents
Cash and cash equivalents for the purpose of cash flow statement
comprise cash at bank and in hand and short-term investments with an
original maturity of three months or less.
1.20 Government Grants and Subsidies
Revenue grants and subsidies from the government are recognized when
there is reasonable assurance that the grant/subsidy will be received
and all attaching conditions will be complied with.
1.21 Identification of segments
The company's operating businesses are organized and managed separately
according to the nature of products and services provided, with each
segment representing a strategic business unit that offers different
products and serves different markets. The analysis of geographical
segments is based on the areas in which major operating divisions of
the company operate.
Allocation of common costs:
Common allocable costs are allocated to each segment according to the
relative contribution of each segment to the total common costs.
Unallocated items:
Unallocated items include general corporate income and expense items
which are not allocated to any business segment. Segment accounting
policies:
The company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the company as a whole.
Mar 31, 2011
1. ACCOUNTING CONVENTION
The financial statements have been prepared under the historical cost
convention, having due regard to fundamental accounting assumptions of
going concern, consistency and accrual, in compliance with the
accounting standards referred to in Section 211(3C) of the Companies
Act, 1956.
2. USE OF ESTIMATES
The preparation of Financial Statements requires the management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosures of contingent liabilities as at the date of
financial statements and reported amounts of income and expenses during
the year. examples of such estimates include provision for doubtful
debts, employee benefits, provision for income taxes, the useful lives
of depreciable fixed assets and provision for impairment. Actual results
may differ from those estimates. Any revisions to accounting estimates
are recognized prospectively in current and future periods.
3. FIXED ASSETS AND DEPRECIATION
i. Freehold land is stated at cost.
ii. Amortization is provided in respect of leasehold land.
iii. All fixed assets are stated at cost of acquisition/construction
less accumulated depreciation, amortization and impairment losses. The
cost of fixed assets includes taxes (other than those subsequently
recoverable from tax authorities), duties, freight and other incidental
expenses related to the acquisition and installation of the respective
assets.
iv. Depreciation on fixed assets except items mentioned below at (v) is
provided on the straight line method pro-rata to the period of use. The
rates of depreciation prescribed in Schedule xIv to the Companies Act,
1956 have been adopted by the Company, which in view of the management
refect the useful lives of related fixed assets.
v. In case of the Auto Division, accelerated rates of depreciation have
been adopted by the Company as the management is of the view that the
same refects the useful life of certain fixed assets.
vi. Capital work-in-progress includes the cost of fixed assets that are
not ready for intended use as at the Balance Sheet date.
vii. The management periodically assesses using external and internal
sources whether there is an indication that an asset may be impaired.
If an asset is impaired, the Company recognizes an impairment loss as
the excess of the carrying amount of asset over the recoverable amount.
4. INVESTMENTS
i. Investments that are readily realizable and intended to be held for
not more than one year from the date on which such investment is made
are classified as current investments.
ii. Long- term investments are carried at cost less any other than
temporary diminution in value, determined separately for each
individual investment.
iii. Current investments are carried at lower of cost and fair value,
which is determined for each individual investment. Cost includes
related expenses such as commission/brokerage etc.
5. 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 upto the date the asset is put to use. A qualifying
asset is one that necessarily takes substantial period of time to get
ready for intended use. All other borrowing costs are charged to Profit
and Loss Account in the year in which they are incurred.
6. INVENTORIES
i. Inventories are stated at cost or net realizable value, whichever
is lower.
ii. Raw Materials are valued on Weighted Average basis.
iii. In case of Semi-finished & Finished goods, cost includes material
cost, conversion costs, and excise duty, wherever applicable.
7. FOREIGN CURRENCY TRANSACTIONS
i. Transactions denominated in foreign currency are accounted for at
rates that approximate the exchange rate prevailing on the date of the
respective transaction. exchange differences arising on foreign
exchange transactions settled during the year are recognized in the
Profit and Loss Account of the year.
ii. Monetary assets and liabilities in foreign currency, which are
outstanding as at the year-end, are translated at the year-end closing
exchange rate and the resultant exchange differences are recognized in
the Profit and Loss Account.
8. REVENUE RECOGNITION
i. Revenue from sales are recognized on dispatch of goods to the
customers, which coincide with the transfer of significant risks and
rewards associated with ownership, and are recorded inclusive of
recurring incentive received from State Government, excise duty, net of
trade discounts, rebates, price adjustments, rejections and shortage in
transit.
ii. Revenue from services is recognized as and when services are
rendered and related costs are incurred, in accordance with the terms
of specific contracts.
iii. Dividends are recorded when the right to receive payment is
established.
iv. Interest Income is recognized on a time proportion basis taking
into account the amount outstanding and the rate applicable.
9. GOVERNMENT GRANTS AND SUBSIDIES
Revenue grants and subsidies from the government are recognized when
there is reasonable assurance that the grant/subsidy will be received
and all attaching conditions will be complied with.
10. EMPLOYEE BENEFITS
a. 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.
b. Post-employment benefits - Defined Contribution Plans
Retirement benefits in the form of Provident Fund and Labour Welfare
Fund is a defined contribution scheme and the contributions are charged
to the Profit and Loss Account of the year when the contributions to the
respective funds are due.
c. Post-employment benefits - Defined Benefit Plans
i. Company's liability towards Gratuity is determined using the
Projected unit Credit Method, which considers each period of service as
giving rise to an additional unit of benefit entitlement and measures
each unit separately to build up the final obligation. Past Service
Gratuity Liability is computed with reference to the service put in by
each employee till the date of valuation as also the projected terminal
salary at the time of exit. Actuarial gain or losses are recognized
immediately in the Statement of Profit and Loss as income or expense.
Obligation is measured at the present value of estimated future Cash
Flow using a discount rate that is determined by reference to market
yields at the Balance Sheet date on government bonds where the currency
and terms of the government bonds are consistent with the currency and
estimated terms of the defined benefit obligation.
ii. Long term compensated absences are provided for based on actuarial
valuation, using the projected unit credit method.
11. TAXATION
Current tax is determined as the amount of tax payable in respect of
taxable income for the year. The deferred tax for timing difference
between the book and tax profit for the year is accounted for using tax
rates and tax laws that have been enacted or substantially enacted at
the Balance sheet date. Deferred tax assets arising from the timing
differences are recognized to the extent that there is virtual
certainty that sufficient future taxable income will be available.
12. LEASES
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased term, are classified as
operating leases. Operating lease payments are recognized as an expense
in the Profit and Loss account on a straight-line basis over the lease
term.
13. PROVISIONS AND CONTINGENT LIABILITIES
i. A provision is recognized when the Company has present obligation as
a result of past event and it is probable that an outflow of resources
will be required to settle the obligation, in respect of which reliable
estimate can be made. Provisions (excluding retirement benefits) are not
discounted to its present value and are determined based on the best
estimate required to settle the obligation at the balance sheet date.
ii. A disclosure for a contingent liability is made when there is a
possible obligation or a present obligation that may, but probably will
not, require an outflow of resources. When there is a possible
obligation or a present obligation in respect of which the likelihood
of outflow of resources is remote, no provision or disclosure is made.
iii. Contingent assets are neither recognized nor disclosed in the
financial statements.
Mar 31, 2010
1. Accounting Convention
The financial statements have been prepared under the historical cost
convention, having due regard to fundamental accounting assumptions of
going concern, consistency and accrual, in compliance with the
accounting standards referred to in Section 211(3C) of the Companies
Act, 1956.
2. Use of Estimates
The preparation of Financial Statements requires the management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosures of contingent liabilities as at the date of
financial statements and reported amounts of income and expenses during
the year. Examples of such estimates include provision for doubtful
debts, employee benefits, provision for income taxes, the useful lives
of depreciable fixed assets and provision for impairment. Actual
results may differ from those estimates. Any revisions to accounting
estimates are recognised prospectively in current and future periods.
3. Fixed Assets and Depreciation
i. Freehold land is stated at cost.
ii. Amortization is provided in respect of leasehold land.
iii. All fixed assets are stated at cost of acquisition / construction
less accumulated depreciation, amortization and impairment losses. The
cost of fixed assets includes taxes (other than those subsequently
recoverable from tax authorities), duties, freight and other incidental
expenses related to the acquisition and installation of the respective
assets.
iv. Depreciation on fixed assets except items mentioned below at (v) is
provided on the straight line method pro-rata to the period of use. The
rates of depreciation prescribed in Schedule XIV to the Companies Act,
1956 have been adopted by the Company, which in view of the management
reflect the useful lives of related fixed assets.
v. In case of the Auto Division, accelerated rates of depreciation have
been adopted by the Company as the management is of the view that the
same reflects the useful life of certain fixed assets.
vi. Capital work-in-progress includes the cost of fixed assets that
are not ready for intended use as at the Balance Sheet date.
vii. The management periodically assesses using external and internal
sources whether there is an indication that an asset may be impaired.
If an asset is impaired, the Company recognizes an impairment loss as
the excess of the carrying amount of asset over the recoverable amount.
4. Investments
i. Investments that are readily realizable and intended to be held for
not more than one year from the date on which such investment is made
are classified as current investments.
ii. Long-term investments are carried at cost less any other than
temporary diminution in value, determined separately for each
individual investment.
iii. Current investments are carried at lower of cost and fair value,
which is determined for each individual investment. Cost includes
related expenses such as commission/brokerage etc.
5. 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 upto the date the asset is put to use. A qualifying
asset is one that necessarily takes substantial period of time to get
ready for intended use. All other borrowing costs are charged to profit
and loss account in the year in which they are incurred.
6. Inventories
i. Inventories are stated at cost or net realizable value, whichever
is lower
ii. Raw Materials are valued on Weighted Average basis.
iii. In case of Semi-finished & Finished goods, cost includes material
cost, conversion costs, and excise duty, wherever applicable.
7. Foreign Currency Transactions
i. Transactions denominated in foreign currency are accounted for at
rates that approximate the exchange rate prevailing on the dale of the
respective transaction. Exchange differences arising on foreign
exchange transactions settled during the year are recognised in the
profit and loss account of the year.
ii Monetary assets and liabilities in foreign currency, which are
outstanding as at the year- end, are translated at the year-end closing
exchange rate and the resultant exchange differences are recognised in
the Profit and loss account.
8. Revenue Recognition
i. Revenue from sales are recognized on dispatch of goods to the
customers, which coincide with the transfer of significant risks and
rewards associated with ownership, and are recorded inclusive of excise
duty, net of trade discounts, rebates, price adjustments, rejections
and shortage in transit.
ii. Revenue from services is recognized as and when services are
rendered and related costs are incurred, in accordance with the terms
of specific contracts.
lii. Dividends are recorded when the right to receive payment is
established.
iv. Interest Income is recognized on a time proportion basis taking
into account the amount outstanding and the rate applicable.
9. Government Grants and Subsidies
Revenue grants and subsidies from the government are recognized when
there is reasonable assurance that the grant/subsidy will be received
and all attaching conditions will be complied with.
10. Employee Benefits
a. Short term employee benefits
Employee benefits payable wholly within twelve months of rendering the
service are classified as short term employee benefits and are
recognised in the period in which the employee renders the related
service.
b. Post-employment benefits - Defined Contribution Plans
Retirement benefits in the form of Provident Fund and Labour Welfare
Fund is a defined contribution scheme and the contributions are charged
to the Profit and Loss Account of the year when the contributions to
the respective funds are due.
c. Post-employment benefits - Defined Benefit Plans
i. Companys liability towards Gratuity is determined using the
Projected Unit Credit Method, which considers each period of service as
giving rise to an additional unit of benefit entitlement and measures
each unit separately to build up the final obligation. Past Service
Gratuity Liability is computed with reference to the service put in by
each employee till the date of valuation as also the projected terminal
salary at the time of exit. Actuarial gain or losses are recognised
immediately in the Statement of Profit and Loss as income or expense.
Obligation is measured at the present value of estimated future Cash
Flow using a discount that determined by reference to market
yields at the Balance Sheet date on government bonds where the currency
and terms of the government bonds are consistent with the currency and
estimated terms of the defined benefit obligation. ii. Long term
compensated absences are provided for based on actuarial valuation,
using the projected unit credit method.
11. Income Taxes
i. Income tax expense comprises of current tax (i.e. amount of tax for
the period determined in accordance with the income tax law) and
deferred tax (reflecting the tax effect of timing differences between
accounting income and taxable income for the year).
ii. In accordance with Accounting Standard 22 - Accounting for taxes
on Income, issued by the Institute of Chartered Accountants of India,
the deferred tax charge or credit and corresponding deferred tax
liabilities or assets are recognised using the tax rates that have been
enacted or substantially enacted by the Balance Sheet date. Deferred
tax assets are recognised only to the extent there is reasonable
certainty that they will be realised in future; however, where there is
unabsorbed depreciation and carry forward loss under taxation laws,
deferred tax assets are recognised only to the extent that there is
virtual certainty that sufficient future taxable income will be
available to realize such assets.
iii. Deferred tax assets are reviewed at each Balance sheet date and
written down or written-up to reflect the amount that is
reasonably/virtually certain (as the case may be) to be realised.
iv. Minimum Alternative tax (MAT) credit is recognised as an asset only
when and to the extent there is convincing evidence that the company
wilt pay normal income tax during the specified period. In the year in
which the MAT credit becomes eligible to be recognized as an asset in
accordance with the recommendations contained in Guidance Note issued
by the Institute of Chartered Accountants of India, the said asset is
created by way of a credit to the profit and loss account and shown as
MAT Credit Entitlement. The Company reviews the same at each balance
sheet date and writes down the carrying amount of MAT Credit
Entitlement to the extent there is no longer convincing evidence to the
effect that Company will pay normal Income Tax during the specified
period.
12. Leases
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased term, are classified as
operating leases. Operating lease payments are recognized as an expense
in the Profit and Loss account on a straight line basis over the lease
term.
13. Provisions and Contingent Liabilities
i. A provision is recognised when the Company has present obligation as
a result of past event and it is probable that an outflow of resources
will be required to settle the obligation, in respect of which reliable
estimate can be made. Provisions (excluding retirement benefits) are
not discounted to its present value and are determined based on the
best estimate required to settle the obligation at the balance sheet
date. ii. A disclosure for a contingent liability is made when there
is 3 possible obligation or a present obligation that may, but probably
will not, require an outflow of resources. When there is a possible
obligation or a present obligation in respect of which the likelihood
of outflow of resources is remote, no provision or disclosure is made.
iii. Contingent assets are neither recognized nor disclosed in the
financial statements.
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