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Accounting Policies of Jamna Auto Industries Ltd. Company

Mar 31, 2015

1 Corporate information

Jamna Auto Industries Limited (hereinafter referred to as 'the Company' or 'JAI') is a manufacturer of Tapered Leaf and Parabolic Springs. The Company's manufacturing facilities are located at Malanpur, Chennai, Yamuna Nagar, Jamshedpur and Hosur.

2 Basis of preparation

The financial statements have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The Company has prepared there financial statements to comply in all material aspect of the Accounting Standard (AS) notified by Section 133 of the Companies Act 2013 read together with paragraph 7 of the Companies (Accounts) Rules 2014. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year except for the change in accounting policy explained below. The financial statements have been prepared on an accrual basis and under historical cost convention.

a) Change in accounting policy

Depreciation on fixed assets

Till the year ended March 31, 2014, Schedule XIV to the Companies Act, 1956, prescribed requirements concerning depreciation of fixed assets. From the current year, Schedule XIV has been replaced by Schedule II to the Companies Act, 2013. The applicability of Schedule II has resulted in the following changes related to depreciation of fixed assets. Unless stated otherwise, the impact mentioned for the current year is likely to hold good for future years also.

Till the year ended March 31, 2014, depreciation rates prescribed under Schedule XIV were treated as minimum rates and the Company was not allowed to charge depreciation at lower rates even if such lower rates were justified by the estimated useful life of the asset. Schedule II to the Companies Act 2013 prescribes useful lives for fixed assets which, in many cases, are different from lives prescribed under the erstwhile Schedule XIV. However, Schedule II allows companies to use higher/ lower useful lives and residual values if such useful lives and residual values can be technically supported and justification for difference is disclosed in the financial statements.

Considering the applicability of Schedule II, the management has re-estimated useful lives and residual values of all its fixed assets and accordingly as per the transitional provision given in Schedule

II of the Companies Act 2013, an amount of Rs. 284.62 (Net of tax impact of Rs. 146.54) has been adjusted with opening reserve and surplus. Further, had the Company continued using earlier estimated useful life and residual value, current year profits before tax would have been higher by Rs. 250.52. The management believes that new depreciation rates reflect its estimate of the useful lives and residual values of fixed assets, though these rates in certain cases are different from lives prescribed under Schedule II.

b) 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.

c) Tangible fixed assets

Fixed Assets are stated at cost net of accumulated depreciation. The cost comprises purchase price, borrowing costs if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discounts and rebates are deducted in arriving at the purchase price.

Subsequent expenditure related to an item of fixed 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 fixed 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 year during which such expenses are incurred.

Gains or losses arising from derecognition 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 proof and loss when the asset is derecognized..

d) Depreciation / amortization

Leasehold land and cost of leasehold improvements are amortized over the period of lease or their useful lives, whichever is shorter.

Depreciation on other fixed assets is calculated on a straight line basis using rates arrived at based on the useful lives estimated by the management. The Company has used following estimated useful life to provide depreciation on its fixed assets:.

(1) The management has estimated, supported by independent assessment, the useful life of certain plant and machinery as 20 years, which is higher than those indicated in schedule II of the Companies Act 2013.

(2) The management has estimated, based on past experience, the useful life of these blocks of assets as lower than the life indicated for respective block of assets in schedule II of the Companies Act 2013.

Fixed assets individually costing up to Rs. 0.05 are depreciated at the rate of 100 percent.

Residual value of fixed assets is considered at 5%.

e) Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization. Internally generated intangible assets, excluding capitalized development costs, are not capitalized and expenditure is rejected in the statement of profit and loss in the year in which the expenditure is incurred.

Intangible assets are amortized on a straight line basis over the estimated useful economic life. The Company uses a rebuttable presumption that the useful life of an intangible asset will not exceed ten years from the date when the asset is available for use. Intangible assets are amortized over the following estimated useful life:

- Software: 5 years

- Copyrights: 5 years.

f) Impairment

The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment

testing for an asset is required, the Company estimates the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash-generating units (CGU) net selling price and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash infows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash fows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining net selling price, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used.

g) Borrowing costs

Borrowing cost includes interest and amortization of ancillary costs incurred in connection with the arrangement of borrowings.

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..

h) 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..

i) 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. Cost 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.

j) Revenue recognition

Revenue is recognized to the extent that it is probable that the economic benefits will fow to the Company and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognized:

i) Sales of goods

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. The Company collects sales taxes and value added taxes (VAT) on behalf of the government and, therefore, these are not economic benefits flowing to the Company. Hence, they are excluded from revenue. 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.

ii) Service income

Revenue from job work services is recognized on completion of services.

iii) Interest income

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

iv) Share of profit from LLP

Share of profit from LLP is recognized when the right to receive share of profit is established.

k) Operating leases

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased asset are classified as operating lease. Operating lease charges are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term.

l) Foreign exchange transactions

i) 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.

ii) 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.

iii) Exchange differences

Exchange differences arising on the settlement of monetary items or on retranslation of monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or as expenses.

m) Retirement and other employee benefits

i) Retirement benefit in the form of provident fund is a defend contribution scheme. The Company has no obligation, other than contribution payable to the provident fund. The Company recognizes contribution payable to the provident fund scheme as an expenditure, when an employee renders the related service.

ii) The Company operates two defend benefit plan for its employees i.e. gratuity and long service award. The cost of providing benefits under these plans are determined and recognized on the basis of actuarial valuation at each year-end using the projected unit credit method. Actuarial gains and losses for both defend benefit plans are recognized in full in the period in which they occur in the statement of profit and loss.

iii) Accumulated leaves, which are 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.

n) 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 enacted in India and tax laws prevailing in the respective tax jurisdictions where the Company operates. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.

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 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.

o) Employee stock compensation cost

Employees (including senior executives) of the Company receive remuneration in the form of share based payment transactions, whereby employees render services as consideration for equity instruments (equity-settled transactions).

In accordance with the SEBI (Share Based Employee Benefits) Regulations, 2014 and the Guidance Note on Accounting for Employee Share-based Payments, the cost of equity-settled transactions is measured using the intrinsic value method and recognized. The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Company's best estimate of the number of equity instruments that will ultimately vest. The expense or credit recognized in the statement of profit and loss for a period represents the movement in cumulative expense recognized as at the beginning and end of that period and is recognized in employee benefits expense.

p) Segment reporting

i) 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 geographical location of the customers.

ii) 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.

q) Earnings per share

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting preference dividends and attributable taxes) by the weighted average number of equity shares outstanding during the period. Partly paid equity shares are treated as a fraction of an equity share to the extent that they are entitled to participate in dividends relative to a fully paid equity share during the reporting 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 proft 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.

r) Provisions

A provision is recognized when the Company has a present obligation as a result of past event, it is probable that an outfow 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.

s) 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.

t) Cash and cash equivalents

Cash and cash equivalents for the purposes of cash fow statement comprise cash at bank and in hand and short-term investments with an original maturity of three months or less.

u) Measurement of EBITDA

The Company has elected to present earnings before interest, tax, depreciation and amortization (EBITDA) as a separate line item on the face of the statement of profit and loss. The Company measures EBITDA on the basis of profit/ (loss) from continuing operations. In its measurement, the Company does not include depreciation and amortization expense, finance costs, exceptional items, prior period items and tax expense.

v) Derivative instruments and hedge accounting

The Company uses derivative financial instruments, such as, foreign currency forward contracts to hedge foreign currency risk arising from future transactions in respect of which form commitments are made. It also uses interest rate swaps to hedge interest risk arising from variable rate loans. Derivative contracts, other than foreign currency forward contracts covered under AS11, are marked to market and the net loan, after considering the offsetting effect of gain on underlying hedged item, if any, is charged to the statement of profit and loss. Net gain, if any, after considering the offsetting effect of loss on underlying hedged items is ignored.


Mar 31, 2014

A) 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.

b) Tangible fixed assets

Fixed Assets are stated at cost net of accumulated depreciation. The cost comprises purchase price, borrowing costs if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discounts and rebates are deducted in arriving at the purchase price.

Subsequent expenditure related to an item of fixed asset is added to its booked value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance. All other expenses on existing fixed 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 derecognition 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.

c) Depreciation / amortisation

Leasehold land and cost of leasehold improvements are amortised over the period of lease or their useful lives, whichever is shorter.

Depreciation on other fixed assets is calculated on a straight line basis using rates arrived at based on the useful lives estimated by the management which are same as under Schedule XIV to the Companies Act, 1956.

Fixed assets individually costing up to Rs. 0.05 are depreciated at the rate of 100 percent.

d) Intangible fixed assets

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortisation. Internally generated intangible assets, excluding capitalized development costs, are not capitalized and expenditure is refected in the statement of Profit and loss in the year in which the expenditure is incurred.

Intangible assets are amortized on a straight line basis over the estimated useful economic life. The Company uses a rebuttable presumption that the useful life of an intangible asset will not exceed ten years from the date when the asset is available for use.

e) Impairment

The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of an asset''s or cash-generating unit''s (CGU) net selling price and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that refects current market assessments of the time value of money and the risks Specific to the asset. In determining net selling price, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used.

The company bases its impairment calculation on detailed budgets and forecast calculations which are prepared separately for each of the company''s cash- generating units to which the individual assets are allocated. These budgets and forecast calculations are generally covering a period of five years. For longer periods, a long term growth rate is calculated and applied to project future cash flows after the ffth year.

f) Borrowing costs

Borrowing cost includes interest and amortization of ancillary costs incurred in connection with the arrangement of borrowings.

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.

g) 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 classifed as current investments. All other investments are classifed 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.

h) 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 fnished 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 fnished 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 fnished goods includes excise duty. Cost 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.

i) Revenue recognition

Revenue is recognized to the extent that it is probable that the economic benefits will fow to the company and the revenue can be reliably measured. The following Specific recognition criteria must also be met before revenue is recognized:

1) Sales of goods

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. The company collects sales taxes and value added taxes (VAT) on behalf of the government and, therefore, these are not economic benefits fowing to the company. Hence, they are excluded from revenue. 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.

2) Service income

Revenue from job work services is recognised on completion of services to be rendered.

3) Interest income

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

4) Share of Profit from LLP

Share of Profit from LLP is recognised when the right to receive share of Profit is established.

j) Operating leases

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased asset are classifed as operating lease. Operating lease charges are recognised as an expense in the statement of Profit and loss on a straight-line basis over the lease term.

k) Foreign exchange transactions

i) 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.

ii) 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.

iii) Exchange differences

Exchange differences arising on the settlement of monetary items or on retranslation of monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognised as income or as expenses.

l) Employee benefits

i) Retirement benefit in the form of provident fund is a Defined contribution scheme. The Company has no obligation, other than contribution payable to the provident fund. The Company recognizes contribution payable to the provident fund scheme as an expenditure, when an employee renders the related service.

ii) The Company operates one Defined benefit plan for its employees i.e. gratuity. The cost of providing benefits under the plan are determined and recognised on the basis of actuarial valuation at each year-end using the projected unit credit method. Actuarial gains and losses for both Defined benefit plans are recognized in full in the period in which they occur in the statement of Profit and loss.

iii) 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.

m) Income taxation

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 enacted in India and tax laws prevailing in the respective tax jurisdictions where the company operates. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.

Deferred income taxes refect 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 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 suffcient 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 suffcient 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 suffcient 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 suffcient 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.

n) Employee stock compensation cost

Employees (including senior executives) of the company receive remuneration in the form of share based payment transactions, whereby employees render services as consideration for equity instruments (equity-settled transactions).

In accordance with the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and the Guidance Note on Accounting for Employee Share-based Payments, the cost of equity-settled transactions is measured using the intrinsic value method and recognized, together with a corresponding increase in the "Stock options outstanding account" in reserves. The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date refects the extent to which the vesting period has expired and the company''s best estimate of the number of equity instruments that will ultimately vest. The expense or credit recognized in the statement of Profit and loss for a period represents the movement in cumulative expense recognized as at the beginning and end of that period and is recognized in employee benefits expense.

o) Segment reporting

Identifcation 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 geographical location of the customers.

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.

p) Earnings per share

Basic earnings per share are calculated by dividing the net Profit or loss for the period attributable to equity shareholders (after deducting preference dividends and attributable taxes) by the weighted average number of equity shares outstanding during the period. Partly paid equity shares are treated as a fraction of an equity share to the extent that they are entitled to participate in dividends relative to a fully paid equity share during the reporting 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.

q) 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 refect the current best estimates.

r) 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.

s) Cash and cash equivalents

Cash and cash equivalents for the purposes of cash fow statement comprise cash at bank and in hand and short-term investments with an original maturity of three months or less.

t) Measurement of EBITDA

As permitted by the Guidance Note on the Revised Schedule VI to the Companies Act, 1956, the company has elected to present earnings before interest, tax, depreciation and amortization (EBITDA) as a separate line item on the face of the statement of Profit and loss. The company measures EBITDA on the basis of Profit/ (loss) from continuing operations. In its measurement, the company does not include depreciation and amortization expense, interest income, finance costs and tax expense.

b. Term and Rights attached to equity shares

The Company has only one type of equity shares having par value of Rs. 10 (absolute amount) each per share. Each shareholder is entitled to one vote per share. The Company pays and declares dividends in Indian rupees. The dividend proposed, if any, by the Board of Directors is subject to approval of shareholders in the ensuing Annual General Meeting, except in case of interim dividend. The repayment of equity share capital in the event of liquidation and buy back of shares are possible subject to prevalent regulations. In the event of liquidation, normally the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding. During the year ended March 31, 2014, the Company has declared final dividends of Rs. 1 (absolute amount) (previous year Rs.2 (absolute amount)) per share.

c. Terms and rights of Preference shares including the terms of conversion/redemption

The preference shares were issued to IFCI pursuant to the debt restructuring scheme entered between erstwhile Jai Parabolic Springs Limited and IFCI Limited. The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to approval of the shareholders in the ensuing Annual General Meeting. The preference share are redeemable in two instalments of Rs. 175 each, out of which frst instalment was redeemed during the year on October 1, 2013 and second instalment is due for redemption on October 1, 2014.The preference shares are not entitled to any voting rights.

e. Shares reserved for issue under Options and contracts/commitments for the sale of shares/ disinvestment, including the terms and amounts

The Company provides shares based payment schemes to its employees. During the year ended March 31, 2014, an employee stock option scheme was in existence and 324,785 stock options (Previous year: 621,500) can be exercised by the employees as per their vesting and in accordance with the terms of issue of stock option. Refer note on ESOP 39.

(a) Includes Rs. 150 representing 10% of the issued price of 2,083,333 convertible warrants as application money received towards the subscription of such warrants by the promoters in erstwhile Jai Parabolic Springs Limited. Such application money was forfeited in accordance with SEBI guidelines on the expiry of 18 months from the date of issue. It also includes Rs. 97 representing application money received towards the subscription of 1,343,210 convertible warrants allotted to MAP Auto Limited. Such application money was forfeited on 27 June 2007.

(b) The Board of Directors have recommended preference dividend amounting to Rs. 32.81 relating to the year ended March 31, 2014 (Previous year: Rs. 43.75) in the Board meeting held on May 29, 2014. The same is subject to approval of shareholders.

(c) The Company has declared a final dividend of Re. 1 (absolute amount) (previous year Rs. 2 (absolute amount)) per equity share for the year, subject to the approval of shareholders.

^ Represents reserves created on account of redemption of Preference shares during the year.


Mar 31, 2013

1.1 Basis of preparation

The fnancial statements are prepared on accrual basis under the historical cost convention, modifed to include revaluation of certain assets, in accordance with applicable Accounting Standards (AS) specifed in the Companies (Accounting Standards) Rules, 2006 and presentational requirements of the Companies Act, 1956.

1.2 Use of estimates

The preparation of fnancial statements in conformity with generally accepted accounting principles in India (GAAP) requires management to make estimates and assumptions that afect the reported amounts of assets and liabilities and the disclosure of contingent liabilities on the date of the fnancial statements and the result of operations during the year. Diferences between actual results and estimates are recognized in the year in which the results are known or materialized examples of such estimates are estimated useful life of assets, classifcation of assets/liabilities as current or non-current in certain circumstances, provision for doubtful receivables and retirement benefts, etc. Actual results could difer from those estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.

1.3 Current-non-current classifcation

All assets and liabilities are classifed into current and non-current

Assets

An asset is classifed as current when it satisfes any of the following criteria:

(a) it is expected to be realized in, or is intended for sale or consumption in, the Company''s normal operating cycle;

(b) it is held primarily for the purpose of being traded;

(c) it is expected to be realized within 12 months after the reporting date; or

(d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date.

Current assets include the current portion of non-current fnancial assets. All other assets are classifed as non-current.

Liabilities

A Liability is classifed as current when it satisfes any of the following criteria;

(a) it is expected to be settled in the Company''s normal operating cycle;

(b) it is held primarily for the purpose of being traded;

(c) it is due to be settled within 12 months after the reporting date; or

(d) the Company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of a liability that could, at the option, of the counter party, results in its settlement by the issue of equity instruments do not afect its classifcation.

Current liabilities include current portion of non-current fnancial liabilities All other liabilities are classifed as non-current.

Operating cycle

Operating cycle is the time between the acquisition of assets for processing and their realization in cash or cash equivalents.

The Company''s normal operating cycle is 12 months.

1.4 Fixed assets

Fixed assets are stated at cost or at revalued amounts less accumulated depreciation. Cost of fxed assets includes all incidental expenses and interest costs on borrowings, attributable to the acquisition of qualifying assets, upto the date of commissioning of assets.

Foreign currency exchange diferences to the extent covered under AS-11 are capitalized as per the policy stated in note 2.12 below.

1.5 Depreciation / amortization

Tangible

Leasehold land and cost of leasehold improvements are amortized over the period of lease or their useful lives, whichever is shorter.

Depreciation on other fxed assets is provided using the straight line method at the rates prescribed under Schedule XIV to the Companies Act, 1956.

Fixed assets individually costing up to Rupees fve thousand are depreciated at the rate of 100%.

Intangible

Intangible assets are being depreciated over a period of fve year.

1.6 Impairment

The carrying amounts of the Company''s assets are reviewed at each Balance Sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset''s recoverable amount is estimated as higher of its net selling price and value in use. An impairment loss is recognized whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount. Impairment losses are recognized in the Statement of Proft and Loss. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset''s carrying amount does not exceed the carrying amount that would have been determined net of depreciation or amortization, had no impairment loss been recognized.

1.7 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 to the extent that they relate to the period till such assets are ready to be put to use. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to Statement of Proft and Loss.

1.8 Investments

Current investments are carried at the lower of cost and fair value. Long-term investments are carried at cost less diminution, other than temporary in value.

1.9 Inventories

Stores and spares parts are valued at cost or under, computed on weighted average basis. Raw materials, work in progress and fnished goods are valued at the lower of cost and net realisable value. Cost includes purchase price, taxes (excluding those subsequently recoverable by the enterprise from the concerned revenue authorities), freight inwards and other expenditure incurred in bringing such inventories to their present location and condition. Finished goods and work in progress include material cost and appropriate portion of manufacturing and other overheads. Cost is ascertained on a weighted average basis.

1.10 Revenue recognition

a) Sales of goods

Revenue from sale of products is recognized when the products are delivered against orders from customers in accordance with the contract terms, which coincides with the transfer of risks and rewards. Sales are stated inclusive of excise duty and net of rebates, trade discounts, sales tax and sales returns.

b) Dividend/Share of Proft from LLP

Dividend/Share of proft from LLP from investments is recognized when the right to receive dividend/share of proft is established.

c) Interest income

Interest income is recognized using the time-proportion method, based on interest rates implicit in the transaction.

d) Service income

Revenue from jobwork services is recognized on completion of services to be rendered.

1.11 Operating leases

Leases where the lessor efectively retains substantially all the risks and benefts of ownership of the leased asset are classifed as operating lease. Operating lease charges are recognized as an expense in the Statement of Proft and Loss on a straight-line basis over the lease term.

1.12 Foreign exchange transactions and forward contracts

Foreign exchange transactions

i) Foreign currency transactions are accounted for at the exchange rate prevailing on the date of the transaction. All monetary foreign currency assets and liabilities are converted at the exchange rates prevailing at the date of the Balance Sheet. All exchange diferences other than in relation to acquisition of fxed assets and other long term foreign currency monetary liabilities are dealt with in the Statement of Proft and Loss.

ii) In accordance with Accounting Standard 11, "Accounting for the efects of changes in foreign exchange rates", exchange diferences arising in respect of long term foreign currency monetary items used for acquisition of depreciable capital asset, are added to or deducted from the cost of asset and are depreciated over the balance life of asset.

iii) In case of foreign exchange forward contracts taken for underlying transactions, and covered by Accounting Standard 11, "Accounting for the efects of changes in foreign exchange rates", the premium or discount is amortized as income or expense over the life of the contract. The exchange diference is calculated as the diference between the foreign currency amount of the contract translated at the exchange rate at the reporting date, or the settlement date where the transaction is settled during the reporting period, and the corresponding foreign currency amount translated at the later of the date of inception of the forward exchange contract and the last reporting date. Such exchange diferences are recognized in the Statement of Proft and Loss in the reporting period in which the exchange rates change. Any proft or loss arising on the cancellation or renewal of such contracts is recognized as income or expense for the year.

1.13 Employee benefts

a) Short-term employee benefts

All employee benefts payable wholly within twelve months of rendering the service are classifed as short term employee benefts. Benefts such as salaries, wages and bonus, etc., are recognized in the Statement of Proft and Loss in the period in which the employee renders the related service.

b) Post employment beneft

Defned contribution plan : The Company deposits the contributions for provident fund to the appropriate government authorities and these contributions are recognized in the Statement of Proft and Loss in the fnancial year to which they relate.

Defned beneft plan : The Company''s gratuity scheme is a defned beneft plan. The present value of the obligation under such defned beneft plan is determined based on an actuarial valuation carried out by an independent actuary, using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee beneft entitlement and measures each unit separately to build up the fnal obligation. The obligation is measured at the present value of the estimated future cash fows. The discount rates used for determining the present value of the obligation under defned beneft plans, is based on the market yields on Government securities as at the Balance Sheet date. Actuarial gains and losses are recognized immediately in the Statement of Proft and Loss.

c) Other long-term employee benefts

Entitlements to annual leave are recognized when they accrue to employees. Leave entitlements can be availed while in service or en-cashed at the time of retirement/ termination of employment, subject to a restriction on the maximum number of accumulation. The Company determines the liability for such accumulated leave entitlements on the basis of an actuarial valuation carried out by an independent actuary at the year end.

1.14 Taxation

Income tax expense comprises current tax, deferred tax charge or credit. Current tax provision is made based on the tax liability computed after considering tax allowances and exemptions under the Income tax Act, 1961.

The deferred tax charge or credit and the corresponding deferred tax liability and assets are recognized using the tax rates that have been enacted or substantively enacted by the Balance Sheet date. Deferred tax assets are recognized only to the extent where there is reasonable certainty that the assets can be realized in future; however, where there is unabsorbed depreciation or carried forward business loss under taxation laws, deferred tax assets are recognized only if there is a virtual certainty of realization of such assets. Deferred tax assets are reviewed at each Balance Sheet date to reassess their realisability.

In accordance with the provisions of Section 115 JAA of the Income-tax Act, 1961, the Company is allowed to avail credit equal to the excess of Minimum Alternate Tax (MAT) over normal income tax for the assessment year for which MAT is paid. MAT credit so determined can be carried forward for set-of for ten succeeding assessment years from the year in which such credit becomes allowable. MAT credit can be set-of only in the year in which the Company is liable to pay tax as per the normal provisions of the Income-tax Act, 1961 and such tax is in excess of MAT for that year. Accordingly, MAT credit entitlement is recognized only to the extent there is convincing evidence that the Company will pay normal tax during the specifed period.

1.15 Earnings per share

Basic earnings per share are calculated by dividing the net proft or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. For the purpose of calculating diluted earnings per share, the net proft or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the efects of all dilutive potential equity shares.

1.16 Provisions and contingent liabilities

The Company recognizes a provision when there is a present obligation as a result of a past event and it is more likely than not that there will be a outfow of resources embodying economic benefts to settle such obligations and the amount of such obligation can be reliably estimated. Provisions are not discounted to their present value and are determined based on the management''s estimation of the outfow required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to refect current management estimates. Contingent liabilities are disclosed in respect of possible obligations that have arisen from past events and the existence of which will be confrmed only by the occurrence or non-occurrence of future events, not wholly within the control of the Company. When there is an obligation in respect of which the likelihood of outfow of resources is remote, no provision or disclosure is made.

1.17 Cash and cash equivalent

Cash and cash equivalents comprise cash at bank and in hand and fxed deposits with banks with an original maturity of three months or less.


Mar 31, 2012

1.1 Basis of preparation

The financial statements are prepared on accrual basis under the historical cost convention, modified to include revaluation of certain assets, in accordance with applicable Accounting Standards (AS) specified in the Companies (Accounting Standards) Rules, 2006 and presentational requirements of the Companies Act, 1956. 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 revised Schedule VI to the Companies Act, 1956. 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 being a period within 12 months for the purposes of classification of assets and liabilities as current and non-current.

1.2 Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles in India (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities on the date of the financial statements and the result of operations during the year. Differences between actual results and estimates are recognised in the year in which the results are known or materialised. Examples of such estimates are estimated useful life of assets, classification of assets/liabilities as current or non-current in certain circumstances, provision for doubtful receivables and retirement benefits, etc. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in current and future periods.

1.3 Fixed assets

Fixed Assets are stated at cost or at revalued amounts less accumulated depreciation. Cost of fixed assets includes all incidental expenses and interest costs on borrowings, attributable to the acquisition of qualifying assets, upto the date of commissioning of assets.

Foreign currency exchange differences to the extent covered under AS-11 are capitalised as per the policy stated in note 2.11 below.

1.4 Depreciation / amortisation

Leasehold land and cost of leasehold improvements are amortised over the period of lease or their useful lives, whichever is shorter.

Depreciation on other fixed assets is provided using the straight line method at the rates prescribed under Schedule XIV to the Companies Act, 1956.

Fixed assets individually costing up to rupees five thousand are depreciated at the rate of 100 percent.

1.5 Impairment

The carrying amounts of the Company's assets are reviewed at each Balance Sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated as higher of its net selling price and value in use. An impairment loss is recognised whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount. Impairment losses are recognised in the Statement of Profit and Loss. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined net of depreciation or amortisation, had no impairment loss been recognised.

1.6 Borrowing costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets to the extent that they relate to the period till such assets are ready to be put to use. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to Statement of Profit and Loss.

1.7 Investments

Current investments are carried at the lower of cost and fair value. Long-term investments are carried at cost less diminution, other than temporary in value.

1.8 Inventories

Stores and spares parts are valued at cost or under, computed on weighted average basis Raw materials, work in progress and finished goods are valued at the lower of cost and net realisable value. Finished goods and work in progress include material cost and appropriate portion of manufacturing and other overheads. Cost is ascertained on a weighted average basis.

1.9 Revenue recognition

a) Sales of goods

Revenue from sale of products is recognised when the products are delivered against orders from customers in accordance with the contract terms, which coincides with the transfer of risks and rewards. Sales are stated inclusive of excise duty and net of rebates, trade discounts, sales tax and sales returns.

b) Dividend/Share of Profit from LLP

Dividend/Share of profit from LLP from investments is recognised when the right to receive dividend/share of profit is established.

c) Interest income

Interest income is recognised using the time-proportion method, based on interest rates implicit in the transaction.

d) Service income

Revenue from jobwork services is recognised on completion of services to be rendered.

1.10 Operating leases

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased asset are classified as operating lease. Operating lease charges are recognised as an expense in the Statement of Profit and Loss on a straight-line basis over the lease term.

1.11 Foreign exc8ange transactions and forward contracts

Foreign exchange transactions

i) Foreign currency transactions are accounted for at the exchange rate prevailing on the date of the transaction. All monetary foreign currency assets and liabilities are converted at the exchange rates prevailing at the date of the balance sheet. All exchange differences other than in relation to acquisition of fixed assets and other long term foreign currency monetary liabilities are dealt with in the Statement of Profit and Loss.

ii) In accordance with Accounting Standard 11, "Accounting for the effects of changes in foreign exchange rates", exchange differences arising in respect of long term foreign currency monetary items used for acquisition of depreciable capital asset, are added to or deducted from the cost of asset and are depreciated over the balance life of asset.

iii) In case of foreign exchange forward contracts taken for underlying transactions, and covered by Accounting Standard 11, "Accounting for the effects of changes in foreign exchange rates", the premium or discount is amortised as income or expense over the life of the contract. The exchange difference is calculated as the difference between the foreign currency amount of the contract translated at the exchange rate at the reporting date, or the settlement date where the transaction is settled during the reporting period, and the corresponding foreign currency amount translated at the later of the date of inception of the forward exchange contract and the last reporting date. Such exchange differences are recognised in the Statement of Profit and Loss in the reporting period in which the exchange rates change. Any profit or loss arising on the cancellation or renewal of such contracts is recognised as income or expense for the year.

1.12 Employee benefits

a) Short-term employee benefits

All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits. Benefits such as salaries, wages and bonus, etc., are recognised in the Statement of Profit and Loss in the period in which the employee renders the related service.

b) Post employment benefit

Defined contribution plan : The Company deposits the contributions for provident fund to the appropriate government authorities and these contributions are recognised in the Statement of Profit and Loss in the financial year to which they relate. Defined benefit plan : The Company's gratuity scheme is a defined benefit plan. The present value of the obligation under such defined benefit plan is determined based on actuarial valuation carried out by an independent actuary, using the Projected unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation is measured at the present value of the estimated future cash flows. The discount rates used for determining the present value of the obligation under defined benefit plans, is based on the market yields on Government securities as at the balance sheet date. Actuarial gains and losses are recognised immediately in the Statement of Profit and Loss.

c) Other long-term employee benefits

Entitlements to annual leave are recognised when they accrue to employees. Leave entitlements can be availed while in service or en-cashed at the time of retirement/ termination of employment, subject to a restriction on the maximum number of accumulation. The Company determines the liability for such accumulated leave entitlements on the basis of actuarial valuation carried out by an independent actuary at the year end.

1.13 Taxation

Income tax expense comprises current tax, deferred tax charge or credit. Current tax provision is made based on the tax liability computed after considering tax allowances and exemptions under the Income tax Act, 1961. The deferred tax charge or credit and the corresponding deferred tax liability and assets are recognised using the tax rates that have been enacted or substantively enacted on the balance sheet date. Deferred tax assets are recognised only to the extent where there is reasonable certainty that the assets can be realised in future; however, where there is unabsorbed depreciation or carried forward business loss under taxation laws, deferred tax assets are recognised only if there is a virtual certainty of realisation of such assets. Deferred tax assets are reviewed at each balance sheet date to reassess their realisability In accordance with the provisions of Section 115JAA of the Income-tax Act, 1961, the Company is allowed to avail credit equal to the excess of Minimum Alternate Tax (MAT) over normal income tax for the assessment year for which MAT is paid. MAT credit so determined can be carried forward for set-off for ten succeeding assessment years from the year in which such credit becomes allowable. MAT credit can be set-off only in the year in which the Company is liable to pay tax as per the normal provisions of the Income-tax Act, 1961 and such tax is in excess of MAT for that year. Accordingly, MAT credit entitlement is recognised only to the extent there is convincing evidence that the Company will pay normal tax during the specified period.

1.14 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 year. For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

1.15 Provisions and contingent liabilities

The Company recognises a provision when there is a present obligation as a result of a past event and it is more likely than not that there will be a outflow of resources embodying economic benefits to settle such obligations and the amount of such obligation can be reliably estimated. Provisions are not discounted to their present value and are determined based on the management's estimation of the outflow required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect current management estimates. Contingent liabilities are disclosed in respect of possible obligations that have arisen from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of future events, not wholly within the control of the Company. When there is an obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.


Mar 31, 2011

A. Basis of Accounting

The financial statements are prepared under the historical cost convention in accordance with applicable mandatory accounting standards and presentation requirements of the Companies Act, 1956. Accounting policies not specifically referred to otherwise are consistent with generally accepted accounting principles are followed by the company.

b. Fixed Assets

Fixed assets are stated at cost less accumulated depreciation. Cost of acquisition or construction is inclusive of freight and taxes. The capital expenditure is inclusive of direct expenses and proportionate indirect expenses attributable to the project and is inclusive of modification expenditure of plant and machinery. The expenses have been capitalised proportionately till the date of installation of plant and machinery and capital work in progress. Capital work in progress includes advances for capital equipments.

c. Depreciation

Depreciation is provided on straight line method at the applicable rates prescribed in Schedule XIV of the Companies Act, 1956. Except for items for which 100% depreciation rates are applicable, depreciation on assets added/disposed off during the year is provided on pro rata basis with reference to the date of addition/disposal.

d. Borrowing Cost

Borrowing cost 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 the cost of such assets. All other borrowing costs are charged to the revenue.

e. Investments

All Investments are considered as long term and are stated at cost. Provision for permanent diminution in value, in the perceptions of the Management, will only be considered at the appropriate time.

f. Inventories

Inventories are valued as under:

a) Raw Material At Weighted Average Cost

(Including stores & components)

b) Finished Goods

Valued at cost inclusive of manufacturing and other overhead or at realisable value whichever is lower.

c) Work in Progress

Valued at cost inclusive of manufacturing and other overhead or at realisable value whichever is lower.

d) Scrap

At Realisable Value

g. Foreign Currency Transaction

Foreign currency transactions are converted into Indian rupees at the rate of exchange prevailing on the date of the transaction. All exchange differences in respect of the foreign currency transactions are dealt with in the Profit & Loss Account. All foreign currency assets and liabilities, if any, as at the Balance Sheet date are restated at the applicable exchange rates prevailing at that date and difference is dealt with the Profit & Loss Account. All liabilities in foreign currency, for which forward cover has been taken, have been stated at the forward value i.e. the value at which the liability will be settled in future.

h. Employees Retirement Benefits

Contribution made towards Provident Fund (under the Employees Provident Fund and Miscellaneous Provisions Act, 1952) is charged to the Profit & Loss Account.

Gratuity Liability is charged to the Profit & Loss Account on the basis of actuarial valuation carried out by an approved Actuary as on 31st March of each Accounting Year.

Provision is made in Accounts for unutilized leaves due to the employees at the year end as per the leave encashment policy of the company.

i. Excise Duty

Excise Duty is accounted for when paid on the clearance of goods from bonded premises but is accounted for on accrual basis. Accordingly, provision for excise duty is made in the accounts for goods manufactured and lying in the bonded warehouse within the factory.

j. Revenue Recognition

Sale of goods is recognised at the point of dispatch of fnished goods to the customers. All expenses and revenue are accounted for on accrual basis .All export benefits are accounted for on accrual basis. Sale is accounted for net of returns. Returns are accounted for on receipt of the rejected material. Services include excise duty. Price escalation claims from customers and discounts from suppliers are accounted for in the year under audit only. Leave Travel Assistance to employees are accounted on payment basis.

k. Lease

i) Finance Lease

Finance lease, which effectively transfer substantially all the risks and benefits incidental to ownership of the leased assets to the company are capitalized at the fair market value. Lease payments are apportioned between the finance charges and reduction of lease liabilities so as to reflect a constant rate of interest on the remaining balance of the liability. Finance charges are charged to the Profit & Loss Account.

ii) Operating Lease

Operating lease payments are recognized as an expense in the Profit & Loss Account.

l. Research & Development

Expenditures of capital nature are debited to the respective Fixed Assets and depreciation at applicable rate and revenue expenditures are charged to Profit & Loss Account.

m. Miscellaneous Expenditure

The cost of development of new samples and other Deferred Revenue Expenditures are amortised over a period of five years.

Upto 31 March 2010, revenue expenses incurred on sample development were recognized as deferred revenue expenses which were written off in 5 equal yearly instalments (On pro-rata basis). However with effect from 1 April 2010, the policy has been reviewed and revenue expenditure on sample development incurred during the year has been charged to Profit & Loss Account.

The amount of deferred revenue expenditure recognized on account of Present Value of Interest differential due to

resetting of interest rates in terms of restructuring package approved by IFCI Limited shall be written off and charged to Profit & Loss Account to the extent of 6.25% p.a., as the same shall be amortized over a period of 16 years i.e. the total number of years stipulated by IFCI Limited for payment of Present Value of interest differential.

n. Taxation

i) Provision for current tax is made in accordance with and at the rates specified under the Income Tax Act, 1961 as amended.

ii) In accordance with Accounting Standard 22 - 'Accounting for taxes on Income', issued by the Institute of Chartered Accountants of India, the deferred tax for timing differences between the book and tax profits for the year is accounted for using the tax rates and law that have been enacted or substantively enacted as on the Balance Sheet date.

Deferred tax assets arising from the timing differences are recognized to the extent there is virtual certainty that the assets can be realized in future.

Net outstanding balance in deferred tax account is recognized as deferred tax liability/asset. The deferred tax account is used solely for reversing timing difference as and when crystallized.

o. Impairment of Assets

The carrying amount of assets, other than inventories, is reviewed at each Balance Sheet date to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount of the asset is estimated.

An impairment loss is recognized whenever the carrying amount of an asset or its cash generating units exceeds its recoverable amount. The recoverable amount is greater of the assets net selling price and the value in use which is determined based on the estimated future cash flow discounted to their present values. All impairment losses are recognized in compliance with Accounting Standard- 28.

An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount and recognized in compliance with Accounting Standard-28.

p Intangible Assets (Goodwill & Software)

Acquisition cost of Goodwill and Software is being amortised over a period of five years.

q. Expansion Project Expenses

All items of direct expenditures in relation to the expansion project being implemented by the company are treated as preoperative expenditure pending capitalization. Such expenditures are capitalized to various assets in the year of the commencement of the production of the expansion project. Depreciation on assets put to use for expansion as also on capitalized assets is charged in the year of commencement of commercial production.


Mar 31, 2010

(A) BASIS OF ACCOUNTING:

The financial statements are prepared under the historical cost convention in accordance with applicable mandatory accounting standards and presentation requirements of the Companies Act, 1956. Accounting policies not specifically referred to otherwise are consistent with generally accepted accounting principles are followed by the company.

(B) FIXED ASSETS:

Fixed assets are stated at cost less accumulated depreciation. Cost of acquisition or construction is inclusive of freight and taxes. The capital expenditure is inclusive of direct expenses and proportionate indirect expenses attributable to the project and is inclusive of modification expenditure of plant and machinery. The expenses have been capitalised proportionately till the date of installation of plant and machinery and capital work in progress. Capital work in progress includes advances for capital equipments.

(C) DEPRECIATION:

Depreciation is provided on straight line method at the applicable rates prescribed in Schedule XIV of the Companies Act, 1956. Except for items for which 100% depreciation rates are applicable, depreciation on assets added/disposed of during the year is provided on pro rate basis with reference to the date of addition/disposal.

(D) BORROWING COST:

Borrowing cost 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 the cost of such assets. All other borrowing costs are charged to the revenue.

(E) INVESTMENTS:

All Investments are considered as long term and are stated at cost. Provision for permanent diminution in value, in the perceptions of the Management, will only be considered at the appropriate time.

(F) INVENTORIES:

Inventories are valued as under:

a) Raw Material : At Weighted Average Cost (Including stores&components)

b) Finished Goods

Valued at cost inclusive of manufacturing and other overhead or at realisable value whichever is lower.

c) Work in Progress

: Valued at cost inclusive of manufacturing and other overhead or at realisable value whichever is lower.

d) Scrap

: At Realisable Value

(G) FOREIGN CURRENCY TRANSACTION:

Foreign currency transactions are converted into Indian rupees at the rate of exchange prevailing on the date of the transaction. All exchange differences in respect of the foreign currency transactions are dealt with in the Profit & Loss Account. All foreign currency assets and liabilities, if any, as at the Balance Sheet date are restated at the applicable exchange rates prevailing at that date and difference is dealt with the Profit & Loss Account. All liabilities in foreign currency, for which forward cover has been taken, have been stated at the forward value i.e. the value at which the liability will be settled in future.

(H) EMPLOYEES RETIREMENT BENEFITS:

Contribution made towards Provident Fund (under the Employees Provident Fund and Miscellaneous Provisions Act, 1952) is charged to the Profit & Loss Account.

Gratuity Liability is charged to the Profit & Loss Account on the basis of actuarial valuation carried out by an approved Actuary as on 1st March of each Accounting Year.

Provision is made in Accounts for unutilized leaves due to the employees at the year end as per the leave encashment policy of the company.

(I) EXCISE DUTY:

Excise Duty is accounted for when paid on the clearance of goods from bonded premises but is accounted for on accrual basis. Accordingly, provision for excise duty is made in the accounts for goods manufactured and lying in the bonded warehouse within the factory.

(J) REVENUE RECOGNITION:

Sale of Goods is recognised at the point of dispatch of finished goods to the customers. All expenses and revenue are accounted for on accrual basis. All export benefits are accounted for on accrual basis. Sale is accounted for net of returns. Returns are accounted for on receipt of the rejected material. Services include excise duty. Price escalation claims from customers and discounts from suppliers are accounted for in the year under audit only. Leave Travel Assistance to employees are accounted on payment basis.

(K) LEASE:

a) Finance Lease:

Finance lease, which effectively transfer substantially all the risks and benefits incidental to ownership of the leased assets to the company are capitalized at the fair market value. Lease payments are apportioned between the finance charges and reduction of lease liabilities so as to reflect a constant rate of interest on the remaining balance of the liability. Finance charges are charged to the Profit & Loss account.

b) Operating Lease:

Operating lease payments are recognized as an expense in the Profit & Loss account.

(L) RESEARCH & DEVELOPMENT:

Expenditures of capital nature are debited to the respective Fixed Assets and depreciation at applicable rate and revenue expenditures are charged to the Profit & Loss Account.

(M) MISCELLANEOUS EXPENDITURE:

The cost of development of new samples and other Deferred Revenue Expenditures are amortised over a period of five years.

The amount of deferred revenue expenditure recognized on account of Present Value of Interest differential due to resetting of interest rates in terms of restructuring package approved by IFCI Limited shall be written off and charged to the Profit & Loss account to the extent of 6.25% p.a., as the same shall be amortized over a period of 16 years i.e. the total number of years stipulated by IFCI Limited for payment of Present Value of interest differential.

(N) TAXATION:

i) Provision for current tax is made in accordance with and at the rates specified under the Income Tax Act, 1961 as amended.

ii) In accordance with Accounting Standard 22 - Accounting for taxes on Income, issued by the Institute of Chartered Accountants of India, the deferred tax for timing differences between the book and tax profits for the year is accounted for using the tax rates and law that have been enacted or substantively enacted as on the balance sheet date.

Deferred tax assets arising from the timing differences are recognized to the extent there is virtual certainty that the assets can be realized in future.

Net outstanding balance in deferred tax account is recognized as deferred tax liability/asset. The deferred tax account is used solely for reversing timing difference as and when crystallized.

(O) IMPAIRMENT OF ASSETS

The carrying amount of assets, other than inventories, is reviewed at each Balance Sheet date to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount of the asset is estimated.

An impairment loss is recognized whenever the carrying of an asset or its cash generating units exceeds its recoverable amount. The recoverable amount is greater of the assets net selling price and the value in use which is determined based on the estimated future cash flow discounted to their present values. All impairment losses are recognized in compliance with Accounting Standard-28.

An impairment loss is reversed if there has been a charge in the estimates used to determine the recoverable amount and recognized in compliance with Accounting Standard-28.

(P) INENGIBLE ASSETS (GOODWILL/SOFTWARE)

Acquisition cost of Goodwill and software is being amortised over a period of five years.

(Q) EXPANSION PROJECT EXPENSES

All items of direct expenditures in relation to the expansion project being implemented by the company are treated as preoperative expenditure pending capitalization. Such expenditures are capitalized to various assets in the year of the commencement of the production of the expansion project. Depreciation on assets put to use for expansion as also on capitalized assets is charged in the year of commencement of commercial production.



 
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