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Accounting Policies of JCT Electronics Ltd. Company

Mar 31, 2015

Terms of repayment

a) Rate of Interest

As per BIFR sanctioned scheme interest rate of 6% p.a. is payable to Financial Institutions and Indian Banks referred to in Note no. 3.2 above starting from 1.10.2008.

b) Repayment

i) Secured loans from Financial Institutions and Indian Banks are repayable in 33 quarterly instalments starting from Dec., 2008 to Mar., 2017 [Refer Note no. 28A (b)]

ii) Foreign Banks referred to in Note No. 3.1(1)(c) and 3(iv)(a) are to be setteled by way of OTS to be paid out of the sale proceeds of land & building at Mohali, which is yet to materialize.

Note - 3.5

An amount of Rs.750 lacs was paid to IFCI, Operating Agency, for distribution among Financial Institutions and Indian Banks as per BIFR orders and the same has been reduced from the amount of term loans and working capital term loans, a sum of Rs.27.99 lacs is still lying with the Operating Agency as undistributed amount.

Note - 3.7

As per BIFR orders no interest is being provided on the ICD. Interest accrued and due on ICD represents balance as on 31.03.2007. These ICDs are payable alongwith interest accued & due after the scheme period.

Note - 3.8

Non Convertible Debentures subscribed by M/s Escort Mutual Fund on 18.11.1996 for a period of 17 months and 30 days @ 21.5% p.a. which were redeemable on 23.11.99, will be now paid as per terms of the sanctioned scheme. As per BIFR order, no interest is being provided on these NCDs. Interest accrued and due on NCDs represents balance as on 31.03.2007. These NCDs are payable alongwith interest accrued & due after the scheme period.

Note - 7.1 :

The information required to be disclosed under the Micro, Small & Medium Enterprises Development Act, 2006 (MSMED), has been determined to the extent such parties have been identified on the basis of information available with the company. During the year ended 31st March, 2015, company has not received any confirmation or intimation from any party that it is covered under the Micro Small & Medium Enterprises Development Act, 2006 (MSMED).

Note - 7.2 :

An amount of Rs. 6,101.35 Lacs (Previous Year - Rs. 6,154.73 Lacs) receivable from Videocon Group is adjustable against trade payable to Videocon Group upon getting confirmation for same.

25. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

(i) The financial statements have been prepared in accordance with Generally Accepted Accounting Principles ("GAAP") in India under the historical cost convention on accrual basis and are in accordance with the applicable accounting standards as prescribed under Section 133 of the Companies Act, 2013 ('Act') read with Rule 7 of the Companies (Accounts) Rules, 2014, the provisions of the Act (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). These Accounting policies have been consistently applied, except where a newly issued Accounting Standard is initially adopted by the company.

(ii) As required & mandated by relevant guidelines prescribed under Companies Act, 2013, Company has prepared its financials as per Schedule III. All assets and liabilities have been classified as current or non-current as per the Company's normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has considered a period of twelve months for the purposes of classification of assets and liabilities as current and noncurrent.

(iii) VALUATION OF INVENTORIES:

(a) Finished goods are valued at lower of cost or net realizable value. In the case of finished goods, cost is determined by taking material, labour and related factory overheads including depreciation and fixed production overheads arrived at by the cost sheet of the last month of the financial year. Relevant proportionate amount of excise duty is also added. Fixed overheads are allocated for inclusion in the cost of conversion on the basis of normal levels of production capacity or actual production whichever is higher.

(b) Raw materials, stores and spares have been valued at cost by using weighted average basis. Cost includes purchase price, freight and other incidental expenses incurred to bring the material at the present location.

(c) Goods in process are valued at raw material cost incurred up to the stage of production plus conversion cost apportioned on the basis of raw material cost of goods in process.

(d) Loose tools and stock in transit have been valued at cost. Cost includes purchase price, freight and other incidental expenses incurred to bring the material at the present location.

(e) As per past practice, no value is placed on stock of scrap as the cost of such scrap material is nil. The estimated net realizable/usable value is not accurately ascertainable.

(iv) DEPRECIATION

(a) Depreciation on fixed assets is provided on the straight-line method in accordance with Schedule II to the Companies Act, 2013. However, as per rehabilitation scheme approved by Board for Industrial and Financial Reconstruction (BIFR), in respect of plant & machinery (including electrical installation, factory equipment, storage & water system) the estimated useful life of assets has, with retrospective effect, been considered as 30 years. The aforesaid Plant & Machinery does not include electrical fan, cooler, refrigerator, A.C. and other electrical appliances given to the employee's on which depreciation rates has been charged as per the useful lives as prescribed under Part C of Schedule II of the Companies Act 2013. The rate of depreciation on plant & machinery determined on the basis of life of 30 years are lower than rates prescribed in Schedule II which are based on 15 Years. The rate of depreciation as per Straight Line Method is being used is 3.333% as against rate of 6.67% mentioned in Schedule II of Companies Act, 2013. Hence the useful lives for these assets are different from the useful lives as prescribed under Part C of Schedule II of the Companies Act 2013.

(b) In the case of purchase/sale of asset, depreciation is computed on pro rata basis from the date of such addition or as the case may be, up to the date on which such asset has been sold, discarded, demolished or destroyed.

(c) Intangible assets are amortized over their respective individual estimated useful lives on a straight-line basis within a parameters of "Accounting Standard 26" as prescribed under Section 133 of the Companies Act, 2013 ('Act') read with Rule 7 of the Companies (Accounts) Rules, 2014, commencing from the date the asset is available to the Company for its use.

Depreciation and amortization methods, useful lives and residual values are reviewed periodically, including at each financial year end.

(v) FOREIGN CURRENCY TRANSACTION

Foreign exchange transactions are recorded at the rate of exchange prevailing on the date of transaction. Accordingly, exchange differences arising on foreign exchange transactions settled during the period are recognized in the statement of profit and loss of the period.

Monetary current assets and monetary current liabilities that are denominated in foreign currency are translated at the exchange rate prevalent at the date of the balance sheet. The resulting difference is also recorded in the Statement of profit & loss.

(vi) ACCOUNTING FOR FIXED ASSETS

Fixed assets are stated at their original cost including incidental expenses related to acquisition and installation less accumulated depreciation. The costs of assets under installation or under construction as at the balance sheet date are shown as capital work in process. There has been no revaluation of fixed assets carried out during the year.

(vii) REVENUE RECOGNITION

(a) Sales are recognized when significant risks and rewards of goods are transferred to the customers and is stated net of returns, trade and volume discounts, rebates and sales tax but includes excise duties.

(b) Dividend Income is recognized when the right to receive is established.

(c) Interest revenue is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

(viii) EMPLOYEE BENEFITS

(a) Short Term Employee Benefits

All employee benefits falling due within twelve months of rendering the service are classified as short term employee benefits. The benefits like salaries, wages, short term compensated absences etc. and the expected cost of bonus, ex-gratia are recognized in the period in which the employee renders the related service.

(b) Post-Employment Benefits

(i) Defined Contribution Plans

Defined Contribution Plans are provident fund scheme, officers' superannuation scheme, employee's state insurance and government pension fund scheme for eligible employees. The company's contribution to the Defined Contribution Plans is recognized in the Statement of profit & loss in the financial year to which they relate.

(ii) Defined Benefit Plans

The employee's gratuity fund scheme managed by LIC is the Company's defined benefit plans. Wherever applicable, the present value of the obligation under such defined benefit plans are determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes 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 plan, are based on the market yields on Government securities as at the balance sheet date, having maturity periods approximating to the terms of related obligations.

Actuarial gains and losses are recognized immediately in the Statement of Profit & Loss.

In case of funded plans, the fair value of the plan assets is reduced from the gross obligation under the defined benefit plans to recognize the obligation or assets on the net basis.

Gains or losses on the curtailment or settlement of any defined benefit plan are recognized when the curtailment or settlement occurs. Past service cost is recognized as an expense on a straight-line basis over the average period until the benefits become vested.

(c) Other Long-term Employee Benefits

The obligations for long term employee benefits such as long term compensated leave or encashment of leave accrued up to the specified period only at the time of retirement are recognized in the similar manner as in the case of defined benefit plans as mentioned in (b) (ii) above. The provision for leave encashment is accrued and provided for, based on the actuarial valuation made by an independent Actuary as on the Balance Sheet date.

(ix) ACCOUNTING FOR INVESTMENT

Investments are classified into current and long term investments. Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long term investments. Current investments are stated at the lower of cost and fair value determined on an individual basis. A provision for decline in value of Long Term Investments is made only when the extent of loss is determinable and diminution in value, in the opinion of the Management, is permanent.

(x) INTANGIBLE ASSETS

Intangible Assets & related expenditure are recognized as per criteria specified in Accounting Standard-26 on "Intangible Assets" as prescribed under Section 133 of the Companies Act, 2013 ('Act') read with Rule 7 of the Companies (Accounts) Rules, 2014 and accounted for as under :

(a) Intangible Assets are recognized when it is probable that the future economic benefits that are attributable to the asset will flow to the enterprise and the cost of the asset can be measured reliably.

(b) The cost of internally generated products is the sum of the expenditure incurred from the time when the product first met the recognition criteria for an intangible asset in development stage. The expenditure incurred during research phase is directly charged to Statement of Profit & Loss. The cost of product development comprises its raw material cost, salary & wages, Stores & spares, including any import duties and other taxes (other than those subsequently recoverable by the enterprise from the taxing authorities) and any directly attributable expenditure on making the product ready for its use.

(c) Intangible assets are recorded at the consideration paid for acquisition of such assets and are carried at cost less accumulated amortization and impairment.

(xi) EXCISE DUTY

Excise duty is accounted for on the basis of removal of goods as well as provision made for goods lying as closing stock.

(xii) DEFERRED TAXATION

Deferred tax is the effect of timing differences, being the difference between taxable incomes and accounting income that originates in one period and is capable of reversal in one or more subsequent periods. On prudent grounds, deferred tax liabilities, when they arise, are provided without any exceptions but deferred tax assets are calculated on the accumulated timing differences as at the end of the year and are based on tax rates and laws in force on the balance sheet date and are recognized and carried forward only to the extent that there is a virtual certainty of realization against future taxable income.

(xiii) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

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

(xiv) LEASES

Assets taken on lease under which the lessor effectively retains all significant risks & rewards of ownership have been classified as operating lease. Lease payments made under an operating lease are recognized as expense in the Statement of profit & loss on straight line basis over the primary term of the lease as mentioned in the lease agreement.

(xv) BORROWING COSTS

Borrowing costs that are specifically attributable to the acquisition, construction or production of a qualifying asset are capitalized as part of cost of such asset till the asset is ready for its intended use. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use or sale. All other borrowing costs are recognized as an expense in the period in which they are incurred.

(xvi) EARNINGS PER SHARE

In determining earnings per share, the Company considers the net profit after tax and includes the post-tax effect of any extraordinary/ exceptional item. The number of shares used in computing basic earnings per share comprises of the weighted average number of shares outstanding during the period. The number of shares used in computing diluted earnings per share comprises of the weighted average shares considered for deriving basic earnings per share, and also the weighted average number of equity shares that could have been issued on the conversion of all dilutive potential equity shares.

(xvii) CASH FLOW STATEMENTS

Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from principle revenue generating, investing and financing activities of the Company are segregated.






Mar 31, 2014

A) Equity Shares : The company has only one class of equity shares having face value of Rs.1/- each. Each holder of equity share is entitled to one vote per share.

b) Share holders are entitled to dividend, if any, declared by the company. The dividend is payable in Indian rupees. The dividend, if any, declared by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

c) Re-payment of equity share capital shall be made at the time of winding-up of the company. The company can also partly buy back equity as and when decided by the company in accordance with the provision of Companies Act, 1956.

Note - 1.4

Equity shares held by holding company, ultimate holding company, subsidiaries of the holding company, Associates of the holding company, subsidiary of the ultimate holding company and/or Associates of the ultimate holding company

a) Term loans (secured) from the Financial Institutions and Indian Banks are secured by an equitable mortgage on all the immovable properties at Mohali & Vadodara and hypothecation of the movable assets of the company, present and future, save and except prior charges on specified movables in favour of the bankers for working capital requirements.

b) Working Capital term loans from Indian Banks and working capital facilities from foreign banks are secured by first charge by way of hypothecation of raw materials, goods-in-process, finished goods, stores and spares, book debts and receivables of the Company, present and future and second charge on the immovable properties at Mohali and Vadodara.

c) In terms of the BIFR sanctioned scheme, outstanding principal amount of the working capital facilities from banks (other than banks covered under OTS as per sanctioned scheme) as on 31st March, 2007 have been converted into working capital term loans. These will additionaly be covered by a pari-pasu charge on the fixed assets along with the term lenders, after completion of documentation in this regard.

d) Principal amount of working capital from banks covered under OTS have been shown under working capital facilities. As mentioned in the sanctioned scheme [Refer note no. 27(A) (c)] foreign banks are to be paid by way of one time settelment (OTS)

Note - 3.3 : Terms of repayment

a) Rate of Interest

As per BIFR sanctioned scheme interest rate of 6% p.a. is payable to Financial Institutions and Indian Banks referred to in Note no. 3.2 above starting from 1.10.2008.

b) Repayment

i) Secured loans from Financial Institutions and Indian Banks are repayable in 33 quarterly instalments starting from Dec., 2008 to Mar., 2017 [Refer Note no. 28A (b)]

ii) Foreign Banks referred to in Note No. 3.1(1)(c) and 3(iv)(a) are to be setteled by way of OTS to be paid out of the sale proceeds of land & building at Mohali, which is yet to materialize.

Note - 3.4 : Details of default in Repayments

The company has defaulted in payment of instalments for the period 01.04.2011 to 31.03.2012 as follows :

Note - 3.5

An amount of Rs.750 lacs was paid to IFCI, Operating Agency, for distribution among Financial Institutions and Indian Banks as per BIFR orders. A sum of Rs.27.99 lacs is still lying with the Operating Agency as undistributed amount and the same has been reduced from the amount of term loans and working capital term loans.

Note - 3.7

As per BIFR orders no interest is being provided on the ICD. Interest accrued and due on ICD represents balance as on 31.03.2007. These ICDs are payable alongwith interested accued & due after the scheme period.

Note - 3.8

Non Convertible Debentures subscribed by M/s Escort Mutual Fund on 18.11.1996 for a period of 17 months and 30 days @ 21.5% p.a. which were redeemable on 23.11.99, will be now paid as per terms of the sanctioned scheme. As per BIFR order, no interest is being provided on these NCDs. Interest accrued and due on NCDs represents balance as on 31.03.2007. These NCDs are payable alongwith interest accrued & due after the scheme period.

The information required to be disclosed under the Micro, Small & Medium Enterprises Development Act, 2006 (MSMED), has been determined to the extent such parties have been identified on the basis of information available with the company. During the year ended 31st March, 2014, company has not received any confirmation or intimation from any party that it is covered under the Micro, Small & Medium Enterprises Development Act, 2006 (MSMED).

Rs. 15.39 lacs (Previous Year 15.39 Lacs) is payable to M/s H. K. Industries. This party is registered under the said Act to whom the company owes an amount for more than 45 days as at the Balance Sheet date which are carrying since 31st March, 2007. Dues of the creditors as at 31st March, 2007 are to be addressed as per terms of sanctioned scheme of BIFR. However, in respect of balances outstanding as at 31st March, 2007, no provision for interest has been made in view of the BIFR order passed under the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA), wherein it is stated that no interest on outstanding amounts due to creditors standing as on the cut off date i.e. 31st March, 2007, shall be payable. Besides, there are no transactions with these parties in the reporting year. In view of above, the information required under the Micro, Small & Medium Enterprises Development Act, 2006 (MSMED), has not been furnished.

The information required to be disclosed under the Micro, Small & Medium Enterprises Development Act, 2006 (MSMED), has been determined to the extent such parties have been identified on the basis of information available with the company. During the year ended 31st March, 2014, company has not received any confirmation or intimation from any party that it is covered under the Micro Small & Medium Enterprises Development Act, 2006 (MSMED).

Note - 7.2 :

An amount of Rs. 6,154.73 Lacs (Previous Year - Rs. 5,648.35 Lacs) receivable from Videocon Group. The same is adjustable against trade payable to Videocon Group.

The current maturities includes defaults in payment of instalments of Rs. 6,977.43 Lacs (Previous Year Rs. 4,105.33 Lacs) as per details given in Note No. 3.4

Note - 8.2

Interest accrued but not due is on Term Loans from Financial Institutions & Indian Banks and Working Capital Term Loans from Indian Banks in view of BIFR order dated 12.11.2008.

a) Finished goods have been valued at lower of cost or net realizable value. In the case of finished goods, cost is determined by taking material, labour and related factory overheads including depreciation, excise duly and fixed production overheads arrived at by the cost sheet of the last month of the financial year. Fixed overheads are allocated for inclusion in the cost of conversion on the basis of normal levels of production capacity or actual production whichever is higher.

b) Raw materials, stores and spares have been valued at cost by using weighted average basis.

c) Stock in transit have been valued at cost

d) As per past practice, no value is placed on stock of scrap since its estimated net realizable/usable value is not accurately ascertainable.

Note - 24.1

Exchange differences arising on foreign currency transactions relating to revenue items have been recognised as income or expense in the period in which they arise. During the current year, there was a Profit of Rs. 44.14 Lacs (Previous year loss of Rs.115.60 Lacs) which has been shown as part of other income/expense.

(i) The financial statements have been prepared in accordance with Generally Accepted Accounting Principles ("GAAP") in India under the historical cost convention on accrual basis and are in accordance with the applicable accounting standards issued by Ministry of Corporate Affairs, Government of India and as prescribed in the Companies (Accounting Standards) Rules, 2006. These Accounting policies have been consistently applied, except where a newly issued accounting standard is initially adopted by the company. Management evaluates the effect of accounting standards issued on a going basis and ensures that they are adopted as mandated by Companies Act, 1956.

(ii) As required & mandated by relevant guidelines prescribed under Companies Act, 1956, Company has prepared its financials as per Revised Schedule VI. 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 realization in cash and cash equivalents, the Company has considered a period of twelve months for the purposes of classification of assets and liabilities as current and non-current.

(iii) VALUATION OF INVENTORIES:

a) Finished goods are valued at lower of cost or net realizable value. In the case of finished goods, cost is determined by taking material, labour and related factory overheads including depreciation and fixed production overheads arrived at by the cost sheet of the last month of the financial year. Relevant proportionate amount of excise duty is also added. Fixed overheads are allocated for inclusion in the cost of conversion on the basis of normal levels of production capacity or actual production whichever is higher.

b) Raw materials, stores and spares have been valued at cost by using weighted average basis. Cost includes purchase price, freight and other incidental expenses incurred to bring the material at the present location.

c) Goods in process are valued at raw material cost incurred up to the stage of production plus conversion cost apportioned on the basis of raw material cost of goods in process.

d) Loose tools and stock in transit have been valued at cost. Cost includes purchase price, freight and other incidental expenses incurred to bring the material at the present location.

e) As per past practice, no value is placed on stock of scrap as the cost of such scrap material is nil. The estimated net realizable/usable value is not accurately ascertainable.

(iv) DEPRECIATION

a) Depreciation on fixed assets is provided on the straight-line method in accordance with Schedule XIV to the Companies Act, 1956. However, as per rehabilitation scheme approved by Board for Industrial and Financial Reconstruction (BIFR), in respect of plant & machinery (including electrical installation, factory equipment, storage & water system) the estimated useful life of assets has, with retrospective effect, been considered as 30 years. The aforesaid Plant & Machinery does not include electrical fan, cooler, refrigerator, A.C. and other electrical appliances given to the employee''s on which depreciation rates has been charged as per the rates prescribed by Schedule XIV of the Companies Act. The rate of depreciation on plant & machinery determined on the basis of life of 30 years are lower than rates prescribed in Schedule XIV. The rate of depreciation as per Straight Line Method is being used is 3.333% as against rate of 4.75% mentioned in Schedule XIV of Companies Act, 1956.

On indigenous vehicles/cycles, depreciation is provided on the written down value method as per rates prescribed and in accordance with the Income Tax Act, 1961. The rate of depreciation charged on vehicles is 15% p.a.

b) In the case of purchase/sale depreciation is charged for the full month in which purchase /sale is made.

c) 100% depreciation is charged in the year of purchase on assets equal to or less than Rs. 5,000.

(v) FOREIGN CURRENCY TRANSACTION

Foreign exchange transactions are recorded at the rate of exchange prevailing on the date of transaction. Accordingly, exchange differences arising on foreign exchange transactions settled during the period are recognized in the statement of profit and loss of the period.

Monetary current assets and monetary current liabilities that are denominated in foreign currency are translated at the exchange rate prevalent at the date of the balance sheet. The resulting difference is also recorded in the Statement of profit & loss.

(vi) ACCOUNTING FOR FIXED ASSETS

Fixed assets are stated at their original cost including incidental expenses related to acquisition and installation less accumulated depreciation. The costs of assets under installation or under construction as at the balance sheet date are shown as capital work in process. There has been no revaluation of fixed assets carried out during the year.

(vii) REVENUE RECOGNITION

a) Sales are recognized when significant risks and rewards of goods are transferred to the customers and is stated net of returns, trade and volume discounts, rebates and sales tax but includes excise duties.

b) Dividend Income is recognized when the right to receive is established.

c) Interest revenue is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

(viii) EMPLOYEE BENEFITS

a) Short Term Employee Benefits

All employee benefits falling due within twelve months of rendering the service are classified as short term employee benefits. The benefits like salaries, wages, short term compensated absences etc. and the expected cost of bonus, ex-gratia are recognized in the period in which the employee renders the related service.

b) Post-Employment Benefits

(i) Defined Contribution Plans

Defined Contribution Plans are provident fund scheme, officers'' superannuation scheme, employee''s state insurance and government pension fund scheme for eligible employees. The company''s contribution to the Defined Contribution Plans is recognized in the Statement of profit & loss in the financial year to which they relate.

(ii) Defined Benefit Plans

The employee''s gratuity fund scheme managed by LIC is the Company''s defined benefit plans. Wherever applicable, the present value of the obligation under such defined benefit plans are determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes 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 plan are based on the market yields on Government securities as at the balance sheet date having maturity periods approximating to the terms of related obligations.

Actuarial gains and losses are recognized immediately in the Statement of Profit & Loss.

In case of funded plans, the fair value of the plan assets is reduced from the gross obligation under the defined benefit plans to recognize the obligation or assets on the net basis.

Gains or losses on the curtailment or settlement of any defined benefit plan are recognized when the curtailment or settlement occurs. Past service cost is recognized as expense on a straight-line basis over the average period until the benefits become vested.

c) Other Long-term Employee Benefits

The obligations for long term employee benefits such as long term compensated leave or encashment of leave accrued up to the specified period only at the time of retirement are recognized in the similar manner as in the case of defined benefit plans as mentioned in (b) (ii) above. The provision for leave encashment is accrued and provided for, based on the actuarial valuation made by an independent Actuary as on the Balance Sheet date.

(ix) ACCOUNTING FOR INVESTMENT

Investments are classified into current and long term investments. Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long term investments. Current investments are stated at the lower of cost and fair value determined on an individual basis. A provision for decline in value of Long Term Investments is made only when the extent of loss is determinable and diminution in value, in the opinion of the Directors, is permanent.

(x) INTANGIBLE ASSETS

Intangible Assets & related expenditure are recognized as per criteria specified in Accounting Standard-26 on "Intangible Assets" issued by the Institute of Chartered Accountants of India and accounted for as under :-

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

b) The cost of internally generated products is the sum of the expenditure incurred from the time when the product first met the recognition criteria for an intangible asset in development stage. The expenditure incurred during research phase is directly charged to Statement of Profit & Loss. The cost of product development comprises its raw material cost, salary & wages, Stores & spares, including any import duties and other taxes (other than those subsequently recoverable by the enterprise from the taxing authorities) and any directly attributable expenditure on making the product ready for its use.

c) Internally developed new products for commercial use: over a period of 120 months from the month subsequent to the month in which it got activated for commercial use.

(xi) EXCISE DUTY

Excise duty is accounted for on the basis of removal of goods as well as provision made for goods lying as closing stock.

(xii) DEFERRED TAXATION

Deferred tax is the effect of timing differences, being the difference between taxable incomes and accounting income that originates in one period and is capable of reversal in one or more subsequent periods. On prudent grounds, deferred tax liabilities, when they arise, are provided without any exceptions but deferred tax assets are calculated on the accumulated timing differences as at the end of the year and are based on tax rates and laws in force on the balance sheet date and are recognized and carried forward only to the extent that there is a virtual certainty of realization against future taxable income.

(xiii) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

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

(xiv) LEASES

Assets taken on lease under which the lessor effectively retains all significant risks & rewards of ownership have been classified as operating lease. Lease payments made under an operating lease are recognized as expense in the Statement of profit & loss on straight line basis over the primary term of the lease as mentioned in the lease agreement.

(xv) BORROWING COSTS

Borrowing costs that are specifically attributable to the acquisition, construction or production of a qualifying asset are capitalized as part of cost of such asset till the asset is ready for its intended use. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use or sale. All other borrowing costs are recognized as an expense in the period in which they are incurred.

(xvi) EARNINGS PER SHARE

In determining earnings per share, the Company considers the net profit after tax and includes the post-tax effect of any extraordinary/ exceptional item. The number of shares used in computing basic earnings per share comprises of the weighted average number of shares outstanding during the period. The number of shares used in computing diluted earnings per share comprises of the weighted average shares considered for deriving basic earnings per share, and also the weighted average number of equity shares that could have been issued on the conversion of all dilutive potential equity shares.

(xvii) CASH FLOW STATEMENTS

Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from principle revenue generating, investing and financing activities of the Company are segregated.


Mar 31, 2013

(i) The financial statements have been prepared in accordance with Generally Accepted Accounting Principles ("GAAP") in India under the historical cost convention on accrual basis and are in accordance with the applicable accounting standards issued by Ministry of Corporate Affairs, Government of India and as prescribed in the Companies (Accounting Standards) Rules, 2006. These Accounting policies have been consistently applied, except where a newly issued accounting standard is initially adopted by the company. Management evaluates the effect of accounting standards issued on a going basis and ensures that they are adopted as mandated by Companies Act, 1956.

(ii) As required & mandated by relevant guidelines prescribed under Companies Act, 1956, Company has prepared its financials as per Revised Schedule VI. 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 realization in cash and cash equivalents, the Company has considered a period of twelve months for the purposes of classification of assets and liabilities as current and non-current.

(iii) VALUATION OF INVENTORIES:

(a) Finished goods have been valued at lower of cost or net realizable value. In the case of finished goods, cost is determined by taking material, labour and related factory overheads including depreciation and fixed production overheads arrived at by the cost sheet of the last month of the financial year. Relevant proportionate amount of excise duty is also added. Fixed overheads are allocated for inclusion in the cost of conversion on the basis of normal levels of production capacity or actual production whichever is higher.

(b) Raw materials, stores and spares have been valued at cost by using weighted average basis. Cost includes purchase price, freight and other incidental expenses incurred to bring the material at the present location.

(c) Goods in process have been valued at raw material cost incurred up to the stage of production plus conversion cost apportioned on the basis of raw material cost of goods in process.

(d) Loose tools and stock in transit have been valued at cost. Cost includes purchase price, freight and other incidental expenses incurred to bring the material at the present location.

(e) As per past practice, no value is placed on stock of scrap as the cost of such sGrap material is nil. The estimated net realizable/usable value is not accurately ascertainable.

(iv) DEPRECIATION

(a) Depreciation on fixed assets is provided on the straight-line method in accordance with Schedule XIV to the Companies Act, 1956. However, as per rehabilitation scheme approved by Board for Industrial and Financial Reconstruction (BIFR), in respect of plant & machinery (including electrical installation, factory equipment, storage & water system) the estimated useful life of assets has, with retrospective effect, been considered as 30 years. The aforesaid Plant & Machinery does not include electrical fan, cooler, refrigerator, A.C. and other electrical appliances given to the employee''s on which depreciation rates has been charged as per the rates prescribed by Schedule XIV of the Companies Act. The rate of depreciation on plant & machinery determined on the basis of life of 30 years are lower than rates prescribed in Schedule XIV. The rate of depreciation as per Straight Line Method is being used is 3.333% as against rate of 4.75% mentioned in Schedule XIV of Companies Act, 1956.

On indigenous vehicles/cycles, depreciation is provided on the written down value method as per rates prescribed and in accordance with the Income Tax Act, 1961. The rate of depreciation charged on vehicles is 15% p.a.

(b) In the case of purchase/sale depreciation is charged for the full month in which purchase /sale is made.

(c) 100% depreciation is charged in the year of purchase on assets equal to or less than Rs. 5,000.

(v) FOREIGN CURRENCY TRANSACTION

Foreign exchange transactions are recorded at the rate of exchange prevailing on the date of transaction. Accordingly, exchange differences arising on foreign exchange transactions settled during the period are recognized in the statement of profit and loss of the period.

Monetary current assets and monetary current liabilities that are denominated in foreign currency are translated at the exchange rate prevalent at the date of the balance sheet. The resulting difference is also recorded in the Statement of profit & loss.

(vi) ACCOUNTING FOR FIXED ASSETS

Fixed assets are stated at their original cost including incidental expenses related to acquisition and installation less accumulated depreciation. The costs of assets under installation or under construction as at the balance sheet date are shown as capital work in process. There has been no revaluation of fixed assets carried out during the year.

(vii) REVENUE RECOGNITION

(a) Sales are recognized when significant risks and rewards of goods are transferred to the customers and is stated net of returns, trade and volume discounts, rebates and sales tax but includes excise duties.

(b) Dividend Income is recognized when the right to receive is established.

(c) Interest revenue is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

(viii) EMPLOYEE BENEFITS

(a) Short Term Employee Benefits

All employee benefits falling due within twelve months of rendering the service are classified as short term employee benefits. The benefits like salaries, wages, short term compensated absences etc. and the expected cost of bonus, ex-gratia are recognized in the period in which the employee renders the related service.

(b) Post-Employment Benefits

(i) Defined Contribution Plans

Defined Contribution Plans are provident fund scheme, officers'' superannuation scheme, employee''s state insurance and government pension fund scheme for eligible employees. The company''s contribution to the Defined Contribution Plans is recognized in the Statement of profit & loss in the financial year to which they relate.

(ii) Defined Benefit Plans

The employee''s gratuity fund scheme managed by LIC is the Company''s defined benefit plans. Wherever applicable, the present value of the obligation under such defined benefit plans are determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes 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 plan, are based on the market yields on Government securities as at the balance sheet date, having maturity periods approximating to the terms of related obligations.

Actuarial gains and losses are recognized immediately in the Statement of Profit & Loss.

In case of funded plans, the fair value of the plan assets is reduced from the gross obligation under the defined benefit plans to recognize the obligation or assets on the net basis.

Gains or losses on the curtailment or settlement of any defined benefit plan are recognized when the curtailment or settlement occurs. Past service cost is recognized as expense on a straight-line basis over the average period until the benefits become vested.

(c) Other Long-term Employee Benefits

The obligations for long term employee benefits such as long term compensated leave or encashment of leave accrued up to the specified period only at the time of retirement are recognized in the similar manner as in the case of defined benefit plans as mentioned in (b) (ii) above. The provision for leave encashment is accrued and provided for, based on the actuarial valuation made by an independent Actuary as on the Balance Sheet date.

(ix) ACCOUNTING FOR INVESTMENT

Investments are classified into current and long term investments. Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long term investments. Current investments are stated at the lower of cost and fair value determined on an individual basis. A provision for decline in value of Long Term Investments is made only when the extent of loss is determinable and diminution in value, in the opinion of the Directors, is permanent.

(x) INTANGIBLE ASSETS

Intangible Assets & related expenditure are recognized as per criteria specified in Accounting Standard-26 on "Intangible Assets" issued by the Institute of Chartered Accountants of India and accounted for as under:-

(a) Intangible Assets are recognized when it is probable that the future economic benefits that are attributable to the asset will flow to the enterprise and the cost of the asset can be measured reliably.

(b) The cost of internally generated products is the sum of the expenditure incurred from the time when the product first met the recognition criteria for an intangible asset in development stage. The expenditure incurred during research phase is directly charged to Statement of Profit & Loss. The cost of product development comprises its raw material cost, salary & wages, Stores & spares, including any import duties and other taxes (other than those subsequently recoverable by the enterprise from the taxing authorities) and any directly attributable expenditure on making the product ready for its use.

(c) Acquisition of software is amortized on a straight line basis over a period of five years starting from the year of capitalization.

(d) Internally developed new products for commercial use: over a period of 120 months from the month subsequent to the month in which it got activated for commercial use.

(xi) EXCISE DUTY

Excise duty has been accounted for on the basis of removal of goods as well as provision made for goods lying as closing stock.

(xii)DEFERRED TAXATION

Deferred tax is the effect of timing differences, being the difference between taxable incomes and accounting income that originates in one period and is capable of reversal in one or more subsequent periods. On prudent grounds, deferred tax liabilities, when they arise, are provided without any exceptions but deferred tax assets are calculated on the accumulated timing differences as at the end of the year and are based on tax rates and laws in force on the balance sheet date and are recognized and carried forward only to the extent that there is a virtual certainty of realization against future taxable income.

(xiii)PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

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

(xiv)LEASES

Assets taken on lease under which the lessor effectively retains all significant risks & rewards of ownership have been classified as operating lease. Lease payments made under an operating lease are recognized as expense in the Statement of profit & loss on straight line basis over the primary term of the lease as mentioned in the lease agreement.

(xv) BORROWING COSTS

Borrowing costs that are specifically attributable to the acquisition, construction or production of a qualifying asset are capitalized as part of cost of such asset till the asset is ready for its intended use. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use or sale. All other borrowing costs are recognized as an expense in the period in which they are incurred.

(xvi) EARNINGS PER SHARE

In determining earnings per share, the Company considers the net profit after tax and includes the post-tax effect of any extraordinary/ exceptional item. The number of shares used in computing basic earnings per share comprises of the weighted average number of shares outstanding during the period. The number of shares used in computing diluted earnings per share comprises of the weighted average shares considered for deriving basic earnings per share, and also the weighted average number of equity shares that could have been issued on the conversion of all dilutive potential equity shares.

(xvii)CASH FLOW STATEMENTS

Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from principle revenue generating, investing and financing activities of the Company are segregated.


Mar 31, 2012

(i) The financial statements have been prepared in accordance with Generally Accepted Accounting Principles ("GAAP") in India under the historical cost convention on accrual basis and are in accordance with the applicable accounting standards issued by Ministry of Corporate Affairs, Government of India and as prescribed in the Companies (Accounting Standards) Rules, 2006. These Accounting policies have been consistently applied, except where a newly issued accounting standard is initially adopted by the company. Management evaluates the effect of accounting standards issued on a going basis and ensures that they are adopted as mandated by Companies Act, 1956.

(ii) As required & mandated by relevant guidelines prescribed under Companies Act, 1956, Company has prepared its financials as per Revised Schedule VI. 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 realization in cash and cash equivalents, the Company has considered a period of twelve months for the purposes of classification of assets and liabilities as current and non-current.

(iii) VALUATION OF INVENTORIES

(a) Finished goods have been valued at lower of cost or net realizable value. In the case of finished goods, cost is determined by taking material, labour and related factory overheads including depreciation, excise duty and fixed production overheads arrived at by the cost sheet of the last month of the financial year. Fixed overheads are allocated for inclusion in the cost of conversion on the basis of normal levels of production capacity or actual production whichever is higher.

(b) Raw materials, stores and spares have been valued at cost by using weighted average basis.

(c) Goods in process have been valued at raw material cost incurred up to the stage of production plus conversion cost apportioned on the basis of raw material cost of goods in process.

(d) Loose tools and stock in transit have been valued at cost.

(e) As per past practice, no value is placed on stock of scrap since its estimated net realizable/usable value is not accurately ascertainable.

(iv) DEPRECIATION

(a) Depreciation on fixed assets is provided on the straight-line method in accordance with Schedule XIV to the Companies Act, 1956. However, as per rehabilitation scheme approved by Board tor Industrial and Financial Reconstruction (BIFR), in respect of plant & machinery (including electrical installation, factory equipment, storage & water system), the estimated useful life of assets has, with retrospective effect, been considered as 30 years. However, the rate of depreciation on plant & machinery are lower than rates prescribed in Schedule XIV. The rate of depreciation as per Straight Line Method is being used is 3.333% as against rate of 4.75% mentioned in Schedule XIV of Companies Act, 1956.

On indigenous vehicles/cycles, depreciation is provided on the written down value method as per rates prescribed and in accordance with the Income Tax Act, 1961.

(b) In the case of purchase/sale depreciation is charged for the full month in which purchase/sale is made.

(c) 100% depreciation is charged in the year of purchase on assets equal to or less than Rs. 5,000.

(v) FOREIGN CURRENCY TRANSLATION

Foreign exchange transactions are recorded at the rate of exchange prevailing on the date of transaction (i.e. bill of entry). Accordingly, exchange differences arising on foreign exchange transactions settled during the period are recognized in the statement of profit and loss of the period.

Monetary current assets and monetary current liabilities that are denominated in foreign currency are translated at the exchange rate prevalent at the date of the balance sheet. The resulting difference is also recorded in the Statement of profit & loss.

(vi) ACCOUNTING FOR FIXED ASSETS

(a) Fixed assets are stated at their original cost including incidental expenses related to acquisition and installation less accumulated depreciation. The costs of assets under installation or under construction as at the balance sheet date are shown as capital work in process. There has been no revaluation of fixed assets carried out during the year.

(b) Leasehold land is written off over the period of lease.

(vii) REVENUE RECOGNITION

(a) Sales are recognized when significant risks and rewards of goods are transferred to the customers and is stated net of returns, trade discounts, rebates and sales tax but includes excise duties.

(b) Dividend Income is recognized when the right to receive is established.

(c) Interest revenue is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

(viii) EMPLOYEE BENEFITS

(a) Short Term Employee Benefits

All employee benefits falling due within twelve months of rendering the service are classified as short term employee benefits. The benefits like salaries, wages, short term compensated absences etc. and the ex- pected cost of bonus, ex-gratia are recognized in the period in which the employee renders the related service.

(b) Post-Employment Benefits

(i) Defined Contribution Plans

Defined Contribution Plans are provident fund scheme, officers' superannuation scheme, employees state insurance and government pension fund scheme for eligible employees. The company's contribution to the Defined Contribution Plans is recognized in the Statement of profit & loss in the financial year to which they relate.

(ii) Defined Benefit Plans

The employee's gratuity fund scheme managed by LIC is the Company's defined benefit plans. Wherever applicable, the present value of the obligation under such defined benefit plans are determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes 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 plan, are based on the market yields on Government securities as at the balance sheet date, having maturity periods approximating to the terms of related obligations.

Actuarial gains and losses are recognized immediately in the Statement of Profit & Loss.

In case of funded plans, the fair value of the plan assets is reduced from the gross obligation under the defined benefit plans to recognize the obligation on the net basis.

Gains or losses on the curtailment or settlement of any defined benefit plan are recognized when the curtailment or settlement occurs. Past service cost is recognized as expense on a straight-line basis over the average period until the benefits become vested.

(c) Other Long-term Employee Benefits

The obligations for long term employee benefits such as long term compensated leave or encashment of leave accrued up to the specified period only at the time of retirement are recognized in the similar manner as in the case of defined benefit plans as mentioned in (b) (ii) above. The provision for leave encashment is accrued and provided for, based on the actuarial valuation made by an independent Actuary as on the Balance Sheet date.

(ix) ACCOUNTING FOR INVESTMENT

Investments are classified into current and long term investments. Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long term investments. Current investments are stated at the lower of cost and fair value determined on an individual basis. A provision for decline in value of investments is made only when the extent of loss is determinable and diminution in value, in the opinion of the Directors, is permanent.

(x) INTANGIBLE ASSETS

Intangible Assets & related expenditure are recognized as per criteria specified in Accounting Standard-26 on "Intangible Assets" issued by the Institute of Chartered Accountants of India and accounted for as under :-

(a) Intangible Assets are recognized when it is probable that the future economic benefits that are attributable to the asset will flow to the enterprise and the cost of the asset can be measured reliably.

(b) The cost of internally generated products is the sum of the expenditure incurred from the time when the product first met the recognition criteria for an intangible asset in development stage. The expenditure incurred during research phase is directly charged to Statement of Profit & Loss. The cost of product development comprises its raw material cost, salary & wages, Stores & spares, including any import duties and other taxes (other than those subsequently recoverable by the enterprise from the taxing authorities) and any directly attributable expenditure on making the product ready for its use. Any trade discounts, rebates and realization from sale of products during test runs are deducted in arriving at the cost.

(c) Revenue expenditure whenever incurred on research and development is expensed as incurred.

(d) Acquisition of software is amortized on a straight line basis over a period of five years starting from the year of capitalization.

(e) Internally developed new products for commercial use : over a period of 120 months from the month subsequent to the month in which it got activated for commercial use.

(xi) EXCISE DUTY

Excise duty has been accounted for on the basis of removal of goods as well as provision made for goods lying as closing stock.

(xii) DEFERRED TAXATION

Deferred tax is the effect of timing differences, being the difference between taxable income and accounting income that originates in one period and is capable of reversal in one or more subsequent periods. On prudent grounds, deferred tax liabilities, when they arise, are provided without any exceptions but deferred tax assets are calculated on the accumulated timing differences as at the end of the year and are based on tax rates and laws in force on the balance sheet date and are recognized and carried forward only to the extent that there is a virtual certainty of realization against future taxable income.

(xiii) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

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

(xiv) LEASES

(a) Lease rentals on assets taken on lease prior to April 01,2001 are charged to the Statement of profit & loss over the period of the lease.

(b) Assets taken on lease under which the lessor effectively retains all significant risks & rewards of ownership have been classified as operating lease. Lease payments made under an operating lease are recognized as expense in the Statement of profit & loss on straight line basis over the primary term of the lease as mentioned in the lease agreement.

(xv) BORROWING COSTS

Borrowing costs that are specifically attributable to the acquisition, construction or production of a qualifying asset are capitalized as part of cost of such asset till the asset is ready for its intended use. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use or sale. All other borrowing costs are recognized as an expense in the period in which they are incurred.

(xvi) EARNINGS PER SHARE

In determining earnings per share, the Company considers the net profit after tax and includes the post-tax effect of any extraordinary/exceptional item. The number of shares used in computing basic earnings per share comprises of the weighted average number of shares outstanding during the period. The number of shares used in computing diluted earnings per share comprises of the weighted average shares considered for deriving basic earnings per share, and also the weighted average number of equity shares that could have been issued on the conversion of all dilutive potential equity shares.

(xvii)CASH FLOW STATEMENTS

Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from principle revenue generating, investing and financing activities of the Company are segregated.


Mar 31, 2011

1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The financial statements have been prepared in accordance with Generally Accepted Accounting Principles ("GAAP") in India under the historical cost convention on accrual basis and are in accordance with the applicable accounting standards issued by the Institute of Chartered Accountants of India (ICAI) & prescribed in the Companies (Accounting Standards) Rules, 2006. These Accounting policies have been consistently applied, except where a newly issued accounting standard is initially adopted by the company. Management evaluates the effect of accounting standards issued on a going basis and ensures that they are adopted as mandated by the ICAI.

2. VALUATION OF INVENTORIES:

(a) Finished goods have been valued at lower of cost or net realizable value. In the case of finished goods, cost is determined by taking material, labour and related factory overheads including depreciation, excise duty and fixed production overheads arrived at by the cost sheet of the last month of the financial year. Fixed overheads are allocated for inclusion in the cost of conversion on the basis of normal levels of production capacity or actual production whichever is higher.

(b) Raw materials, stores and spares have been valued at cost by using weighted average basis.

(c) Goods in process have been valued at raw material cost incurred up to the stage of production plus conversion cost apportioned on the basis of raw material cost of goods in process.

(d) Loose tools and stock in transit have been valued at cost.

(e) As per past practice, no value is placed on stock of scrap since its estimated net realizable/usable value is not accurately ascertainable.

3. DEPRECIATION

(a) Depreciation on fixed assets is provided on the straight-line method in accordance with Schedule XIV to the Companies Act, 1956. However, as per rehabilitation scheme approved by Board for Industrial and Financial Reconstruction (BIFR), in respect of plant & machinery (including electrical installation, factory equipment, storage & water system), the estimated useful life of assets has, with retrospective effect, been considered as 30 years. However, the rate of depreciation on plant & machinery are lower than rates prescribed in Schedule XIV. The rate of depreciation as per Straight Line Method is being used is 3.333% as against rate of 4.75% mentioned in Schedule XIV of Companies Act, 1956.

On indigenous vehicles/cycles, depreciation is provided on the written down value method as per rates prescribed and in accordance with the Income Tax Act, 1961.

(b) In the case of purchase/sale depreciation is charged for the full month in which purchase/sale is made.

(c) 100% depreciation is charged in the year of purchase on assets equal to or less than Rs. 5,000.

4. FOREIGN CURRENCY TRANSLATION

Foreign exchange transactions are recorded at the rate of exchange prevailing on the date of transaction (i.e. bill of entry). Accordingly, exchange differences arising on foreign exchange transactions settled during the period are recognized in the profit and loss account of the period.

Monetary current assets and monetary current liabilities that are denominated in foreign currency are translated at the exchange rate prevalent at the date of the balance sheet. The resulting difference is also recorded in the profit & loss account.

5. ACCOUNTING FOR FIXED ASSETS

(a) Fixed assets are stated at their original cost including incidental expenses related to acquisition and installation less accumulated depreciation. The cost of assets under installation or under construction as at the balance sheet date are shown as capital work in process. There has been no revaluation of fixed assets carried out during the year.

(b) Leasehold land is written off over the period of lease.

6. REVENUE RECOGNITION

(a) Sales are recognized when significant risks and rewards of goods are transferred to the customers and is stated net of returns, trade discounts, rebates and sales tax but includes excise duties.

(b) Dividend Income is recognized when the right to receive is established.

(c) Interest revenue is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

7. EMPLOYEE BENEFITS

(a) Short Term Employee Benefits

All employee benefits falling due within twelve months of rendering the service are classified as short term employee benefits. The benefits like salaries, wages, short term compensated absences etc. and the expected cost of bonus, ex-gratia are recognized in the period in which the employee renders the related service.

(b) Post-Employment Benefits

(i) Defined Contribution Plans

Defined Contribution Plans are provident fund scheme, officers' superannuation scheme, employees state insurance and government pension fund scheme for eligible employees. The company's contribution to the Defined Contribution Plans is recognized in the profit & loss account in the financial year to which they relate.

(ii) Defined Benefit Plans

The employee's gratuity fund scheme managed by LIC are the Company's defined benefit plans.

Wherever applicable, the present value of the obligation under such defined benefit plans are determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes 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 plan, are based on the market yields on Government securities as at the balance sheet date, having maturity periods approximating to the terms of related obligations.

Actuarial gains and losses are recognized immediately in the Profit & Loss Account.

In case of funded plans, the fair value of the plan assets is reduced from the gross obligation under the defined benefit plans to recognize the obligation on the net basis.

Gains or losses on the curtailment or settlement of any defined benefit plan are recognized when the curtailment or settlement occurs. Past service cost is recognized as expense on a straight-line basis over the average period until the benefits become vested.

(c) Other Long-term Employee Benefits

The obligations for long term employee benefits such as long term compensated leave or encashment of leave accrued up to the specified period only at the time of retirement are recognized in the similar manner as in the case of defined benefit plans as mentioned in (b) (ii) above. The provision for leave encashment is accrued and provided for, based on the actuarial valuation made by an independent Actuary as on the Balance Sheet date.

8. ACCOUNTING FOR INVESTMENT

Investments are classified into current and long term investments. Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long term investments. Current investments are stated at the lower of cost and fair value determined on an individual basis. A provision for decline in value of investments is made only when the extent of loss is determinable and diminution in value, in the opinion of the Directors, is permanent.

9. INTANGIBLE ASSETS

Intangible Assets & related expenditure are recognized as per criteria specified in Accounting Standard-26 on "Intangible Assets" issued by the Institute of Chartered Accountants of India and accounted for as under :- Intangible Assets are recognized when it is probable that the future economic benefits that are attributable to the asset will flow to the enterprise and the cost of the asset can be measured reliably. The cost of internally generated products is the sum of the expenditure incurred from the time when the product first met the recognition criteria for an intangible asset in development stage. The expenditure incurred during research phase is directly charged to Profit & Loss Account. The cost of product development comprises its raw material cost, salary & wages, stores & spares, including any import duties and other taxes (other than those subsequently recoverable by the enterprise from the taxing authorities) and any directly attributable expenditure on making the product ready for its use. Any trade discounts, rebates & realization from sale of products during test runs are deducted in arriving at cost. Revenue expenditure whenever incurred on research and development is expensed as incurred. Acquisition of software is amortized on a straight line basis over a period of five years starting from the year of capitalization.

Internally developed new products for commercial use : over a period of 120 months from the month subsequent to the month in which it got activated for commercial use.

10. EXCISE DUTY

Excise duty has been accounted for on the basis of removal of goods as well as provision made for goods' lying as closing stock.

11. DEFERRED TAXATION

Deferred tax is the effect of timing differences, being the difference between taxable income and accounting income that originates in one period and is capable of reversal in one or more subsequent periods. On prudent grounds, deferred tax liabilities, when they arise, are provided without any exceptions but deferred tax assets are calculated on the accumulated timing differences as at the end of the year and are based on tax rates and laws in force on the balance sheet date and are recognized and carried forward only to the extent that there is a virtual certainty of realization against future taxable income.

12. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

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

13. LEASES

(a) Lease rentals on assets taken on lease prior to April 01, 2001 are charged to the profit & loss account over the period of the lease.

(b) Assets taken on lease under which the lessor effectively retains all significant risks & rewards of ownership have been classified as operating lease. Lease payments made under an operating lease are recognized as expense in the profit & loss account on straight line basis over the primary term of the lease as mentioned in the lease agreement.

14. BORROWING COSTS

Borrowing costs that are specifically attributable to the acquisition, construction or production of a qualifying asset are capitalized as part of cost of such asset till the asset is ready for its intended use. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use or sale. All other borrowing costs are recognized as an expense in the period in which they are incurred.

15. EARNINGS PER SHARE

In determining earnings per share, the Company considers the net profit after tax and includes the post-tax effect of any extraordinary / exceptional item. The number of shares used in computing basic earnings per share comprises of the weighted average number of shares outstanding during the period. The number of shares used in computing diluted earnings per share comprises of the weighted average shares considered for deriving basic earnings per share, and also the weighted average number of equity shares that could have been issued on the conversion of all dilutive potential equity shares.

16. CASH FLOW STATEMENTS

Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from principle revenue generating, investing and financing activities of the Company are segregated.

17. DISCOUNTS

Discount allowed on sale (other than trade or volume discount) is shown under the Selling & Distribution expense schedule. Discount allowed on purchase (other than trade or volume discount) is reduced from Raw Material Consumed.
















Mar 31, 2010

1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The financial statements have been prepared in accordance with Generally Accepted Accounting Principles ("GAAP") in India under the historical cost convention on accrual basis and are in accordance with the applicable accounting standards issued by the Institute of Chartered Accountants of India (ICAI) & prescribed in the Compa- nies (Accounting Standards) Rules, 2006. These Accounting policies have been consistently applied, except where a newly issued accounting standard is initially adopted by the company. Management evaluates the effect of accounting standards issued on a going basis and ensures that they are adopted as mandated by the ICAI.

2. VALUATION OF INVENTORIES:

(a) Finished goods have been valued at lower of cost or net realizable value. In the case of finished goods, cost is determined by taking material, labour and related factory overheads including depreciation, excise duty and fixed production overheads arrived at by the cost sheet of the last month of the financial year. Fixed overheads are allocated for inclusion in the cost of conversion on the basis of normal levels of production capacity or actual production whichever is higher.

(b) Raw materials, stores and spares have been valued at cost by using weighted average basis.

(c) Goods in process have been valued at raw material cost incurred up to the stage of production plus conversion cost apportioned on the basis of raw material cost of goods in process.

(d) Loose tools and stock in transit have been valued at cost.

(e) As per past practice, no value is placed on stock of scrap since its estimated net realizable/usable value is not accurately ascertainable.

3. DEPRECIATION

(a) Depreciation on fixed assets is provided on the straight-line method in accordance with Schedule XIV to the Companies Act, 1956. However in respect of plant & machinery (including electrical installation, factory equipment, storage & water system), the estimated useful life of assets has, with retrospective effect, been considered as 30 years. However, the rate of depreciation on plant & machinery are lower than rates prescribed in Schedule XIV.

On indigenous vehicles/cycles, depreciation is provided on the written down value method as per rates prescribed and in accordance with the Income Tax Act, 1961.

(b) In the case of purchase/sale depreciation is charged for the full month in which purchase /sale is made.

(c) 100% depreciation is charged in the year of purchase on assets equal to or less than Rs. 5,000.

4. FOREIGN CURRENCY TRANSLATION

Foreign exchange transactions are recorded at the rate of exchange prevailing on the date of transaction (i.e. bill of entry). Accordingly, exchange differences arising on foreign exchange transactions settled during the period are recognized in the profit and loss account of the period.

Monetary current assets and monetary current liabilities that are denominated in foreign currency are translated at the exchange rate prevalent at the date of the balance sheet. The resulting difference is also recorded in the profit & loss account.

5. ACCOUNTING FOR FIXED ASSETS

(a) Fixed assets are stated at their original cost including incidental expenses related to acquisition and installation less accumulated depreciation. The cost of assets under installation or under construction as at the balance sheet date are shown as capital work in process. There has been no revaluation of fixed assets carried out during the year.

(b) Leasehold land is written off over the period of lease.

6. REVENUE RECOGNITION

(a) Sales are recognized when significant risks and rewards of goods are transferred to the customers and is stated net of returns, trade discounts, rebates and sales tax but includes excise duties. -

(b) Export incentives are accounted for on accrual basis and includes the estimated value of export incentives receivable under the Duty Entitlement Pass Book Scheme and Duty Drawback Scheme.

(c) Dividend Income is recognized when the right to receive is established.

(d) Interest revenue is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

7. EMPLOYEE BENEFITS

(a) Short Term Employee Benefits

All employee benefits falling due within twelve months of rendering the service are classified as short term employee benefits. The benefits like salaries, wages, short term compensated absences etc. and the expected cost of bonus, ex-gratia are recognized in the period in which the employee renders the related service.

(b) Post-Employment Benefits

(i) Defined Contribution Plans

Defined Contribution Plans are provident fund scheme, officers superannuation scheme, employees state insurance and government pension fund scheme for eligible employees. The companys contri- bution to the Defined Contribution Plans is recognized in the profit & loss account in the financial year to which they relate.

(ii) Defined Benefit Plans

The employees gratuity fund scheme managed by LIC are the Companys defined benefit plans. Wherever applicable, the present value of the obligation under such defined benefit plans are deter- mined based on actuarial valuation using the Projected Unit Credit Method, which recognizes 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 plan, are based on the market yields on Government securities as at the balance sheet date, having maturity periods approxi- mating to the terms of related obligations.

Actuarial gains and losses are recognized immediately in the Profit & Loss Account.

In case of funded plans, the fair value of the plan assets is reduced from the gross obligation under the defined benefit plans to recognize the obligation on the net basis.

Gains or losses on the curtailment or settlement of any defined benefit plan are recognized when the curtailment or settlement occurs. Past service cost is recognized as expense on a straight-line basis over the average period until the benefits become vested.

(c) Other Long-term Employee Benefits

The obligations for long term employee benefits such as long term compensated leave or encashment of leave accrued up to the specified period only at the time of retirement are recognized in the similar manner as in the case of defined benefit plans as mentioned in (b) (ii) above. The provision for leave encashment is accrued and provided for, based on the actuarial valuation made by an independent Actuary as on the Balance Sheet date.

8. ACCOUNTING FOR INVESTMENT

Investments meant to be held for a long term period are shown at cost. A provision for decline in value of investments is made only when the extent of loss is determinable and diminution in value, in the opinion of the Directors, is permanent.

9. EXPENDITURE ON RESEARCH AND DEVELOPMENT

Research and development expenses which are revenue in nature are charged off in the year in which they are incurred. Capital expenditure is included in fixed assets under appropriate heads.

10. INTANGIBLE ASSETS

Intangible Assets are recognized when it is probable that the future economic benefits that are attributable to the asset will flow to the enterprise and the cost-of the asset can be measured reliably. Intangible assets are amortized as under :-

¦ Acquisition of software is amortized on a straight line basis over a period of five years starting from the year of capitalization.

11. EXCISE DUTY

Excise duty has been accounted for on the basis of both payments made in respect of goods cleared as well as provision made for goods lying in bonded warehouses.

12. DEFERRED TAXATION

Deferred tax is the effect of timing differences, being the difference between taxable income and accounting income that originates in one period and is capable of reversal in one or more subsequent periods. On prudent grounds, deferred tax liabilities, when they arise, are provided without any exceptions but deferred tax assets are calculated on the accumulated timing differences as at the end of the year and are based on tax rates and laws in force on the balance sheet date and are recognized and carried forward only to the extent that there is a reasonable certainty of realization against future taxable income.

13. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

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

14. LEASES

(a) Lease rentals on assets taken on lease prior to April 01, 2001 are charged to the profit & loss account over the period of the lease.

(b) Assets taken on lease under which the lessor effectively retains all significant risks & rewards of ownership have been classified as operating lease. Lease payments made under an operating lease are recognized as expense in the profit & loss account on straight line basis over the primary term of the lease as mentioned in the lease agreement,

15. BORROWING COSTS

Borrowing costs that are specifically attributable to the acquisition, construction or production of a qualifying asset are capitalized as part of cost of such asset till the asset is ready for its intended use. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use or sale. All other borrowing costs are recognized as an expense in the period in which they are incurred.

16. EARNINGS PER SHARE

In determining earnings per share, the Company considers the net profit after tax and includes the post-tax effect of any extraordinary / exceptional item. The number of shares used in computing basic earnings per share comprises of the weighted average number of shares outstanding during the period. The number of shares used in computing diluted earnings per share comprises of the weighted average shares considered for deriv- ing basic earnings per share, and also the weighted average number of equity shares that could have been issued on the conversion of all dilutive potential equity shares.

17. CASH FLOW STATEMENTS

Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from principle revenue generating, investing and financing activities of the Company are segregated.

18. DISCOUNTS

Discount allowed on sale (other than trade or volume discount) is shown under the Selling & Distribution expense schedule. Discount allowed on purchase (other than trade or volume discount) is reduced from Raw Material Consumed.

 
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