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Accounting Policies of KDDL Ltd. Company

Mar 31, 2015

A Basis of preparation

These financial statements have been prepared under the historical cost convention on a going concern basis, on the accrual basis of accounting in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP). Indian GAAP comprises mandatory accounting standards as specified under Section 133 of the Companies Act, 2013 ('the Act'), read with Rule 7 of the Companies (Accounts) Rules, 2014 (as amended) and other accounting pronouncements of The Institute of Chartered Accountants of India.

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 III to the Companies Act, 2013. Based on the nature of services and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as twelve months for the purpose of current/ non-current classification of its assets and liabilities.

b Use of estimates

In preparing the financial statements in conformity with accounting principles generally accepted in India, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Any revisions to accounting estimates are recognised in the current and future periods.

c Revenue recognition

a) Revenue from sale of goods is recognised when the significant risks and rewards in respect of ownership of the goods are transferred to the customer and is stated inclusive of excise duty and net of trade discounts, sales returns and sales tax wherever applicable.

b) Duty Entitlement Pass Book (DEPB) and any other scheme are recognized in the statement of profit and loss when the right to receive credit as per the terms of the scheme is established in respect of the exports made.

c) Revenue in respect of tool development and job charges is recognized as per the terms of the contract with the customers.

d) Interest income is recognised on a time proportion basis, taking into account the amount outstanding and the rates applicable.

e) Dividend income is recognised when the Company's right to receive the same is established. d Fixed assets

Tangible Assets

Fixed assets are stated at cost (gross block) less accumulated depreciation and impairment losses, if any. Cost comprises the purchase price (net of cenvat credit availed) and any attributable cost of bringing the asset to its working condition for its intended use.

Expenditure on account of modification / alteration in plant and machinery / building, which increases the future benefit from the existing asset beyond its previous assessed standard of performance, is capitalised.

Borrowing costs directly attributable to acquisition or construction of fixed assets, which necessarily takes a substantial period of time to get ready for their intended use are capitalised.

Assets acquired on hire purchase are capitalised at the inception of the hire purchase agreement. Interest cost is charged to statement of profit and loss on accrual basis.

Intangible assets

Intangible assets are stated at cost (gross block) less accumulated depreciation and impairment losses, if any. Cost Intangible assets are stated at cost (gross block) less accumulated depreciation and impairment losses, if any. Cost comprises the purchase price (net of cenvat credit availed) and any attributable cost of bringing the asset to its

working condition for its intended use. e Depreciation and amortisation

Pursuant to the notification in Part II of Schedule II to the Companies Act, 2013, effective from 1 April 2014, the management has reassessed and changed, wherever necessary the useful lives to compute depreciation, to conform to the requirements of the Companies Act, 2013. Depreciation on fixed assets for year ended 31 March 2015 is provided on straight line method based on life prescribed as per Schedule II of the Companies Act, 2013.

- Depreciation on improvements carried out on buildings taken on lease (included under buildings) is provided over the period of the lease or useful life of the assets, whichever is lower.

- Depreciation on a particular class of dies and tools manufactured by the Company and put to use after 1 April 2003 is provided over a period of 3 years.

- The cost of leasehold land is not amortised as these are perpetual leases.

- Know-how is amortised over a period of four years.

- Software is amortised over a period not exceeding six years.

Depreciation on fixed assets for the year ended 31 March 2014 was provided on straight line method as per the rates prescribed under Schedule XIV to the Companies Act, 1956.

f. Inventories

Inventories are valued as follows:

1. Raw materials and components, stores and spares, finished goods and stock in process: At lower of cost and net realisable value.

2. Cost of inventories is ascertained on the following basis:

a) Raw materials and components and stores and spares cost includes material cost, custom duty, freight and related direct expenses incurred in bringing the inventories to present location and condition. Cost is determined on moving weighted average basis.

b) Work in progress is valued at raw material cost plus conversion costs depending upon the stage of completion.

c) Finished goods are stated at the lower of cost or net realizable value. Cost is determined using moving weighted average cost basis and includes the raw material cost plus conversion costs, packing cost and other overheads costs incurred to bring the goods to their present location and condition.

g. Investments

Investments that are readily realisable 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.

Long-term investments are stated at cost. Provision is made for diminution in the value of long-term investments to recognise decline, if any, other than temporary in nature.

h. Foreign Currency transactions

Investments in foreign entities are recorded at the exchange rate prevailing on the date of making the investment. Transaction in foreign currencies are recorded at the rates prevailing on the date of the transaction and monetary items denominated in foreign currency are restated at the rate prevailing on the balance sheet date.

Differences arising on foreign currency translations of transactions settled during the year are recognised in the statement of profit and loss.

Forward exchange contracts not covered under Accounting Standard 11 'Effect of change in Foreign Exchange Rates', that are entered to hedge the foreign currency risk of highly probable forecast transactions and unrecognized firm commitments are marked to market at the balance sheet date and exchange loss is recognised in the statement of profit and loss immediately. Any gain is ignored and not recognised in the financial statements, in accordance with the principles of prudence enunciated in Accounting Standard 1- Disclosure of Accounting Policies.

The premium or discount arising at the inception of the forward contracts other than those entered into to hedge the foreign currency risk of firm commitments or highly probable forecast transactions is amortised as expense or income over the life of the contract.

Any profit or loss arising on cancellation or renewal of forward exchange contracts is recognised as income or expense for the year.

i. Employee benefits

Short term employee benefits

All employee benefits payable/available within twelve months of rendering the service are classified as short term employee benefits. Benefits such as salaries, wages, bonus, etc are recognized in the statement of profit and loss in the period in which the employee renders the related service.

Post-employment benefits Defined contribution plan

The company makes specified contribution towards employee provident fund to Employees Provident Fund administered by the Regional Provident Commissioner. The Company's contribution to provident fund, being a defined contribution plan, is recognized in the statement of profit and loss in the financial year to which it relates.

In respect of superannuation, the Company makes contribution to Life Insurance Corporation of India ("LIC") of an amount payable by the trusts to LIC, which is charged to the statement of profit and loss.

Defined benefit plan

Gratuity is a post-employment defined benefit plan. The present value of obligation for gratuity is determined based on actuarial valuation using the Projected Unit Credit Method, less the fair value of plan assets, together with adjustments for unrecognized actuarial gains or losses and past service costs. Gratuity and superannuation funds are administered by trustees of independently constituted trusts. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to the statement of profit and loss in the year in which such gains or losses arise.

Other long term liability

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognized as a liability determined based on actuarial valuation using the Projected Unit Credit Method at the balance sheet date.

Actuarial Gains/Losses

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to the statement of profit and loss in the year in which such gains or losses arise.

j. Employee Stock Option Plan (ESOP)

Stock options granted to the employees under the stock options schemes are accounted at intrinsic value as per the accounting treatment prescribed by the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 ('Guidelines') and guidance note on Employee share based payments issued by the Institute of Chartered Accountants of India. Accordingly, the excess of market price, determined as per the Guidelines and guidance note, of underlying equity shares (market value), over the exercise price of the options is recognised as deferred stock compensation expense and is charged to statement of profit and loss on a straight line basis over the vesting period of the options. The amortised portion of the cost is shown under shareholders' funds.

k. Taxes on income

Tax expense comprises current tax and deferred income tax.

Current tax is determined as the amount of tax payable in respect of taxable income for the year.

Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. In respect of carry forward losses and unabsorbed depreciation, deferred tax assets are recognized only to the extent there is virtual certainty that sufficient future taxable income will be available against which such losses can be realised.

i. Earnings per share

The earnings considered in ascertaining the Company's earnings per share comprise the net profit or loss for the year attributable to the equity shareholders. Earnings per share are computed using the weighted average number of shares outstanding during the year.

For the purpose of calculating diluted earning per share, the net profit or loss for the period attributable to equity share holders and the weighted average number of shares outstanding during the period are adjusted for the effect of all dilutive potential equity shares.

m. Leases

Leases of assets under which significant risks and rewards of ownership are effectively retained by the lessor are classified as operating leases. Lease rentals in respect of assets taken under an operating lease are charged to the statement of profit and loss on a straight line basis over the lease term.

In respect of assets given on operating lease, income is being recognised on a straight line basis over the lease term.

n. Contingent liabilities and provisions

A provision is created when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation at the reporting date. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

The Company does not recognize assets which are of contingtent nature until there is virtual certainty of realisability of such assets. However, if it has become virtually certain that an inflow of economic benefits will arise, asset and related income is recognized in the financial statements of the period in which the change occurs.

o Impairment of Assets

The Company on an annual basis makes an assessment of any indicator that may lead to impairment of assets. If any such indication exists, the Company estimates the recoverable amount of the assets. If such recoverable amount is less than the carrying amount, then the carrying amount is reduced to its recoverable amount by treating the difference as impairment loss and is charged to the statement of profit and loss.

p Cash and cash equivalent

Cash and cash equivalents comprise cash and deposit with banks. The Company considers all highly liquid investment with a remaining maturity at the date of purchase of three months or less and that are readily convertible to known amounts of cash to be cash equivalent.

a. The Company has only one class of equity shares having a par value of Rs.10 each. Each holder of equity share is entitled to one vote per share. In the event of liquidation of the Company, holders of equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

d. Shares reserved for issue under options and other commitments

As on 31 March 2015, 39,750 (previous year : 84,000) equity shares have been reserved for issue under the Employee Stock Plan of the company (Refer note 41).

e. Utlisation of proceeds received pursuant to issue of shares

The Company has allotted 39,750 equity shares of face value of Rs 10 each during the year ended 31 March 2015 to the eligible employees on account of exercise of vested stock under Employee Stock Option Plan 2011. Consequent to the said allotment, the Company has received Rs. 4,770,000 as allotment money. Out of such proceeds, Rs 3,330,000 has been utilised by the Company for meeting its working capital requirements. The outstanding balance of Rs 1,440,000 has been kept in a separate bank account.

f. Shares issued for consideration other than cash

The Company has not issued any share pursuant to a contract without payment being received in cash in the current year and preceding five years. The Company has not issued any bonus shares nor has there been any buy-back of shares in the current year and preceding five years.

Term loans from banks amounting to Rs.161,638,987 (previous year Rs. 199,039,685) (including current maturities of long term debt amounting to Rs. 65,393,521 (previous year Rs. 65,569,287) as referred to in Note 11) are secured as under:

- Term loans from Bank of India amounting to Rs. 78,373,720 (previous year Rs 78,365,764)(including current maturities of long term debt amounting to Rs. 30,213,521(previous year Rs. 32,703,000) and buyers credit Nil (previous year Rs 12,842,509) availed as a sub limit to term loan) carrying interest rate of 3.20% and 2.95% over the bank base rate are secured by way of first pari passu charge on all the plant and machinery and furniture and fixtures of the Company excluding the fixed assets installed at packaging division at Chandigarh (KPAC), hands division at Bengaluru (KHAN-2), and the plant and machinery and furniture and fixtures of dials division at Parwanoo (TTPA) acquired before 31 March 2005 and second charge on all the current assets (save and except the book debts) subject to the first charge in favour of the Company's bankers for securing the working capital limits. The term loan is further secured by way of first pari passu mortgage charge on land and building of dials division at Derabassi (KDER). The term loans are also personally guaranteed by the Chairman and Chief Executive Officer (CEO) of the Company.

- Term loans from IDBI amounting to Rs. 3,780,000 (previous year Rs. 8,820,000)(including current maturities of long term debt amounting to Rs. 3,780,000 (previous year Rs.5,040,000 ), carrying interest rate of 2.5% over the bank base rate and Corporate loan amounting to Rs. 39,284,000 (previous year Rs 40,000,000)(includng current maturities of long term debt amounting to Rs. 14,288,000)(previous year Rs. 10,714,287) carrying interest rate of 3% over the bank base rate are secured by way of first pari passu charge on all the plant and machinery and furniture and fixtures of KDER, tool room division at Bengaluru (EIGEN) and hands division at Bengaluru (KHAN-1) and second charge on all the current assets (save and except the book debts) subject to the first charge in favour of the Company's bankers for securing the working capital limits. The term loan is further secured by way of first pari passu mortgage charge on land and building of KDER. The term loans are also personally guaranteed by the Chairman and Chief Executive Officer (CEO) of the Company.

-Term loan from Corporation Bank amounting to Rs. 40,201,267 (previous year Rs.42,313,207) (including current maturities of long term debt amounting to Rs. 17,112,000 (previous year Rs 17,112,000) and buyers credit nil (previous year Rs 16,698,205) availed as a sub limit to term loan) carrying interest rate of 5.50% over the bank base rate, are secured by way of first exclusive charge on all the plant and machinery and furniture and fixtures of KHAN-2 and second charge on all the current assets (save and except the book debts) subject to the first charge in favour of the Company's bankers for securing the working capital limits. The loan is further secured by exclusive mortgage charge on land and building of KHAN-1.

Repayment terms of term loans from banks (including the current maturities of long term debt as referred to in Note 11) are given as under:

- Term loan from IDBI amounting to Rs. 3,780,000 is repayable in 3 quarterly instalments of Rs. 1,260,000 commencing from 30 April 2015. The last instalment would be repaid on 31 October 2015.

- Term loan from IDBI amounting to Rs. 39,284,000 (sanctioned amount being Rs. 50,000,000) is repayable in 10 quarterly instalments of Rs. 3,572,000 and last instalment of Rs. 35,64,000 commencing from 30 June 2015. The last instalment would be repaid on 31 December 2017.

- Term loan from Bank of India amounting to Rs. 22,807,748 is repayable in 12 equal quarterly instalments of Rs. 1,875,000 and last instalment of Rs. 307,748 commencing from 31 December 2015. The last instalment would be repaid on 31 December 2018.

- Term loan from Bank of India amounting to Rs. 1,016,834 is repayable in 2 equal quarterly instalments of Rs. 682,000 and Rs 334,834 on 30 June 2015 and 30 September 2015 respectively.

- Term loan from Bank of India amounting to Rs. 13,238,432 is repayable in 10 quarterly instalments of Rs. 1,250,000 and last instalment of Rs. 738,432 commencing from 30 April 2015. The last instalment would be due on 30 October 2017.

- Term loan from Bank of India amounting to Rs. 1,071,687 is repayble in one instalment of Rs. 1,071,687 on 30 April 2015.

- Term loan from Corporation Bank amounting to Rs. 16,201,207 (sanctioned amount being Rs. 50,000,000) is repayable in 5 quarterly instalments of Rs.2,778,000 and last instalment of Rs. 2,311,207 commencing from 30 June 2015. The last instalment would be repaid on 30 September 2016.

- Term loan from Corporation Bank amounting to Rs. 24,000,000 (sanctioned amount being Rs. 30,000,000) is repayable in 16 quarterly instalments of Rs. 1,500,000 commencing from 30 June 2015. The last instalment would be repaid on 31 March 2019.

- Term loan from Bank of India amounting to Rs. 21,422,265 (sanctioned amount Rs. 50,000,000) is repayable in 6 quarterly instalments of Rs. 3,125,000 and last instalment of Rs. 2,672,265 commencing from 30 April 2015. The last instalment would be repaid on 31 October 2016.

- Term loan from Bank of India amounting to Rs. 18,816,754 is repayable in 10 quarterly instalments of Rs. 1,718,750 and last instalment of Rs. 1,629,254 commencing from 30 June 2015. The last instalment would be repaid on 31 December 2017.

b. Details of security and terms of repayment of term loans from others

Term loan from Intec Capital limited amounting to Rs. 10,160,134 ( previous year Nil) (including current maturities of long term debt amounting to Rs. 1,736,449 (previous year Nil) carrying fixed interest rate of 11.75% is secured by way of hypothecation of the specific asset purchased out of proceeds of the loan. The loan is also personally guaranteed of Chairman and Chief Executive Officer (CEO) of the Company. The loan is to be repaid in 56 monthly intallments as per the repayment schedule in equivated annual installments commencing from 1 April 2015. The last instalment would be repaid on 1 November 2019.

c. Vehicle loans from banks carrying interest rate in the range of 8.5% per annum to 12.25% per annum are secured against hypothecation of specific vehicle purchased out of the proceeds of those loans. The loans are to be repaid as per the respective repayment schedule in equivated monthly installments.

d. Inter corporate deposits amounting to Rs. 15,000,000 from VBL Innovations Private Limited carrying interest rate of 16% per annum due for repayment in 20 May 2016.

e. Inter corporate deposit amounting to Rs. 9,300,000 from Vardhan Properties and Investments Limited carrying interest rate of 14% per annum are due for repayment in June 2015 .

f. Public deposits carrying interest rates in the range of 9.5% per annum to 12.5% per annum are repayable in 6 months to 3 years from the respective dates of deposit.

(ii) Defined benefit plan/other long term benefit plans

a. Gratuity

b. Compensated absences

The following table set out the status of the plan for gratuity and compensated absences as required under Accounting Standard (AS) - 15 (R) - Employee benefits and the reconciliation of opening and closing balances of the present value of the defined benefit obligation:

Notes :

1) The discount rate is based on the prevailing market yield of Indian Government bonds as at the balance sheet date for the estimated terms of obligations.

2) The expected return is based on the expectation of the average long term rate of return on investments of the fund during the estimated terms of obligations.

3) The estimates of future salary increases considered takes into account the inflation, seniority, promotion and other relevant factors.

4) Plan assets mainly comprise funds managed by the insurer i.e. Life insurance corporation of India.

5) For Gratuity, the Company makes annual contributions to the Life insurance corporation of India ('LIC') of an amount advised by the LIC.

6) An amount of Rs. 3,500,000 was paid by the Company on 31 March 2014 but had not been considered by LIC as contributions received as on 31 March 2014, though the same had been considered as contribution made for the year ended 31 March 2014.

a. Details of security of short-term secured loans

- Working capital borrowings carrying interest rate varying from 12.50% to 13.25% are secured by hypothecation of stocks of stores and spares, raw materials and components, finished goods and stock-in-process and book debts and other assets of the Company (both present and future), on pari passu basis except packaging unit (KPAC) and are further secured by a second charge on the entire fixed assets of the Company. These loans are also guaranteed by the Chairman and Chief Executive Officer (CEO) of the Company and is repayable on demand.

- Buyers credit from corporation bank amounting to Rs 8,231,865 carrying interest rate 6 month libor plus .80% is secured against hypothecation of inventory and receivables is repayable on demand.

- Buyers credit from IDBI amounting to Rs 26,952,400 carrying interest rate varying from 6 month libor plus .65% to 6 month libor plus 1.25% is secured against hypothecation of inventory and receivables is repayable on demand.

- Buyers credit from bank of India amounting to Rs 6,445,273 carrying interest rate varying from 6 month libor plus 1.2% to 6 month libor plus 1.3% is secured against hypothecation of inventory and receivables is repayable on demand.

a. Dues to micro and small enterprises pursuant to section 22 of the Micro, Small and Medium Enterprises Development Act (MSMED), 2006

Amount due to entities covered under Micro and Small Enterprises as defined in the MSMED Act, 2006, have been identified on the basis of information available with the management of the Company. As per the information available with the management of the company, there was no amount due to any such entities which needs to be disclosed.

a. Dues to micro and small enterprises pursuant to section 22 of the Micro, Small and Medium Enterprises Development Act (MSMED), 2006

Amount due to entities covered under Micro and Small Enterprises as defined in the MSMED Act, 2006, have been identified on the basis of information available with the management of the Company. As per the information available with the management of the company, there was no amount due to any such entities which needs to be disclosed.

* The Board of Directors have recommended dividend @ 20% (previous year 15%) amounting to Rs 2 (previous year Rs 1.5) per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual general meeting.

a) Cash and cash equivalents include Rs 1,420,904 (previous year Rs 1,288,986) held in dividend accounts which is not available for use by the Company.

b) Rs 34,536,375 (previous year 23,342,756) has been placed as fixed deposits with banks for repayment of deposits as required under section 73 of the Companies Act, 2013 (corresponding to section 58A of the Companies Act, 1956) and margin money for working capital.

*During the year ended 31 March 2015 and 31 March 2014, the Company has provided for other than temporary diminution in the value of its investment in its joint venture, Satva Jewellery and Design Limited amounting to Rs. 1,396,171 and Rs 300,000 respectively considering the erosion of their net worth based on the their financial results as per management estimate and future projections.

**During the year ended 31 March 2014, the Company has closed down two of its units KHIM I situated at Parwanoo and KHAR situated at Barwala. The Company has written off fixed assets comprising of leasehold improvements, plant and machinery, furniture and fixtures and office equipments having net book value of Rs. 2,338,943 at KHIM I and Rs. 3,235,917 at KHAR and the remaining net book values have been transferred to other units of the Company.


Mar 31, 2014

A. Basis of preparation

The financial statements have been prepared to comply in accordance with generally accepted accounting principles in India, the accounting standards notified under the Companies Act, 1956 ("the Act") read with the General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013. The financial statements have been prepared under the historical cost convention on the accrual basis except in case of the assets for which provision for impairment is made. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.

b. Use of estimates

In preparing the financial statements in conformity with accounting principles generally accepted in India, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Any revisions to accounting estimates are recognised in the current and future periods.

c. Revenue recognition

a) Revenue from sale of goods is recognised when the significant risks and rewards in respect of ownership of the goods are transferred to the customer and is stated inclusive of excise duty and net of trade discounts, sales returns and sales tax wherever applicable.

b) Duty Entitlement Pass Book (DEPB) and any other scheme are recognized in the statement of profit and loss when the right to receive credit as per the terms of the scheme is established in respect of the exports made.

c) Revenue in respect of tool development and job charges is recognized as per the terms of the contract with the customers.

d) Interest income is recognised on a time proportion basis, taking into account the amount outstanding and the rates applicable.

e) Dividend income is recognised when the Company''s right to receive the same is established.

d. Fixed assets

Fixed assets are stated at cost (gross block) less accumulated depreciation and impairment losses, if any. Cost comprises the purchase price (net of Cenvat credit availed) and any attributable cost of bringing the asset to its working condition for its intended use.

Expenditure on account of modification / alteration in plant and machinery / building, which increases the future benefit from the existing asset beyond its previous assessed standard of performance, is capitalised.

Borrowing costs directly attributable to acquisition or construction of fixed assets, which necessarily takes a substantial period of time to get ready for their intended use are capitalised.

Assets acquired on hire purchase are capitalised at the inception of the hire purchase agreement. Interest cost is charged to statement of profit and loss on accrual basis.

e. Depreciation and amortisation

Depreciation is provided on straight line method as per the rates specified in Schedule XIV to the Act, as applicable at the time of addition of the respective fixed assets, on pro-rata basis from the month of addition, except for the following:

- Depreciation on improvements carried out on buildings taken on lease (included under buildings) is provided over the period of the lease.

- Depreciation on a particular class of dies and tools manufactured by the Company and put to use after 01 April 2003 is provided over a period of 3 years.

- The rates of depreciation are indicative of the useful lives of the assets.

- The cost of leasehold land is not amortised as these are perpetual leases.

- Know-how is amortised over a period of four years.

- Software is amortised over a period not exceeding six years.

f. Inventories

Inventories are valued as follows:

1. Raw materials & components, stores and spares, finished goods and stock in process: At lower of cost and net realisable value.

2. Scrap: At estimated realisable value.

3. Cost of inventories is ascertained on the following basis:

a) Raw materials and components and stores & spares on moving weighted average basis.

b) Cost of finished goods and stock in process comprise material cost on moving weighted average. Finished goods are stated inclusive of excise duty, labour and related estimated overheads including depreciation.

g. Investments

Investments that are readily realisable 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.

Long-term investments are stated at cost. Provision is made for diminution in the value of long-term investments to recognise decline, if any, other than temporary in nature.

h. Foreign currency transactions

Investments in foreign entities are recorded at the exchange rate prevailing on the date of making the investment. Transactions in foreign currencies are recorded at the rates prevailing on the date of the transaction and monetary items denominated in foreign currency are restated at the rate prevailing on the balance sheet date.

Differences arising on foreign currency translations of transactions settled during the year are recognised in the statement of profit and loss.

Forward exchange contracts not covered under Accounting Standard 11 ''Effect of change in Foreign Exchange Rates'', that are entered to hedge the foreign currency risk of highly probable forecast transactions and unrecognized firm commitments are marked to market at the balance sheet date and exchange loss is recognised in the statement of profit and loss immediately. Any gain is ignored and not recognised in the financial statements, in accordance with the principles of prudence enunciated in Accounting Standard 1- Disclosure of Accounting Policies.

The premium or discount arising at the inception of the forward contracts other than those entered into to hedge the foreign currency risk of firm commitments or highly probable forecast transactions is amortised as expense or income over the life of the contract.

Any profit or loss arising on cancellation or renewal of forward exchange contracts is recognised as income or expense for the year.

i. Employee benefits

The Company''s contribution to provident fund, being a defined contribution plan, is recognised in the statement of profit and loss.

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognised as a liability determined based on actuarial valuation using the Projected Unit Credit Method at the balance sheet date. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to the statement of profit and loss in the year in which such gains or losses arise.

Gratuity is a post employment defined benefit plan. The present value of obligation for gratuity is determined based on actuarial valuation using the Projected Unit Credit Method, less the fair value of plan assets, together with adjustments for unrecognised actuarial gains or losses and past service costs. Gratuity and superannuation funds are administered by trustees of independently constituted trusts. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to the statement of profit and loss in the year in which such gains or losses arise.

In respect of superannuation, the Company makes contribution to Life Insurance Corporation of India ("LIC") of an amount payable by the trusts to LIC, which is charged to the statement of profit and loss.

j. Employee Stock Option Scheme (ESOS)

Stock options granted to the employees under the stock options schemes are accounted at intrinsic value as per the accounting treatment prescribed by the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (''Guidelines'') and guidance note on Employee share based payments issued by the Institute of Chartered Accountants of India. Accordingly, the excess of market price, determined as per the Guidelines and guidance note, of underlying equity shares (market value), over the exercise price of the options is recognised as deferred stock compensation expense and is charged to statement of profit and loss on a straight line basis over the vesting period of the options. The amortised portion of the cost is shown under shareholders'' funds.

k. Taxes on income

Tax expense comprises current tax and deferred income tax.

Current tax is determined as the amount of tax payable in respect of taxable income for the year.

Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. In respect of carry forward losses and unabsorbed depreciation, deferred tax assets are recognized only to the extent there is virtual certainty that sufficient future taxable income will be available against which such losses can be realised.

Minimum Alternate tax (''MAT'') credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which MAT credit becomes eligible to be recognised as an asset in accordance with the recommendations contained in guidance note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the statement of profit and loss and shown as MAT credit entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT credit entitlement to the extent there is no longer convincing evidence to the effect that the Company will pay normal income tax during the specified period.

l. Earnings per share

The earnings considered in ascertaining the Company''s earnings per share comprise the net profit or loss for the year attributable to the equity shareholders. Earnings per share are computed using the weighted average number of shares outstanding during the year.

For the purpose of calculating diluted earning per share, the net profit or loss for the period attributable to equity share holders and the weighted average number of shares outstanding during the period are adjusted for the effect of all dilutive potential equity shares.

m. Leases

Leases of assets under which significant risks and rewards of ownership are effectively retained by the lessor are classified as operating leases. Lease rentals in respect of assets taken under an operating lease are charged to the statement of profit and loss on a straight line basis over the lease term.

In respect of assets given on operating lease, income is being recognised on a straight line basis over the lease term.

n. Contingent liabilities and provisions

The Company makes a provision when there is a present obligation as a result of a past event where the outflow of economic resources is probable and a reliable estimate of the amount of obligation can be made. A disclosure is made for possible or present obligations that may but probably will not require outflow of resources or where a reliable estimate cannot be made, as a contingent liability in the financial statements.

o. Impairment of assets

The Company on an annual basis makes an assessment of any indicator that may lead to impairment of assets. If any such indication exists, the Company estimates the recoverable amount of the assets. If such recoverable amount is less than the carrying amount, then the carrying amount is reduced to its recoverable amount by treating the difference as impairment loss and is charged to the statement of profit and loss.

d. Shares reserved for issue under options and other commitments

As on 31 March 2014, 84,000 (previous year : 90,000) Employee Stock Options were outstanding under the Employee Stock Option Plan of the Company. Each option would entitle the holder thereof to subscribe to one Equity Share of Rs. 10 each in the Company. For details of shares reserved for issue under the employee stock option (ESOP) plan of the Company, please refer note 43.



5. Money received against zero coupon convertible warrants

a. During 2010-2011, the Company issued 1,687,600 zero coupon convertible warrants on preferential basis upon payment of a consideration of Rs.10.25 per warrant. Each zero coupon convertible warrant is convertible into one equity share of Rs.10 each at a premium of Rs.31 per share on payment of remaining consideration. Holders of such warrants have the option to convert these warrants into equity shares upon payment of aforesaid consideration on or before eighteen months from the date of allotment of warrants, viz., 02 November 2010. During the year, holders of Nil (previous year 200,100) zero coupon convertible warrants exercised the option of conversion of warrants into equity shares and Nil (previous year 100) zero coupon convertible warrants has been forfeited on account of non payment of balance on due date.

Term loans from banks amounting to Rs. 199,039,685 (previous year Rs. 145,982,759) (including current maturities of long term debt amounting to Rs. 65,569,287 (previous year Rs. 51,443,577) as referred to in Note 12) are secured as under:

- Term loans from Bank of India amounting to Rs. 78,365,764 (previous year Rs 89,756,813)(including current maturities of long term debt amounting to Rs. 32,703,000(previous year Rs. 27,256,577)) and buyers credit Rs 12,842,509 (previous year Rs 11,668,202) availed as a sub limit to term loan) carrying interest rate of 2.65% and 2.90% over the bank base rate are secured by way of first pari passu charge on all the plant & machinery and furniture & fixtures of the Company excluding the fixed assets installed at packaging division at Chandigarh (KPAC), hands division at Bengaluru (KHAN-2), dials division at Barwala (KHAR) and the plant & machinery and furniture & fixtures of dials division at Parwanoo (TTPA) acquired before 31 March 2005 and second charge on all the current assets (save and except the book debts) subject to the first charge in favour of the Company''s bankers for securing the working capital limits. The term loan is further secured by way of first pari passu mortgage charge on land and building of dials division at Derabassi (KDER). The loan includes construction loan for dials unit at Parwanoo (TTPA) which is secured by first pari passu charge on land and building of TTPA. The term loans are also personally guaranteed by the Chairman and Chief Executive Officer (CEO) of the Company.

- Term loans from IDBI amounting to Rs. 8,820,000 (previous year Rs. 17,275,000)(including current maturities of long term debt amounting to Rs. 5,040,000 (previous year Rs.13,075,000)), carrying interest rate of 2.5% over the bank base rate and Corporate loan amounting to Rs. 40,000,000 ((previous year nil)(includng current maturities of long term debt amounting to Rs. 10,714,287)(previous year Nil)) are secured by way of first pari passu charge on all the plant & machinery and furniture & fixtures of KDER, tool room division at Bengaluru (EIGEN) and hands division at Bengaluru (KHAN-1) and second charge on all the current assets (save and except the book debts) subject to the first charge in favour of the Company''s bankers for securing the working capital limits. The term loan is further secured by way of first pari passu mortgage charge on land and building of KDER. The term loans are also personally guaranteed by the Chairman and Chief Executive Officer (CEO) of the Company.

-Term loan from Corporation Bank amounting to Rs. 42,313,207 (previous year Rs. 38,950,746) (including current maturities of long term debt amounting to Rs. 17,112,000 (previous year Rs 11,112,000) and buyers credit Rs 16,698,205 (previous year Rs 15,525,738) availed as a sub limit to term loan) carrying interest rate of 5.50% over the bank base rate, are secured by way of first exclusive charge on all the plant & machinery and furniture & fixtures of KHAR and KHAN-2 and second charge on all the current assets (save and except the book debts) subject to the first charge in favour of the Company''s bankers for securing the working capital limits. The loan is further secured by exclusive mortgage charge on land and building of KHAN-1.

Repayment terms of term loans from banks (including the current maturities of long term debt as referred to in Note 12) are given as under:

- Term loan from IDBI amounting to Rs. 8,820,000 is repayable in 7 quarterly instalments of Rs. 1,260,000.

- Term loan from IDBI amounting to Rs. 40,000,000 (sanctioned amount being Rs. 50,000,000) is repayable in 11 quarterly instalments of Rs. 3,571,429 and last instalment of Rs. 714,281.

- Term loan from Bank of India amounting to Rs. 27,410,504 is repayable in 15 quarterly instalments of Rs. 1,718,750 and last instalment of Rs. 1,629,254.

- Term loan from Bank of India amounting to Rs. 3,406,000 is repayable in 4 quarterly instalments of Rs. 682,000 and last instalment of Rs. 678,000.

- Term loan from Bank of India amounting to Rs. 18,238,432 is repayable in 14 quarterly instalments of Rs. 1,250,000 and last instalment of Rs. 738,432.

- Term loan from Bank of India amounting to Rs. 6,671,687 is repayable in 4 quarterly instalments of Rs. 1,400,000 and last instalment of Rs. 1,071,687.

- Term loan from Corporation Bank amounting to Rs. 29,011,412 (sanctioned amount being Rs. 50,000,000) is repayable in 10 quarterly instalments of Rs.2,778,000 and last instalment of Rs. 1,231,412.

- Term loan from Corporation Bank amounting to Rs. 30,000,000 (sanctioned amount being Rs. 30,000,000) is repayable in 20 quarterly instalments of Rs. 1,500,000.

- Term loan from Bank of India amounting to Rs. 35,481,650 (sanctioned amount Rs. 50,000,000) is repayable in 11 quarterly instalments of Rs. 3,125,000 and last instalment of Rs. 1,106,650.

b. Inter corporate deposits amounting to Rs. 15,000,000 from VBL Innovations Private Limited carrying interest rate of 16% p.a. and Rs. 15,000,000 from EON Coatings Limited carrying interest rate of 14% p.a are due for repayment in May 2014 and June 2014 respectively.

c. Inter corporate deposit amounting to Rs. 5,000,000 from Dream Digital carrying interest rate of 15% p.a. and Rs. 9,300,000 from Vardhan Properties & Investments Limited carrying interest rate of 14% p.a. are due for repayment in July 2014 and June 2015 respectively.

d. Vehicle loans from banks carrying interest rate in the range of 10% p.a. to 12.25% p.a. are secured against hypothecation of specific vehicles purchased out of the proceeds of those loans. The loans are to repaid as per the respective repayment schedules in equal monthly instalments.

e. Public deposits carrying interest rates in the range of 12% p.a. to 12.5% p.a., are repayable in 2 to 3 years from the respective dates of deposit.

7. Deferred tax liabilities (net)

In accordance with accounting standard 22 on Accounting for Taxes on Income, deferred tax charge has been recognised in the statement of profit and loss. Tax effect of significant timing differences that reverses in one or more subsequent years gave rise to the following net deferred tax items. During the previous year, pursuant to the merger of Himachal Fine Blanks Limited with the Company, Rs. 1,796,475 has been recognised as an adjustment to opening balance of deferred tax liability as on 1 April 2012 (refer note 44).

In the previous year, the Company had recognised deferred tax asset on unabsorbed depreciation amounting to Rs. 21,125,183. However, as per the return of income filed for the previous year, the Company has claimed unabsorbed depreciation amounting to Rs. 19,008,843. Hence, prior year deferred tax adjustment of Rs. 751,536 has been recognised in the statement of profit and loss on the differential amount.

(ii) Defined benefit plan/ other long term benefit plans

a. Gratuity

b. Compensated absences

The following table set out the status of the plan for gratuity and compensated absences as required under Accounting Standard (AS) - 15 (R) - Employee benefits and the reconciliation of opening and closing balances of the present value of the defined benefit obligation:

a. Dues to micro, small and medium enterprises pursuant to section 22 of the Micro, Small and Medium Enterprises Development Act (MSMED), 2006

Amount due to entities covered under Micro, Small and Medium Enterprises as defined in the Micro, Small, Medium Enterprises Development Act, 2006, have been identified on the basis of information available with the Company. There was no amount due to any such entities which needs to be disclosed. This has been relied upon by the auditors.


Mar 31, 2013

A. Basis of preparation

The financial statements of KDDL Limited ("the Company") have been prepared on accrual basis under the historical cost convention, in accordance with the generally accepted accounting principles in India and to comply with the Accounting Standards referred to in sub section (3C) of section 211 of the Companies Act, 1956 ("the Act") and the Rules framed there under. The accounting policies have been consistently applied by the Company unless otherwise stated.

All assets and liabilities have been classified as current or non-current, wherever applicable as per the operating cycle of the Company in terms with the guidance as set out in the Revised Schedule VI to the Companies Act, 1956.

b. Use of estimates

In preparing the financial statements in conformity with accounting principles generally accepted in India, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Any revisions to accounting estimates are recognised in the current and future periods.

c. Revenue recognition

a) Revenue from sale of goods is recognised when the significant risks and rewards in respect of ownership of the goods are transferred to the customer and is stated inclusive of excise duty and net of trade discounts, sales returns and sales tax wherever applicable.

b) Duty Entitlement Pass Book (DEPB) and any other scheme are recognized in the statement of profit and loss when the right to receive credit as per the terms of the scheme is established in respect of the exports made.

c) Revenue in respect of tool development and job charges is recognized as per the terms of the contract with the customers.

d) Interest income is recognised on a time proportion basis, taking into account the amount outstanding and the rates applicable.

e) Dividend income is recognised when the Company''s right to receive the same is established.

d. Fixed assets

Fixed assets are stated at cost (gross block) less accumulated depreciation and impairment losses, if any. Cost comprises the purchase price (net of Cenvat credit availed) and any attributable cost of bringing the asset to its working condition for its intended use.

Expenditure on account of modification / alteration in plant and machinery / building, which increases the future benefit from the existing asset beyond its previous assessed standard of performance, is capitalised.

Borrowing costs directly attributable to acquisition or construction of fixed assets, which necessarily takes a substantial period of time to get ready for their intended use are capitalised.

Assets acquired on hire purchase are capitalised at the inception of the hire purchase agreement. Interest cost is charged to statement of profit and loss on accrual basis.

e. Depreciation and amortisation

Depreciation is provided on straight line method as per the rates specified in Schedule XIV to the Act, as applicable at the time of addition of the respective fixed assets, on pro-rata basis from the month of addition, except for the following:

- Depreciation on improvements carried out on buildings taken on lease (included under buildings) is provided over the period of the lease.

- Depreciation on a particular class of dies and tools manufactured by the Company and put to use after 01 April 2003 is provided over a period of 3 years.

- The rates of depreciation are indicative of the useful lives of the assets.

- The cost of leasehold land is not amortised as these are perpetual leases.

- Know-how is amortised overa period of fouryears.

- Software is amortised over a period not exceeding six years.

f. Inventories

Inventories are valued as follows:

1. Raw materials & components, stores and spares, finished goods and stock in process: At lower of cost and net realisable value.

2. Scrap: At estimated realisable value.

3. Cost of inventories is ascertained on the following basis:

a) Raw materials and components and stores & spares on moving weighted average basis.

b) Cost of finished goods and stock in process comprise material cost on moving weighted average. Finished goods are stated inclusive of excise duty, labour and related estimated overheads including depreciation.

g. Investments

Investments that are readily realisable 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.

Long-term investments are stated at cost. Provision is made for diminution in the value of long-term investments to recognise decline, if any, otherthan temporary in nature.

h. Foreign currency transactions

Investments in foreign entities are recorded at the exchange rate prevailing on the date of making the investment. Transactions in foreign currencies are recorded at the rates prevailing on the date of the transaction and monetary items denominated in foreign currency are restated at the rate prevailing on the balance sheet date.

Differences arising on foreign currency translations of transactions settled during the year are recognised in the statement of profit and loss.

Forward exchange contracts not covered under Accounting Standard 11 ''Effect of change in Foreign Exchange Rates'', that are entered to hedge the foreign currency risk of highly probable forecast transactions and unrecognized firm commitments are marked to market at the balance sheet date and exchange loss is recognised in the statement of profit and loss immediately. Any gain is ignored and not recognised in the financial statements, in accordance with the principles of prudence enunciated in Accounting Standard 1- Disclosure of Accounting Policies.

The premium or discount arising at the inception of the forward contracts other than those entered into to hedge the foreign currency risk of firm commitments or highly probable forecast transactions is amortised as expense or income over the life of the contract.

Any profit or loss arising on cancellation or renewal of forward exchange contracts is recognised as income or expense for the year.

i. Employee benefits

The Company''s contribution to provident fund, being a defined contribution plan, is recognised in the statement of profit and loss.

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognised as a liability determined based on actuarial valuation using the Projected Unit Credit Method at the balance sheet date. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to the statement of profit and loss in the year in which such gains or losses arise.

Gratuity is a post employment defined benefit plan. The present value of obligation for gratuity is determined based on actuarial valuation using the Projected Unit Credit Method, less the fair value of plan assets, together with adjustments for unrecognised actuarial gains or losses and past service costs. Gratuity and superannuation funds are administered by trustees of independently constituted trusts. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to the statement of profit and loss in the year in which such gains or losses arise.

In respect of superannuation, the Company makes contribution to Life Insurance Corporation of India ("LIC") of an amount payable by the trusts to LIC, which is charged to the statement of profit and loss.

j. Employee Stock Option Scheme (ESOS)

Stock options granted to the employees under the stock options schemes are accounted at intrinsic value as per the accounting treatment prescribed by the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (''Guidelines'') and guidance note on Employee share based payments issued by the Institute of Chartered Accountants of India. Accordingly, the excess of market price, determined as per the Guidelines and guidance note, of underlying equity shares (market value), over the exercise price of the options is recognised as deferred stock compensation expense and is charged to statement of profit and loss on a straight line basis over the vesting period of the options. The amortised portion of the cost is shown under shareholders''funds. k. Taxes on income

Tax expense comprises current tax and deferred income tax.

Current tax is determined as the amount of tax payable in respect of taxable income for the year.

Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. In respect of carry forward losses and unabsorbed depreciation, deferred tax assets are recognized only to the extent there is virtual certainty that sufficient future taxable income will be available against which such losses can be realised.

Minimum Alternate tax (''MAT'') credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which MAT credit becomes eligible to be recognised as an asset in accordance with the recommendations contained in guidance note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the statement of profit and loss and shown as MAT credit entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT credit entitlement to the extent there is no longer convincing evidence to the effect that the Company will pay normal income tax during the specified period.

I. Earnings per share

The earnings considered in ascertaining the Company''s earnings per share comprise the net profit or loss for the year attributable to the equity shareholders. Earnings per share are computed using the weighted average number of shares outstanding during the year.

For the purpose of calculating diluted earning per share, the net profit or loss for the period attributable to equity share holders and the weighted average number of shares outstanding during the period are adjusted for the effect of all dilutive potential equity shares.

m. Leases

Leases of assets under which significant risks and rewards of ownership are effectively retained by the lessor are classified as operating leases. Lease rentals in respect of assets taken under an operating lease are charged to the statement of profit and loss on a straight line basis over the lease term.

In respect of assets given on operating lease, income is being recognised on a straight line basis over the lease term.

n. Contingent liabilities and provisions

The Company makes a provision when there is a present obligation as a result of a past event where the outflow of economic resources is probable and a reliable estimate of the amount of obligation can be made. A disclosure is made for possible or present obligations that may but probably will not require outflow of resources or where a reliable estimate cannot be made, as a contingent liability in the financial statements.

o. Impairment of assets

The Company on an annual basis makes an assessment of any indicator that may lead to impairment of assets. If any such indication exists, the Company estimates the recoverable amount of the assets. If such recoverable amount is less than the carrying amount, then the carrying amount is reduced to its recoverable amount by treating the difference as impairment loss and is charged to the statement of profit and loss.


Mar 31, 2012

A. Basis of preparation

The financial statements of KDDL Limited ("the Company") have been prepared on accrual basis under the historical cost convention, in accordance with the generally accepted accounting principles in India and to comply with the Accounting Standards referred to in sub section (3C) of section 211 of the Companies Act, 1956 ("the Act") and the Rules framed there under. The accounting policies have been consistently applied by the Company unless otherwise stated.

All assets and liabilities have been classified as current or non-current, wherever applicable as per the operating cycle of the Company in terms with the guidance as set out in the Revised Schedule VI to the Companies Act, 1956.

b. Use of estimates

In preparing the financial statements in conformity with accounting principles generally accepted in India, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Any revisions to accounting estimates are recognised in the current and future periods.

c. Revenue recognition

a) Revenue from sale of goods is recognised when the significant risks and rewards in respect of ownership of the goods are transferred to the customer and is stated inclusive of excise duty and net of trade discounts, sales returns and sales tax wherever applicable.

b) Duty Entitlement Pass Book (DEPB) and any other scheme are recognized in the statement of profit and loss when the right to receive credit as per the terms of the scheme is established in respect of the exports made.

c) Revenue in respect of tool development and job charges is recognized as per the terms of the contract with the customers.

d) Interest income is recognised on a time proportion basis, taking into account the amount outstanding and the rates applicable.

e) Dividend income is recognised when the Company's right to receive the same is established.

d. Fixed assets

Fixed assets are stated at cost (gross block) less accumulated depreciation and impairment losses, if any. Cost comprises the purchase price (net of Cenvat credit availed) and any attributable cost of bringing the asset to its working condition for its intended use.

Expenditure on account of modification / alteration in plant and machinery / building, which increases the future benefit from the existing asset beyond its previous assessed standard of performance, is capitalised.

Borrowing costs directly attributable to acquisition or construction of fixed assets, which necessarily takes a substantial period of time to get ready for their intended use are capitalised.

Assets acquired on hire purchase are capitalised at the inception of the hire purchase agreement. Interest cost is charged to statement of profit and loss on accrual basis.

e. Depreciation and amortisation

Depreciation is provided on straight line method as per the rates specified in Schedule XIV to the Act, as applicable at the time of addition of the respective fixed assets, on pro-rata basis from the month of addition, except for the following:

- Depreciation on improvements carried out on buildings taken on lease (included under buildings) is provided over the period of the lease.

- Depreciation on a particular class of dies and tools manufactured by the Company and put to use after 01 April 2003 is provided over a period of 3 years.

- The rates of depreciation are indicative of the useful lives of the assets.

- The cost of leasehold land is not amortised as these are perpetual leases.

- Know-how is amortised over a period of four years.

- Software is amortised over a period not exceeding six years.

f. Inventories

Inventories are valued as follows:

1. Raw materials & components, stores and spares, finished goods and stock in process: At lower of cost and net realisable value.

2. Scrap: At estimated realisable value.

3. Cost of inventories is ascertained on the following basis:

a) Raw materials and components and stores & spares on moving weighted average basis.

b) Cost of finished goods and stock in process comprise material cost on moving weighted average. Finished goods are stated inclusive of excise duty, labour and related estimated overheads including depreciation.

g. Investments

Investments that are readily realisable 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.

Long-term investments are stated at cost. Provision is made for diminution in the value of long-term investments to recognise decline, if any, other than temporary in nature.

h. Foreign currency transactions

Investments in foreign entities are recorded at the exchange rate prevailing on the date of making the investment. Transactions in foreign currencies are recorded at the rates prevailing on the date of the transaction and monetary items denominated in foreign currency are restated at the rate prevailing on the balance sheet date.

Differences arising on foreign currency translations of transactions settled during the year are recognised in the statement of profit and loss.

The exchange differences arising on forward contracts other than those entered into to hedge the foreign currency risk of firm commitments or highly probable forecast transactions are recognised in the year in which they arise based on the difference between

i) foreign currency amount of the contract translated at the exchange rate on the reporting date and

ii) the same foreign currency amount translated at the later of the date of inception of the forward exchange contract or the last reporting date.

The premium or discount arising at the inception of the forward contracts other than those entered into to hedge the foreign currency risk of firm commitments or highly probable forecast transactions is amortised as expense or income over the life of the contract.

Any profit or loss arising on cancellation or renewal of forward exchange contracts is recognised as income or expense for the year.

i. Employee benefits

The Company's contribution to provident fund, being a defined contribution plan, is recognised in the statement of profit and loss.

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognised as a liability determined based on actuarial valuation using the Projected Unit Credit Method at the balance sheet date. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to the statement of profit and loss in the year in which such gains or losses arise.

Gratuity is a post employment defined benefit plan. The present value of obligation for gratuity is determined based on actuarial valuation using the Projected Unit Credit Method, less the fair value of plan assets, together with adjustments for unrecognised actuarial gains or losses and past service costs. Gratuity and superannuation funds are administered by trustees of independently constituted trusts. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to the statement of profit and loss in the year in which such gains or losses arise.

In respect of superannuation, the Company makes contribution to Life Insurance Corporation of India ("LIC") of an

j. Employee Stock Option Scheme(ESOS)

Stock options granted to the employees under the stock options schemes are accounted at intrinsic value as per the accounting treatment prescribed by the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 ('Guidelines') and guidance note on Employee share based payments issued by the Institute of Chartered Accountants of India. Accordingly, the excess of market price, determined as per the Guidelines and guidance note, of underlying equity shares (market value), over the exercise price of the options is recognised as deferred stock compensation expense and is charged to statement of profit and loss on a straight line basis over the vesting period of the options. The amortised portion of the cost is shown under shareholders' funds.

k. Taxes on income

Tax expense comprises current tax and deferred income tax.

Current tax is determined as the amount of tax payable in respect of taxable income for the year.

Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. In respect of carry forward losses and unabsorbed depreciation, deferred tax assets are recognized only to the extent there is virtual certainty that sufficient future taxable income will be available against which such losses can be realised.

Minimum Alternate tax ('MAT') credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which MAT credit becomes eligible to be recognised as an asset in accordance with the recommendations contained in guidance note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the statement of profit and loss and shown as MAT credit entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT credit entitlement to the extent there is no longer convincing evidence to the effect that the Company will pay normal income tax during the specified period.

l. Earnings per share

The earnings considered in ascertaining the Company's earnings per share comprise the net profit or loss for the year attributable to the equity shareholders. Earnings per share are computed using the weighted average number of shares outstanding during the year.

For the purpose of calculating diluted earning per share, the net profit or loss for the period attributable to equity share holders and the weighted average number of shares outstanding during the period are adjusted for the effect of all dilutive potential equity shares.

m. Leases

Leases of assets under which significant risks and rewards of ownership are effectively retained by the lessor are classified as operating leases. Lease rentals in respect of assets taken under an operating lease are charged to the statement of profit and loss on a straight line basis over the term of the lease.

In respect of assets given on operating lease, income is being recognised on a straight line basis over the term of the lease.

n. Contingent liabilities and provisions

The Company makes a provision when there is a present Obligation as a result of a past event where the outflow of economic resources is probable and a reliable estimate of the amount of obligation can be made. A disclosure is made for possible or present obligations that may but probably will not require outflow of resources or where a reliable estimate cannot be made, as a contingent liability in the financial statements.

o. Impairment of assets

The Company on an annual basis makes an assessment of any indicator that may lead to impairment of assets. If any such indication exists, the Company estimates the recoverable amount of the assets. If such recoverable amount is less than the carrying amount, then the carrying amount is reduced to its recoverable amount by treating the difference as impairment loss and is charged to the statement of profit and loss.


Mar 31, 2011

1. Basis of preparation

The financial statements of KDDL Limited ("the Company") have been prepared on accrual basis under the historical cost convention, in accordance with the generally accepted accounting principles in India and to comply with the Accounting Standards referred to in sub section (3C) of section 211 of the Companies Act, 1956 ("the Act") and the Rules framed there under. The accounting policies have been consistently applied by the Company unless otherwise stated.

2. Use of estimates

In preparing the financial statements in conformity with accounting principles generally accepted in India, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Any revisions to accounting estimates are recognised in the current and future periods.

3. Revenue recognition

a) Revenue from sale of goods is recognised when the significant risks and rewards in respect of ownership of the goods are transferred to the customer and is stated inclusive of excise duty and net of trade discounts, sales returns and sales tax wherever applicable.

b) Duty Entitlements Pass Book (DEPB) and any other scheme are recognized in the profit and loss account when the right to receive credit as per the terms of the scheme is established in respect of the exports made.

c) Revenue in respect of tool development and job charges is recognized as per the terms of the contract with the customers.

d) Interest income is recognized on a time proportion basis, taking into account the amount outstanding and the rates applicable.

e) Dividend income is recognized when the Company's right to receive the same is established.

4. Fixed assets

Fixed assets are stated at cost (gross block) less accumulated depreciation and impairment losses, if any. Cost comprises the purchase price (net of Cenvat credit availed) and any attributable cost of bringing the asset to its working condition for its intended use.

Expenditure on account of modification / alteration in plant and machinery / building, which increases the future benefit from the existing asset beyond its previous assessed standard of performance, is capitalised.

Borrowing costs directly attributable to acquisition or construction of fixed assets, which necessarily takes a substantial period of time to get ready for their intended use are capitalized.

Assets acquired on hire purchase are capitalized at the inception of the hire purchase agreement. Interest cost is charged to profit and loss account on accrual basis.

5. Depreciation and amortisation

Depreciation is provided on straight line method as per the rates specified in Schedule XIV to the Act, as applicable at the time of addition of the respective fixed assets, on pro-rata basis from the month of addition, except for the following:

Depreciation on improvements carried out on buildings taken on lease (included under buildings) is provided over the period of the lease.

Depreciation on a particular class of dies and tools manufactured by the Company and put to use after 01 April 2003 is provided over a period of 3 years.

The rates of depreciation are indicative of the useful lives of the assets.

The cost of leasehold land is not amortised as these are perpetual leases.

Know-how is amortised over a period of four years.

Software is amortised over a period not exceeding six years.

6. Inventories

Inventories are valued as follows:

1. Raw materials & components, stores and spares, finished goods and stock in process: At lower of cost and net realisable value.

2. Scrap: At estimated realisable value.

3. Cost of inventories is ascertained on the following basis:

a) Raw materials and components and stores & spares - on moving weighted average basis.

b) Cost of finished goods and stock in process comprise material cost on moving weighted average. Finished goods are stated inclusive of excise duty, labour and related estimated overheads including depreciation.

7. Investments

Investments that are readily realisable 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.

Long-term investments are stated at cost. Provision is made for diminution in the value of long-term investments to recognise decline, if any, other than temporary in nature.

8. Foreign currency transactions

Investments in foreign entities are recorded at the exchange rate prevailing on the date of making the investment. Transactions in foreign currencies are recorded at the rates prevailing on the date of the transaction and monetary items denominated in foreign currency are restated at the rate prevailing on the balance sheet date.

Differences arising on foreign currency translations of transactions settled during the year are recognised in the profit and loss account.

The exchange differences arising on forward contracts other than those entered into to hedge the foreign currency risk of firm commitments or highly probable forecast transactions are recognised in the year in which they arise based on the difference between i) foreign currency amount of the contract translated at the exchange rate on the reporting date and ii) the same foreign currency amount translated at the later of the date of inception of the forward exchange contract or the last reporting date.

The premium or discount arising at the inception of the forward contracts other than those entered into to hedge the foreign currency risk of firm commitments or highly probable forecast transactions is amortised as expense or income over the life of the contract.

Any profit or loss arising on cancellation or renewal of forward exchange contracts is recognised as income or expense for the year.

9. Employee benefits

The Company's contribution to provident fund, being a defined contribution plan, is recognised in the profit and loss account. Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognized as a liability determined based on actuarial valuation using the Projected Unit Credit Method at the Balance Sheet date. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to the Profit and Loss Account in the year in which such gains or losses arise.

Gratuity is a post employment defined benefit plan. The present value of obligation for gratuity is determined based on actuarial valuation using the Projected Unit Credit Method, less the fair value of plan assets, together with adjustments for unrecognized actuarial gains or losses and past service costs. Gratuity and superannuation funds are administered by trustees of independently constituted trusts. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to the Profit and Loss Account in the year in which such gains or losses arise. In respect of superannuation, the Company makes contribution to Life Insurance Corporation of India ("LIC") of an amount payable by the trusts to LIC, which is charged to the profit and loss account.

10. Taxes on income

Tax expense comprises current tax and deferred income tax.

Current tax is determined as the amount of tax payable in respect of taxable income for the year.

Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. In respect of carry forward losses and unabsorbed depreciation, deferred tax assets are recognized only to the extent there is virtual certainty that sufficient future taxable income will be available against which such losses can be realised.

Minimum alternate tax ('MAT1) credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which MAT credit becomes eligible to be recognised as an asset in accordance with the recommendations contained in guidance note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the Profit and Loss Account and shown as MAT credit entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT credit entitlement to the extent there is no longer convincing evidence to the effect that the company will pay normal income tax during the specified period.

11. Earnings per share

The earnings considered in ascertaining the Company's earnings per share comprise the net profit or loss for the year attributable to the equity shareholders. Earnings per share are computed using the weighted average number of shares outstanding during the year.

For the purpose of calculating diluted earning per share, the net profit or loss for the period attributable to equity share holders and the weighted average number of shares outstanding during the period are adjusted for the effect of all dilutive potential equity shares.

12. Leases

Lease of assets under which significant risks and rewards of ownership are effectively retained by the lessor are classified as operating leases. Lease rentals in respect of assets taken under an operating lease are charged to the profit and loss account on a straight line basis over the term of the lease. In respect of assets given on operating lease, income is being recognised on a straight line basis over the term of the lease.

13. Contingent liabilities and provisions

The Company makes a provision when there is a present obligation as a result of a past event where the outflow of economic resources is probable and a reliable estimate of the amount of obligation can be made. A disclosure is made for possible or present obligations that may but probably will not require outflow of resources or where a reliable estimate cannot be made, as a contingent liability in the financial statements.

14. Impairment of assets

The Company on an annual basis makes an assessment of any indicator that may lead to impairment of assets. If any such indication exists, the Company estimates the recoverable amount of the assets. If such recoverable amount is less than the carrying amount, then the carrying amount is reduced to its recoverable amount by treating the difference as impairment loss and is charged to the profit and loss account.


Mar 31, 2010

1. Basis of preparation The financial statements of KDDL Limited ("the Company") have been prepared on accrual basis under the historical cost convention, in accordance with the generally accepted accounting principles in India and to comply with the Accounting Standards referred to in sub section (3C) of section 211 of the Companies Act, 1956 ("the Act") and the Rules framed there under. The accounting policies have been consistently applied by the Company unless otherwise stated.

2. Use of estimates

In preparing the financial statements in conformity with accounting principles generally accepted in India, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Any revisions to accounting estimates are recognised in the current and future periods.

3. Revenue recognition

a) Revenue from sale of goods is recognised when the significant risks and rewards in respect of ownership of the goods are transferred to the customer and is stated inclusive of excise duty and net of trade discounts, sales returns and sales tax wherever applicable.

b) Export entitlements under the Duty Entitlement Pass Book scheme are recognised in the profit and loss account when the right to receive credit as per the terms of the scheme is established in respect of the exports made.

c) Revenue in respect of tool development and job charges is recognized as per the terms of the contract with the customers.

d) Interest income is recognized on a time proportion basis, taking into account the amount outstanding and the rates applicable.

e) Dividend income is recognized when the Companys right to receive the same is established.

4. Fixed assets

Fixed assets are stated at cost (gross block) less accumulated depreciation and impairment losses, if any. Cost

comprises the purchase price (net of Cenvat credit availed) and any attributable cost of bringing the asset to its working condition for its intended use.

Expenditure on account of modification / alteration in plant and machinery / building, which increases the future benefit from the existing asset beyond its previous assessed standard of performance, is capitalised.

Borrowing costs directly attributable to acquisition or construction of fixed assets, which necessarily takes a substantial period of time to get ready for their intended use are capitalized.

5. Depreciation

Depreciation is provided on straight line method as per the rates specified in Schedule XIV to the Act, as applicable at the time of addition of the respective fixed assets, on pro-rata basis from the month of addition, except for the following:

Depreciation on improvements carried out on buildings taken on lease (included under buildings) is provided over the period of the lease. Depreciation on a particular class of dies and tools manufactured by the Company and put to use after 01 April 2003 is provided over a period of 3 years.

The above rates of depreciation are indicative of the useful lives of the assets.

The cost of leasehold land is not amortised.

Know-how is amortised over a period of four years.

6. Inventories

Inventories are valued as follows:

1. Raw materials & components, stores and spares, finished goods and stock in process: At lower of cost and net realisable value.

2. Scrap: At estimated realisable value.

3. Cost of inventories is ascertained on the following basis:

a) Raw materials and components and stores & spares - on moving weighted average basis.

b) Cost of finished goods and stock in process comprise material, labour and related estimated overheads including depreciation.

7. Investments

Investments that are readily realisable 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.

Long-term investments are stated at cost. Provision is made for diminution in the value of long-term investments to recognise decline, if any, other than temporary in nature.

8. Foreign currency transactions

Investments in foreign entities are recorded at the exchange rate prevailing on the date of making the investment. Transactions in foreign currencies are recorded at the rates prevailing on the date of the transaction and monetary items denominated in foreign currency are restated at the rate prevailing on the balance sheet date.

Differences arising on foreign currency translations of transactions settled during the year are recognised in the profit and loss account.

The exchange differences arising on forward contracts other than those entered into to hedge the foreign currency risk of firm commitments or highly probable forecast transactions are recognised in the year in which they arise based on the difference between

i) foreign currency amount of the contract translated at the exchange rate on the reporting date and

ii) the same foreign currency amount translated at the later of the date of inception of the forward exchange contract or the last reporting date.

The premium or discount arising at the inception of the forward contracts other than those entered into to hedge the foreign currency risk of firm commitments or highly probable forecast transactions is amortised as expense or income over the life of the contract.

Any profit or loss arising on cancellation or renewal of forward exchange contracts is recognised as income or expense for the year.

9. Employee benefits

The Companys contribution to provident fund, being a defined contribution plan, is recognised in the profit and loss account. Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognized as a liability determined based on actuarial valuation using the Projected Unit Credit Method at the Balance Sheet date. Gratuity is a post employment defined benefit plan. The present value of obligation for gratuity is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service. Gratuity and superannuation funds are administered by trustees of independently constituted trusts.

In respect of superannuation, the Company makes contribution to Life Insurance Corporation of India ("LIC") of an amount payable by the trusts to LIC, which is charged to the profit and loss account.

10. Taxes on income

Tax expense comprises current tax and deferred income tax.

Current tax is determined as the amount of tax payable in respect of taxable income for the year.

Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. In respect of carry forward losses and unabsorbed depreciation, deferred tax assets are recognized only to the extent there is virtual certainty that sufficient future taxable income will be available against which such losses can be realised. Minimum alternate tax payable under the provisions of the Income Tax Act, 1961 is recognised as an asset in the year in which credit becomes eligible and is set off in the year in which the Company becomes liable to pay income taxes at the enacted tax rates.

11. Earnings per share

The earnings considered in ascertaining the Companys earnings per share comprise the net profit or loss for the year attributable to the equity shareholders. Earnings per share are computed using the weighted average number of shares outstanding during the year.

For the purpose of calculating diluted earning per share, the net profit or loss for the period attributable to equity share holders and the weighted average number of shares outstanding during the period are adjusted for the effect of all dilutive potential equity shares.

12. Leases

Lease rentals in respect of assets taken under an operating lease are charged to the profit and loss account on a straight line basis over the term of the lease. In respect of assets given on operating lease, income is being recognised on a straight line basis over the term of the lease.

13. Contingent liabilities and provisions

The Company makes a provision when there is a present obligation as a result of a past event where the outflow of economic resources is probable and a reliable estimate of the amount of obligation can be made. A disclosure is made for possible or present obligations that may but probably will not require outflow of resources or where a reliable estimate i cannot be made, as a contingent liability in the financial statements. I

14. Impairment of assets

The Company on an annual basis makes an assessment of any indicator that may lead to impairment of assets. If any such indication exists, the Company estimates the recoverable amount of the assets. If such recoverable amount is less than the carrying amount, then the carrying amount is reduced to its recoverable amount by treating the difference as impairment loss and is charged to the profit and loss account. If at the balance sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciated historical cost.

 
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