Accounting Policies of Khaitan Electricals Ltd. Company

Mar 31, 2014

1.1 Basis of Accounting

a) The financial statements have been prepared under the historical cost convention in accordance with the generally accepted accounting principles and the provisions of the Companies Act,1956 as adopted consistently by the Company and Companies Act, 2013 to the extent applicable

b) The Company generally follows accrual system of accounting and recognises significant items of income and expenditure on accrual basis.

c) All Assets and Liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in the Schedule VI to the Companies'' Act, 1956. Based on the nature of operations and time between the procurement of raw material and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current and non-current classification of assets and liabilities.

1.2 Fixed Assets

a) Fixed Assets are stated at their original cost (net of accumulated depreciation and amortization) of acquisition including all related expenses of acquisition and installation.

b) Depreciation is provided on Straight Line Method at the rates prescribed under Schedule XIV to the Companies Act, 1956 from the month the assets are put to use.

c) Leasehold land is amortised, over the period of lease. Computer Software acquired is to be amortised over a period of five years on Straight Line Basis.

1.3 Inventories

a) Inventories (other than scrap) are valued at lower of cost or net realisable value. The cost of inventories is computed on weighted average basis except Trading goods the cost of which is calculated on first in first out basis. Cost of inventories comprises of purchase price, cost of conversion and other directly attributable cost that have been incurred in bringing the inventories to their respective present location and condition.

b) Scrap is valued at net realisable value.

1.4 Investments

Investments are either classified as current or long-term based on Management''s intention at the time of purchase. Long term Investments are carried at cost. Provision for diminution is made to recognise a decline, other than temporary, in the value of non current investments, scrip wise. Current Investments are valued at lower of cost or fair value, category wise. Cost of investments include acquisition cost such as brokerage, stamp duty etc.

1.5 Sales

a) Sale of goods is recognised at the time of transfer of substantial risk and rewards of ownership to the buyer for a consideration.

b) Sales is inclusive of Excise Duty and net of Sales Tax and Trade Discount.

1.6 Employee benefits

a) Short-term employee benefits are recognized as an expense at the undiscounted amount in the Statement of Profit & Loss of the year in which the related service is rendered.

b) Post employment and other long term employee benefits are recognized as an expense in the Statement of Profit & Loss for the year in which the employee has rendered services. The expense is recognized at the present value of the amount payable determined as per actuarial valuations. Actuarial gains and losses in respect of long term employee benefits are recognized in the Statement of Profit and Loss.

1.7 Research & Development

Revenue expenditure pertaining to research and development is charged to revenue in the year in which it is incurred. Capital Expenditure on Research & Development is shown as addition to Fixed Assets.

1.8 Foreign Currency Transactions

a) Transactions in Foreign Currency are initially recorded at the Exchange Rate at which the transactions are carried out.

b) Monetary items are translated at Exchange Rate prevailing at the year-end.

Any income or expense on account of exchange difference either on settlement or on translation at the year-end is recognised in the Statement of Profit and Loss.

c) Forward exchange contracts entered into for hedging purposes are accounted for separately from the underlying transactions. The premium or discount on forward exchange contract is amortized over the period of the respective contract.

1.9 Insurance Claims

Insurance claims are recognized when the amount thereof can be reasonably ascertained and the claim is likely to be received.

1.10 Deferred Revenue Expenditure

Payment to employees under employees separation scheme are amortized equally over a period of five years.

1.11 Provisions, Contingent Liabilities And Contingent Assets

Provisions are recognized in respect of obligations where, based on the evidence available, their existence at the Balance Sheet date is considered probable as a result of a past event, and the Company has a present legal obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are measured by the best estimate of the outflow of economic benefits required to settle the obligation at the balance sheet date.

Contingent liabilities are shown by way of Notes on Account in respect of obligations where, based on the evidence available, their existence at the Balance Sheet date is considered not probable.

Provisions, contingent liabilities and contingent assets are reviewed at each balance sheet date.

Re-imbursement expected in respect of expenditure to settle a provision is recognised only when it is virtually certain that the re- imbursement will be received.

Contingent assets are neither recognised nor disclosed in the Accounts.

1.12 Taxes On Income

Current tax is determined as the amount of tax payable in respect of taxable income for the year. Deferred tax is recognized, subject to consideration of prudence in respect of deferred tax assets, on timing difference, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets are reviewed as at each Balance Sheet date and written down or written up to reflect the amount that is reasonably/virtually certain to be realized.

The deferred tax for timing differences between the book and tax profit for the period is accounted for using the tax rates and laws that have been enacted or substantively enacted as of the balance sheet date.

1.13 Government Grant

a) Grants from the Government are recognised when there is reasonable assurance that the Company would comply with the conditions attached with them and the grant would be received.

b) Government grants related to specific fixed assets are adjusted with the value of the fixed asset. Government Grant received on Capital Account is shown as Capital Reserve.

c) Government grants related to revenue items are adjusted with the related expenditure. If not related to a specific expenditure, it is taken as income.

1.14 Impairment Of Assets

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

1.15 Cash flow statement

Cash flows are reported using the indirect method, whereby profit/loss before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing flows. The cash flows from operating, investing and financing activities of the Company are segregated.

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Mar 31, 2013

1.1 Basis of Accounting

a) The financial statements have been prepared under the historical cost convention in accordance with the generally accepted accounting principles and the provisions of the Companies Act,1956 as adopted consistently by the Company.

b) The Company generally follows accrual system of accounting and recognises significant items of income and expenditure on accrual basis.

c) All Assets and Liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in the Schedule VI to the Companies'' Act, 1956. Based on the nature of operations and time between the procurement of raw material and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current and non-current classification of assets and liabilities.

1.2 Fixed Assets

a) Fixed Assets are stated at their original cost (net of accumulated depreciation and amortization) of acquisition including all related expenses of acquisition and installation.

b) Depreciation is provided on Straight Line Method at the rates prescribed under Schedule XIV to the Companies Act, 1956 from the month the assets are put to use.

c) Leasehold land is amortised, over the period of lease. Computer Software acquired is to be amortised over a period of five years on Straight Line Basis.

1.3 Inventories

a) Inventories (other than scrap) are valued at lower of cost or net realisable value. The cost of inventories is computed on weighted average basis except Trading goods the cost of which is calculated on first in first out basis. The cost of Finished Goods and Work-in-Progress include cost of conversion and other cost incurred in bringing the inventories to their present location and condition.

b) Scrap is valued at net realisable value.

1.4 Investments

Non current Investments are carried at cost. Provision for diminution is made to recognise a decline, other than temporary, in the value of non current investments, scrip wise. Current Investments are valued at lower of cost or fair value, category wise. Cost of investments include acquisition cost such as brokerage, stamp duty etc.

1.5 Sales

a) Sale of goods is recognised at the time of transfer of substantial risk and rewards of ownership to the buyer for a consideration.

b) Sales is inclusive of Excise Duty and net of Sales Tax and Trade Discount.

1.6 Employee benefits

a) Short-term employee benefits are recognized as an expense at the undiscounted amount in the Statement of Profit & Loss of the year in which the related service is rendered.

b) Post employment and other long term employee benefits are recognized as an expense in the Statement of Profit & Loss for the year in which the employee has rendered services. The expense is recognized at the present value of the amount payable determined as per actuarial valuations. Actuarial gains and losses in respect of long term employee benefits are recognized in the Statement of Profit and Loss.

1.7 Research & Development

Revenue expenditure pertaining to research and development is charged to revenue in the year in which it is incurred. Capita!

Expenditure on Research & Development is shown as addition to Fixed Assets.

1.8 Foreign Currency Transactions

a) Transactions in Foreign Currency are initially recorded at the Exchange Rate at which the transactions are carried out.

b) Monetary items are translated at Exchange Rate prevailing at the year-end.

The difference in translation of monetary items and realised gains and losses on foreign exchange transactions are recognised in the Profit and Loss Account.

c) Forward exchange contracts entered into for hedging purposes are accounted for separately from the underlying transactions. The premium or discount on forward exchange contract is amortized over the period of the respective contract.

1.9 Insurance Claims

Insurance claims are recognized when the amount thereof can be reasonably ascertained and the claim is likely to be received.

1.10 Provisions, Contingent Liabilities And Contingent Assets

Provisions are recognized in respect of obligations where, based on the evidence available, their existence at the Balance Sheet date is considered probable.

Contingent liabilities are shown by way of Notes on Account in respect of obligations where, based on the evidence available, their existence at the Balance Sheet date is considered not probable. Contingent assets are not recognized in the Accounts.

1.11 Taxes On Income

Current tax is determined as the amount of tax payable in respect of taxable income for the year. Deferred tax is recognized, subject to consideration of prudence in respect of deferred tax assets, on timing difference, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

1.12 Government Grant

Government Grant received on Capital Account is shown as Capital Reserve.

1.13 Impairment Of Assets

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting periods reversed if there has been a change in the estimate of recoverable amount.

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Mar 31, 2012

1.1 Basis Of Accounting

a) The financial statements have been prepared under the historical cost convention in accordance with the generally accepted accounting principles and the provisions of the Companies Act,1956 as adopted consistently by the Company.

b) The Company generally follows accrual system of accounting and recognises significant items of income and expenditure on accrual basis.

c) All Assets and Liabilities have been classified as current or non-current as per the Company's normal operating cycle and other criteria set out in the schedule VI to the Companies Act, 1956. Based on the nature of operations and time between the procurement of raw material and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current and non-current classification of assets and liabilities.

1.2 Fixed Assets

a) Fixed Assets are stated at their original cost (net of accumulated depreciation and amortization) of acquisition including all related expenses of acquisition and installation.

b) Depreciation is provided on Straight Line Method at the rates prescribed under Schedule XIV to the Companies Act, 1956 from the month the assets are put to use.

c) Leasehold land is amortised, over the period of lease. Computer Software acquired is amortised over a period of five years on Straight Line Basis.

1.3 Inventories

a) Inventories (other than scrap) are valued at lower of cost or net realisable value.

The cost of inventories is computed on weighted average basis except Trading goods the cost for which is calculated on first in first out basis. The cost of Finished Goods and Stock-in-Process include cost of conversion and other cost incurred in bringing the inventories to their present location and condition.

b) Scrap is valued at net realisable value.

1.4 Investments

Non current Investments are carried at cost. Provision for diminution is made to recognise a decline, other than temporary, in the value of non current investments, scrip wise. Current Investments are valued at lower of cost or fair value, category wise. Cost of investments include acquisition cost such as brokerage, stamp duty etc.

1.5 Sales

a) Sale of goods is recognised at the time of transfer of substantial risk and rewards of ownership to the buyer for a consideration.

b) Sales is inclusive of Excise Duty and net of Sales Tax and Trade Discount.

1.6 Employee benefits

a) Short-term employee benefits are recognized as an expense at the undiscounted amount in the Profit & Loss Account of the year in which the related service is rendered.

b) Post employment and other long term employee benefits are recognized as an expense in the Profit & Loss Account for the year in which the employee has rendered services. The expense is recognized at the present value of the amount payable determined as per actuarial valuations. Actuarial gains and losses in respect of long term employee benefits are recognized in the Profit and Loss account.

1.7 Research & Development

Revenue expenditure pertaining to research and development is charged to revenue in the year in which it is incurred. Capital Expenditure on Research & Development is shown as addition to Fixed Assets.

1.8 Foreign Currency Transactions

a) Transactions in Foreign Currency are initially recorded at the Exchange Rate at which the transactions are carried out.

b) Monetary items are translated at Exchange Rate prevailing at the year-end.

The difference in translation of monetary items and realised gains and losses on foreign exchange transactions are recognised in the Profit and Loss Account,

c) Forward exchange contracts entered into for hedging purposes are accounted for separately from the underlying transactions. The premium or discount on forward exchange contract is amortized over the period of the respective contract.

1.9 Insurance Claims

Insurance claims are recognized when the amount thereof can be reasonably ascertained and the claim is likely to be received.

1.10 Deferred Revenue Expenditure

Payment to employees under employees separation scheme are amortized equally over a period of five years.

1.11 Provisions, Contingent Liabilities and Contingent Assets

Provisions are recognized in respect of obligations where, based on the evidence available, their existence at the Balance Sheet date is considered probable.

Contingent liabilities are shown by way of Notes to the Accounts in respect of obligations where, based on the evidence available, their existence at the Balance Sheet date is considered not probable.

Contingent assets are not recognized in the Accounts.

1.12 Taxes on Income

Current tax is determined as the amount of tax payable in respect of taxable income for the year. Deferred tax is recognized, subject to consideration of prudence in respect of deferred tax assets, on timing difference, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

1.13 Government Grant

Government Grant received on Capital Account is shown as Capital Reserve.

1.14 Impairment Of Assets

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the profit and loss account in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount. (d) The Company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share. The holders of Equity Shares are entitled to receive dividend as declared from time to time.

The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation of the company, the holders of equity shares will be entitled to receive 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.

I) General reserve is primarily created to comply with the requirements of section 205 (2A) of Companies Act. 1956. This is a free reserve and can be utilised for any general purpuse like for issue of bonus shares,payment of dividend, buy back shares etc.

ii) During the previous year ended 31st March,2011, Dividend @ Rs.1.50 per equity share was recognised as distribution to equity shareholders.

a) Nature of securities:

i) Vehicle loan from Axis Bank Ltd. and HDFC Bank are secured against hypothecation of vehicles.

ii) Rupee Term Loans from Allahabad Bank is secured by an equitable mortgage of immovable property owned by a third party and is also secured by personal guaranttee of Vice Chairman & Managing Director of the Company.

iii) Term loan from State Bank of Travancore Rs. Nil (Previous year Rs. 1,50,00,000/- was secured by hypothecation of Raw Materials, Stock-in-Process, Stock-in-Trade and Fixed Assets of Hyderabad, Faridabad, Kolkata and Poanta Sahib Factories.

iv) Home loan were secured against Immovable property situated at Kolkata are financed against the loan.

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Mar 31, 2010

1. Basis of Accounting

a) The financial statements have been prepared under the historical cost convention in accordance with the generally accepted accounting principles and the provisions of the Companies Act,1956 as adopted consistently by the Company.

b) The Company generally follows accrual system of accounting and recognises significant items of income and expenditure on accrual basis.

2. Fixed Assets

a) Fixed Assets are stated at their original cost of acquisition including all related expenses of acquisition and installation.

b) Depreciation is provided from the month the assets are put to use on Straight Line Method at the rates prescribed under Schedule XIV to the Companies Act, 1956.

c) Leasehold land is amortised, over the period of lease. Computer Software acquired is to be amortised over a period of five years on Straight Line Basis.

3. Inventories

a) Inventories (other than scrap) are valued at lower of cost or net realisable value.

The cost of inventories is computed on weighted average basis except Trading goods the cost for which is calculated on first in first out basis. The cost of Finished Goods and Stock-in-Process include cost of conversion and other cost incurred in bringing the inventories to their present location and condition.

b) Scrap is valued at net realisable value.

4. Investments

Long Term Investments are carried at cost. Provision for diminution is made to recognise a decline, other than temporary, in the value of long term investments, scrip wise. Current Investments are valued at lower of cost or fair value, category wise. Cost of investments include acquisition cost such as brokerage, stamp duty etc.

5. Sales

a) Sale of goods is recognised at the time of transfer of substantial risk and rewards of ownership to the buyer for a consideration.

b) Sales is inclusive of Excise Duty and net of Sales Tax and Trade Discount.

6. Employee benefits

a) Short-term employee benefits are recognized as an expense at the undiscounted amount in the Profit & Loss Account of the year in which the related service is rendered.

b) Post employment and other long term employee benefits are recognized as an expense in the Profit & Loss Account for the year in which the employee has rendered services. The expense is recognized at the present value of the amount payable determined as per actuarial valuations. Actuarial gains and losses in respect of post employment and long term employee benefits are recognized in the Profit and Loss account.

7. Research & Development

Revenue expenditure pertaining to research and development is charged to revenue in the year in which it is incurred Capital Expenditure on Research & Development is shown as addition to Fixed Assets.

8. Foreign Currency Transactions

a) Transactions in Foreign Currency are initially recorded at the Exchange Rate at which the transactions are carried out.

b) Monetary items are translated at Exchange Rate prevailing at the year-end.

The difference in translation of monetary items and realised gains and losses on foreign exchange transactions are recognised in the Profit and Loss Account.

c) Forward exchange contracts entered into for hedging purposes are accounted for separately from the underlying transactions. The premium or discount on forward exchange contract is amortized over the period of the respective contract.

9. insurance Claims

insurance claims are recognized upon settlement of the claims.

10. Deferred Revenue Expenditure

Payment to employees under employees separation scheme are amortized equally over a period of five years.

11. Provisions, Contingent Liabilities and Contingent Assets

Provisions are recognized in respect of obligations where, based on the evidence available, their existence at the Balance

Sheet date is considered probable.

Contingent liabilities are shown by way of Notes to the Accounts in respect of obligations where, based on the evidence

available, their existence at the Balance Sheet date is considered not probable.

Contingent assets are not recognized in the Accounts.

12. Taxes on Income

Current tax is determined as the amount of tax payable in respect of taxable income for the year. Deferred tax is recognized, subject to consideration of prudence in respect of deferred tax assets, on timing difference, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

13. Government Grant

Government Grant received on Capital Account is shown as Capital Reserve.

14. Impairment Of Assets

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the profit and loss account in the year in which an asset is identtjfed as impaired. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.