Accounting Policies of Kilburn Engineering Ltd. Company

Mar 31, 2018

Note 1: Significant Accounting Estimates and Assumptions

The preparation of the Company''s financial statements requires management to make estimates and assumptions that affect the reported values of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

Estimates and assumptions

The key assumptions concerning future and other key sources of estimating uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

Project revenue and costs

The percentage-of-completion method places considerable importance on accurate estimates of the extent of progress towards completion and may involve estimates on the scope of deliveries and services required for fulfilling the contractually defined obligations. These significant estimates include total contract costs, total contract revenues, contract risks, including technical, political and regulatory risks, and other judgments. The Company re-assesses these estimates on periodic basis and makes appropriate revisions accordingly.

Taxes

Significant management judgement is required to determine the amount of deferred tax assets (including MAT credit) that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

Employee benefit plans

The cost of defined benefit gratuity plan and other post-employment benefits are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans operated in India, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post employment benefit obligation.

The mortality rate is based on publicly available mortality tables for India. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates for the respective countries.

Further details about gratuity obligations are given in Note 34.

Fair value measurement of financial instruments

When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.

Impairment of financial assets

The impairment provision for financial assets are based on assumptions about risk of default and expected loss rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Company''s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

Allowance for uncollectible trade receivables

Trade receivables do not carry interest and are stated at their nominal values as reduced by appropriate allowances for estimated irrecoverable amounts. Estimated irrecoverable amounts are based on the aging of the receivable balances and historical experiences. Individual trade receivables are written off when management deems them not be collectible.

The Company follows ''simplified approach'' for recognition of impairment loss allowance on Trade receivables or contract revenue receivables (including revenue in excess of billing).

The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.

For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12-month ECL.

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Mar 31, 2016

1 Corporate Information

Kilburn Engineering Limited is primarily engaged in designing, manufacturing and commissioning customized equipment / systems for critical applications in several industrial sectors viz. Chemical including Soda Ash, Carbon Black, Steel, Nuclear Power, Petrochemical and Food Processing etc.

2 Significant Accounting Policies

2.1 Basis of accounting and preparation of financial statements

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013 and the relevant provisions of The 2013 Act. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.

2.2 Use of Estimates

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognized in the periods in which the results are known / materialize.

2.3 Inventories

Inventories are valued, after providing for obsolescence and other losses were considered necessary as under:

- Raw Materials/Components: at lower of cost (determined on monthly weighted average cost basis) and net realizable value.

- Stores and spare parts: at lower of cost (determined on FIFO basis) and net realizable value.

- Work-in-progress and Finished Goods: at lower of weighted average cost (including appropriate proportion of overheads) and net realizable value.

Net realizable value is estimated at the expected selling price less estimated completion and selling costs.

2.4 Depreciation/Amortization

- Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value. Depreciation on tangible fixed assets has been provided on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013. Leasehold land is amortized over the duration of the lease. Intangible assets are amortized over their estimated useful life on straight line method over a period of 5 years. (Refer Note 11).

- Assets costing Rs. 5,000/- or less are fully depreciated in the year of acquisition. Lease hold land and improvements are depreciated over the lease period.

2.5 Revenue Recognition

Revenue / Sales are recognized when significant risks and rewards associated with ownership are transferred to the buyer. Revenue from contract related activity is recognized on progress method; the stage of completion is measured by reference to the proportion that contract costs incurred for work done till the balance sheet date bears to the estimated total contract costs; full provision is made for any loss in the period in which it is foreseen.

2.6 Fixed Assets (Tangible / Intangible )

Fixed Assets are recorded at cost. The cost of fixed assets include all costs incidental to acquisition, commissioning and related internal costs. The fixed assets are carried at cost less accumulated depreciation.

2.7 Foreign currency transactions and translations

Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of transaction. Monetary assets and liabilities denominated in foreign currency as at balance sheet date are restated at the exchange rates prevailing on that date. Exchange differences on such restatement or on settlement are recognized in the Statement of profit and loss. The Company''s forward exchange contracts are not held for trading or speculation. The discount / premium arising on entering into such contract is amortized over the life of such contracts and exchange differences arising on such contracts are recognized in the Statement of Profit and Loss.

2.8 Investments

Long-term investments are stated at cost less diminution in value other than temporary. Current investments are stated at lower of cost or fair market value. Cost of investments included acquisition charges such as brokerage, fees and duties. Dividends are accounted for when declared.

2.9 Employee benefits

Employee benefits include provident fund, superannuation fund, gratuity fund and compensated absences.

Defined contribution plans

Provident fund is a defined contribution scheme and the contributions as required by the statute to Government Provident Fund are charged to Statement of profit and loss during the period in which employees perform the services that the payment covers. Superannuation fund is a defined contribution scheme. The Company contributes a sum equivalent to 15% of eligible employees'' salary to Superannuation Fund administered by a trust and managed by a life insurance company.

Defined benefit plans

Gratuity liability is defined benefit obligation and is funded with Life Insurance Corporation of India. The present value of gratuity obligation is actuarially determined based on the projected unit credit method as at the balance sheet date. Actuarial gains/losses are immediately taken to the Statement of profit and loss and are not deferred.

Short-term employee benefits

The amount of short term employee benefits expected to be paid in exchange for the services rendered by employee is recognized during the period when the employee renders the service.

Long-term employee benefits

The company accrues the liability for compensated absences based on the actuarial valuation as at the balance sheet date conducted by an independent actuary.

2.10 Borrowing Costs

Borrowing costs are recognized as an expense in the period in which they are incurred. The borrowing costs in respect of funds borrowed to finance the qualifying fixed assets until the assets are ready for commercial use are capitalized.

2.11 Taxes on Income

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the applicable tax rates and the provisions of the Income Tax Act, 1961 and other applicable tax laws.

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognized as an asset in the Balance Sheet when it is highly probable that future economic benefit associated with it will flow to the Company.

Deferred tax is recognized on timing differences between taxable income and accounting income that are capable of reversal in one or more subsequent periods. Deferred tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantially enacted on the balance sheet date. Deferred tax assets are recognized, on consideration of prudence if there is certainty that sufficient future taxable income will be available against which such deferred tax assets will be realized; deferred tax asset consisting of losses / accumulated depreciation is recognized only if there is virtual certainty supported by convincing evidence that the asset will be realized in future. Such assets are reviewed as at each Balance Sheet date to reassess reliability thereof.

2.12 Provisions, Contingent Liabilities and Contingent Assets

Provisions involve substantial degree of estimation in measurement and are recognized when it is probable that there will be outflow of resources as a result of past events. Separate disclosure in notes to accounts is made for each class of provision. Contingent Liabilities (where outflow of resources is not considered probable) are not recognized but are disclosed in notes. Contingent assets are neither recognized nor disclosed in the financial statements.

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Mar 31, 2015

2.1 Basis of accounting and preparation of financial statements

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013 ("the 2013 Act") / Companies Act, 1956 ("the 1956 Act"), as applicable. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.

2.2 Use of Estimates

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise.

2.3 Inventories

Inventories are valued, after providing for obsolescence and other losses where considered necessary as under:

* Raw Materials/Components: at lower of cost (determined on monthly weighted average cost basis) and net realizable value.

* Stores and spare parts: at lower of cost (determined on FIFO basis) and net realizable value.

* Work-in-progress and Finished Goods: at lower of weighted average cost (including appropriate proportion of overheads) and net realizable value.

Net realisable value is estimated at the expected selling price less estimated completion and selling costs.

2.4 Depreciation/Amortisation

* Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value. Depreciation on tangible fixed assets has been provided on the straightline method as per the useful life prescribed in Schedule II to the Companies Act, 2013. Leasehold land is amortised over the duration of the lease. Intangible assets are amortised over their estimated useful life on straight line method over a period of 5 years. (Refer Note 10).

* Assets costing Rs. 5,000/- or less are fully depreciated in the year of acquisition. Lease hold land and improvements are depreciated over the lease period.

2.5 Revenue Recognition

Revenue / Sales are recognized when significant risks and rewards associated with ownership are transferred to the buyer. Revenue from contract related activity is recognised on progress method; the stage of completion is measured by reference to the proportion that contract costs incurred for work done till the balance sheet date bears to the estimated total contract costs; full provision is made for any loss in the period in which it is foreseen.

2.6 Fixed Assets (Tangible / Intangible )

Fixed Assets are recorded at cost. The cost of fixed assets include all costs incidental to acquisition, commissioning and related internal costs. The fixed assets are carried at cost less accumulated depreciation.

2.7 Foreign currency transactions and translations

Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of transaction. Monetary assets and liabilities denominated in foreign currency as at balance sheet date are restated at the exchange rates prevailing on that date. Exchange differences on such restatement or on settlement are recognized in the Statement of profit and loss. The Company's forward exchange contracts are not held for trading or speculation. The discount / premium arising on entering into such contract is amortised over the life of such contracts and exchange differences arising on such contracts are recognised in the Statement of Profit and Loss.

2.8 Investments

Long-term investments are stated at cost less diminution in value other than temporary. Current investments are stated at lower of cost or fair market value. Cost of investments included acquisition charges such as brokerage, fees and duties. Dividends are accounted for when declared.

2.9 Employee benefits

Employee benefits include provident fund, superannuation fund, gratuity fund and compensated absences.

Defined contribution plans

Provident fund is a defined contribution scheme and the contributions as required by the statute to Government Provident Fund are charged to Statement of profit and loss during the period in which employees perform the services that the payment covers. Superannuation fund is a defined contribution scheme. The Company contributes a sum equivalent to 15% of eligible employees' salary to Superannuation Fund administered by a trust and managed by a life insurance company.

Defined benefit plans

Gratuity liability is defined benefit obligation and is funded with Life Insurance Corporation of India. The present value of gratuity obligation is actuarially determined based on the projected unit credit method as at the balance sheet date. Actuarial gains/losses are immediately taken to the Statement of profit and loss and are not deferred.

Short-term employee benefits

The amount of short term employee benefits expected to be paid in exchange for the services rendered by employee is recognized during the period when the employee renders the service.

Long-term employee benefits

The company accrues the liability for compensated absences based on the actuarial valuation as at the balance sheet date conducted by an independent actuary.

2.10 Borrowing Costs

Borrowing costs are recognised as an expense in the period in which they are incurred. The borrowing costs in respect of funds borrowed to finance the qualifying fixed assets until the assets are ready for commercial use are capitalised.

2.11 Taxes on Income

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the applicable tax rates and the provisions of the Income Tax Act, 1961 and other applicable tax laws. Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is highly probable that future economic benefit associated with it will flow to the Company. Deferred tax is recognized on timing differences between taxable income and accounting income that are capable of reversal in one or more subsequent periods. Deferred tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantially enacted on the balance sheet date. Deferred tax assets are recognized, on consideration of prudence if there is certainty that sufficient future taxable income will be available against which such deferred tax assets will be realized; deferred tax asset consisting of losses / accumulated depreciation is recognized only if there is virtual certainty supported by convincing evidence that the asset will be realized in future. Such assets are reviewed as at each Balance Sheet date to reassess realisability thereof.

2.12 Provisions, Contingent Liabilities and Contingent Assets

Provisions involve substantial degree of estimation in measurement and are recognized when it is probable that there will be outflow of resources as a result of past events. Separate disclosure in notes to accounts is made for each class of provision. Contingent Liabilities (where outflow of resources is not considered probable) are not recognized but are disclosed in notes. Contingent assets are neither recognized nor disclosed in the financial statements.

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Mar 31, 2014

1.1 Basis of accounting and preparation of financial statements

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under Section 211 (3C) of the Companies Act, 1956 ("the 1956 Act") (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 ("the 2013 Act") in terms of General circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs) and the relevant provisions of the 1956 Act / 2013 Act, as applicable. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.

2.2 Use of Estimates

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise.

2.3 Inventories

Inventories are valued, after providing for obsolescence and other losses where considered necessary as under:

- Raw Materials/Components: at lower of cost (determined on monthly weighted average cost basis) and net realizable value.

- Stores and spare parts: at lower of cost (determined on FIFO basis) and net realizable value.

- Work-in-progress and Finished Goods: at lower of weighted average cost (including appropriate proportion of overheads) and net realizable value.

Net realisable value is estimated at the expected selling price less estimated completion and selling costs.

2.4 Depreciation/ Amortisation

Depreciation is provided on the straight-line method as per the rates and in the manner specified in Schedule XIV of Companies Act, 1956. Assets costing '' 5,000/- or less are fully depreciated in the year of acquisition. Lease hold land and improvements are depreciated over the lease period. Intangible assets are amortised over 6 years.

2.5 Revenue Recognition

Revenue / Sales are recognized when significant risks and rewards associated with ownership are transferred to the buyer. Revenue from contract related activity is recognised on progress method; the stage of completion is measured by reference to the proportion that contract costs incurred for work done till the balance sheet date bears to the estimated total contract costs; full provision is made for any loss in the period in which it is foreseen.

2.6 Fixed Assets (Tangible / Intangible)

Fixed Assets are recorded at cost. The cost of fixed assets include all costs incidental to acquisition, commissioning and related internal costs. The fixed assets are carried at cost less accumulated depreciation.

2.7 Foreign currency transactions and translations

Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of transaction. Monetary assets and liabilities denominated in foreign currency as at balance

sheet date are restated at the exchange rates prevailing on that date. Exchange differences on such restatement or on settlement are recognized in the Statement of profit and loss. The Company''s forward exchange contracts are not held for trading or speculation. The discount / premium arising on entering into such contract is amortised over the life of such contracts and exchange differences arising on such contracts are recognised in the Statement of Profit and Loss.

2.8 Investments

Long-term investments are stated at cost less diminution in value other than temporary. Current investments are stated at lower of cost or fair market value. Cost of investments included acquisition charges such as brokerage, fees and duties. Dividends are accounted for when declared.

2.9 Employee benefits

Employee benefits include provident fund, superannuation fund, gratuity fund and compensated absences.

Defined contribution plans

Provident fund is a defined contribution scheme and the contributions as required by the statute to Government Provident Fund are charged to Statement of profit and loss during the period in which employees perform the services that the payment covers. Superannuation fund is a defined contribution scheme. The Company contributes a sum equivalent to 15% of eligible employees'' salary to Superannuation Fund administered by a trust and managed by a life insurance Company.

Defined benefit plans

Gratuity liability is defined benefit obligation and is funded with Life Insurance Corporation of India. The present value of gratuity obligation is actuarially determined based on the projected unit credit method as at the balance sheet date. Actuarial gains/losses are immediately taken to the Statement of profit and loss and are not deferred.

Short-term employee benefits

The amount of short term employee benefits expected to be paid in exchange for the services rendered by employee is recognized during the period when the employee renders the service.

Long-term employee benefits

The Company accrues the liability for compensated absences based on the actuarial valuation as at the balance sheet date conducted by an independent actuary.

2.10 Borrowing Costs

Borrowing costs are recognized as an expense in the period in which they are incurred. The borrowing costs in respect of funds borrowed to finance the qualifying fixed assets until the assets are ready for commercial use are capitalized.

2.11 Taxes on Income

Income Tax expense comprises current tax and deferred tax. Deferred tax is recognized on timing differences between taxable income and accounting income that are capable of reversal in one or more subsequent periods. Deferred tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantially enacted on the balance sheet date. Deferred tax assets are recognized, on consideration of prudence if there is certainty that sufficient future taxable income will be available against which such deferred tax assets will be realized; deferred tax asset consisting of losses / accumulated depreciation is recognized only if there is virtual certainty that the asset will be realized in future. Such assets are reviewed as at each Balance Sheet date to reassess realisability thereof.

2.12 Provisions, Contingent Liabilities and Contingent Assets

Provisions involve substantial degree of estimation in measurement and are recognized when it is probable that there will be outflow of resources as a result of past events. Separate disclosure in notes to accounts is made for each class of provision. Contingent Liabilities (where outflow of resources is not considered probable) are not recognized but are disclosed in notes. Contingent assets are neither recognized nor disclosed in the financial statements.

The Company has only one class of shares referred to above as Equity Shares having par value of Rs.10/-. Each holder of equity share is entitled to one vote per share.

Notes:

Details of security:

1. Equitable Mortgage created by way of Deposit of Title Deed on the Company''s immovable property situated at Plot No.6, Kalyan Bhiwandi Industrial Area, Thane.

2. Hypothecation of present and future stocks of raw materials, semi-finished goods, finished goods and book debts by way of first charge and also by hypothecation of movable plant and machinery by way of first charge.

Note

Details of terms of repayment and security provided for the Term Loan from IL & FS Financia Services :

Secured by pledge of 850,000 shares of Mcnally Bharat Engineering Company Limited and further secure by cross default arrangement on securities offered by Group Companies;

Terms of Repayment: Payable in eight equal installments of Rs.125 Lacs on quarterly basis, commencing fror June, 2012 to March, 2014.

Rate of Interest : 475 basis points below the Long Term Borrowing Monthly Rate (LTBMR)of IL&FS. Durin the year, the rate varied from 14% p.a. to 15.25% p.a. (Previous year 14% p.a.)

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Mar 31, 2013

1.1 Basis of accounting and preparation of fnancial statements

The fnancial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notifed under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The fnancial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the fnancial statements are consistent with those followed in the previous year.

1.2 Use of Estimates

The preparation of the fnancial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the fnancial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise.

1.3 Inventories

Inventories are valued, after providing for obsolescence and other losses were considered necessary as under:

Raw Materials/Components: at lower of cost (determined on monthly weighted average cost basis) and net realizable value.

Stores and spare parts: at lower of cost (determined on FIFO basis) and net realizable value.

Work-in-progress and Finished Goods: at lower of weighted average cost (including appropriate proportion of overheads) and net realizable value.

Net realisable value is estimated at the expected selling price less estimated completion and selling costs.

1.4 Depreciation/ Amortisation

Depreciation is provided on the straight-line method as per the rates and in the manner specifed in Schedule XIV of Companies Act, 1956. Assets costing Rs. 5,000/- or less are fully depreciated in the year of acquisition. Lease hold land and improvements are depreciated over the lease period. Intangible assets are amortised over 6 years.

1.5 Revenue Recognition

Revenue / Sales are recognized when signifcant risks and rewards associated with ownership are transferred to the buyer. Revenue from contract related activity is recognised on progress method; the stage of completion is measured by reference to the proportion that contract costs incurred for work done till the balance sheet date bears to the estimated total contract costs; full provision is made for any loss in the period in which it is foreseen.

1.6 Fixed Assets (Tangible / Intangible)

Fixed Assets are recorded at cost. The cost of fxed assets include all costs incidental to acquisition, commissioning and related internal costs. The fxed assets are carried at cost less accumulated depreciation.

1.7 Foreign currency transactions and translations

Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of transaction. Monetary assets and liabilities denominated in foreign currency as at balance sheet date are restated at the exchange rates prevailing on that date. Exchange differences on such restatement or on settlement are recognized in the Statement of proft and loss. The Company''s forward exchange contracts are not held for trading or speculation. The discount / premium arising on entering into such contract is amortised over the life of such contracts and exchange differences arising on such contracts are recognised in the Statement of Proft and Loss.

1.8 Investments

Long-term investments are stated at cost less diminution in value other than temporary. Current investments are stated at lower of cost or fair market value. Cost of investments included acquisition charges such as brokerage, fees and duties. Dividends are accounted for when declared.

1.9 Employee benefts

Employee benefts include provident fund, superannuation fund, gratuity fund and compensated absences.

Defned contribution plans

Provident fund is a defned contribution scheme and the contributions as required by the statute to Government Provident Fund are charged to Statement of proft and loss during the period in which employees perform the services that the payment covers. Superannuation fund is a defned contribution scheme. The Company contributes a sum equivalent to 15% of eligible employees'' salary to Superannuation Fund administered by a trust and managed by a life insurance Company.

Defned beneft plans

Gratuity liability is defned beneft obligation and is funded with Life Insurance Corporation of India. The present value of gratuity obligation is actuarially determined based on the projected unit credit method as at the balance sheet date. Actuarial gains/losses are immediately taken to the Statement of proft and loss and are not deferred.

Short-term employee benefts

The amount of short term employee benefts expected to be paid in exchange for the services rendered by employee is recognized during the period when the employee renders the service.

Long-term employee benefts

The Company accrues the liability for compensated absences based on the actuarial valuation as at the balance sheet date conducted by an independent actuary.

1.10 Borrowing Costs

Borrowing costs are recognized as an expense in the period in which they are incurred. The borrowing costs in respect of funds borrowed to fnance the qualifying fxed assets until the assets are ready for commercial use are capitalized.

1.11 Taxes on Income

Income Tax expense comprises current tax and deferred tax. Deferred tax is recognized on timing differences between taxable income and accounting income that are capable of reversal in one or more subsequent periods. Deferred tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantially enacted on the balance sheet date. Deferred tax assets are recognized, on consideration of prudence if there is certainty that suffcient future taxable income will be available against which such deferred tax assets will be realized; deferred tax asset consisting of losses / accumulated depreciation is recognized only if there is virtual certainty that the asset will be realized in future. Such assets are reviewed as at each Balance Sheet date to reassess realisability thereof.

1.12 Provisions, Contingent Liabilities and Contingent Assets

Provisions involve substantial degree of estimation in measurement and are recognized when it is probable that there will be outfow of resources as a result of past events. Separate disclosure in notes to accounts is made for each class of provision. Contingent Liabilities (where outfow of resources is not considered probable) are not recognized but are disclosed in notes. Contingent assets are neither recognized nor disclosed in the fnancial statements.

Details of terms of repayment and security provided :

Secured by pledge of 850,000 shares of Mcnally Bharat Engineering Company Limited and further secured by cross default arrangement on securities offered by Group Companies;

Terms of Repayment: Payable in eight equal installments of Rs. 125 Lacs on quarterly basis, commencing from June, 2012 to March, 2014.

Rate of Interest: 475 basis points below the Long Term Borrowing Monthly Rate (LTBMR)of IL&FS. The rate varied from 14% p.a. to 15.25% p.a.

Details of security:

1. Equitable Mortgage created by way of Deposit of Title Deed on the Company''s immovable property situated at Plot No.6, Kalyan Bhiwandi Industrial Area, Thane.

2. Hypothecation of present and future stocks of raw materials, semi-fnished goods, fnished goods and book debts by way of frst charge and also by hypothecation of movable plant and machinery by way of frst charge.

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Mar 31, 2012

1.1 Basis of accounting and preparation of financial statements

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.

1.2 Use of Estimates

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known/materialise.

1.3 Inventories

Inventories are valued, after providing for obsolescence and other losses where considered necessary as under:

- Raw Materials/Components: at lower of cost (determined on monthly weighted average cost basis) and net realizable value

- Stores and spare parts: at lower of cost (determined on FIFO basis) and net realizable value.

- Work-in-progress and Finished Goods: at lower of weighted average cost (including appropriate proportion of overheads) and net realizable value.

Net realisable value is estimated at the expected selling price less estimated completion and selling costs.

1.4 Depreciation

Depreciation is provided on the straight-line method as per the rates and in the manner specified in Schedule XIV of Companies Act, 1956. Assets costing Rs. 5,000/- or less are fully depreciated in the year of acquisition. Lease hold land and improvements are depreciated over the lease period.

1.5 Revenue Recognition

Revenue/Sales are recognized when significant risks and rewards associated with ownership are transferred to the buyer. Revenue from contract related activity is recognised on progress method; the stage of completion is measured by reference to the proportion that contract costs incurred for work done till the balance sheet date bears to the estimated total contract costs; full provision is made for any loss in the period in which it is foreseen.

1.6 Tangible Fixed Assets

Fixed Assets are recorded at cost. The cost of fixed assets include all costs incidental to acquisition, commissioning and related internal costs. The fixed assets are carried at cost less accumulated depreciation.

1.7 Foreign currency transactions and translations

Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of transaction. Monetary assets and liabilities denominated in foreign currency as at balance sheet date are restated at the exchange rates prevailing on that date. Exchange differences on such restatement or on settlement are recognized in the Statement of Profit and Loss. The Company's forward exchange contracts are not held for trading or speculation. The discount/premium arising

on entering into such contract is amortised over the life of such contracts and exchange differences arising on such contracts are recognised in the Statement of Profit and Loss; Forward contracts covering firm commitments are marked to market and loss if any is provided for.

1.8 Investments

Long-term investments are stated at cost less diminution in value other than temporary. Current investments are stated at lower of cost or fair market value. Cost of investments included acquisition charges such as brokerage, fees and duties. Dividends are accounted for when declared.

1.9 Employee benefits

Employee benefits include provident fund, superannuation fund, gratuity fund and compensated absences.

Defined contribution plans

Provident fund is a defined contribution scheme and the contributions as required by the statute to Government Provident Fund are charged to Statement of Profit and Loss during the period in which employees perform the services that the payment covers. Superannuation fund is a defined contribution scheme. The Company contributes a sum equivalent to 15% of eligible employees' salary to Superannuation Fund administered by trustee and managed by a life insurance company.

Defined benefit plans

Gratuity liability is defined benefit obligation and is funded with Life Insurance Corporation of India. The present value of gratuity obligation is actuarially determined based on the projected unit credit method as at the Balance Sheet date. Actuarial gains/losses are immediately taken to the Statement of Profit and Loss and are not deferred.

Short-term employee benefits

The amount of short term employee benefits expected to be paid in exchange for the services rendered by employee is recognized during the period when the employee renders the service.

Long-term employee benefits

The company accrues the liability for compensated absences based on the actuarial valuation as at the balance sheet date conducted by an independent actuary.

1.10 Borrowing Costs

Borrowing costs are recognised as an expense in the period in which they are incurred. The borrowing costs in respect of funds borrowed to finance the qualifying fixed assets until the assets are ready for commercial use are capitalised.

1.11 Taxes on Income

Income Tax expense comprises current tax and deferred tax. Deferred tax is recognized on timing differences between taxable income and accounting income that are capable of reversal in one or more subsequent periods. Deferred tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantially enacted on the balance sheet date. Deferred tax assets are recognized, on consideration of prudence if there is certainty that sufficient future taxable income will be available against which such deferred tax assets will be realized; deferred tax asset consisting of losses/accumulated depreciation is recognized only if there is virtual certainty that the asset will be realized in future. Such assets are reviewed as at each Balance Sheet date to reassess realisability thereof.

1.12 Provisions, Contingent Liabilities and Contingent Assets

Provisions involve substantial degree of estimation in measurement and are recognized when it is probable that there will be outflow of resources as a result of past events. Separate disclosure in notes to accounts is made for each class of provision. Contingent Liabilities (where outflow of resources is not considered probable) are not recognized but are disclosed in notes. Contingent assets are neither recognized nor disclosed in the financial statements.

1.13 Deferred Expenses

Expenses incurred in relation to issue of shares are amortized over a period of 5 years.

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Mar 31, 2011

1. Basis of Preparation of Financial Statements

The financial statements have been prepared under historical cost convention in accordance with generally accepted accounting principles and the provisions of the Companies Act, 1956.

2. Use of Estimates

The presentation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual result and the estimates are recognized in the period in which the results are known/ materialized.

3. Fixed Assets

Fixed Assets are recorded at cost. The costs of fixed assets include all costs incidental to acquisition, commissioning and related internal costs.

4. Depreciation

Depreciation is calculated on the assets on straight-line method at the rates and in the manner specified in Schedule XIV of Companies Act, 1956, except where on a consideration of useful life, based on technical assessment higher depreciation is necessary. Assets costing Rs. 5,000/- or less are fully depreciated in the year of acquisition. Lease hold land and improvements are depreciated over the lease period.

5. Inventories

Inventories are valued as under:

Raw Materials/Components: at lower of cost (determined on monthly weighted average cost basis) and net realizable value.

Stores and spare parts: at lower of cost (determined on FIFO basis) and net realizable value. Work-in-progress and Finished Goods: at lower of cost and net realizable value. Cost includes related overheads Finished goods are valued including Excise Duty. Net realizable value is estimated at the expected selling price less estimated completion and selling costs.

6. Investments

Long-term investments are stated at cost less diminution in value other than temporary in nature. Current investments are stated at lower of cost or fair market value. Dividends are accounted for when declared.

7. Foreign Currency Transactions

Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of transaction. Assets and liabilities denominated in foreign currency as at balance sheet date are restated at the exchange rates prevailing on that date. Exchange differences on such restatement or on settlement are recognized in the Profit and loss account. The Company''s forward exchange contracts are not held for trading or speculation. The premium arising on entering into such contract is amortized over the life of such contracts and exchange differences arising on such contracts are recognized in the Profit and Loss Account.

8. Revenue Recognition

Sales are recognized when significant risks and rewards associated with ownership are transferred to the buyer. Revenue from contract related activity is recognized on progress method; the stage of completion is measured by reference to the proportion that contract costs incurred for work done till the balance sheet date bears to the estimated total contract costs; full provision is made for any loss in the period in which it is foreseen.

9. Employee Benefits

Provident fund is a defined contribution scheme and the contributions as required by the statute to Government Provident Fund are charged to Profit and loss account during the period in which employees perform the services that the payment covers. Superannuation fund is a defined contribution scheme. The Company contributes a sum equivalent to 15% of eligible employees'' salary to Superannuation Fund administered by trustee and managed by a life insurance Company.

Gratuity liability is defined benefit obligation and is funded with Life Insurance Corporation of India. The present value of gratuity obligation is actuarially determined based on the projected unit credit method as at the balance sheet date.

The amount of short term employee benefits expected to be paid in exchange for the services rendered by employee is recognized during the period when the employee renders the service.

The Company accrues the liability for compensated absences based on the actuarial valuation as at the balance sheet date conducted by an independent actuary.

Actuarial gains/losses are immediately taken to the Profit and loss account and are not deferred.

10. Provisions, Contingent Liabilities and Contingent Assets

Provisions involve substantial degree of estimation in measurement and are recognized when it is probable that there will be outflow of resources as a result of past events. Separate disclosure in notes to accounts is made for each class of provision during the year.

Contingent Liabilities (where outflow of resources is not considered probable) are not recognized but are disclosed in notes.

Contingent assets are neither recognized nor disclosed in the financial statements.

11. Deferred Expenses

Expenses incurred in relation to issue of shares are amortized over a period of 5 years.

12. Taxes on Income

Income Tax expense comprises current tax and deferred tax. Deferred tax is recognized on timing differences between taxable income and accounting income that are capable of reversal in one or more subsequent periods. Deferred tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantially enacted on the balance sheet date. Deferred tax assets are recognized, on consideration of prudence if there is certainty that sufficient future taxable income will be available against which such deferred tax assets will be realized; deferred tax asset consisting of losses / accumulated depreciation is recognized only if there is virtual certainty that the asset will be realized in future. Such assets are reviewed as at each Balance Sheet date to reassess realisability thereof.

13. Borrowing Cost

Borrowing costs are recognized as an expense in the period in which they are incurred. The borrowing costs in respect of funds borrowed to finance the qualifying fixed assets until the assets are ready for commercial use are capitalized.

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Mar 31, 2010

1. Basis of Preparation of Financial Statements

The financial statements have been prepared under historical cost convention in accordance with generally accepted accounting principles and the provisions of the Companies Act, 1956.

2. Use of Estimates

The presentation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual result and the estimates are recognized in the period in which the results are known / materialized.

3. Fixed Assets

Fixed Assets are recorded at cost. The cost of fixed assets include all costs incidental to acquisition, commissioning and related internal costs.

4. Depreciation

Depreciation is calculated on the assets on straight-line method at the rates and in the manner specified in Schedule XIV of Companies Act, 1956, except where on a consideration of useful life, based on technical assessment higher depreciation is necessary. Assets costing Rs. 5,000/- or less are fully depreciated in the year of acquisition. Lease hold land and improvements are depreciated over the lease period.

5. Inventories

Inventories are valued as under:

Raw Materials/Components: at lower of cost (determined on monthly weighted average cost basis) and net realizable value.

Stores and spare parts: at lower of cost (determined on FIFO basis) and net realizable value.

Work-in-progress and Finished Goods: at lower of weighted average cost (including attributable charges and levies) and net realizable value.

Net realisable value is estimated at the expected selling price less estimated completion and selling costs.

6. Investments

Long-term investments are stated at cost less diminution in value other than temporary. Current investments are stated at lower of cost or fair market value. Dividends are accounted for when declared.

7. Foreign Currency Transactions

Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of transaction. Assets and liabilities denominated in foreign currency as at balance sheet date are restated at the exchange rates prevailing on that date. Exchange differences on such restatement or on settlement are recognized in the profit and loss account. The Companys forward exchange contracts are not held for trading or speculation. The premium arising on entering into such contract is amortised over the life of such contracts and exchange differences arising on such contracts are recognised in the Profit and Loss Account.

8. Revenue Recognition

Revenue / Sales are recognized when significant risks and rewards associated with ownership are transferred to the buyer - generally based on terms of delivery. For jobs completed against specific customer orders and subject to inspection by customer prior to dispatch, revenue is recognized after goods are moved out and invoiced after such inspection.

9. Employee Benefits

Provident fund is a defined contribution scheme and the contributions as required by the statute to Government Provident Fund are charged to profit and loss account during the period in which employees perform the services that the payment covers. Superannuation fund is a defined contribution scheme. The Company contributes a sum equivalent to 15% of eligible employees salary to Superannuation Fund administered by trust and managed by a life insurance Company.

Gratuity liability is defined benefit obligation and is funded with Life Insurance Corporation of India. The present value of gratuity obligation is actuarially determined based on the projected unit credit method as at the balance sheet date.

The amount of short term employee benefits expected to be paid in exchange for the services rendered by employee is recognized during the period when the employee renders the service.

The Company accrues the liability for compensated absences based on the actuarial valuation as at the balance sheet date conducted by an independent actuary.

Actuarial gains/losses are immediately taken to the profit and loss account and are not deferred.

10. Provisions, Contingent Liabilities and Contingent Assets

Provisions involve substantial degree of estimation in measurement and are recognized when it is probable that there will be outflow of resources as a result of past events. Separate disclosure in notes to accounts is made for each class of provision made during the year.

Contingent Liabilities (where outflow of resources is not considered probable) are not recognized but are disclosed in notes.

Contingent assets are neither recognized nor disclosed in the financial statements.

11. Deferred Expenses

Expenses incurred in relation to issue of shares are amortized over a period of 5 years.

12. Taxes on Income

Income Tax expense comprises current tax and deferred tax. Deferred tax is recognized on timing differences between taxable income and accounting income that are capable of reversal in one or more subsequent periods. Deferred tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantially enacted on the balance sheet date. Deferred tax assets are recognized, on consideration of prudence if there is certainty that sufficient future taxable income will be available against which such deferred tax assets will be realized; deferred tax asset consisting of losses / accumulated depreciation is recognized only if there is virtual certainty that the asset will be realized in future. Such assets are reviewed as at each Balance Sheet date to reassess realisability thereof.

13. Borrowing Cost

Borrowing costs are recognised as an expense in the period in which they are incurred. The borrowing costs in respect of funds borrowed to finance the qualifying fixed assets until the assets are ready for commercial use are capitalised.