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Accounting Policies of Kirloskar Ferrous Industries Ltd. Company

Mar 31, 2016

1. Basis of preparation of financial statements

a. The financial statements have been prepared and presented in accordance with the generally accepted accounting principles in India (Indian GAAP) under the historical cost convention, to comply in all material respects with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013 and guidelines issued by the Securities and Exchange Board of India (SEBI).

b. The Company follows mercantile system of accounting and recognizes income and expenditure on an accrual basis except those with significant uncertainties.

c. The accounting policies applied by the Company are consistent with those used in the previous year.

2. Summary of significant accounting policies:

a. Use of estimates

Estimates and assumptions used in the preparation of the Financial Statements are based on management''s evaluation of the relevant facts and circumstances as at the date of the Financial Statements, which may differ from the actual results at a subsequent date.

b. Fixed Assets

i. Tangible fixed assets are stated at original cost net of accumulated depreciation and impairment loss, if any. The cost of the fixed asset includes the purchase price and the incidental or directly attributable expenses incurred in bringing the asset to its working condition for its intended use.

ii. Borrowing Costs relating to acquisition and construction of qualifying assets are also included to the extent they relate to the period till such assets are ready to be put to use.

iii. Pre-operative expenditure including trial run expenses comprising of revenue expenses incurred as reduced by the revenue generated during the period up to commencement of commercial production are treated as part of project costs and are capitalized.

iv. Intangible assets expected to provide future enduring economic benefits are recorded at the value of consideration paid for acquisition of such assets and are carried at cost of acquisition net of accumulated depreciation and impairment loss, if any.

v. Cost of fixed assets not ready for use before the Balance Sheet date is disclosed as capital work-in-progress.

c. Depreciation and Amortization

i. The Company has provided for depreciation using the straight line method, based on the useful lives specified in Schedule II Part C to the Companies Act, 2013, except in case of the following assets:

ii. Freehold land is not depreciated.

iii. In the event of sale / retirement of assets, depreciation is provided up to the date of sale / retirement.

iv. The Mining Right acquired by the Company is amortized over 11 years being the period of lease.

v. Computer software recognized as intangible asset is amortized on straight line method over an estimated useful life of 6 years.

d. Operating leases

Leases in which the Company does not transfer substantially all the risks and benefits of ownership of the asset are classified as operating leases and assets subjected to operating leases are included in the fixed assets.

e. Investments

Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long term investments.

i. Current Investments are carried at lower of cost and fair value determined on an individual investment basis.

Ii. Long-term investments are carried at cost.

f. Inventories

I. Raw Materials, Stores and Spares are valued at lower of cost and net realizable value. Cost is determined using weighted average method.

Ii. Work in process and finished goods other than by-products are valued at lower of cost and net realizable value. Cost is arrived at by absorption cost method.

Iii. By-products are valued at net realizable value.

iv. Necessary provisions are made for obsolete and non-moving inventories as per the policy framed by the management and the value of inventory is net of such provision.

v. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

g. Foreign Currency Transactions

i. Initial Recognition: Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction.

ii. Conversion: Monetary items denominated in foreign currencies other than those covered by forward contracts are reinstated into rupee equivalents at the exchange rates as on the reporting date.

iii. Forward Exchange Contracts: In respect of transactions covered by forward exchange contracts, the difference between the forward rate and the exchange rate at the date of the transaction is recognized as income or expense over the period of the contract.

h. Revenue Recognition

i. Revenue from sale of goods is recognized when the significant risks and rewards of ownership of the goods have passed to the customer, which generally coincides with their delivery to customers/customers representatives. Sales reported includes excise duty and excludes discounts, rebates, returns, sales tax and value added tax.

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

iii. Dividend income is recognized when the Company''s right to receive dividend is established.

iv. Lease income in respect of "Operating Lease" is recognized in the Statement of Profit and Loss on a straight-line basis over the lease terms.

v. All other incomes are accounted for on accrual basis.

i. Borrowing Costs

Borrowing costs are charged to Statement of Profit and Loss except in cases where the borrowings are directly attributable to the acquisition, construction or production of qualifying asset in which case they are capitalized.

Exchange Differences: Exchange difference arising from foreign currency borrowings are recognized as borrowing cost to the extent that they are regarded as an adjustment to interest costs as per AS 16 Borrowing Costs.

j. Excise Duty

Excise Duty in respect of goods manufactured by the Company is accounted on accrual basis.

k. Employee Benefits

i. Short Term Employee Benefits:

All employee benefits payable within twelve months of rendering of services are classified as short term benefits. Such benefits include salaries, wages, bonus, short term compensated absences, awards, excreta, performance pay etc., and the same are recognized in the period in which the employee renders the related service.

ii. Post Employment Benefits:

a. Defined Contribution Plan:

The Company''s approved Superannuation Scheme and Central Government Provident Fund Scheme, are defined contribution plans. The contribution paid / payable under the schemes are recognized during the period in which the employee renders the related service.

b. Defined Benefit Plans:

The employee''s gratuity fund scheme, long term compensated absences is Company''s defined benefit plans. The present value of the obligation under such defined benefit plans is determined based on the actuarial valuation using the Projected Unit Credit Method as at the date of the Balance Sheet. In case of funded plans, the fair value of plan asset is reduced from the gross obligation under the defined benefit plans, to recognize the obligation on net basis.

I. Taxes on Income

i. Deferred tax is recognized on timing differences between the accounting income and the taxable income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date.

Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

ii. Provision for current tax is made on the basis of the taxable profits computed for the current accounting period in accordance with Income Tax Act, 1961.

iii. Advance taxes and provisions for current Income Tax are presented in the Balance Sheet after off-setting advance taxes paid and Income Tax provision arising in the same tax jurisdiction and the Company intends to settle the assets and liabilities on a net basis.

iv. Minimum Alternate Tax (MAT) credit is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the period of MAT credit entitlement as per the Income-tax Act, 1961. In the year in which the MAT credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in Guidance Note issued by the ICAI, 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.

m. Research and Development Expenses

Revenue expenditure on the Research and Development is charged off as expense in the year in which incurred. Capital expenditure is grouped with Fixed Assets under appropriate heads and depreciation is provided as per the rates applicable.

n. Earnings Per Share

Basic Earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

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

o. Provisions and Contingencies

i. Necessary provisions are made for the present obligations that arise out of past events prior to the Balance Sheet date entailing future outflow of economic resources. Such provisions reflect best estimates based on available information.

ii. However, 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 is made.

p. Cash and cash equivalents

Cash and cash equivalents for the purposes of Cash Flow Statement comprise cash on hand and demand deposits with banks. Cash equivalents are short term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.

q. Impairment of Asset

The Company assesses at each Balance Sheet date whether there is any indication due to internal or external factors than an asset or a group of asset comprising a Cash Generating Unit(CGU) may be impaired. If any such indication exists, the Company estimates the recoverable amount of the assets. If such recoverable amount of the assets or the recoverable amount (economic value in use) of the CGU, to which the asset belongs is less than the carrying amount of the assets or the CGU as the case may be, the carrying amount is reduced to its recoverable amount and the reduction is treated as an impairment loss and is recognized in the Statement of Profit and Loss. If at any subsequent Balance Sheet date there is an indication that 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 and is accordingly reversed in the Statement of Profit and Loss.


Mar 31, 2015

1. Basis of preparation of financial statements

a. The financial statements have been prepared and presented in accordance with the generally accepted accounting principles in India (Indian GAAP) under the historical cost convention.

b. The financial statements have been prepared to comply in all material respects with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013.

c. The Company follows mercantile system of accounting and recognises income and expenditure on an accrual basis except those with significant uncertainties.

d. The accounting policies applied by the Company are consistent with those used in the previous year.

2. Summary of significant accounting policies:

a. Use of Estimates

Estimates and assumptions used in the preparation of the financial statements are based on management''s evaluation of the relevant facts and circumstances as at the date of the Financial Statements, which may differ from the actual results at a subsequent date.

b. Fixed Assets

i. Tangible fixed assets are stated at original cost net of accumulated depreciation and impairment loss, if any. The cost of the fixed asset includes the purchase price and the incidental or directly attributable expenses incurred in bringing the asset to its working condition for its intended use.

ii. Borrowing Costs relating to acquisition and construction of qualifying assets are also included to the extent they relate to the period till such assets are ready to be put to use.

iii. Pre-operative expenditure including trial run expenses comprising of revenue expenses incurred as reduced by the revenue generated during the period up to commencement of commercial production are treated as part of project costs and are capitalized.

iv. Intangible assets expected to provide future enduring economic benefits are recorded at the value of consideration paid for acquisition of such assets and are carried at cost of acquisition net of accumulated depreciation and impairment loss, if any.

v. Cost of fixed assets not ready for use before the Balance Sheet date is disclosed as capital work-in-progress.

c. Depreciation and Amortisation

i. The Company has provided for depreciation using the straight line method, based on the useful lives specified in Schedule II Part C to the Companies Act, 2013, except in case of the following assets:

ii. Freehold land is not depreciated.

iii. In the event of sale / retirement of assets, depreciation is provided up to the date of sale / retirement.

iv. The Mining Right acquired by the Company is amortised over 11 years being the period of lease.

v. Computer software recognised as intangible asset is amortised on straight line method over an estimated useful life of 6 years.

d. Operating leases

Leases in which the Company does not transfer substantially all the risks and benefits of ownership of the asset are classified as operating leases and assets subjected to operating leases are included in the fixed assets.

e. 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.

i. Current Investments are carried at lower of cost and fair value determined on an individual investment basis.

ii. Long-term investments are carried at cost.

f. Inventories

i. Raw Materials, Stores and Spares are valued at lower of cost and net realizable value. Cost is determined using Weighted Average method.

ii. Work in process and finished goods other than by-products are valued at lower of cost and net realisable value. Cost is arrived at by absorption cost method.

iii. By-products are valued at net realisable value.

iv. Necessary provisions are made for obsolete and non-moving inventories as per the policy framed by the Management and the value of inventory is net of such provision.

v. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

g. Foreign Currency Transactions

i. Initial Recognition: Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction.

ii. Conversion: Monetary items denominated in foreign currencies other than those covered by forward contracts are reinstated into rupee equivalents at the exchange rates as on the reporting date.

iii. Forward Exchange Contracts: In respect of transactions covered by forward exchange contracts, the difference between the forward rate and the exchange rate at the date of the transaction is recognised as income or expense over the period of the contract.

h. Revenue Recognition

i. Revenue from sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the customer, which generally coincides with their delivery to customers/customers'' representatives. Sales reported includes excise duty and excludes discounts, rebates, returns, sales tax and value added tax.

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

iii. Dividend income is recognised when the Company''s right to receive dividend is established.

iv. Lease income in respect of ''''Operating Lease'''' is recognised in the Statement of Profit and Loss on a straight-line basis over the lease terms.

v. All other income are accounted for on accrual basis.

i. Borrowing Costs

Borrowing costs are charged to Statement of Profit and Loss except in cases where the borrowings are directly attributable to the acquisition, construction or production of qualifying asset, in which case they are capitalised.

Exchange Differences: Exchange difference arising from foreign currency borrowings are recognised as borrowing cost to the extent that they are regarded as an adjustment to interest costs as per AS 16 Borrowing Costs.

j. Excise Duty

Excise Duty in respect of goods manufactured by the Company is accounted on accrual basis.

k. Employee Benefits

i. Short Term Employee Benefits:

All employee benefits payable within twelve months of rendering of services are classified as short term benefits. Such benefits include salaries, wages, bonus, short term compensated absences, awards, exgratia, performance pay etc., and the same are recognised in the period in which the employee renders the related service.

ii. Post Employment Benefits:

a. Defined Contribution Plan:

The Company''s approved Superannuation Scheme and Central Government Provident Fund Scheme, are defined contribution plans. The contribution paid / payable under the schemes are recognised during the period in which the employee renders the related service.

b. Defined Benefit Plans:

The employee''s gratuity fund scheme, long term compensated absences is Company''s defined benefit plans. The present value of the obligation under such defined benefit plans is determined based on the actuarial valuation using the Projected Unit Credit Method as at the date of the Balance Sheet. In case of funded plans, the fair value of plan asset is reduced from the gross obligation under the defined benefit plans, to recognise the obligation on net basis.

l. Taxes on Income

i. Deferred tax is recognised on timing differences between the accounting income and the taxable income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date.

Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

ii. Provision for current tax is made on the basis of the taxable profits computed for the current accounting period in accordance with Income Tax Act, 1961.

iii. Advance taxes and provisions for current Income Tax are presented in the Balance Sheet after setting off advance taxes paid and Income Tax provision arising in the same tax jurisdiction and the Company intends to settle the assets and liabilities on a net basis.

iv. 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 period of MAT credit entitlement as per the Income-tax Act, 1961. In the year in which the MAT credit becomes eligible to be recognised as an asset in accordance with the recommendations contained in Guidance Note issued by the ICAI, 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 Company will pay normal income tax during the specified period.

m. Research and Development Expenses

Revenue expenditure on the Research and Development is charged off as expense in the year in which incurred. Capital expenditure is grouped with Fixed Assets under appropriate heads and depreciation is provided as per the rates applicable.

n. Earnings Per Share

Basic Earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

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

o. Provisions and Contingencies

i. Necessary provisions are made for the present obligations that arise out of past events prior to the Balance Sheet date entailing future outflow of economic resources. Such provisions reflect best estimates based on available information.

ii. However, 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 is made.

p. Cash and cash equivalents

Cash and cash equivalents for the purposes of Cash Flow Statement comprise cash on hand and demand deposits with banks. Cash equivalents are short term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.

q. Impairment of Asset

The Company assesses at each Balance Sheet date whether there is any indication due to internal or external factors than an asset or a group of asset comprising a Cash Generating Unit(CGU) may be impaired. If any such indication exists, the Company estimates the recoverable amount of the assets. If such recoverable amount of the assets or the recoverable amount (economic value in use) of the CGU, to which the asset belongs is less than the carrying amount of the assets or the CGU as the case may be, the carrying amount is reduced to its recoverable amount and the reduction is treated as an impairment loss and is recognised in the Statement of Profit and Loss. If at any subsequent Balance Sheet date there is an indication that 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 and is accordingly reversed in the Statement of Profit and Loss.


Mar 31, 2013

A. Use of Estimates

Estimates and assumptions used in the preparation of the financial statements are based on management''s evaluation of the relevant facts and circumstances as of date of the financial statements, which may differ from the actual results at a subsequent date.

b. Fixed Assets

Fixed assets are stated at original cost less accumulated depreciation. Cost comprises the purchase price and any other attributable cost of bringing the asset to its working condition for its intended use. Financing costs relating to acquisition of qualifying fixed assets are also included to the extent they relate to the period till such assets are ready to be put to use. Cenvat and other credits availed have been deducted from the cost of respective assets. Intangible assets are recorded at the consideration paid for acquisition.

c. Depreciation and Amortisation

i. Depreciation on the fixed assets of the casting division at Solapur, acquired under the "Slump Sale Agreement" entered into with Kirloskar Oil Engines Ltd, is provided on straight line method over the remaining useful life of the asset ranging from 1 year to 18 years.

ii. In respect of specific plant and machinery acquired from Kirloskar Oil Engines Ltd, and installed at Bevinahalli Village, Koppal District, Karnataka, depreciation is provided on straight line method over the remaining useful life of the asset ranging from 5 years to 9 years.

iii. Mining Rights are amortised over 11 years being the period of lease.

iv. On all other fixed assets, depreciation is provided on straight line method in the manner and at the rates specified in Schedule-XIV to the Companies Act, 1956.

v. Fixed assets individually costing rupees five thousand or less are depreciated at 100 percent over a period of one year.

vi. Intangible assets are amortised over their respective individual estimated useful lives on a straight line basis, commencing from the date the asset is available to the Company for its intended use.

d. 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.

i. Current Investments are carried at lower of cost and fair value determined on an individual investment basis.

ii. Long-term investments are carried at cost. However, provision for diminution in value is made to recognise a decline other than temporary in the value of investments.

e. Inventories

i. Raw Materials, Stores and Spares are valued at lower of cost and net realisable value. Rates are determined on Weighted Average Cost formula.

ii. Work in progress and finished goods other than by-products are valued at lower of cost and net realisable value. Cost is arrived at by absorption cost method.

iii. By-products are valued at net realisable value.

iv. Necessary provisions are made for obsolete and non-moving inventories as per the policy framed by the management and the value of inventory is net of provision.

v. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

f. Foreign Currency Transactions

i. Initial Recognition: Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction.

ii. Conversion: Monetary items denominated in foreign currencies other than those covered by forward contracts are reinstated into rupee equivalents at the exchange rates as on the reporting date.

iii. Forward Exchange Contracts: In respect of transactions covered by forward exchange contracts, the difference between the forward rate and the exchange rate at the date of the transaction is recognised as income or expense over the period of the contract.

iv. Exchange Differences: All exchange differences arising on settlement/conversion of foreign currency transactions are recognised in the Statement of Profit and Loss.

g. Revenue Recognition

Revenue from sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the customer, which generally coincides with their delivery to customers/customers representatives. Sales are stated net of discounts, rebates and returns.

h. Borrowing Costs

Borrowing costs are charged to the Statement of Profit and Loss except in cases where the borrowings are directly attributable to the acquisition, construction or production of qualifying asset.

i. Excise Duty

Excise Duty in respect of goods manufactured by the Company is accounted on accrual basis.

j. Employee Benefits

i. Short Term Employee Benefits:

All employee benefits payable within twelve months of rendering of services are classified as short term benefits. Such benefits include salaries, wages, bonus, short term compensated absences, awards, exgratia, performance pay etc., and the same are recognised in the period in which the employee renders the related service.

ii. Post Employment Benefits:

a. Defined Contribution Plan:

The Company''s approved Superannuation Scheme, Central Government Provident Fund Scheme, are defined contribution plans. The contribution paid / payable under the schemes are recognised during the period in which the employee renders the related service.

b. Defined Benefit Plans:

The employee''s gratuity fund scheme, long term compensated absences is Company''s defined benefit plans. The present value of the obligation under such defined benefit plans is determined based on the actuarial valuation using the Projected Unit Credit Method as at the date of the Balance Sheet. In case of funded plans, the fair value of plan asset is reduced from the gross obligation under the defined benefit plans, to recognise the obligation on net basis.

k. Taxes on Income

i. Deferred tax is recognised on timing differences between the accounting income and the taxable income for the year. The tax effect is calculated on the accumulated timing differences at the end of accounting period based on prevailing enacted or subsequently enacted regulations.

ii. Provision for current tax is made on the basis of the taxable profits computed for the current accounting period in accordance with Income Tax Act, 1961.

iii. Advance taxes and provisions for current Income Tax are presented in the Balance Sheet after off-setting advance taxes paid and Income Tax provision arising in the same tax jurisdiction and the Company intends to settle the assets and liabilities on a net basis.

l. Research and Development Expenses

Revenue expenditure on the Research and Development is charged off as expense in the year in which incurred. Capital expenditure is grouped with Fixed Assets under appropriate heads and depreciation is provided as per the rates applicable.

m. Earnings per share

Earnings per share is calculated by dividing the net profit or loss for the year after prior period adjustments attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

n. Provisions and Contingencies:

i) Necessary provisions are made for the present obligations that arise out of past events prior to the Balance Sheet date entailing future outflow of economic resources. Such provisions reflect best estimates based on available information.

ii) However, 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.

o. Cash and Cash Equivalents

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

p. Impairment of Assets

The Company assesses at each Balance Sheet date whether there is any indication due to internal or external factors that an asset or a group of assets comprising a Cash Generating Unit (CGU) may be impaired. If any such indication exists, the Company estimates the recoverable amount of the assets. If such recoverable amount of the assets or the recoverable amount (economic value in use) of the CGU, to which the asset belongs is less than the carrying amount of the assets or the CGU as the case may be, the carrying amount is reduced to its recoverable amount and the reduction is treated as an impairment loss and is recognised in the Statement of Profit and Loss. If at any subsequent Balance Sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at recoverable amount subject to a maximum of depreciated historical cost and is accordingly reversed in the Statement of Profit and Loss.


Mar 31, 2012

A. Use of Estimates

Estimates and assumptions used in the preparation of the financial statements are based on management's evaluation of the relevant facts and circumstances as of date of the Financial Statements, which may differ from the actual results at a subsequent date.

b. Fixed Assets

Fixed assets are stated at original cost less accumulated depreciation. Cost comprises the purchase price and any other attributable cost of bringing the asset to its working condition for its intended use. Financing costs relating to acquisition of qualifying fixed assets are also included to the extent they relate to the period till such assets are ready to be put to use. Cenvat and other credits availed have been deducted from the cost of respective assets.

c. Depreciation and Amortization

i. Depreciation on the fixed assets of the casting division at Solapur, acquired under the 'Slump Sale Agreement' entered into with Kirloskar Oil Engines Ltd, is provided on straight line method over the remaining useful life of the asset ranging from 1 year to 18 years.

ii. In respect of specific plant and machinery installed at Koppal and acquired from Kirloskar Oil Engines Ltd, depreciation is provided on straight line method over the remaining useful life of the asset ranging from 5 years to 9 years.

iii. Mining rights are amortized over 11 years being the period of lease.

iv. On all other fixed assets, depreciation is provided on straight line method in the manner and at the rates specified in Schedule-XI V to the Companies Act, 1956.

d. Investments

Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long term investments.

i. Current Investments are carried at lower of cost and fair value determined on an individual investment basis.

ii. Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of investments.

e. Inventories

i. Raw Materials, Stores and Spares are valued at lower of cost and net realizable value. Rates are determined on Weighted Average Cost formula.

ii. Work in progress and finished goods other than by-products are valued at lower of cost and net realizable value. Cost is arrived at by absorption cost method.

iii. By-products are valued at net realizable value.

f. Foreign Currency Transactions

i. Initial Recognition: Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction.

ii. Conversion: At the year end, monetary items denominated in foreign currencies other than those covered by forward contracts are converted into rupee equivalents at the year-end exchange rates.

iii. Forward Exchange Contracts: In respect of transactions covered by forward exchange contracts, the difference between the forward rate and the exchange rate at the date of the transaction is recognized as income or expense over the period of the contract.

iv. Exchange Differences: All exchange differences arising on settlement / conversion of foreign currency transactions are recognized in the Statement of Profit and Loss.

g. Revenue Recognition

Revenue from sale of goods is recognized when the significant risks and rewards of ownership of the goods have passed to the customer, which generally coincides with their delivery to customers. Sales are stated net of discounts, rebates and returns.

h. Borrowing Costs

Borrowing costs are charged to Statement of Profit and Loss except in cases where the borrowings are directly attributable to the acquisition, construction or production of a asset.

i. Excise Duty

Excise Duty in respect of goods manufactured by the Company is accounted on accrual basis.

j. Employee Benefits

i. Short Term Employee Benefits:

All employee benefits payable within twelve months of rendering of services are classified as short term benefits. Such benefits include salaries, wages, bonus, short term compensated absences, awards, exgratia, performance pay etc., and the same are recognized in the period in which the employee renders the related service.

ii. Post Employment Benefits:

a. Defined Contribution Plan:

The Company's approved Superannuation Scheme, Central Government Provident Fund Scheme, are defined contribution plans. The contribution paid / payable under the schemes are recognized during the period in which the employee renders the related service.

b. Defined Benefit Plans:

The employee's gratuity fund scheme, long term compensated absences is Company's defined benefit plans. The present value of the obligation under such defined benefit plans is determined based on the actuarial valuation using the Projected Unit Credit Method as at the date of the Balance Sheet. In case of funded plans, the fair value of plan asset is reduced from the gross obligation under the defined benefit plans, to recognize the obligation on net basis.

k. Taxes on Income

i. Deferred tax is recognized on timing differences between the accounting income and the taxable income for the year. The tax effect is calculated on the accumulated timing differences at the end of accounting period based on prevailing enacted or subsequently enacted regulations.

ii. Provision for current tax is made on the basis of the taxable profits computed for the current accounting period in accordance with Income Tax Act, 1961.

iii. Advance taxes and provisions for current Income Tax are presented in the Balance Sheet after off-setting advance taxes paid and Income Tax provision arising in the same tax jurisdiction and the Company intends to settle the assets and liabilities on a net basis.

I. Research and Development Expenses

Revenue expenditure on the Research and Development is charged off as expense in the year in which incurred. Capital expenditure is grouped with Fixed Assets under appropriate heads and depreciation is provided as per the rates applicable.

m. Earnings per share

Earnings per share is calculated by dividing the net profit or loss for the year after prior period adjustments attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

n. Provisions and Contingencies:

i. Necessary provisions are made for the present obligations that arise out of past events prior to the Balance Sheet date entailing future outflow of economic resources. Such provisions reflect best estimates based on available information.

ii. However, 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.

o. Cash and Cash Equivalents

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


Mar 31, 2011

1.01 Basis of preparation of financial statements

a) The financial statements have been prepared to comply in all material respects with the mandatory Accounting Standards notified under Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act, 1956.

b) The Company follows mercantile system of accounting and recognizes income & expenditure on an accrual basis except those with significant uncertainties.

c) The accounting policies applied by the Company are consistent with those used in the previous year.

1.02 Use of estimates

Estimates and assumptions used in the preparation of the financial statements are based on managements evaluation of the relevant facts and circumstances as of date of the financial statements, which may differ from the actual results at a subsequent date.

1.03 Fixed Assets

Fixed assets are stated at original cost less accumulated depreciation. Cost comprises the purchase price and any other attributable cost of bringing the asset to its working condition for its intended use. Financing costs relating to acquisition of qualifying fixed assets are also included to the extent they relate to the period till such assets are ready to be put to use. Cenvat / other credits availed have been deducted from the cost of respective assets.

1.04 Depreciation and Amortisation

a) Depreciation on the fixed assets of the casting division at Solapur, acquired under the "Slump Sale Agreement "entered into with Kirloskar Oil Engines Ltd, is provided on straight line method over the remaining useful life of the asset ranging from 1 year to 18 years.

b) In respect of the plant and machinery acquired from Kirloskar Oil Engines Ltd, depreciation is provided on straight line method over the remaining useful life of the asset ranging from 5 years to 9 years.

c) Mining Rights are amortised over 11 years being the period of lease.

d) On all other fixed assets, depreciation is provided on straight line method in the manner and at the rates specified in Schedule-XIV to the Companies Act, 1956.

1.05 Investments

Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long term investments.

a) Current Investments are carried at lower of cost and fair value determined on an individual investment basis.

b) Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of investments.

1.06 Inventories

a) Raw Materials, Stores and Spares are valued at lower of cost and net realizable value. Rates are determined on Weighted Average Cost formula.

b) Work in process and finished goods other than by-product are valued at lower of cost and net realizable value. Cost is arrived at by absorption cost method.

c) By-products are valued at net realizable value. {

1.07 Foreign Currency Transactions

a) Initial Recognition: Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction.

b) Conversion: At the year end, monetary items denominated in foreign currencies other than those covered by forward contracts are converted into rupee equivalents at the year-end exchange rates.

c) Forward Exchange Contracts: In respect of transactions covered by forward exchange contracts, the difference between the forward rate and the exchange rate at the date of the transaction is recognized as income or expense over the period of the contract.

d) Exchange Differences: All exchange differences arising on settlement/conversion of foreign currency transactions are recognised in the Profit and Loss Account.

1.08 Revenue Recognition

Revenue from sale of goods is recognized when the significant risks and rewards of ownership of the goods have passed to the customer, which generally coincides with their delivery to customers. Sales are stated net of discounts, rebates and returns.

1.09 Borrowing Costs

Borrowing costs are charged to Profit and Loss account except in cases where the borrowings are directly attributable to the acquisition, construction or production of a asset.

1.10 Excise Duty

Excise Duty in respect of goods manufactured by the Company is accounted on accrual basis.

1.11 Employee Benefits

a) Short Term Employee Benefits:

All employee benefits payable within twelve months of rendering of services are classified as short term benefits. Such benefits include salaries, wages, bonus, short term compensated absences, awards, exgratia, performance pay etc., and the same are recognized in the period in which the employee renders the related service.

b) Post Employment Benefits:

i) Defined Contribution Plan:

The Companys approved Superannuation Scheme, Central Government Provident Fund Scheme, are defined contribution plans. The contribution paid / payable under the schemes are recognized during the period in which the employee renders the related service.

ii) Defined Benefit Plans:

The employees gratuity fund scheme, long term compensated absences are Companys defined benefit plans. The present value of the obligation under such defined benefit plans is determined based on the actuarial valuation using the Projected Unit Credit Method as at the date of the Balance Sheet. In case of funded plans, the fair value of plan asset is reduced from the gross obligation under the defined benefit plans, to recognize the obligation on net basis.

1.12 Taxes on Income

a) Deferred tax is recognized on timing differences between the accounting income and the taxable income for the year. The tax effect is calculated on the accumulated timing differences at the end of accounting period based on prevailing enacted or subsequently enacted regulations.

b) Provision for current tax is made on the basis of the taxable profits computed for the current accounting period in accordance with Income Tax Act, 1961.

c) Advance taxes and provisions for current Income Tax are presented in the Balance Sheet after

off-setting advance taxes paid and Income Tax provision arising in the same tax jurisdiction and the Company intends to settle the assets and liabilities on a net basis.

1.13 Research and Development Expenses

Revenue expenditure on the Research and Development is charged off as expense in the year in which incurred. Capital expenditure is grouped with Fixed Assets under appropriate heads and depreciation is provided as per the rates applicable.

1.14 Earnings Per Share

Earnings per share is calculated by dividing the net profit or loss for the year after prior period adjustments attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.


Mar 31, 2010

1.01 Basis of preparation of financial statements

a) The financial statements have been prepared to comply in all material respects with the mandatory Accounting Standards notified under Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act, 1956.

b) The Company follows mercantile system of accounting and recognizes income & expenditure on an accrual basis except those with significant uncertainties.

c) The accounting policies applied by the Company are consistent with those used in the previous year.

1.02 Use of estimates

Estimates and assumptions used in the preparation of the financial statements are based on managements evaluation of the relevant facts and circumstances as of date of the financial statements, which may differ from the actual results at a subsequent date.

1.03 Fixed Assets

a) Fixed assets (except Goodwill) are stated at original cost less accumulated depreciation. Cost comprises the purchase price and any other attributable cost of bringing the asset to its working condition for its intended use. Financing costs relating to acquisition of qualifying fixed assets are also included to the extent they relate to the period till such assets are ready to be put to use. Cenvat / other credits availed have been deducted from the cost of respective assets.

b) Goodwill : Difference between the purchase consideration and the net assets as on the date of acquisition of Solapur unit from Kirloskar Oil Engines Ltd. has been treated as goodwill.

1.04 Depreciation and Amortisation

a) Depreciation on the fixed assets of the casting division at Solapur, acquired underthe "Slump Sale Agreement "entered into with Kirloskar Oil Engines Ltd, is provided on straight line method over the remaining useful life of the asset ranging from 1 yearto 18 years.

b) In respect of the plant and machinery acquired from Kirloskar Oil Engines Ltd, depreciation is provided on straight line method over the remaining useful life of the asset ranging from 5 years to 9 years.

c) Goodwill arising out of acquisition of Solapur unit from Kirloskar Oil Engines Ltd. is amortised over a period of 36 months commencing from 1 st January, 2007.

d) Mining Rights are amortised over 11 years being the period of lease.

e) On all other fixed assets depreciation is provided on straight line method in the manner and at the rates specified in Schedule-XIV to the Companies Act, 1956.

1.05 Investments

Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long term investments.

a) Current investments are carried at lower of cost and fair value determined on an individual investment basis.

b) Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of investments.

1.06 Inventories

a) Raw Materials, Stores and Spares are valued at lower of Cost and net realizable value. Rates are determined on weighted average cost formula.

b) Work in process and finished goods other than by-product are valued at lower of cost and net realizable value. Cost is arrived at by absorption cost method.

c) By-products, self generated scrap and non reusable waste are valued at net realizable value.

1.07 Foreign Currency Transactions

a) Initial Recognition: Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction.

b) Conversion: At the year end, monetary items denominated in foreign currencies other than those covered by forward contracts are converted into rupee equivalents at the year-end exchange rates.

c) Forward Exchange Contracts: In respect of transactions covered by forward exchange contracts, the difference between the forward rate and the exchange rate at the date of the transaction is recognized as income or expense over the period of the contract.

d) Exchange Differences: All exchange differences arising on settlement/conversion of foreign currency transactions are recognised in the Profit and Loss Account.

1.08 Revenue Recognition

Revenue from sale of goods is recognized when the significant risks and rewards of ownership of the goods have passed to the customer, which generally coincides with their delivery to customers. Sales are stated net of discounts, rebates and returns.

1.09 Borrowing Costs

Borrowing costs are charged to Profit and Loss account except in cases where the borrowings are directly attributable to the acquisition, construction or production of a qualifying asset. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use.

1.10 Excise Duty

Excise Duty in respect of goods manufactured by the Company is accounted on accrual basis.

1.11 Employee Benefits

a) Short Term Employee Benefits:

All employee benefits payable within twelve months of rendering of services are classified as short term benefits. Such benefits include salaries, wages, bonus, short term compensated absences, awards, exgratia, performance pay etc., and the same are recognized in the period in which the employee renders the related service.

b) Post Employment Benefits:

i) Defined Contribution Plan:

The Companys approved Superannuation Schemes, Central Government Provident Fund Scheme, are defined contribution plans. The contribution paid / payable under the schemes are recognized during the period in which the employee renders the related service.

ii) Defined Benefit Plans:

The employees gratuity fund scheme, long term compensated absences are Companys defined benefit plans. The present value of the obligation under such defined benefit plans is determined based on the actuarial valuation using the Projected Unit Credit Method as at the date of the Balance Sheet. In case of funded plans, the fair value of plan asset is reduced from the gross obligation under the defined benefit plans, to recognize the obligation on net basis.

1.12 Taxes on Income

a) Deferred tax is recognized on timing differences between the accounting income and the taxable income for the year. The tax effect is calculated on the accumulated timing differences at the end of accounting period based on prevailing enacted or subsequently enacted regulations.

b) Provision for current tax is made on the basis of the taxable profits computed for the current accounting period in accordance with Income Tax Act, 1961.

c) Advance taxes and provisions for current Income Tax are presented in the Balance Sheet after off-setting advance taxes paid and Income Tax provision arising in the same tax jurisdiction and the Company intends to settle the assets and liabilities on a net basis.

1.13 Research and Development Expenses

Revenue expenditure on the Research and Development is charged off as expense in the year in which incurred. Capital expenditure is grouped with Fixed Assets under appropriate heads and Depreciation is provided as perthe rates applicable.

1.14 Earnings Per Share

Earnings per share is calculated by dividing the net profit or loss for the year after prior period adjustments attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

 
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