Accounting Policies of KPT Industries Ltd. Company

Mar 31, 2015

A. Fixed Assets and Intangible Assets

1. Fixed Assets other than those revalued are carried at cost of acquisition or construction (inclusive of freight, duties, taxes and expenses related to acquisition and installation and commissioning and net of modvat and vat wherever applicable) less accumulated depreciation. The fixed assets which are revalued are stated at the revalued amount.

2. Intangible Assets are recorded at the consideration paid for acquisition.

3. The Company assesses at each Balance Sheet date whether there is any indication that an asset or Cash Generating Unit (CGU) may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. The recoverable amount is the higher of the asset's or CGU's net selling price or its value in use. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

B. Depreciation and Amortization.

1. Depreciation on Tangible Fixed Assets is provided using Straight Line Method as per the Useful Life of assets prescribed in Part C of Schedule II of Companies Act, 2013. The Company has aligned its depreciation policy in accordance with Schedule II to the Companies Act, 2013. Consequently, with effect from 01-04-2014;

a. The carrying value of assets is now depreciated over their remaining useful lives;

b. Where the remaining useful life of an asset is Nil as on 01 -04-2014, carrying value has been adjusted against opening reserves amounting to Rs, 13,50,328 (net of tax), in accordance with transitional provisions of Schedule II; and

c. On account of above change, depreciation expense charged to Statement of Profit and Loss for the year ended 31st March 2015 is higher by Rs, 31,51,730.

2. Depreciation on addition to assets or sale/disposal of assets is calculated pro rata from the date of such addition or up to the date of sale/disposal, as the case may be.

3. Dies and Moulds are depreciated over the useful life of 8.84 years.

4. Computer Software is amortized over the period of three years. Technical knowhow is amortized over the period of seven years. Leasehold lands are amortized over the period of lease.

C. Investments

Long Term Investments are carried at cost of acquisition. A provision for diminution is made to recognize decline other than temporary, in the value of investments.

D. Valuation of Inventories

1 Raw Material, Stores and Spares

i Raw materials, stores and spares are valued at the lower of cost and net realizable value.

ii The cost is calculated on moving weighted average method.

iii Cost comprises costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.

2 Work-in-progress

Work-in-Process is valued at the lower of cost and net realizable value. Cost includes direct materials and labor and part of manufacturing overheads apportioned based on normal operating capacity.

3 Finished Goods

Finished Goods have been valued at lower of cost and at net realizable value. Excise duty at applicable rate is included in the value of finished goods.

4 Stock in Trade

Stock in Trade is valued at lower of the cost or net realizable value. The cost comprises of all the cost of purchases and other costs incurred in bringing the inventories to their present location and condition.

E. Research and Development

Revenue Expenditure on Research and Development is charged off as an expense in the year in which incurred and the Capital Expenditure is grouped with fixed assets under appropriate heads and depreciation is provided at the applicable rates.

F. Employee Benefits

1. Defined Contribution Plans

The Company's Superannuation Scheme, state governed provident fund scheme are defined contribution plans. The contribution paid / payable under the scheme is recognized during the period in which the employee renders the related service.

2. Defined Benefit Plans

The Employees' Gratuity Fund Schemes managed by Trust is the Company's defined benefit plan. The present value of obligation under the defined benefit plans is determined based on actuarial valuation using the Projected unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

The obligation is measured at the present value of the estimated future cash flows. The discount rates used for determining the present value of the obligation under the defined benefit plan, is based on the market yields on Government securities as at the balance sheet date, having maturity periods approximating to the terms of related obligations.

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

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

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

3. Other long term employee benefits

The obligation for long term employee benefits such as long term compensated absence is recognized in the same manner as in case of defined benefit plans as mentioned in note (2) above.

G. Revenue Recognition

1. Revenue in respect of insurance/other claims, interest, subsidy, etc., is recognized only when it is reasonably certain that the ultimate collection will be made.

2. Sales Value is inclusive of excise duty and export benefit and net of sales tax, sales returns, discounts and concessions.

H. Foreign Currency Transactions

1. All foreign currency transactions are accounted for at the rates prevailing on the date of the transaction.

2. The monetary items are restated at the rate of exchange prevailing on the date of the balance sheet. The difference in exchange arising on settlement of the short term monetary item or on restatement of the same at the year end is adjusted to Profit and Loss Account.

3. The Company has exercised the option allowed by the Ministry of Corporate Affairs vide its notification dated 29th December, 2011 on Accounting Standard 11. Accordingly, in respect of accounting periods commencing on or after the 1st April, 2011, the exchange differences arising on reporting of long-term foreign currency monetary items at rates different from those at which they were reported in previous financial statements, in so far as they relate to the acquisition of depreciable capital asset is added to or deducted from the cost of the asset and depreciated over the balance life of the asset, and in other cases, accumulated in a " Foreign Currency Monetary Item Translation Difference Account" and amortized over the balance period of such long term asset or liability, by recognition as income or expense in each of such periods. Accordingly, exchange loss for the year ended 31st March, 2015, Rs, 675 (Previous Year Rs, 816,075) has been added to the cost of fixed assets.

4. In respect of amount payable in foreign currency covered by forward contracts, the premium is recognised over the period of contract.

I. Custom Claim Receivable

Custom Claims Receivable under Duty Free Replenishment Certificate, Duty Entitlement Pass Book, Licenses and Duty Drawback for export have been accounted based on shipment to overseas customers.

J. Borrowing Costs

1. Borrowing costs that are attributable to acquisition, construction or erection of qualifying fixed assets incurred during the period of acquisition or construction, are capitalized as part of the cost of the asset.

2. Other borrowing costs are recognized as expenditure in the period in which they are incurred. K. Earnings Per Share

1 Basic Earnings per share

For the purpose of calculating basic earnings per share, the net profit or loss for the period attributable to equity shareholders after deducting any attributable tax thereto for the period is divided by weighted number of equity shares outstanding during the period.

2 Diluted earnings per share

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

L. Taxes on Income

1. Tax on income for the current period is determined on the basis of taxable income after considering the various deductions available under The Income Tax Act, 1961.

2. 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 the accounting period based on prevailing enacted or substantially enacted regulations.

3. Deferred tax liabilities are recognized for all timing differences. Deferred tax assets are recognized for deductible timing differences only to the extent there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. At each reporting date the company reassesses the unrecognized deferred tax assets and reviews the deferred tax assets recognized.

M. Provisions and Contingent Liabilities

A provision is recognized when an enterprise has a present obligation as a result of past event and it is probable that an outflow of resources is expected to settle the obligation, in respect of which a reliable estimate can be made. Provision for warranty related costs are recognized when the product is sold. Provision is based on historical experience. Contingent liability is disclosed in case of -

a. a present obligation arising from past events, when it is not probable that an outflow of resources will be required to settle the obligation,

b. a present obligation arising from past events, when no reliable estimate is possible,

c. a possible obligation arising from past events, where the probability of outflow of resources is not remote.

Contingent assets are neither recognized, nor disclosed.

Provisions, contingent liabilities and contingent assets are reviewed at each Balance Sheet date.

N. Subsidies Received

1 Subsidies received towards specific fixed assets are reduced from gross block value of the concerned fixed asset.

2 Subsidies received related to revenue expenditure are deducted from related expenses.

3 Subsidies which are in nature of Investment subsidy are treated as capital reserve.

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Mar 31, 2014

A. Fixed Assets and Intangible Assets.

1. Fixed Assets other than those revalued are carried at cost of acquisition or construction (inclusive of freight, duties, taxes and expenses related to acquisition and installation and commissioning) less accumulated depreciation. The fixed assets which are revalued are stated at the revalued amount.

2. Intangible Assets are recorded at the consideration paid for acquisition.

3. Impairment loss, if any, is recognised whenever the recoverable amount of an asset / cash generating unit is less than its carrying amount.

B. Depreciation and Amortisation.

1. Depreciation on Fixed Assets is provided on "Straight Line Method", as per the provisions of Schedule XIV to the Companies Act, 1956.

2. Computer Software is amortised over a period of three years. Technical knowhow is amortised over a period of seven years. Leasehold lands are amortised over the period of lease

C. Investments

Long Term Investments are carried at cost of acquisition. A provision for diminution is made to recognise decline other than temporary, in the value of investments.

D. Valuation of Inventories

Inventories are valued at lower of cost and net realisable value. Cost of Raw Material, Stores and Spares is determined on weighted average method. Cost of finished goods and work-in- process comprises of material and conversion costs.

E. Research and Development

Revenue Expenditure on Research and Development is charged off as an expense in the year in which incurred and the Capital Expenditure is grouped with fixed assets under appropriate heads and depreciation is provided at the applicable rates.

F. Employee benefits

1. Defned Contribution Plans

Contribution to defined contribution plans, such as Provident Fund and Superannuation are charged to Profit and Loss Account as incurred.

2. Defned benefit Plans

Gratuity is accounted on the basis of actuarial valuation carried out as at Balance Sheet date. Actuarial gain / loss is recognised immediately in the statement of Profit and Loss Account as income or expenses. The method adopted for actuarial valuation is Projected Unit Credit Method.

3. Other long term employee benefits

Leave entitlement is charged to the Profit and Loss Account as incurred on the basis of actuarial valuation carried out as at Balance Sheet date. The method adopted for actuarial valuation is Projected Unit Credit Method.

G. Revenue Recognition

1. Revenue in respect of insurance / other claims, interest, subsidy, etc., is recognised only when it is reasonably certain that the ultimate collection will be made.

2. Sales Value is inclusive of excise duty and export benefit and net of sales tax, sales returns, discounts and concessions.

H. Foreign Currency Transactions

1. All foreign currency transactions are accounted for at the rates prevailing on the date of the transaction.

2. The monetary items are restated at the rate of exchange prevailing on the date of the Balance Sheet. The difference in exchange arising on settlement of the short term monetary item or on restatement of the same at the year end is adjusted to Profit and Loss Account.

3. The Company has exercised the option allowed by the Ministry of Corporate Affairs vide its notification dated 29th December 2011 on Accounting Standard 11. Accordingly, in respect of accounting periods commencing on or after the 1st April 2011, the exchange differences arising on reporting of long-term foreign currency monetary items at rates different from those at which they were reported in previous financial statements,in so far as they relate to the acquisition of depreciable capital asset is added to or deducted from the cost of the asset and depreciated over the balance life of the asset, and in other cases, accumulated in a " Foreign Currency Monetary Item Translation Difference Account" and amortised over the balance period of such long term asset or liability, by recognition as income or expense in each of such periods. Accordingly, exchange loss for the year ended 31st March 2014, Rs. 8,16,075 has been added to the cost of fixed assets.

4. In respect of amount payable in foreign currency covered by forward contracts, the premium is recognised over the period of contract.

I. Custom Claim Receivable

Custom Claims Receivable under Duty Free Replenishment Certificate, Duty Entitlement Pass Book licenses and Duty Drawback for export have been accounted based on shipment to overseas customers.

J. Borrowing Costs

1. Borrowing costs that are attributable to acquisition, construction or erection of qualifying fixed assets incurred during the period of acquisition or construction, are capitalised as part of the cost of the asset.

2. Other borrowing costs are recognised as expenditure in the period in which they are incurred.

K. Taxes on Income

1. Tax on income for the current period is determined on the basis of taxable income after considering the various deductions available under The Income Tax Act,1961

2. 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 the accounting period based on prevailing enacted or substantially enacted regulations.

3. Deferred tax liabilities are recognized for all timing differences. Deferred tax assets are recognized for deductible timing differences only to the extent there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. At each reporting date the company reassesses the unrecognized deferred tax assets and reviews the deferred tax assets recognized.

L. Product Warranty

Provision for estimated liability on warranty given on sale of the Company''s products is made on the basis of past performance of such products.

M. Subsidies Received

1. Subsidies received towards specific fixed assets are reduced from gross block value of the concerned fixed asset.

2. Subsidies received related to revenue expenditure are deducted from related expenses.

3. Subsidies which are in nature of Investment subsidy are treated as capital reserve.

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Mar 31, 2013

A. Fixed Assets and Intangible Assets

1. Fixed Assets other than those revalued are carried at cost of acquisition or construction (inclusive of freight, duties, taxes and expenses related to acquisition and installation and commissioning) less accumulated depreciation. The fixed assets which are revalued are stated at the revalued amount.

2. Intangible Assets are recorded at the consideration paid for acquisition.

3. Impairment loss, if any, is recognised whenever the recoverable amount of an asset / cash generating unit is less than its carrying amount.

B. Depreciation and Amortisation.

1. Depreciation on Fixed Assets is provided on "Straight Line Method", as per the provisions of Schedule XIV to the Companies Act, 1956.

2. Computer Software is amortised over a period of three years. Technical knowhow is amortised over a period of seven years. Leasehold lands are amortised over the period of lease.

C. Investments

Long Term Investments are carried at cost of acquisition. A provision for diminution is made to recognise decline other than temporary, in the value of investments.

D. Valuation of Inventories

Inventories are valued at lower of cost and net realisable value. Cost of Raw Material, Stores and Spares is determined on weighted average method. Cost of finished goods and work-in- process comprises of material and conversion costs.

E. Research and Development

Revenue Expenditure on Research and Development is charged off as an expense in the year in which incurred and the Capital Expenditure is grouped with fixed assets under appropriate heads and depreciation is provided at the applicable rates.

F. Employee Benefits

1. Defined Contribution Plans

Contribution to defined contribution plans, such as Provident Fund and Superannuation are charged to the Profit and Loss Account as incurred.

2. Defined Benefit Plans

Gratuity is accounted on the basis of actuarial valuation carried out as at Balance Sheet date. Actuarial gain / loss is recognised immediately in the statement of Profit and Loss Account as income or expenses.

3. Other long term employee benefits

Leave entitlement is charged to the Profit and Loss Account as incurred on the basis of actuarial valuation carried out as at Balance Sheet date.

G. Revenue Recognition

1. Revenue in respect of insurance / other claims, interest, subsidy, etc., is recognised only when it is reasonably certain that the ultimate collection will be made.

2. Sales value is inclusive of excise duty and export benefit and net of sales tax, sales returns, discounts and concessions.

H. Foreign Currency Transactions

1. All foreign currency transactions are accounted for at the rates prevailing on the date of the transaction.

2. The monetary items are restated at the rate of exchange prevailing on the date of the Balance Sheet. The difference in exchange arising on settlement of the short term monetary item or on restatement of the same at the year end is adjusted to Profit and Loss Account.

3. The Company has exercised the option allowed by the Ministry of Corporate Affairs vide its Notification dated 29th December, 2011 on Accounting Standard 11. Accordingly, in respect of accounting periods commencing on or after the 1st April, 2011, the exchange differences arising on reporting of long-term foreign currency monetary items at rates different from those at which they were reported in previous financial statements, in so far as they relate to the acquisition of depreciable capital asset, is added to or deducted from the cost of the asset and depreciated over the balance life of the asset, and in other cases, accumulated in a " Foreign Currency Monetary Item Translation Difference Account" and amortised over the balance period of such long term asset or liability, by recognition as income or expense in each of such periods. Accordingly, exchange loss for the year ended 31st March, 2013, Rs. 4,172,850, has been added to the cost of fixed assets.

4. In respect of amount payable in foreign currency covered by forward contracts, the premium is recognised over the period of contract.

I. Custom Claim Receivable

Custom Claims Receivable under Duty Free Replenishment Certificate, Duty Entitlement Pass Book Licenses and Duty Drawback for export have been accounted based on shipment to overseas customers.

J. Borrowing Costs

1. Borrowing costs that are attributable to acquisition, construction or erection of qualifying fixed assets incurred during the period of acquisition or construction, are capitalised as part of the cost of the asset.

2. Other borrowing costs are recognised as expenditure in the period in which they are incurred.

K. Taxes on Income

1. Tax on income for the current period is determined on the basis of taxable income after considering the various deductions available under The Income Tax Act,1961.

2. 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 the accounting period based on prevailing enacted or substantially enacted regulations.

3. Deferred tax liabilities are recognized for all timing differences. Deferred tax assets are recognized for deductible timing differences only to the extent there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. At each reporting date the Company reassesses the unrecognized deferred tax assets and reviews the deferred tax assets recognised.

L. Product Warranty

Provision for estimated liability on warranty given on sale of the Company''s products is made on the basis of past performance of such products.

M. Subsidies Received

1. Subsidies received towards specific fixed assets are reduced from gross block value of the concerned fixed asset.

2. Subsidies received related to revenue expenditure are deducted from related expenses.

3. Subsidies which are in nature of Investment subsidy are treated as capital reserve.

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Mar 31, 2012

A. Fixed Assets and Intangible Assets

1. Fixed Assets other than those revalued are carried at cost of acquisition or construction (inclusive of freight, duties, taxes and expenses related to acquisition and installation and commissioning) less accumulated depreciation. The fixed assets which are revalued are stated at the revalued amount.

2. Intangible Assets are recorded at the consideration paid for acquisition.

3. Impairment loss, if any, is recognised whenever the recoverable amount of an asset / cash generating unit is less than its carrying amount.

B. Depreciation and Amortisation.

1. Depreciation on Fixed Assets is provided on "Straight Line Method", as per the provisions of Schedule XIV to the Companies Act, 1956.

2. Computer Software is amortised over a period of three years. Technical knowhow is amortised over a period of seven years. Leasehold lands are amortised over the period of lease.

C. Investments

Long Term Investments are carried at cost of acquisition. A provision for diminution is made to recognise decline other than temporary, in the value of investments.

D. Valuation of Inventories

Inventories are valued at lower of cost and net realisable value. Cost of Raw Material, Stores and Spares is determined on weighted average method. Cost of finished goods and work-in- process comprises of material and conversion costs.

E. Research and Development

Revenue Expenditure on Research and Development is charged off as an expense in the year in which incurred and the Capital Expenditure is grouped with fixed assets under appropriate heads and depreciation is provided at the applicable rates.

F. Employee Benefits

1. Defined Contribution Plans

Contribution to defined contribution plans, such as Provident Fund and Superannuation are charged to the Profit and Loss Account as incurred.

2. Defined Benefit Plans

Gratuity is accounted on the basis of actuarial valuation carried out as at balance sheet date. Actuarial gain / loss is recognised immediately in the statement of Profit and Loss Account as income or expenses.

3. Other long term employee benefits

Leave entitlement is charged to the Profit and Loss Account as incurred on the basis of actuarial valuation carried out as at Balance Sheet date.

G. Revenue Recognition

1. Revenue in respect of insurance / other claims, interest, subsidy, etc., is recognised only when it is reasonably certain that the ultimate collection will be made.

2. Sales Value is inclusive of excise duty and export benefit and net of sales tax, sales returns, discounts and concessions.

H. Foreign Currency Transactions

1. All foreign currency transactions are accounted for at the rates prevailing on the date of the transaction.

2. The monetary items are restated at the rate of exchange prevailing on the date of the balance sheet. The difference in exchange arising on settlement of the short term monetary item or on restatement of the same at the year end is adjusted to Profit and Loss Account.

3. The Company has exercised the option allowed by the Ministry of Corporate Affairs vide its Notification dated 29th December, 2011 on Accounting Standard 11. Accordingly, in respect of accounting periods commencing on or after the 1st April, 2011, the exchange differences arising on reporting of long-term foreign currency monetary items at rates different from those at which they were reported in previous financial statements, in so far as they relate to the acquisition of depreciable capital asset is added to or deducted from the cost of the asset and depreciated over the balance life of the asset, and in other cases, accumulated in a " Foreign Currency Monetary Item Translation Difference Account" and amortised over the balance period of such long term asset or liability, by recognition as income or expense in each of such periods. Accordingly, exchange loss for the year ended 31st March, 2012, Rs. 6,070,950 has been added to the cost of fixed assets.

4. In respect of amount payable in foreign currency covered by forward contracts, the premium is recognised over the period of contract.

I. Custom Claim Receivable

Custom Claims Receivable under Duty Free Replenishment Certificate and Duty Entitlement Pass Book licenses for export have been accounted based on shipment to overseas customers.

J. Borrowing Costs

1. Borrowing costs that are attributable to acquisition, construction or erection of qualifying fixed assets incurred during the period of acquisition or construction, are capitalised as part of the cost of the asset.

2. Other borrowing costs are recognised as expenditure in the period in which they are incurred.

K. Taxes on Income

1. Tax on income for the current period is determined on the basis of taxable income after considering the various deductions available under The Income Tax Act,1961.

2. 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 the accounting period based on prevailing enacted or substantially enacted regulations.

3. Deferred tax liabilities are recognized for all timing differences. Deferred tax assets are recognized for deductible timing differences only to the extent there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. At each reporting date the Company reassesses the unrecognized deferred tax assets and reviews the deferred tax assets recognized.

L. Product Warranty

Provision for estimated liability on warranty given on sale of the Company's products is made on the basis of past performance of such products.

M. Subsidies Received

1. Subsidies received towards specific fixed assets are reduced from gross block value of the concerned fixed asset.

2. Subsidies received related to revenue expenditure are deducted from related expenses.

3. Subsidies which are in nature of Investment subsidy are treated as capital reserve.

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Mar 31, 2011

A. Fixed Assets and Intangible Assets

1. Fixed Assets, other than those revalued, are carried at cost of acquisition or construction (inclusive of freight, duties, taxes and expenses related to acquisition and installation and commissioning) less accumulated depreciation. The fixed assets which are revalued are stated at the revalued amount.

2. Intangible Assets are recorded at the consideration paid for acquisition.

3. Impairment loss, if any, is recognised whenever the recoverable amount of an asset/ cash generating unit is less than its carrying amount.

B. Depreciation and Amortisation.

1. Depreciation on Fixed Assets is provided on “Straight Line Method”, as per the provisions of Schedule XIV to the Companies Act, 1956.

2. Computer Software is amortised over a period of three years. Technical knowhow is amortised over a period of seven years. Leasehold lands are amortised over the period of lease.

C. Investments

Investments are carried at cost of acquisition. A provision for diminution is made to recognise decline, other than temporary, in the value of investments.

D. Valuation of Inventories

Inventories are valued at lower of cost and net realisable value. Cost of Raw Material, Stores and Spares is determined on weighted average method. Cost of finished goods and work-in- process comprises of material and conversion costs.

E. Research and Development

Revenue Expenditure on Research and Development is charged off as an expense in the year in which incurred and the Capital Expenditure is grouped with fixed assets under appropriate heads and depreciation is provided at the applicable rates.

F. Employee Benefits

1. Defined Contribution Plans

Contribution to defined contribution plans, such as Provident Fund and Superannuation are charged to the Profit and Loss Account as incurred.

2. Defined Benefit Plans

Gratuity is accounted on the basis of actuarial valuation carried out as at Balance Sheet date. Actuarial gain/loss is recognised immediately in the statement of Profit and Loss Account as income or expenses.

3. Other long term employee benefits

Leave entitlement is charged to the Profit and Loss Account as incurred on the basis of actuarial valuation carried out as at Balance Sheet date.

G. Revenue Recognition

1. Revenue in respect of insurance/other claims, interest, subsidy, etc. is recognised only when it is reasonably certain that the ultimate collection will be made.

2. Sales Value is inclusive of excise duty and export benefit and net of sales tax, sales returns, discounts and concessions.

H. Foreign Currency Transactions

1. All foreign currency transactions are accounted for at the rates prevailing on the date of the transaction.

2. The monetary items are restated at the rate of exchange prevailing on the date of the balance sheet. The difference in exchange arising on settlement of the transaction or on restatement at the year end is adjusted to Profit and Loss Account.

3. In respect of amount payable in foreign currency covered by forward contracts, the premium is recognised over the period of contract.

I. Custom Claim Receivable

Custom Claims Receivable under DFRC and DEPB licenses for export have been accounted based on shipment to overseas customers.

J. Borrowing Costs

1. Borrowing costs that are attributable to acquisition, construction or erection of qualifying fixed assets incurred during the period of acquisition or construction, are capitalised as part of the cost of the asset.

2. Other borrowing costs are recognised as expenditure in the period in which they are incurred.

K. Taxation

Provision for taxation for the current accounting period is made in accordance with the provisions of the Income Tax Act, 1961. Deferred Tax resulting from timing difference between book profits and tax profits is accounted for at the applicable rate of tax to the extent timing differences are expected to crystallise, in the case of deferred tax assets with virtual certainty, that there would be adequate future taxable income against which deferred tax assets can be realised.

L. Product Warranty

Provision for estimated liability on warranty given on sale of the Company's products is made on the basis of past performance of such products.

M. Miscellaneous/Deferred Revenue Expenditure

Voluntary Retirement Scheme compensation paid to employees is amortised over a period of four years.

N. Subsidies Received

1. Subsidies received towards specific fixed assets are reduced from gross block value of the concerned fixed asset.

2. Subsidies received related to revenue expenditure are deducted from related expenses.

3. Subsidies which are in nature of Investment subsidy are treated as capital reserve.

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Mar 31, 2010

A. Fixed Assets and Intangible Assets

1. Fixed Assets other than those revalued are carried at cost of acquisition or construction (inclusive of freight, duties, taxes and expenses related to acquisition and installation and commissioning) less accumulated depreciation. The fixed assets which are revalued are stated at the revalued amount.

2. Intangible Assets are recorded at the consideration paid for acquisition.

3. Impairment loss, if any, is recognised whenever the recoverable amount of an asset/ cash generating unit is less than its carrying amount.

B. Depreciation and Amortisation

1. Depreciation on Fixed Assets is provided on "Straight Line Method", as per the provisions of Schedule XIV to the Companies Act, 1956.

2. Computer Software is amortised over a period of three years. Technical knowhow is amortised over a period of seven years. Leasehold lands are amortised over the period of lease.

C. Investments

Investments are carried at cost of acquisition. A provision for diminution is made to recognise decline other than temporary, in the value of investments.

D. Valuation of Inventories

Inventories are valued at lower of cost and net realisable value. Cost of Raw Material, Stores and Spares is determined on weighted average method. Cost of finished goods and work-in- process comprises of material and conversion costs.

E. Research and Development

Revenue Expenditure on Research and Development is charged off as an expense in the year in which incurred and the Capital Expenditure is grouped with fixed assets under appropriate heads and depreciation is provided at the applicable rates.

F. Employee Benefits

1. Defined Contribution Plans

Contribution to defined contribution plans, such as Provident Fund and Superannuation are charged to the profit and loss account as incurred.

2. Defined Benefit Plans

Gratuity is accounted on the basis of actuarial valuation carried out as at balance sheet date. Actuarial gain / loss is recognised immediately in the statement of profit and loss account as income or expenses.

3. Other long term employee benefits

Leave entitlement is charged to the profit and loss account as incurred on the basis of actuarial valuation carried out as at balance sheet date.

G. Revenue Recognition

1. Revenue in respect of insurance / other claims, interest, subsidy, etc. is recognised only when it is reasonably certain that the ultimate collection will be made.

2. Sales Value is inclusive of excise duty and export benefit and net of sales tax, sales returns, discounts and concessions.

H. Foreign Currency Transactions

1. All foreign currency transactions are accounted for at the rates prevailing on the date of the transaction.

2. The monetary items are restated at the rate of exchange prevailing on the date of the balance sheet. The difference in exchange arising on settlement of the transaction or on restatement at the year end is adjusted to Profit and Loss Account.

3. In respect of amount payable in foreign currency covered by forward contracts, the premium is recognised over the period of contract.

I. Custom Claim Receivable

Custom Claims Receivable under DFRC and DEPB licenses for export have been accounted based on shipment to overseas customers.

J. Borrowing Costs

1. Borrowing costs that are attributable to acquisition, construction or erection of qualifying fixed assets incurred during the period of acquisition or construction, are capitalised as part of the cost of the asset.

2. Other borrowing costs are recognised as expenditure in the period in which they are incurred.

K. Taxation

Provision for taxation for the current accounting period is made in accordance with the provisions of the Income Tax Act, 1961. Deferred Tax resulting from timing difference between book profits and tax profits is accounted for at the applicable rate of tax to the extent timing differences are expected to crystallise, in the case of deferred tax assets with virtual certainty, that there would be adequate future taxable income against which deferred tax assets can be realised.

L. Product Warranty

Provision for estimated liability on warranty given on sale of the Companys products is made on the basis of past performance of such products.

M. Miscellaneous / Deferred Revenue Expenditure

Voluntary retirement scheme compensation paid to employees is amortised over a period of four years.

N. Subsidies Received

1. Subsidies received towards specific fixed assets are reduced from gross block value of the concerned fixed asset.

2. Subsidies received related to revenue expenditure are deducted from related expenses.

3. Subsidies which are in nature of Investment subsidy are treated as capital reserve.