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Accounting Policies of Lakshmi Precision Screws Ltd. Company

Mar 31, 2014

1.01 Basis of preparation

The financial statements of the Company have been prepared on historical cost convention as a going concern on accrual basis, in accordance with the requirements of the Companies Act, 1956, read with General Circular 8/ 2014 dated 4th April, 2014 issued by the Ministry of Corporate Affairs and in accordance with generally accepted accounting principles in India (Indian GAAP) and comply with Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006, (as amended) to the extent applicable. Accounting policies have been consistently applied and where a newly issued accounting standard is initially adopted or where an existing accounting policy requires a change due to more appropriate presentation of financial statements, such changes are suitably incorporated. The management evaluates all recently issued or revised accounting standards on an ongoing basis.

1.02 Presentation and disclosure of financial statements

The presentation and disclosure of the financial statements have been made in accordance with the revised Schedule VI notified by the Central Government vide notification no. S.O 447(E), dated 28th February 2011 (as amended by notification no. F No. 2/6/2008-CL-V, dated 30th March 2011) which has become effective for accounting periods commencing on or after 1st April 2011.

1.03 Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in India requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the management''s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods. Changes in estimates are reflected in the financial statements in the period in which changes are made and if material, their effects are disclosed in notes to accounts.

1.04 Inventories

a) Inventories have been valued at lower of cost and net realizable value. Cost has been ascertained in case of semi-finished goods at 66% less on the price-list and finished goods have been valued at 57% less on the price-list and special items have been valued at 31% less in case of semi-finished goods and 22% less in the case of finished goods of selling price, based on overall cost data and gross margins. Since exact cost is not ascertainable. Excise duty payable on finished goods and scrap materials are shown separately as part of manufacturing cost and is included in the valuation of finished goods and scrap materials. Inventories are consumed on FIFO (First in First out) basis. Scrap material has been valued at net realisable value.

b) Dies and tools are amortised over their residual useful lives based on the assessment made by the technical committee of the Company.

1.05 Tangible fixed assets

a) Tangible assets are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises purchase price, taxes, duties, freight and other incidental expenses related to acquisition and installation of the concerned assets are further adjusted by the amount of CENVAT credit and VAT credit availed wherever applicable and subsidy directly attributable to the cost of fixed asset. Interest and other borrowing costs during construction period to finance qualifying fixed assets is capitalised if capitalisation criteria are met.

b) Subsequent expenditure related to an item of tangible asset is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance. All other expenses on existing fixed assets, including day to day repair and maintenance expenditure are charged to the statement of profit and loss for the period during which such expenses are incurred.

c) Capital work-in- progress comprises cost of fixed assets that are not yet ready for their intended use at the balance sheet date and are carried at cost comprising direct cost , related incidental expenses and interest on borrowings their against.

d) Preoperative expenditure and trial run expenditure accumulated as capital work in progress is allocated on the basis of prime cost of fixed assets in the year of commencement of commercial production.

e) Gains or losses arising from disposal of fixed assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is disposed off.

1.06 Intangible assets

a) Acquired intangible assets

Intangible assets including software licenses of enduring nature and contractual rights acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses, if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use.

b) Research and development cost

Research costs are expensed as incurred. Development expenditure incurred on an individual project is recognized as an intangible asset when it is probable that the future economic benefits that are attributable to the asset will fiow to the Company and cost of the assets can be measured reliably.

c) Gains or losses arising from disposal of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit and loss when the asset is disposed off.

1.07 Depreciation and amortization

a) Depreciation on tangible fixed assets is provided on written down value method using the rates and in the manner as prescribed in Schedule XIV of the Companies Act, 1956, which approximates the useful lives of the assets estimated by the management, except in case of Plant-II, Manesar Plants and Recoil Business Division where depreciation has been provided on straight-line method.

b) Assets costing not more than 5,000/- each individually are depreciated at 100%.

c) Intangible assets are amortised on a straight line basis over six years being estimated useful life of the assets.

1.08 Prior Period Items/ Extraordinary Items

Prior Period expenses/incomes, are shown as prior period items in the profit and loss account as per the provision of Accounting Standard-5 "Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies" notified under the Companies (Accounting Standards) Rules, 2006 (as amended). Items of income or expenses that arise from events or transactions that are distinct from ordinary activities of the enterprise and are not expected to recur frequently or regularly are treated as extraordinary items.

1.09 Revenue Recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognized:

i) Sale of Goods

Revenue from sale of Goods is recognised when all the significant risks and rewards of ownership of the goods have been passed to the buyer, and are recorded net of returns and trade discount. The Company collects sales taxes and value added taxes (VAT) on behalf of the government and, therefore, these are not economics benefits flowing to the company and therefore are excluded from revenue. Excise Duty is deducted from revenue(Gross) to arrive at revenue from operations (net). Sales do not include inter-divisional transfers. Export sales are recognised at the time of clearance of goods and approval from Excise Authorities.

ii) Rental Income

Rental income is recognised on a time proportionate basis.

iii) Interest Income

Interest income is recognized on time proportionate basis taking into account the amount outstanding and the applicable rate of interest.

iv) Dividend income

Dividend income is accounted for when the right to receive the payment is established.

1.10 Foreign currency transactions

Foreign currency transactions and balances

i) Initial recognition

Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

ii) Conversion

Foreign currency monetary items are retranslated using the exchange rate prevailing at the reporting date. Non-monetary items, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction.

iii) Exchange differences

Exchange differences arising on conversion / settlement of foreign currency monetary items and on foreign currency liabilities relating to fixed assets acquisition are recognised as income or expense in the year in which they arise. In case of exchange variation arising on reporting of long term foreign currency monetary item at rates different from those at which they were initially recorded during the period, or reported in previous financial statements, in so far as they relate to the acquisition of a depreciable capital assets, are added to or deducted from the cost of assets and are 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/liability by recognition as income or expense in each of such period.

iv) Bank Guarantee and Letter of Credit

Bank Guarantee and Letter of Credits are recognized at the point of negotiation with Banks and converted at the rates prevailing on the date of Negotiation, However, Outstanding at the period end are recognized at the rate prevailing as on that date and total sum is considered as contingent liability.

1.11 Government Grants/ Subsidies

Government grants available to the Company are recognized in accounts:

i) Where there is reasonable assurance that the enterprise will comply with the conditions attached to them and;

ii) Where such benefits have been earned by the enterprise and it is reasonably certain that the ultimate collection will be made

Grants related to revenue are deducted in reporting the related expense.

1.12 Investments

Investments, which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long-term investments.

On initial recognition, all investments are measured at cost. The cost comprises purchase price and directly attributable acquisition charges such as brokerage, fees and duties.

Current investments are carried in the financial statements at lower of cost and fair value determined on an individual investment basis. 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 the investments.

On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the statement of profit and loss.

1.13 Retirement Benefits

i) Gratuity

The employee''s Gratuity Scheme, which is defined benefit plan, is managed by trust maintained with Life Insurance Corporation of India (LIC). The liabilities with respect to Gratuity Plan are determined by actuarial valuation on projected unit credit method on the balance sheet date, based upon which the Company contributes to the Group Gratuity Scheme. The difference, if any, between the actuarial valuation of the gratuity of employees at the year end and the balance of funds with Life Insurance Corporation of India is provided for as assets/(liability) in the books. Actuarial gains/ (losses) for defined plans are recognised in full and are immediately taken to the statement of profit and loss and are not deferred.

ii) Provident fund

Retirement benefit in the form of provident fund is a defined contribution scheme. The contribution to provident fund are made in accordance with the relevant scheme and are charged to the statement of profit and loss for the year when contribution are due. The Company has no obligation, other than the contribution payable to the provident fund.

iii) Leave Encashment

Accrual for leave encashment benefit is based on acturial valuation as on the balance sheet date in pursuance of the company''s leave rules.

1.14 Borrowing costs

Borrowing cost includes interest and ancillary costs incurred in connection with the arrangement of borrowings and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost.

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur.

1.15 Leases

Leases, where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term.

1.16 Earning per share

Basic earning per share is computed by dividing the profit/(loss) after tax (including the post tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year. Diluted earning per share is computed by dividing the profit/(loss) after tax (including the post tax effect of extraordinary items, if any) as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earning per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease the net profit per share from continuing ordinary operations. Potential equity shares are deemed to be converted as at the beginning of the period, unless they have been issued at a later date. The dilutive potential equity shares are adjusted for the proceeds receivable had the shares been actually issued at fair value (i.e. average market value of the outstanding shares). Dilutive potential equity shares are determined independently for each period presented.

1.17 Taxes on Income

Tax expense for the year comprises of direct taxes and indirect taxes.

DIRECT TAXES

i) Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current income tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit and loss.

ii) Deferred income taxes refect the impact of timing differences between taxable income and accounting income originating during the current year and reversal of timing differences for the earlier years. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted at the reporting date.

Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized only to the extent that there is reasonable certainty that suffcient future taxable income will be available against which such deferred tax assets can be realized. In situations where the company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.

The carrying amount of deferred tax assets are reviewed at each reporting date. The company writes-down the carrying amount of deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.

iii) Wealth tax is ascertained in accordance with the provisions of the Wealth Tax Act, 1957.

INDIRECT TAXES

i) Excise duty (including education cess) has been accounted for in respect of the goods cleared. The company is providing excise duty liability in respect of finished products.

ii) Service Tax has been accounted for in respect of services rendered.

iii) Final sales tax / Value added tax liability is ascertained on the finalization of assessments in accordance to provisions of sales tax / value added tax laws of respective states where the company is having offices/works.

1.18 Research and Development

Intangible Assets arising from development are not recognised since the asset is not identifiable and future economic benefits from the assets are not probable. Expenditure on research is recognised as an expense when it is incurred. Research and Development cost includes salaries and other related cost of personnel, cost of materials and services consumed and other overhead costs related to research and development.

1.19 Miscellaneous Expenditure

Technical know-how is amortized on a systematic basis on straight line method over its useful life based upon the respective technical know-how agreements.

1.20 Impairment of assets

At the end of each year, the Company determines whether a provision should be made for impairment loss on fixed assets by considering the indications that an impairment loss may have occurred and where the recoverable amount of any fixed asset is lower than its carrying amount, a provision for impairment loss on fixed assets is made for the difference. Recoverable amount is generally measured using discounted estimated cash fows. Post impairment, depreciation is provided on the revised carrying value of the asset over its remaining useful life.

1.21 Provisions and Contingent Liabilities Provisions

A provision is recognized when the company has a present obligation as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of obligation. Provisions are not discounted to their present value and are determined based on the best estimates required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to refect the current best estimates.

Contingent Liabilities

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.

1.22 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 three months or less.

c. Terms/right attached to equity shares:

The Company has issued equity shares having a par value of Rs. 10/- per share. Each holder of equity shares is entitled to one vote per share.

The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the Annual General Meeting.

During the year ended 31st March 2014, the amount of per share dividend recognized as distributions to equity shareholders is Rs.NIL (Previous Year Rs.0.80)

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assests of the Company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

d. Details of shareholders holding more than 5% shares in the Company is set out below:

As per records of the Company, including its register of shareholders/members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownership of shares.

''Pursuant to Notification no: G.S.R 225(E) dated 31st March, 2009 and as amended by notification dated 11th May, 2011 issued by the Ministry of Corporate Affairs, the Company has opted to apply the prescribed treatment in respect of exchange rate variation arising on long term foreign currency monetary items. Accordingly exchange rate variation arising out of reporting of long term foreign currency monetary items at rates different from those at which they were initially recorded during the period, or reported in previous financial statements, in so far as they relate to the acquisition of depreciable capital assets, are added to or deducted from the cost of the assets 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/liability by recognition as income or expense in each of such period. Out of total exchange loss of Rs 3686380/- arising on aforesaid long term foreign currency monetary items, a sum of Rs 2449969/- has been added to the cost of fixed assets and a sum of Rs 1236411/- has been transferred to Foreign Monetary Items Translation Difference account. A sum of Rs.3149002/- has been fully amortized in the Statement of Profit and Loss since the connected long term foreign currency liability has been discharged during the year.

(i) Term loans are from Canara Bank, IDBI Bank Limited, State Bank of India and ICICI Bank Limited.

(ii) Details of term loans from Canara Bank and security furnished are as under:

a) Interest accrued and due Rs.6632117/- (previous year Rs.4758747/-) remained unpaid as on the date of Balance Sheet in respect of term loans from banks.

Term Loans from other parties (secured)

(viii) Term loans from other parties are from Intec Capital Limited, Haryana State Industrial and Infrastructure Development Corporation Limited (HSIIDC), Karvy Financial Services Limited and Hero Fincorp Limited as under:

b. Deferred Payment Liabilities:

(i) Deferred payment credits from Haryana State Industrial & Infrastructure Development Corporation Limited (HSIIDC) are secured against the following properties:-

1. Plot no. 153, Sector 3 at IMT Manesar, Gurgaon

2. Plot no. 257, Sector 6 at IMT Manesar, Gurgaon

3. Working Housing unit at IMT Manesar, Gurgaon

4. Dormitory House at IMT Manesar, Gurgaon

a) The above properties shall continue to belong to HSIIDC until and unless the full price of the properties with interest and other amount, if any, due to HSIIDC is paid by the Company.

b) On the payment of total price of the properties, the HSIIDC would execute a deed of conveyance in favour of the Company.

(i) Unsecured loans from Religare Finvest Limited, Magma Fincorp Limited, Tata Capital Limited, Bajaj Finance Limited and Hero Fincorp Limited aggregating to Rs.67541204 are repayable in 12 to 36 monthly installments varying from Rs.1.51 lacs to Rs.54.44 lacs.

(i) The liability towards gratuity is as certified by an actuary.

(ii) The Company provides for encashment of leave or leave with pay subject to certain rules. The employees are entitled to accumulate leave subject to to certain limits for future encashment. The liability is provided based on numbers of days of unutilized leave at each Balance Sheet date as certified by an actuary.

a. Working capital limits from banks (secured)

1) Working capital limits from consortium banks are from Canara Bank and State Bank of India in the ratio of 70:30 and are secured by way of pari passu first charge against hypothecation of entire chargeable current assets i.e stock and book debts (present and future) of the Company and pari passu second charge on fixed assets of the Company consisting of land and building, plant and machinery and other fixed assets including capital work in progress (present and future) and guaranteed by some of the Directors of the Company and their relatives.

Working capital limits from consortium banks are further secured by way of equitable mortgage of:

Second pari passu charge on 10640 square yards of Land and Building standing in the name of Mrs.Sushila Devi Jain, Director of the Company, situated at nH - 10, Hissar Road, Rohtak.

Second pari passu charge on Land and Building 4.6125 acres situated at Mauza Kharawar, Tehsil - Sampla, District - Rohtak, Haryana in the name of Shri Nikhlesh Jain and Shri Saurabh Jain.

First pari passu charge with other consortium members on Dies and Tools capitalised during financial year 2010-2011 and 2011-12.

Exclusive charge on Dies and Tools capitalised during financial year 2012-13.

2) Working capital limits from ICICI Bank Limited are secured as under:-

First charge by way of hypothecation of the Company''s entire stocks of raw materials, semi-finished and finished goods, consumable store and spares and such other moveable''s including book-debts, bills whether documentary or clean, outstanding monies, receivables, both present and future, in a form and manner satisfactory to the bank, ranking pari passu with other participating banks.

Second charge on all the Company''s immoveable properties and fixed assets, both present and future, ranking pari passu with other participating banks. Unconditional and irrevocable personal guarantees of Shri L.K. Jain and Shri D.K. Jain, Directors of the company.

3) Working capital limits from Corporation Bank are secured against:-

Simple Registered Mortgage of industrial plot measuring 16 Kanal 3 Marla situated in the Revenue Village Kutana, tehsil and District Rohtak executed in favour of Corporation Bank.

4) Aggregate amount of loans guaranteed by the Directors of the Company and their relatives (Rs.) 1602345840 1656572554

5) Period and amount of overdue and unpaid as on the Balance Sheet date:

6) Interest accrued and due Rs. 1708771/- on Fixed Deposit from Directors and others remained unpaid as on the Balance Sheet date

b. Other loans and advances from a Company (unsecured)

(i) Other loans and advances are from Companies and repayable on demand.

(ii) Interest accrued and due Rs. 760932/- (previous year Rs.556156/-) remained unpaid as on the Balance Sheet date

(i) Trade payables include payable to a subsidiary company Rs. 8961869/- (Previous Year Rs.8194506/-)

(ii) Information required to be furnished as per section 22 of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) for the year ended 31st March, 2014. This information has been determined to the extent such parties have been identified on the basis of information available with the company.

(ii) The Company has made a provision of Excise duty amounting Rs 50328743/- (previous year Rs. 51120373/-) payable on stocks of Finished and Scrap material. Excise duty is considered as an element of cost at the time of manufacture of goods.

(iii) Employees benefit expense includes Rs.6615000/- (Previous year Rs. 6534800/-) payable to Directors of the Company.

(iv) Statutory dues are in respect of PF,ESI,Sales Tax, Service Tax, Income Tax and TDS.

(v) Other payables include expenses payable, advance against sale of vehicle and other unsecured payables.

(vi) * Credit Balance in HDFC Bank, Rohtak is due to uncashed cheques.

(i) Provisions are recognized for expenses such as gratuity, income tax, wealth tax, and leave encashment. The provisions are recognized on the basis of past events and the probable settlement of the present obligation as a result of the past events during the financial year 2013-14. * **

* Interest on Income Tax for the year 2012-13 debited to finance cost (Note No 28)

** Included under Statutory Dues payable (Note No 9)

Notes:

1 Depreciation has been provided on rates as per Schedule XIV of the Companies Act'' 1956 on wdv basis except in case of Plant-II, Manesar and Recoil Division where depreciation has been provided on straight line method.

2 Depreciation on assets for a value not exceeding Rs. 5000/- has been provided @ 100% .

3 The additions in fixed assets include Rs. 16730445/- (Last year Rs.6314538) capitalised on account of borrowing costs in accordance with AS-16 "Borrowing Cost" issued by the Institute of Chartered Accountant of India.

4 Leasehold offices Premises are in respect of office flats at Bangalore.

5 Freehold offices Premises are in respect of office flats at Mumbai and Delhi.

6 A sum of Rs. 2449969/- on account of exchange loss incurred during the year has been added to the cost of Plant and Machinery in accordance with notification no. G.S.R. 225(E) dated 31.01.2009 as amended vide notification dated 11.05.2011, issued by Ministry of Corporate Affairs.

7 Plant and Machinery include capital expenditure of Rs. 5963676/- incurred during the year and Rs. 12601059/- incurred during the previous year on Research and Development.

8 Vehicles under finance lease are as under:

Gross Block Rs. 40332487/-

Net Block Rs. 24903262/-

9 Machines under finance lease are as under:

Gross Block Rs. 1565758/-

Net Block Rs. 1514748/-

*In terms of joint venture agreement entered into with Bossard AG, Switzerland on 26.06.1997, the Company has invested a sum of Rs.23520190/- in LPS Bossard Private Limited towards allotment of 2352019 Equity Shares of Rs.10/- each and a sum of Rs.1847490/- in LPS Bossard Information Systems Private Limited towards allotment of 184749 equity shares of Rs,10/- each, towards 49% holding in the aforesaid companies. [Refer note no 31(xvii)].

Deferred tax assets in respect of timing differences capable of reversal in future an d carried forward losses und er the Income Tax Act 1961 has not been recognised in view of absence of virtual certainty supported by convincing evidence that sufficient taxable income will be available in future for reversal of deferred tax assets.

Inventories have been valued at lower of cost and net realizable value. Cost has been ascertained in case of Semi-finished goods at 66% less on price-list and finished goods have been valued at 57% less on price-list and special items have been valued at 31% less in case of semi-finished goods and 22% less in the case of finished goods of the selling price; since exact cost is not ascertainable. Excise duty payable on finished goods and scrap materials are shown separately as part of manufacturing cost and is included in the valuation of finished goods and scrap materials. Inventories are consumed on FIFO (First in First out) basis. Scrap material has been valued at net realisable value.

Trade receivables includes

a) Rs 271723/- (previous year Rs. 1963627/-) due from LPS Bossard Private Limited, a Joint Venture Company.

b) Rs 7880/- (previous year Rs. 7880/-) due from J C Fasteners Limited, an Associate Company.

c) Rs 448058/- (previous year Rs. 448058/-) due from Lakshmi Extrution Limited, an Associate Company.

d) Rs 7745249/- (previous year Rs. 7745249/-) due from Universal Precision Screws, a firm in which directors are partners.

e) Rs 139019/- (previous year NIL) due from LPS Industrial Supplies Private Limited, an Associate Company.

* Fixed deposits with banks include deposits of Rs. 36641627/- (Previous Year of Rs. 39831935/-) with maturity of more than 12 months.

* *Unpaid dividends can be utilised only for payment of unpaid dividend liability.

(ii) That the balance with central excise department includes balance in central excise account at head office, duty paid on stocks lying at the branches and with consignees.

(iii) Other advances include Service Tax to be availed, vat refund due and staff imprest accounts.

(i) Interest received includes a sum of Rs.7725097/- (previous year Rs.7052568/-) on bank deposits, Rs. 90661/- (previous year Rs. 1820/-) from trade customers, Rs. 664590/- (previous year Rs. 790214/-) on loans, Rs. 2477645/- (previous year Rs. 1042947/-) on securities, and Rs. Nil (previous year Rs. 622420/-) on interest on income tax refund.

(ii) Miscellaneous receipts includes excise claim, unclaimed balances written off and other miscellaneous incomes.

(i) Employee benefits expenses include managerial remuneration Rs. 4,48,50,000/- (previous year Rs. 40565000/-).

(ii) The managerial remuneration has been paid in terms of sanction from Central Government u/s 269, 198(4)/309(3) and 637AA of the Companies Act, 1956, vide letters dated 17th September 2013 and 29th October 2013.

(iii) The Company has paid managerial remuneration @ Rs. 3,00,000/- p.m. to Shri Rajesh Jain, in terms of approval dated 31st December, 2010 which was valid upto 30th September, 2013. The Company has applied to the Ministry of Corporate Affairs for approval of managerial remuneration being paid to Sh. Rajesh Jain Director vide application dated 22 October, 2013. The remuneration paid to Shri Rajesh Jain, Director for the period from 1st October 2013 to 31st March 2014 amounting to Rs. 18,00,000/- is subject to approval of Ministry of Corporate Affairs.


Mar 31, 2013

1.01 Basis of preparation

The financial statements of the Company have been prepared on historical cost convention as a going concern on accrual basis, in accordance with the requirements of the Companies Act, 1956 and in accordance with generally accepted accounting principles in India (Indian GAAP) and comply with Accounting Standards notifi ed under the Companies (Accounting Standards) Rules, 2006, (as amended) to the extent applicable. Accounting policies have been consistently applied and where a newly issued accounting standard is initially adopted or where an existing accounting policy requires a change due to more appropriate presentation of fi nancial statements, such changes are suitably incorporated. The management evaluates all recently issued or revised accounting standards on an ongoing basis.

1.02 Presentation and disclosure of fi nancial statements

The presentation and disclosure of the fi nancial statements have been made in accordance with the revised Schedule VI notifi ed by the Central Government vide notifi cation no. S.O 447(E), dated 28th February 2011 (as amended by notifi cation no. F No. 2/6/2008-CL-V, dated 30th March 2011) which has become effective for accounting periods commencing on or after 1st April 2011.

1.03 Use of Estimates

The preparation of fi nancial statements in conformity with generally accepted accounting principles in India requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the management''s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods. Changes in estimates are refl ected in the fi nancial statements in the period in which changes are made and if material, their effects are disclosed in notes to accounts.

1.04 Inventories

Inventories have been valued at lower of cost and net realizable value. Cost has been ascertained in case of semi-fi nished goods at 65% less on the price-list and fi nished goods have been valued at 55% less on the price-list and special items have been valued at 30% less in case of semi-fi nished goods and 20% less in the case of fi nished goods of selling price, since exact cost is not ascertainable. Excise duty payable on fi nished goods and scrap materials are shown separately as part of manufacturing cost and is included in the valuation of fi nished goods and scrap materials. Inventories are consumed on FIFO (First in First out) basis. Scrap material has been valued at net realisable value.

1.05 Tangible fi xed assets

a) Tangible assets are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises purchase price, taxes, duties, freight and other incidental expenses related to acquisition and installation of the concerned assets are further adjusted by the amount of CENVAT credit and VAT credit availed wherever applicable and subsidy directly attributable to the cost of fi xed asset. Interest and other borrowing costs during construction period to fi nance qualifying fi xed assets is capitalised if capitalisation criteria are met.

b) Subsequent expenditure related to an item of tangible asset is added to its book value only if it increases the future benefi ts from the existing asset beyond its previously assessed standard of performance. All other expenses on existing fi xed assets, including day to day repair and maintenance expenditure are charged to the statement of profi t and loss for the period during which such expenses are incurred.

c) Capital work-in- progress comprises cost of fi xed assets that are not yet ready for their intended use at the balance sheet date and are carried at cost comprising direct cost , related incidental expenses and interest on borrowings their against.

d) Preoperative expenditure and trial run expenditure accumulated as capital work in progress is allocated on the basis of prime cost of fi xed assets in the year of commencement of commercial production.

e) Gains or losses arising from disposal of fi xed assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profi t and loss when the asset is disposed off.

1.06 Intangible assets

a) Acquired intangible assets

Intangible assets including software licenses of enduring nature and contractual rights acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses, if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use.

b) Research and development cost

Research costs are expensed as incurred. Development expenditure incurred on an individual project is recognized as an intangible asset when it is probable that the future economic benefi ts that are attributable to the asset will fl ow to the Company and cost of the assets can be measured reliably.

c) Gains or losses arising from disposal of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profi t and loss when the asset is disposed off.

1.07 Depreciation and amortization

a) Depreciation on tangible fi xed assets is provided on written down value method using the rates and in the manner as prescribed in Schedule XIV of the Companies Act, 1956, which approximates the useful lives of the assets estimated by the management, except in case of Plant-II, Manesar Plants and Recoil Business Division where depreciation has been provided on straight-line method.

b) Assets costing not more than 5,000/- each individually are depreciated at 100%.

c) Intangible assets are amortised on a straight line basis over six years being estimated useful life of the assets.

1.08 Prior Period Items/ Extraordinary Items

Prior Period expenses/incomes, are shown as prior period items in the profi t and loss account as per the provision of Accounting Standard-5 "Net Profi t or Loss for the Period, Prior Period Items and Changes in Accounting Policies" notifi ed under the Companies (Accounting Standards) Rules, 2006 (as amended). Items of income or expenses that arise from events or transactions that are distinct from ordinary activities of the enterprise and are not expected to recur frequently or regularly are treated as extraordinary items.

1.09 Revenue Recognition

Revenue is recognized to the extent that it is probable that the economic benefi ts will fl ow to the Company and the revenue can be reliably measured. The following specifi c recognition criteria must also be met before revenue is recognized:

i) Sale of Goods

Revenue from sale of Goods is recognised when all the signifi cant risks and rewards of ownership of the goods have been passed to the buyer, and are recorded net of returns and trade discount. The Company collects sales taxes and value added taxes (VAT) on behalf of the government and, therefore, these are not economics benefi ts fl owing to the company and therefore are excluded from revenue. Excise Duty is deducted from revenue(Gross) to arrive at revenue from operations (net). Sales do not include inter-divisional transfers. Export sales are recognised at the time of clearance of goods and approval from Excise Authorities.

ii) Rental Income

Rental income is recognised on a time proportionate basis.

iii) Dividend income

Dividend income is accounted for when the right to receive the payment is established.

1.10 Foreign currency transactions

Foreign currency transactions and balances

i) Initial recognition

Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

ii) Conversion

Foreign currency monetary items are retranslated using the exchange rate prevailing at the reporting date. Non-monetary items, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction.

iii) Exchange differences

Exchange differences arising on conversion / settlement of foreign currency monetary items and on foreign currency liabilities relating to fi xed assets acquisition are recognised as income or expense in the year in which they arise. In case of exchange variation arising on reporting of long term foreign currency monetary item at rates different from those at which they were initially recorded during the period, or reported in previous fi nancial statements, in so far as they relate to the acquisition of a depreciable capital assets, are added to or deducted from the cost of assets and are 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/liability by recognition as income or expense in each of such period.

iv) Bank Guarantee and Letter of Credit

Bank Guarantee and Letter of Credits are recognized at the point of negotiation with Banks and converted at the rates prevailing on the date of Negotiation, However, Outstanding at the period end are recognized at the rate prevailing as on that date and total sum is considered as contingent liability.

1.11 Government Grants/ Subsidies

Government grants available to the Company are recognized in accounts: i) Where there is reasonable assurance that the enterprise will comply with the conditions attached to them and; ii) Where such benefi ts have been earned by the enterprise and it is reasonably certain that the ultimate collection will be made

Grants related to revenue are deducted in reporting the related expense.

1.12 Investments

Investments, which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classifi ed as current investments. All other investments are classifi ed as long-term investments.

On initial recognition, all investments are measured at cost. The cost comprises purchase price and directly attributable acquisition charges such as brokerage, fees and duties.

Current investments are carried in the fi nancial statements at lower of cost and fair value determined on an individual investment basis. 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 the investments.

On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the statement of profi t and loss.

1.13 Retirement Benefi ts

i) Gratuity and Provident Fund

In respect of payment of gratuity to employees, the contribution are being made to the trust established under the group gratuity scheme of Life Insurance Corporation of India. The Company makes contribution to statutory provident fund in accordance with Employee Provident Fund and Miscellaneous Provisions Act, 1952 which is defi ned contribution plan and contribution payable is recognised as an expense in the period in which services are rendered by the employee.

ii) Leave Encashment

Liability in respect of compensated absences becoming due or expected to be availed within one year from the balance sheet date is recognised on the basis of undiscounted value required to be paid or value of benefi ts expected to be availed by the employees as per Company rules.

1.14 Borrowing costs

Borrowing cost includes interest and ancillary costs incurred in connection with the arrangement of borrowings and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost.

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur.

1.15 Leases

Leases, where the lessor effectively retains substantially all the risks and benefi ts of ownership of the leased item, are classifi ed as operating leases. Operating lease payments are recognized as an expense in the statement of profi t and loss on a straight-line basis over the lease term.

1.16 Earning per share

Basic earning per share is computed by dividing the profi t/(loss) aster tax (including the post tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year. Diluted earning per share is computed by dividing the profi t/(loss) after tax (including the post tax effect of extraordinary items, if any) as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earning per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease the net profi t per share from continuing ordinary operations. Potential equity shares are deemed to be converted as at the beginning of the period, unless they have been issued at a later date. The dilutive potential equity shares are adjusted for the proceeds receivable had the shares been actually issued at fair value (i.e. average market value of the outstanding shares). Dilutive potential equity shares are determined independently for each period presented.

1.17 Taxes on Income

Tax expense for the year comprises of direct taxes and indirect taxes.

DIRECT TAXES

i) Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current income tax relating to items recognized directly in equity is recognized in equity and not in the statement of profi t and loss.

ii) Deferred income taxes refl ect the impact of timing differences between taxable income and accounting income originating during the current year and reversal of timing differences for the earlier years. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted at the reporting date.

Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized only to the extent that there is reasonable certainty that suffi cient future taxable income will be available against which such deferred tax assets can be realized. In situations where the company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profi ts.

The carrying amount of deferred tax assets are reviewed at each reporting date. The company writes-down the carrying amount of deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that suffi cient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that suffi cient future taxable income will be available.

iii) Wealth tax is ascertained in accordance with the provisions of the Wealth Tax Act, 1957.

INDIRECT TAXES

i) Excise duty (including education cess) has been accounted for in respect of the goods cleared. The company is providing excise duty liability in respect of fi nished products.

ii) Service Tax has been accounted for in respect of services rendered.

iii) Final sales tax / Value added tax liability is ascertained on the fi nalization of assessments in accordance to provisions of sales tax / value added tax laws of respective states where the company is having offi ces/works.

1.18 Research and Development

Intangible Assets arising from development are not recognised since the asset is not identifi able and future economic benefi ts from the assets are not probable. Expenditure on research is recognised as an expense when it is incurred. Research and Development cost includes salaries and other related cost of personnel, cost of materials and services consumed and other overhead costs related to research and development.

1.19 Miscellaneous Expenditure

Technical know-how is amortized on a systematic basis on straight line method over its useful life based upon the respective technical know-how agreements.

1.20 Impairment of assets

At the end of each year, the Company determines whether a provision should be made for impairment loss on fi xed assets by considering the indications that an impairment loss may have occurred and where the recoverable amount of any fi xed asset is lower than its carrying amount, a provision for impairment loss on fi xed assets is made for the difference. Recoverable amount is generally measured using discounted estimated cash fl ows. Post impairment, depreciation is provided on the revised carrying value of the asset over its remaining useful life.

1.21 Provisions and Contingent Liabilities

Provisions

A provision is recognized when the company has a present obligation as a result of past event, it is probable that an outfl ow of resources embodying economic benefi ts will be required to settle the obligation and a reliable estimate can be made of the amount of obligation. Provisions are not discounted to their present value and are determined based on the best estimates required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to refl ect the current best estimates.

Contingent Liabilities

A contingent liability is a possible obligation that arises from past events whose existence will be confi rmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outfl ow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the fi nancial statements.

1.22 Cash and cash equivalents

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


Mar 31, 2012

A) Accounting convention

The Accounts have been prepared on historical cost convention on accrual basis in accordance with the requirements of the Companies Act, 1956 and applicable statutes and to comply with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956. Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use. The management evaluates all recently issued or revised accounting standards on an ongoing basis.

b) Presentation and disclosure of financial statements

The presentation and disclosure of the financial statements have been made in accordance with the revised Schedule VI notified by the Central Government vide notification no. S.O. 447(E) dated 28th February 2011 (as amended by notification no. F no. 2/6/2008-CL-V, dated 30th March 2011) which has become effective for accounting periods commencing on or after 1st April 2011. The adoption of revised Schedule VI does not impact recoginition and measurement principles followed for preparation of financial statement. However it has significant impact on presentation and disclosures made in the financial statement. The Company has also reclassified the previous year figures in accordance with the requirements applicable in the current year.

c) use of Estimates

The preparation of financial statements in conformity with Generally Accepted Accounting Principles (GAAP) requires management to make estimates and assumptions that effect the reported statements of assets and liabilities and the disclosure of contingent liabilities on the date of financial statements. The actual results could differ from these estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.

d) Fixed Assets

Tangible assets are stated at cost of acquisition inclusive of inward freight, duties and taxes and incidental expenses related to acquisition up to the date of installation. Costs of Fixed Assets are further adjusted by the amount of Modvat/ Cenvat credit availed and VAT credit wherever applicable. Capital work-in-progress comprises cost of fixed assets that are not yet ready for their intended use at the balance sheet date.

Intangibles assets are stated at historical cost and represent computer software acquired for internal use. These are recognized if it is probable that future economic benefits that are attributable to the asset will flow to the Company and the cost of assets can be measured reliably.

e) Depreciation and amortization

Depreciation on tangible fixed assets have been provided on rates as provided in Schedule XIV of the Companies Act, 1956 on written down value method except in case of Plant-II, Manesar Plants and Recoil Business Division where depreciation has been provided on straight-line method. Depreciation on assets for the value not exceeding Rs.5000/- has been provided @100%.

Intangible assets are amortised on a straight line basis over six years being estimated useful life of the assets.

f) Revenue Recognition

Revenue from sale of goods is recognised when significant risks and rewards of ownership of the goods have passed to the buyer which coincides with delivery and are recorded net of returns and trade discount. The sales are accounted for net of sales tax and excise duty. Export sales are recognized at the time of clearance of goods and approval from Excise Authorities. Other income is accounted for on accrual basis. Dividend income is accounted for when the right to receive the payment is established.

g) Foreign currency Transactions

Transactions in foreign currency are recorded at exchange rate prevailing on the date of transaction. Exchange difference arising on the settlement of monetary item during the year is recognized as an income or expense. Monetary assets and liabilities denominated in foreign currency are translated at the rate of exchange at the balance sheet date and resultant gain or loss is recognized in the profit and loss account. However in case of exchange variation arising on reporting of long term foreign currency monetary items at rates different from those at which they were initially recorded during the period, or reported in previous financial statements, in so far as they relate to the acquisition of a depreciable capital assets, are added to or deducted from the cost of the assets and are 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/liability by recognition as income or expense in each of such period. Non monetary assets and liabilities denominated in foreign currency are carried at historical cost using the exchange rate at the date of transaction.

h) Government Grants/Subsidies

Government grants available to the Company are recognized in accounts:

(i) Where there is reasonable assurance that the enterprise will comply with the conditions attached to them and

(ii) Where such benefits have been earned by the enterprise and it is reasonably certain that the ultimate collection will be made

Grants related to revenue are deducted in reporting the related expense.

i) Inventories

Inventories have been valued at lower of cost and net realizable value. Cost has been ascertained in case of Semi-finished goods at 65% less on the price-list and finished goods have been valued at 55% less on the price-list and special items have been valued at 30% less in case of semi- finished goods and 20% less in the case of finished goods of the selling price, since exact cost is not ascertainable. Excise duty payable on finished goods and scrap materials are shown separately as part of manufacturing cost and is included in the valuation of finished goods and scrap materials. Inventories are consumed on FIFO (First in First out) basis. Scrap material has been valued at net realisable value.

j) Investments

Investments are long term and stated at cost. Provision for diminution in value of investments is made to recognize the decline in value of investments, if in the opinion of management; the decline is permanent in nature.

k) Retirement Benefits:

a) Gratuity and Provident Fund

In respect of payment of gratuity to employees, the contributions are being made to the trust established under the group gratuity scheme of Life Insurance Corporation of India. The Company makes contribution to statutory provident fund in accordance with Employee Provident Fund and Miscellaneous Provisions Act, 1952 which is defined contribution plan and contribution payable is recognized as an expense in the period in which services are rendered by the employee.

b) Leave encashment

Liability in respect of compensated absences becoming due or expected to be availed within one year from the balance sheet date is recognized on the basis of undiscounted value required to be paid or value of benefits expected to be availed by the employees as per Company rules.

l) Research and Development

Intangible Assets arising from development are not recognized since the asset is not identifiable and future economic benefits from the assets are not probable. Expenditure on research is recognized as an expense when it is incurred. Research and development cost include salaries and other related cost of personnel, cost of materials and services consumed and other overhead costs related to research and development.

m) Borrowing costs

Borrowing Costs that are attributable to the acquisition for construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue.

n) Excise Duty

Excise duty has been accounted on the basis of both, payments made in respect of goods cleared as also the provision made for goods lying in the warehouses.

o) Miscellaneous Expenditure

Technical know-how is amortized on a systematic basis on straight line method over its useful life based upon the respective technical know-how agreements.

p) Taxes on Income

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

Deferred tax is recognized, subject to consideration of prudence, on timing difference, being difference between taxable and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is accounted for using the tax rates and laws that have been enacted or substantively enacted as on 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.

q) Prior Period Items/Exceptional items

Prior Period Expenses/Income is shown as prior items in statement of profit and loss as per provision of AS-5 "Net Profit or Loss for the period, prior period items and changes in accounting policies" issued by the Instituted of Chartered Accountants of India.

r) Earnings Per Share

The earnings considered in ascertaining the Company's earning per Share (EPS) comprise the net profit after tax. Basic earning per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.

s) Impairment of Fixed Assets

At the end of each year, the Company determines whether a provision should be made for impairment loss on fixed assets by considering the indications that an impairment loss may have occurred and where the recoverable amount of any fixed asset is lower than its carrying amount, a provision for impairment loss on fixed assets is made for the difference. Recoverable amount is generally measured using discounted estimated cash flows. Post impairment, depreciation is provided on the revised carrying value of the asset over its remaining useful life.

t) Leases

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognized as and expense in the statement of profit and loss on a straight-line basis over the lease term.

u) contingent Liabilities and commitments

Contingent Liabilities are disclosed by way of notes and are not recognized as an item of expense in the profit and loss account. Contingent gains are not recognized. Provisions are recognized as liability only when they can be measured by using a substantial degree of estimation and where present obligation of the enterprise arise from past events, the settlement of which is expected to result in an outflow of resources embodying economics benefits.

v) cash and cash equivalents

Cash and cash equivalents for the purpose of cash flow statement comprise cash at bank and in hand and short-term investment with an original maturity of three months or less.


Mar 31, 2011

A) Accounting Convention

The Accounts have been prepared on historical cost convention on accrual basis in accordance with the requirements of the Companies Act, 1956 and applicable statutes and to comply with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956. Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use. The management evaluates all recently issued or revised accounting standards on an ongoing basis.

b) Use of Estimates

The preparation of financial statements in conformity with Generally Accepted Accounting Principles (GAAP) requires management to make estimates and assumptions that effect the reported statements of assets and liabilities and the disclosure of contingent liabilities on the date of financial statements. The actual results could differ from these estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.

c) Fixed Assets

Fixed assets are stated at cost of acquisition inclusive of inward freight, duties and taxes and incidental expenses related to acquisition up to the date of installation. Costs of Fixed Assets are further adjusted by the amount of Modvat/ Cenvat credit availed and VAT credit wherever applicable. Capital work-in-progress comprises cost of fixed assets that are not yet ready for their intended use at the balance sheet date. Intangibles Assets are stated at historical cost and represents computer software required for internal use and these are recognized as assets if it is probable that future economic benefits attributable to such will flow to the Company and the cost of assets can be measured reliably.

d) Depreciation

Depreciation on fixed assets have been provided on triple shift basis rates as provided in Schedule XIV of the Companies Act, 1956 on written down value method except in case of Plant-ll, Manesar Plants and Recoil Business Division where depreciation has been provided on straight-line method. Depreciation on assets for the value not exceeding Rs.50007- has been provided @100%.

e) Revenue Recognition

Domestic sales are recognized at the point of dispatch of goods to the customers. The sales are accounted for net of trade discount, sales tax and excise duty. Export sales are recognized at the time of clearance of goods and approval from Excise Authorities. Other income is accounted for on accrual basis. Dividend income is accounted for when the right to receive the payment is established.

f) Foreign Currency Transactions

Transactions in foreign currency are recorded at exchange rate prevailing on the date of transaction. Exchange difference arising on the settlement of monetary item during the year is recognized as an income or expense. Monetary assets and liabilities denominated in foreign currency are translated at the rate of exchange at the balance sheet date and resultant gain or loss is recognized in the profit and loss account. However in case of exchange variation arising on reporting of long term foreign currency monetary items at rates different from those at which they were initially recorded during the period, or reported in previous financial statements, in so far as they relate to the acquisition of a depreciable capital assets, are added to or deducted from the cost of the assets and are 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/liability by recognition as income or expense in each of such period. Non monetary assets and liabilities denominated in foreign currency are carried at historical cost using the exchange rate at the date of transaction.

g) Government Grants/Subsidies

Government grants available to the Company are recognized in accounts:

(i) where there is reasonable assurance that the enterprise will comply with the conditions attached to them; and

(ii) where such benefits have been earned by the enterprise and it is reasonably certain that the ultimate collection will be made.

Grants related to revenue are deducted in reporting the related expense.

h) Inventories

Inventories have been valued at lower of cost and net realizable value. Cost has been ascertained in case of Semi-finished goods at 65% less than the price-list and finished goods have been valued at 55% less than the price-list and special items have been valued at 30% less in case of semi- finished goods and 20% less in the case of finished goods of the selling price; since exact cost is not ascertainable. Excise duty payable on finished goods and scrap materials are shown separately as part of manufacturing cost and is included in the valuation of finished goods and scrap materials. Inventories are consumed on FIFO (First in First out) basis. Scrap material has been valued at net realisable value.

i) Investments

Investments are long term and stated at cost. Provision for diminution in value of investments is made to recognize the decline in value of investments, if in the opinion of management; the decline is permanent in nature.

j) Retirement Benefits

a) Gratuity and Provident Fund

In respect of payment of gratuity to employees, the contributions are being made to the trust established under the group gratuity scheme of Life Insurance Corporation of India. The Company makes contribution to statutory provident fund in accordance with Employee Provident Fund and Miscellaneous Provisions Act, 1952 which is defined contribution plan and contribution payable is recognized as an expense in the period in which services are rendered by the employee.

b) Leave encashment

Liability in respect of compensated absences becoming due or expected to be availed within one year from the balance sheet date is recognized on the basis of undiscounted value required to be paid or value of benefits expected to be availed by the employees as per Company rules.

k) Research and Development

Intangible Assets arising from development are not recognized since the asset is not identifiable and future economic benefits from the assets are not probable. Expenditure on research is recognized as an expense when it is incurred. Research and development cost include salaries and other related cost of personnel, cost of materials and services consumed and other overhead costs related to research and development.

I) Borrowing Costs

Borrowing Costs that are attributable to the acquisition for construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue.

m) Excise Duty

Excise duty has been accounted on the basis of both, payments made in respect of goods cleared as also the provision made for goods lying in the warehouses.

n) Miscellaneous Expenditure

Technical know-how is amortized on a systematic basis on straight line method over its useful life based upon the respective technical know-how agreements.

o) Taxes on Income

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

p) Prior Period Items

Prior Period Expenses/Income is shown as prior items in profit and loss account as provision of AS-5 "Net Profit or Loss for the period, prior period items and changes in accounting policies" issued by the Institute of Chartered Accountants of India.

q) Earnings Per Share

The earnings considered in ascertaining the Company's earning per Share (EPS) comprise the net profit after tax. Basic earning per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.

r) Impairment of Fixed Assets

At the end of each year, the Company determines whether a provision should be made for impairment loss on fixed assets by considering the indications that an impairment loss may have occurred and where the recoverable amount of any fixed asset is lower than its carrying amount, a provision for impairment loss on fixed assets is made for the difference. Recoverable amount is generally measured using discounted estimated cash flows. Post impairment, depreciation is provided on the revised carrying value of the asset over its remaining useful life.

s) Contingent Liabilities and Provisions

Contingent Liabilities are disclosed by way of notes and are not recognized as an item of expense in the profit and loss account. Contingent gains are not recognized. Provisions are recognized as liability only when they can be measured by using a substantial degree of estimation and where present obligation of the enterprise arise from past events, the settlement of which is expected to result in an outflow of resources embodying economics benefits.


Mar 31, 2010

A) Accounting Convention

The Accounts have been prepared on historical cost convention on accrual basis in accordance with the requirements of the Companies Act, 1956 and applicable statutes and to comply with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956. Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use. The management evaluates all recently issued or revised accounting standards on an ongoing basis.

b) Use of Estimates

The preparation of financial statements in conformity with Generally Accepted Accounting Principles (GAAP) requires management to make estimates and assumptions that effect the reported statements of assets and liabilities and the disclosure of contingent liabilities on the date of financial statements.The actual results could differ from these estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.

c) Fixed Assets

Fixed assets are stated at cost of acquisition inclusive of inward freight, duties and taxes and incidental expenses related to acquisition up to the date of installation. Costs of Fixed Assets are further adjusted by the amount of Modvat/ Cenvat credit availed and VAT credit wherever applicable. Capital work-in-progress comprises cost of fixed assets that are not yet ready for their intended use at the balance sheet date. Intangibles Assets are stated at historical cost and represents computer software required for internal use and these are recognized as assets it is probable that future economic benefits attributable to such will flow to the company and the cost of assets can be measured reliably

d) Depreciation

Depreciation on fixed assets have been provided on triple shift basis rates as provided in Schedule XIV of the Companies Act, 1956 on written down value method except in case of Plant-II and Manesar Plants where depreciation has been provided on straight-line method. Depreciation on assets for the value not exceeding Rs.5000/- has been provided @100%.

e) Revenue Recognition

Domestic sales are recognized at the point of dispatch of goods to the customers. The sales are accounted for net of trade discount, sales tax and excise duty. Export sales are recognized at the time of clearance of goods and approval from Excise Authorities. Other income is accounted for on accrual basis. Dividend income is accounted for when the right to receive the payment is established.

f) Foreign Currency Transactions

Transactions in foreign currency are recorded at exchange rate prevailing on the date of tansaction. Monetary assets and liabilities denominated in foreign currency are translated at the rate of exchange at the balance sheet date and resultant gain or loss is recognized in the profit and loss account. However in case of exchange variation arising on reporting of long term foreign currency monetary items at rates different from those at which they were initially recorded during the period, or reported in previous financial statements, in so far as they relate to the acquisition of a depreciable capital assets, are added to or deducted from the cost of the assets and are 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/liability by recognition as income or expense in each of such period. Non monetary assets and liabilities denominated in foreign currency are carried at historical cost using the exchange rate at the date of tansaction

g) Inventories

Inventories have been valued at lower of cost and net realizable value. Cost has been ascertained in case of Semi-finished goods at 65% less on the price-list and finished goods have been valued at 55% less on the price-list and special items have been valued at 30% less in case of semi finished goods and 20% less in the case of finished goods of the selling price; since exact cost is not ascertainable. Excise duty payable on finished goods and scrap materials are shown separately as part of manufacturing cost and is included in the valuation of finished goods and scrap materials.

h) Investments

Investments are long term and stated at cost. Provision for diminution in value of investments is made to recognize the decline in value of investments, if in the opinion of management; the decline is permanent in nature.

i) Retirement Benefits

In respect of payment of gratuity to employees, the contributions are being made to the trust established under the group gratuity scheme of Life Insurance Corporation of India. The company makes contibution to statutory provident fund in accordance with Employee Provident Fund and Miscellaneous Provisions Act, 1952 which is defined contribution plan and contribution payable is recognized as an expense in the period in which services are rendered by the employee.

Liability in respect of compensated absences becoming due or expected to be availed within one year from the balance sheet date is recognized on the bases of undiscounted value of estimated amount required to be paid or estimated value of benefits expected to be availed by the employees.

j) Research and Development

Intangible Assets arising from development are not recognized since the asset is not identifiable and future economic benefits from the assets are not probable. Expenditure on research is recognized as an expense when it is incurred. Research and development cost include salaries and other related cost of personnel, cost of materials and services consumed and other overhead costs related to research and development.

k) Borrowing Costs

Borrowing Costs that are attributable to the acquisition for construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All oter borrowing costs are charged to revenue.

l) Excise Duty

Excise duty has been accounted on the basis of both, payments made in respect of goods cleared as also the provision made for goods lying in the warehouses.

m) Miscellaneous Expenditure

Technical know-how is amortized on a systematic basis on straight line method over its useful life based upon the respective technical know-how agreements.

n) Taxes on Income

Current tax is determined on the amount of tax payable in respect of taxable income for the period. Deferred tax is recognized, subject to consideration of prudence, on timing difference, being difference between taxable and accounting income/ expenditure that originate in one period and are capable of reversal in one or more subsequent period(s).

o) Prior Period Items

Prior Period Expenses/ Income is accounted for under the respective heads. Material items, if any, are disclosed separately by way of note.

p) Earnings Per Share

The earnings considered in ascertaining the Companys Earning per Share (EPS) comprise the net profit after tax. Basic earning per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.

q) Impairment of Fixed Assets

At the end of each year, the Company determines whether a provision should be made for impairment loss on fixed assets by considering the indications that an impairment loss may have occurred and where the recoverable amount of any fixed asset is lower than its carrying amount, a provision for impairment loss on fixed assets is made for the difference. Recoverable amount is generally measured using discounted estimated cash flows. Post impairment, depreciation is provided on the revised carrying value of the asset over its remaining useful life.

r) Contingent Liabilities and Provisions

Contingent Liabilities are disclosed by way of notes and are not recognized as an item of expense in the profit and loss account. Contingent gains are not recognized. Provisions are recognized as liability only when they can be measured by using a substantial degree of estimation and where present obligation of the enterprise arise from past events, the settlement of which is expected to result in an outflow of resources embodying economics benefits.

 
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