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Accounting Policies of Leel Electricals Ltd. Company

Mar 31, 2016

1. CORPORATE INFORMATION

Lloyd Electric & Engineering Limited is a public Company domiciled in India and incorporated under the provisions of the
Companies Act, 1956. Its shares are listed on National Stock Exchange of India Limited (NSE) & Bombay Stock Exchange Limited
(BSE) in India. The Company is the largest manufacturer of heat exchangers coils in India. It manufactures air conditioners for
various brands as OEM / ODM including its own brand of LLOYD. It is also engaged in the consumer durable business under "Lloyd"
brand which includes product portfolio like Air-Conditioner, LED TV, Washing Machines, Chest Freezers and other small home
appliances. The Company caters to both domestic and international markets.

2. BASIS OF PREPARATION

The Financial statements of the Company have been prepared in accordance with generally accepted accounting principles in India
(GAAP). The Company has prepared these fnancial statements to comply in all material respects with the accounting standards the
relevant provision of the Companies Act, 2013. The fnancial statements have been prepared on an accrual basis and under the
historical cost convention, except for land acquired before 1st April, 1993 which are carried at revalued amounts.

The accounting policies adopted in the preparation of fnancial statements are consistent with those of previous year, except for
the change in accounting policy explained below.

2.1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a) Use of estimates

The preparation of fnancial statements in conformity with Indian GAAP requires the management to make estimates and assumptions
that affect the reported amounts of revenue, expenses, assets and liabilities and disclosure of contingent liabilities, at the
date of the fnancial statements. Although these estimates are based upon management''s best knowledge of current events and
actions, actual results could differ from these estimates. Difference between the actual results and estimates are recognized in
the period in which the results are known / materialized.

b) Tangible Fixed Assets

Fixed assets except leasehold land are stated at cost less accumulated depreciation. The cost includes freight, duties, taxes and
other incidental expenses related to acquisition and installation. CENVAT claim, if any, on capital goods is reduced from the
cost.

Capital Work-in-Progress

Projects under commissioning and other Capital Work-in-Progress are carried at cost, comprising direct cost, related incidental
expenses and attributable interest.

c) Depreciation on tangible fxed assets

i) After Notifcation of the New Companies Act, 2013 which comes into effect from April 01, 2014, Depreciation on fxed assets is
provided on straight-line basis at the rates prescribed in schedule II to the Companies Act, 2013.

ii) Depreciation on assets added during the year, is calculated on pro-rata basis with reference to the date of installation.

iii) Depreciation rates has been arrived after applying estimated life provided in the Schedule-II, for calculating depreciation
on various categories of assets following estimated life has been provided in the schedule

d) Intangible Assets

Intangible Assets are stated at cost of acquisition. Following intangible assets are carried at cost less accumulated
amortization and accumulated impairment losses, if any. Intangible assets are amortized on a straight line basis over the
estimated useful economic life. The following are the acquired intangible assets :

i) LOGO OF BRAND "LLOYD"

Cost of logo is amortized over its useful life of 6 years.

II) PRODUCT DEVELOPMENT EXPENSES

Cost of Product Development expenses will be amortized over its useful life of 5 Years.

e) Grant

Grants are recognized when there is reasonable assurance that the grant will be received and conditions attached to them are
complied with.

f) Research and development

Research costs are expensed as incurred.

g) Impairment of Assets

The carrying values of assets/cash generating units at each Balance Sheet date are reviewed for impairment of assets. If any
indication of such impairment exists, the recoverable amount of such assets is estimated and impairment is recognized, if the
carrying amount of these assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price
and their value in use. Value in use is arrived at by discounting the future cash fows to their present value based on an
appropriate discount factor. When there is indication that an impairment loss recognized for an asset in prior accounting periods
no longer exists or may have decreased such reversal of impairment loss is recognized.

h) Inventory Valuation

i) Raw materials and consumables are valued at cost as per the Weighted Average Method and include(s) customs duty wherever paid
and are net of credit availed under CENVAT scheme.

ii) Stock in process is valued at direct cost, i.e., cost of materials and variable manufacturing expenses.

iii) Finished goods are valued at lower of cost on the basis of weighted average method or net realizable value.

iv) Stock in transit lying in customs warehouse is valued at cost but does not include custom duty payable, however, non-
provision of duty does not affect the proft for the year.

i) Revenue Recognition

i) Income and Expenditure are recognized on accrual basis.

ii) Sale of goods

Revenue from sale of goods is recognized when all the signifcant risks and rewards of ownership of the goods have been passed to
the buyer, usually on delivery of the goods. The Company collects central sales taxes and value added taxes (VAT) on behalf of
the government and, therefore, these are not economic benefts fowing to the Company. Hence, they are excluded from revenue.
Excise duty deducted from revenue (gross) is the amount that is included in the revenue (gross) and not the entire amount of
liability arising during the year.

iii) Export sales are accounted on the basis of date of bill of lading.

iv) Dividend income is recognized when the right to receive the dividend is established.

j) Investments

Long term Investments are stated at cost. Investments in subsidiary Company are of long-term strategic value. The diminution in
value of these investments has been provided.

k) Foreign currency transactions

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 reported using the closing rate. Non-monetary items which are carried in terms of historical
cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction and non-monetary items
which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange
rates that existed when the values were determined.

iii. Exchange Differences

Exchange differences arising on the settlement of monetary items or on reporting Company''s monetary items at rates different from
those at which they were initially recorded during the year or reported in previous fnancial statements, are recognized as income
or as expenses in the year in which they arise.

iv. Forward Exchange Contracts not intended for trading or speculation purposes

The premium or discount arising at the inception of forward exchange contract is amortized and recognized as an expense/ income
over the life of the contract. Exchange differences on such contracts, except the contracts which are long-term foreign currency
monetary items, are recognized in the statement of proft and loss in the period in which the exchange rates change. Any proft or
loss arising on cancellation or renewal of such forward exchange contract is also recognized as income or as expense for the
year.

l) Retirement Benefts

Provident Fund

Retirement beneft in form of provident fund is a defned contribution scheme and the contributions are charged to the proft and
Loss account of the year when the contributions to the respective funds are due.

Gratuity

The Company''s liability in respect of payment of gratuity is provided on accrual basis as per actuarial valuation. The Company is
in process of having arrangement with Insurance Company to administer its Superannuation & Gratuity Fund.

Leave Encashment

Leave Encashment are valued at cost to Company basis without considering any discounting and salary increase and provided on the
basis of actual valuation.

m) Taxation

Current Tax

Current Tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of
the Income Tax Act 1961, except for the overseas subsidiaries where current tax provisions is determined based on the local tax
laws. Deferred tax is recognized for all timing differences, subject to the consideration of prudence applying the tax rates that
have been substantively enacted by the Balance Sheet date.

Deferred Tax

Deferred tax liabilities represent the tax effect of temporary differences substantially on account of differences in the written
down value of Fixed Assets on account of differing depreciation methods and rates and other timing differences.

Minimum Alternate Tax

Minimum alternate tax (MAT) paid in a year is charged to the statement of proft and loss as current tax. The Company recognizes
MAT credit available as an asset only to the extent that there is convincing evidence that the Company will pay normal income tax
during the specifed period, i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the
Company recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of
Minimum Alternative Tax under the Income-tax Act, 1961, the said asset is created by way of credit to the statement of proft and
loss and shown as "MAT Credit Entitlement." The Company reviews the "MAT credit entitlement" asset at each reporting date and
writes down the asset to the extent the Company does not have convincing evidence that it will pay normal tax during the specifed
period.

n) Borrowing Cost

Cost in connection with the borrowing of funds to the extent not directly related to the acquisition of fxed assets are amortized
and charged to the Proft and Loss Account, over the tenure of the loan. Borrowing cost to the extent directly attributable to
acquisition of fxed assets are added to the cost of fxed assets.

o) Segment Reporting

i. Business Segment

As per Accounting Standard 17 on segment reporting of ICAI, the Company has reportable segments viz. Radiators & Heat Exchanger,
OEM & Railways and Consumer Durable Products during the year under review. Accordingly, the reporting is done segment wise.

ii. Geographical Segment

The analysis of geographical segment is based on the geographical location of the customers. The Company operates primarily in
India and has presence in international markets as well. Its business is accordingly aligned geographically, catering to two
markets. The Company has considered domestic and exports markets as geographical segments and accordingly disclosed these as
separate segments. The geographical segments considered for disclosure are as follows;

- Sales within India represent sales made to customers located within India.

- Sales outside India represent sales made to customers located outside India.

p) Earning Per Share

The earnings considered in ascertaining the Company''s Earnings per Share (EPS) comprise the net profts after tax. The number of
shares used in computing basic EPS is the weighted average number of shares outstanding during the year.

The diluted EPS is calculated on the same basis as basic EPS, after adjusting for the effects of potential dilutive equity
shares.

q) Cash Flow Statement

The Cash Flow statement is prepared by the indirect method set out in Accounting Standard –3 issued by the Institute of Chartered
Accountants of India as required by the SEBI on Cash Flow Statement and presents cash fows by operating, investing and fnancing
activities of the Company. Cash and cash equivalents presented in the cash fow statement consists of cash in hand and demand
deposits with banks as on the Balance Sheet date.

r) Measurement of EBITDA

The Company has elected to present earnings before interest, tax, depreciation and amortization (EBITDA) as a separate line item
on the face of the statement of proft and loss. The Company measures EBITDA on the basis of proft/ (loss) from continuing
operations. In its measurement, the Company does not include depreciation and amortization expense, fnance costs and tax expense.

s) Sundry Debtors/Loans & Advances

Company as a policy obtains balance confrmation from Sundry Debtors, Creditors and other advances on monthly / quarterly / half
yearly basis depending upon quantum of transaction made with the parties. Considering the same company does not have all balance
confrmations as at 31st March 2016 the effect of the same, if any which is not likely to be material will be adjusted at the time
of confrmation.

t) Provisions /Contingencies

A provision is recognized when there is a present obligation as a result of past event and it is probable that an outfow of
resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are
determined based on best estimate of the amount required to settle the obligation at the Balance Sheet date.

Contingent liabilities are not recognized and are disclosed in the Note No.30

u) Derivative Instruments

The Company has entered into derivative contracts in the nature of interest rate swaps and forward contracts with intention to
hedge its requirements and frm commitments. The contracts are mark to market and losses are recognized in the proft and loss
account. Gains arising on the same are not recognized on ground of prudence.

v) Deferred Revenue Expenditure

Cost of traveling, Consultancy fees and other expenses related to IRIS Certifcation are considered as deferred revenue
expenditure. 1/5 of the expenditures have been charged to Proft and Loss account.

NOTES:- 1. Out of the above Equity Shares

a) Includes 40,00,000 Equity Share alloted in the year 2006-07 on conversion of warrants issued on preferential basis during the
year 2005-06.

b) Includes 92,00,000 underlying Equity Shares representing 46,00,000 Global Depository Receipts issued during the year 2005-06.

c) In the year 2006-07 the Company had forfeited 13,300 equity shares due to the non-payment of allotment money. The Board of
Directors had annulled the forfeiture of 400 Equity shares on receipt of payment advice by the shareholders and accordingly 400
Equity Shares had been restored back.

d) 43,20,000 no of Equity Shares of Rs. 10/- each were alloted during the fnancial year 2013-14 in favour of shareholders of
erstwhile Perfect Radiators & Oil Coolers Pvt. Ltd. (PROC) on account of merger of PROC with the Company retrospectively since
01.04.2011.

e) Includes 8,85,000 equity shares alloted to Promoter Group Entities on January 29, 2016, upon conversion of equivalent no. of
warrants issued on preferential basis.

(b) Terms/rights attached to equity shares

The Company has only one class of equity shares having 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 ensuing Annual General Meeting.

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

Money received against Share Warrants represents amounts received towards warrants which entitles the warrant holders, the option
to apply for and be alloted equivalent number of equity shares of the face value of Rs. 10/- Each.

During the previous fnancial year, the Company has issued to its Promoter Group Entities 60,00,000 Warrants at a price of Rs.
152/- each entitling them for subscription of equivalent number of Equity Shares of Rs. 10/- each (including premium of Rs. 142/-
each share) in accordance with chapter VII of SEBI (Issue of Capital & Disclosure Requirments) Regulations, 2009. During the
current year, allottees of 8,85,000 warrants have exercised their right to convert the warrants into equity shares by paying
balance 75% of the consideration aggregating Rs.10,08,90,000 and consequently 8,85,000 equity shares were issued to them.

The holder of the remaining warrants are required to exercise the option to subscribe to equity shares before the expiry of 18
months from the date of allotment of warrants i.e. on or before on 12th September, 2016 upon payment of the balance 75% of the
consideration of warrants.

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

Note:- 1. Indian rupee loan for Rs. 35.00 Crores from IDBI Ltd. carries interest @ 12.25% P.A on Rs. 17.50 Crores and @ 11.50%
P.A. on

Rs. 17.50 Crores. The Loan is repayable in 16 quarterly installments of Rs. 2.19 crores each after monotorium of 12 Months from
the

date of loan i.e. 31st March, 2013. Company has taken disbursement of Rs. 31.50 Crores.

2. Indian rupee loan for Rs. 120.00 Crores from SBI carriers interest @ 11.00% P.A. The Loan is repayable in 24 quarterly
installments of Rs. 5.00 crores each after monotorium of 12 Months from the date of loan i.e. 30.06.2013.

3. Indian rupee loan for Rs. 20.00 Crores from SBBJ carries interest @ 12% P.A. The Loan is repayable in 16 Quarterly
installments of Rs. 1.25 Crores each after monotorium of 9 Months from the date of Loan i.e. 01.09.2015.

4. The above loans are Secured by way of frst charge on Pari-Passu basis on the fxed assets of the Company and second
hypothecation charge on the Stock/Book Debts.


Mar 31, 2015

A) Use of estimates

The preparation of financial statements in conformity with Indian GAAP requires the management to make estimates and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities and disclosure of contingent liabilities, at the date of the financial statements. Although these estimates are based upon management's best knowledge of current events and actions, actual results could differ from these estimates. Difference between the actual results and estimates are recognized in the period in which the results are known / materialized.

b) Tangible Fixed Assets:

Fixed assets except leasehold land are stated at cost less accumulated depreciation. The cost includes freight, duties, taxes and other incidental expenses related to acquisition and installation. CENVAT claim, if any, on capital goods is reduced from the cost.

Capital Work-in-Progress

Projects under commissioning and other Capital Work-in-Progress are carried at cost, comprising direct cost, related incidental expenses and attributable interest.

c) Depreciation on tangible fixed assets

i) After Notification of the New Companies Act, 2013 which comes into effect from April 01, 2014,

Depreciation on fixed assets is provided on straight-line basis at the rates prescribed in schedule II to the Companies Act, 2013.

ii) Depreciation on assets added during the year, is calculated on pro-rata basis with reference to the date of installation.

ii) Depreciation rates has been arrived after applying estimated life provided in the Schedule-II, for calculating depreciation on various categories of assets following estimated life has been provided in the schedule

Type of Assets Life in Years

Building 30 Years

Plant & Machinery 15 Years

Office Equipments 5 Years

Vehicles 8 Years

Furniture & Fixtures 10 Years

d) Intangible Assets

Intangible Assets are stated at cost of acquisition. Following intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Intangible assets are amortized on a straight line basis over the estimated useful economic life. The following are the acquired intangible assets :

i) LOGO OF BRAND "LLOYD"

Cost of logo is amortized over its useful life of 5 years.

ii) PRODUCT DEVELOPMENT EXPENSES

Cost of Product Development expenses will be amortized over its useful life of 5 Years.

e) Grant

Grants are recognized when there is reasonable assurance that the grant will be received and conditions attached to them are complied with.

f) Research and development

Research costs are expensed as incurred.

g) Impairment of Assets:

The carrying values of assets/cash generating units at each Balance Sheet date are reviewed for impairment of assets. If any indication of such impairment exists, the recoverable amount of such assets is estimated and impairment is recognized, if the carrying amount of these assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor. When there is indication that an impairment loss recognized for an asset in prior accounting periods no longer exists or may have decreased such reversal of impairment loss is recognized.

h) Inventory Valuation:

i) Raw materials and consumables are valued at cost as per the Weighted Average Method and include(s) customs duty wherever paid, and are net of credit availed under CENVAT scheme.

i) Stock in process is valued at direct cost, i.e., cost of materials and variable manufacturing expenses.

iii) Finished goods are valued at lower of cost on the basis of Weighted average method or net realizable value.

iv) Stock in transit lying in customs warehouse is valued at cost but does not include custom duty payable, however, non-provision of duty does not affect the profit for the year.

i) Revenue Recognition:

i) Income and Expenditure are recognized on accrual basis.

ii) Sale of goods

Revenue from sale of goods is recognized when all the significant risks and rewards of ownership of the goods have been passed to the buyer, usually on delivery of the goods. The Company collects central sales taxes and value added taxes (VAT) on behalf of the government and, therefore, these are not economic benefits flowing to the Company. Hence, they are excluded from revenue. Excise duty deducted from revenue (gross) is the amount that is included in the revenue (gross) and not the entire amount of liability arising during the year.

iii) Export sales are accounted on the basis of date of bill of lading.

iv) Dividend income is recognized when the right to receive the dividend is established.

j) Investments:

Long term Investments are stated at cost. Investments in subsidiary company are of long-term strategic value. The diminution in value of these investments has been provided.

k) Foreign currency transactions:

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 reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.

iii. Exchange Differences

Exchange differences arising on the settlement of monetary items or on reporting company's monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or as expenses in the year in which they arise.

iv. Forward Exchange Contracts not intended for trading or speculation purposes

The premium or discount arising at the inception of forward exchange contract is amortized and recognized as an expense/ income over the life of the contract. Exchange differences on such contracts, except the contracts which are long-term foreign currency monetary items, are recognized in thestatement of profit and loss in the period in which the exchange rates change. Any profit or loss arising on cancellation or renewal of such forward exchange contract is also recognized as income or as expense for the year.

l) Retirement Benefits:

Provident Fund:- Retirement benefit in form of provident fund is a defined contribution scheme and the contributions are charged to the profit and Loss account of the year when the contributions to the respective funds are due.

Gratuity:- The company's liability in respect of payment of gratuity is provided on accrual basis as per actuarial valuation. The company is in process of having arrangement with insurance company to administer its Superannuation & Gratuity Fund.

Leave Encashment:- Leave Encashment are valued at cost to company basis without considering any discounting and salary increase and provided on the basis of actual valuation.

m) Taxation:

Current Tax:

Current Tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961, except for the overseas subsidiaries and joint ventures where current tax provisions is determined based on the local tax laws. Deferred tax is recognized for all timing differences, subject to the consideration of prudence applying the tax rates that have been substantively enacted by the Balance Sheet date.

Deferred Tax:

Deferred tax liabilities represent the tax effect of temporary differences substantially on account of differences in the written down value of Fixed Assets on account of differing depreciation methods and rates and other timing differences.

Minimum Alternate Tax

Minimum Alternate Tax (MAT) paid in a year is charged to the statement of profit and loss as current tax. The Company recognizes MAT credit available as an asset only to the extent that there is convincing evidence that the company will pay normal income tax during the specified period, i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the company recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternative Tax under the Income-tax Act, 1961, the said asset is created by way of credit to the statement of profit and loss and shown as "MAT Credit Entitlement." The Company reviews the "MAT credit entitlement" asset at each reporting date and writes down the asset to the extent the company does not have convincing evidence that it will pay normal tax during the specified period.

n) Borrowing Cost:

Cost in connection with the borrowing of funds to the extent not directly related to the acquisition of fixed assets are amortized and charged to the Profit and Loss Account, over the tenure of the loan. Borrowing cost to the extent directly attributable to acquisition of fixed assets are added to the cost of fixed assets.

o) Segment Reporting:

i. Business Segment

As per Accounting Standard 17 on segment reporting of ICAI, the Company has reportable segments viz. Radiators & Heat Exchanger, OEM & Railways, Consumer Durable Products during the year under review. Accordingly the reporting is done segment wise.

ii. Geographical Segment

The analysis of geographical segment is based on the geographical location of the customers. The Company operates primarily in India and has presence in international markets as well. Its business is accordingly aligned geographically, catering to two markets. The Company has considered domestic and exports markets as geographical segments and accordingly disclosed these as separate segments. The geographical segments considered for disclosure are as follows;

- Sales within India represent sales made to customers located within India.

- Sales outside India represent sales made to customers located outside India.

p) Earning Per Share:

The earnings considered in ascertaining the Company's Earnings Per Share (EPS) comprise the net profits after tax. The number of shares used in computing basic EPS is the weighted average number of shares outstanding during the year.

The diluted EPS is calculated on the same basis as basic EPS, after adjusting for the effects of potential dilutive equity shares.

q) Cash Flow Statement:

The Cash Flow statement is prepared by the indirect method set out in Accounting Standard -3 issued by the Institute of Chartered Accountants of India as required by the SEBI on Cash Flow Statement and presents cash flows by operating, investing and financing activities of the Company. Cash and cash equivalents presented in the cash flow statement consists of cash in hand and demand deposits with banks as on the Balance Sheet date.

r) Measurement of EBITDA

The company has elected to present earnings before interest, tax, depreciation and amortization (EBITDA) as a separate line item on the face of the statement of profit and loss. The company measures EBITDA on the basis of profit/ (loss) from continuing operations. In its measurement, the company does not include depreciation and amortization expense, finance costs and tax expense.

s) Sundry Debtors/Loans & Advances:

Company as a policy obtains balance confirmation from Sundry Debtors, Creditors and other advances on monthly / quarterly / half yearly basis depending upon quantum of transaction made with the parties. Considering the same company does not have all balance confirmations as at 31st March 2015, the effect of the same, if any which is not likely to be material will be adjusted at the time of confirmation.

t) Provisions /Contingencies:

A provision is recognized when there is a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are determined based on best estimate of the amount required to settle the obligation at the Balance Sheet date.

Contingent liabilities are not recognized and are disclosed in the Note No.29

u) Derivative Instruments:

The Company has entered into derivative contracts in the nature of interest rate swaps and forward contracts with intention to hedge its requirements and firm commitments. The contracts are mark to market and losses are recognized in the profit and loss account. Gains arising on the same are not recognized on ground of prudence.

v) Deferred Revenue Expenditure:

Cost of traveling, Consultancy fees and other expenses related to IRIS Certification are considered as deferred revenue expenditure. 1/5 of the expenditures have been charged to Profit and Loss account.


Mar 31, 2012

A) Change in accounting policies

Presentation and disclosure of financial statements

During the year ended 31 March 2012, the revised Schedule VI notified under the Companies Act, 1956 has become applicable to the Company for preparation and presentation of its financial statements. The adoption of revised Schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However, it has significant impact on presentation and disclosures made in the financial statements. The Company has also reclassified the previous year figures in accordance with the requirements applicable in the current year.

b) Use of estimates

The preparation of financial statements in conformity with Indian GAAP requires the management to make estimates and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities and disclosure of contingent liabilities, at the date of the financial statements. Although these estimates are based upon management's best knowledge of current events and actions, actual results could differ from these estimates. Uncertainties about these estimates and assumption could result in the outcomes requiring a material adjustment to the carrying amount of assets or liabilities in the future periods.

c) Tangible Fixed Assets:

Fixed assets except leasehold land are stated at cost less accumulated depreciation. The cost includes freight, duties, taxes and other incidental expenses related to acquisition and installation. CENVAT claim, if any, on capital goods is reduced from the cost.

Capital Work-in-Progress

Projects under commissioning and other Capital Work-in-Progress are carried at cost, comprising direct cost, related incidental expenses and attributable interest.

d) Depreciation on tangible fixed assets

i) Depreciation on fixed assets is provided on straight-line basis at the rates prescribed in schedule XIV to the Companies Act, 1956.

ii) Depreciation on assets added during the year, is calculated on pro-rata basis with reference to the date of installation.

e) Intangible Assets

Intangible Assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Intangible assets are amortized on a straight line basis over the estimated useful economic life. The following are the acquired intangible assets :

i) LOGO OF BRAND "LLOYD"

Cost of logo is amortized over its useful life of 5 years.

f) GRANT

Grants are recognized when there is reasonable assurance that the grant will be received and conditions attached to them are complied with.

g) Research and development

Research costs are expensed as incurred.

h) Impairment of Assets:

The carrying values of assets/cash generating units at each Balance Sheet date are reviewed for impairment of assets. If any indication of such impairment exists, the recoverable amount of such assets is estimated and impairment is recognized, if the carrying amount of these assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor. When there is indication that an impairment loss recognized for an asset in prior accounting periods no longer exists or may have decreased such reversal of impairment loss is recognized.

i) Inventory Valuation:

i) Raw materials and consumables are valued at cost as per the Weighted Average Method and include(s) customs duty wherever paid, and are net of credit availed under CENVAT scheme.

ii) Stock in process is valued at direct cost, i.e., cost of materials and variable manufacturing expenses.

iii) Finished goods are valued at lower of cost or net realizable value.

iv) Stock in transit lying in customs warehouse is valued at cost but does not include custom duty payable, however, non-provision of duty does not affect the profit for the year.

j) Revenue Recognition:

i) Income and Expenditure are recognized on accrual basis.

ii) Sale of goods

Revenue from sale of goods is recognized when all the significant risks and rewards of ownership of the goods have been passed to the buyer, usually on delivery of the goods. The Company collects central sales taxes and value added taxes (VAT) on behalf of the government and, therefore, these are not economic benefits flowing to the Company. Hence, they are excluded from revenue. Excise duty deducted from revenue (gross) is the amount that is included in the revenue (gross) and not the entire amount of liability arising during the year.

iii) Export sales are accounted on the basis of date of bill of lading.

iv) Dividend income is recognized when the right to receive the dividend is established.

k) Investments:

Long term Investments are stated at cost. Investments in subsidiary company are of long-term strategic value and the diminution if any in the value of these investments is temporary in nature.

l) Foreign currency transactions:

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 reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.

iii. Exchange Differences

Exchange differences arising on the settlement of monetary items or on reporting company's monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or as expenses in the year in which they arise.

iv. Forward Exchange Contracts not intended for trading or speculation purposes

The premium or discount arising at the inception of forward exchange contract is amortized and recognized as an expense/ income over the life of the contract. Exchange differences on such contracts, except the contracts which are long-term foreign currency monetary items, are recognized in the statement of profit and loss in the period in which the exchange rates change. Any profit or loss arising on cancellation or renewal of such forward exchange contract is also recognized as income or as expense for the year.

m) Retirement Benefits:

Provident Fund:-

Retirement benefit in form of provident fund is a defined contribution scheme and the contributions are charged to the profit and Loss account of the year when the contributions to the respective funds are due.

Gratuity:-

The company's liability in respect of payment of gratuity is provided on accrual basis as per actuarial valuation. The company is in process of having arrangement with Insurance co. to administer its Superannuation & Gratuity Fund.

Leave Encashment:-

Leave Encashment are valued at cost to company basis without considering any discounting and salary increase and provided on the basis of actual valuation.

n) Taxation:

Current Tax:

Current Tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act 1961, except for the overseas subsidiaries and joint ventures where current tax provisions is determined based on the local tax laws. Deferred tax is recognized for all timing differences, subject to the consideration of prudence applying the tax rates that have been substantively enacted by the Balance Sheet date.

Deferred Tax:

Deferred tax liabilities represent the tax effect of temporary differences substantially on account of differences in the written down value of Fixed Assets on account of differing depreciation methods and rates and other timing differences.

Minimum Alternate Tax

Minimum alternate tax (MAT) paid in a year is charged to the statement of profit and loss as current tax. The Company recognizes MAT credit available as an asset only to the extent that there is convincing evidence that the company will pay normal income tax during the specified period, i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the company recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternative Tax under the Income-tax Act, 1961, the said asset is created by way of credit to the statement of profit and loss and shown as "MAT Credit Entitlement." The Company reviews the "MAT credit entitlement" asset at each reporting date and writes down the asset to the extent the company does not have convincing evidence that it will pay normal tax during the specified period.

o) Borrowing Cost:

Cost in connection with the borrowing of funds to the extent not directly related to the acquisition of fixed assets are amortized and charged to the Profit and Loss Account, over the tenure of the loan. Borrowing cost to the extent directly attributable to acquisition of fixed assets are added to the cost of fixed assets.

p) Segment Reporting:

The Company's operations predominantly comprise of manufacturing and sale of Air-conditioning and parts thereof. Sale of Consumer Durable products other than Air-conditioners are insignificant. The geographical segmentations are also insignificant.

q) Earning Per Share:

The earnings considered in ascertaining the Company's Earnings per Share (EPS) comprise the net profits after tax. The number of shares used in computing basic EPS is the weighted average number of shares outstanding during the year.

The diluted EPS is calculated on the same basis as basic EPS, after adjusting for the effects of potential dilutive equity shares.

r) Cash Flow Statement:

The Cash Flow statement is prepared by the indirect method set out in Accounting Standard -3 issued by the Institute of Chartered Accountants of India as required by the SEBI on Cash Flow Statement and presents cash flows by operating, investing and financing activities of the Company. Cash and cash equivalents presented in the cash flow statement consists of cash in hand and demand deposits with banks as on the Balance Sheet date.

s) Measurement of EBITDA

As permitted by the Guidance Note on the Revised Schedule VI to the Companies Act, 1956, the company has elected to present earnings before interest, tax, depreciation and amortization (EBITDA) as a separate line item on the face of the statement of profit and loss. The company measures EBITDA on the basis of profit/ (loss) from continuing operations. In its measurement, the company does not include depreciation and amortization expense, finance costs and tax expense.

t) Sundry Debtors/Loans & Advances:

Sundry Debtors, Creditors and other advances are subject to confirmation. The effect of the same, if any which is not likely to be material will be adjusted at the time of confirmation.

u) Provisions /Contingencies:

A provision is recognized when there is a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are determined based on best estimate of the amount required to settle the obligation at the Balance Sheet date.

Contingent liabilities are not recognized and are disclosed in the Notes on Accounts.

v) Derivative Instruments:

The Company has entered into derivative contracts in the nature of interest rate swaps and forward contracts with intention to hedge its requirements and firm commitments. The contracts are mark to market and losses are recognized in the profit and loss account. Gains arising on the same are not recognized on ground of prudence.

w) Deferred Revenue Expenditure:

Cost of traveling, Consultancy fees and other expenses related to IRIS Certification are considered as deferred revenue expenditure. 1/5 of the expenditures have been charged to Profit and Loss account.


Mar 31, 2011

A) Basis of Preparation of Financial statements:

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

b) Revenue Recognition:

i) Income and Expenditure are recognized on accrual basis.

ii) Sales are accounted on dispatch of products and sales value includes excise duty.

iii) Export sales are accounted on the basis of date of bill of lading.

iv) Dividend income is recognised when the right to receive the dividend is established.

c) Fixed Assets :

Fixed assets except leasehold land are stated at cost less accumulated depreciation. The cost includes freight, duties, taxes and other incidental expenses related to acquisition and installation. CENVAT claim, if any, on capital goods is reduced from the cost.

d) Depreciation:

I) Depreciation on fixed assets is provided on straight-line basis at the rates prescribed in schedule XIV to the Companies Act, 1956.

ii) Depreciation on assets added during the year, is calculated on pro-rata basis with reference to the date of

installation.

e) Inventory Valuation:

i) Raw materials and consumables are valued at cost as per the First in First Out (FIFO) method and include(s) customs duty wherever paid, and are net of credit availed under CENVAT scheme.

ii) Stock in process is valued at direct cost, i.e., cost of materials and variable manufacturing expenses.

iii) Finished goods are valued at lower of cost or net realizable value.

iv) Stock in transit lying in customs warehouse is valued at cost but does not include custom duty payable, however, non-provision of duty does not affect the profit for the year.

f) Investments:

Long term Investments are stated at cost. Investments in subsidiary company are of long-term and strategic nature . The diminution if any in the value of these investments is temporary in nature.

g) Foreign currency transactions:

- Income and Expenses in foreign exchange are accounted at the transaction rate prevailing at the time of transaction.

- Assets purchased are capitalized at rates prevailing on the date of purchase

- Balances in foreign bank accounts, Exchange Earners Foreign Currency Account are translated into Indian Rupees at rates prevailing at the year-end.

h) Retirement Benefits:

Provident Fund:-

Retirement benefit in form of provident fund is a defined contribution scheme and the contributions are charged to the profit and Loss account of the year when the contributions to the respective funds are due.

Gratuity:-

The company's liability in respect of payment of gratuity is provided on accrual basis and actuarial valuation is subject to management.

Leave Encashment:-

Leave Encashment are valued at cost to company basis without considering any discounting and salary increase and provided on the basis of actual valuation.

i) Borrowing Cost:

Cost in connection with the borrowing of funds to the extent not directly related to the acquisition of fixed assets are amortized and charged to the Profit and Loss Account, over the tenure of the loan. Borrowing cost to the extent directly attributable to acquisition of fixed assets are added to the cost of fixed assets.

j) Taxation:

Current Tax:

Current Tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act 1961, except for the overseas subsidiaries and joint ventures where current tax provisions is determined based on the local tax laws. Deferred tax is recognized for all timing differences, subject to the consideration of prudence applying the tax rates that have been substantively enacted by the Balance Sheet date.

Deferred Tax:

Deferred tax liabilities represent the tax effect of temporary differences substantially on account of differences in the written down value of Fixed Assets on account of differing depreciation methods and rates and other timing differences.

k) Capital Work-in-Progress

Projects under commissioning and other Capital Work-in-Progress are carried at cost, comprising direct cost, related incidental expenses and attributable interest.

I) Use of Estimation:

The financial statements are prepared in conformity with generally accepted accounting principles and applicable accounting standards, which may require management to make estimates and assumptions. These may affect the reported amount of assets and liabilities and disclosures of contingent liabilities on the date of financial statements and the reported amount of the revenue and expenses during the reporting period. Actual report later could differ from these estimates.

m) Impairment of Assets:

The carrying values of assets/cash generating units at each Balance Sheet date are reviewed for impairment of assets. If any indication of such impairment exists, the recoverable amount of such assets is estimated and impairment is recognized, if the carrying amount of these assets exceeds their recoverable amount.The recoverable amount is the greater of the net selling price and their value in use.Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor. When there is indication that an impairment loss recognized for an asset in prior accounting periods no longer exists or may have decreased such reversal of impairment loss is recognized.

n) Segment Reporting:

The Company's operations predominantly comprise of manufacturing and sale of Air-conditioning and parts thereof.The geographical segmentations are insignificant.

o) Earning Per Share:

The earnings considered in ascertaining the Company's Earnings per Share (EPS) comprise the net profits after tax.The number of shares used in computing basic EPS is the weighted average number of shares outstanding during the year.

The diluted EPS is calculated on the same basis as basic EPS, after adjusting for the effects of potential dilutive equity shares.

p) Cash Flow Statement:

The Cash Flow statement is prepared by the indirect method set out in Accounting Standard -3 issued by the Institute of Chartered Accountants of India as required by the SEBI on Cash Flow Statement and presents cash flows by operating, investing and financing activities of the Company. Cash and cash equivalents presented in the cash flow statement consists of cash in hand and demand deposits with banks as on the Balance Sheet date.

q) Sundry Debtors/Loans & Advances:

Sundry Debtors,Creditors and other advances are subject to confirmation.The effect of the same, if any which is not likely to be material will be adjusted at the time of confirmation.

r) Provisions/Contingencies:

A provision is recognized when there is a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are determined based on best estimate of the amount required to settle the obligation at the Balance Sheet date.

Contingent liabilitiesare not recognized and are disclosed in the Notes on Accounts.

s) Derivative Instruments:

The Company has entered into derivative contracts in the nature of interest rate swaps and forward contracts with intention to hedge its requirements and firm commitments.The contracts are markto market and losses are recognized in the profit and loss account.Gains arising on the same are not recognized on ground of prudence.

t) Deferred Revenue Expenditure:

Cost of traveling, Consultancy fees and other expenses related to International Certification are considered as deferred revenue expenditure. 1 /5 of the expenditures have been charged to Profit and Loss account.

u) Debenture issue Expenses:

Debenture issue expenses are adjusted against the Securities Premium Account as permissible under Section 78 (2) of theCompaniesAct1956.


Mar 31, 2010

A) Basis of Preparation of Financial statements:

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

b) Revenue Recognition:

i) Income and Expenditure are recognized on accrual basis.

ii) Sales are accounted on dispatch of products and sales value includes excise duty.

iii) Export sales are accounted on the basis of date of bill of lading.

iv) Dividend income is recognised when the right to receive the dividend is established.

c) Fixed Assets:

Fixed assets except leasehold land are stated at cost less accumulated depreciation. The cost includes freight, duties, taxes and other incidental expenses related to acquisition and installation. CENVAT claim, if any, on capital goods is reduced from the cost.

d) Depreciation:

i) Depreciation on fixed assets is provided on straight-line basis at the rates prescribed in schedule XIV to the Companies Act, 1956.

ii) Depreciation on assets added during the year, is calculated on pro-rata basis with reference to the date of installation.

e) Inventory Valuation:

i) Raw materials and consumables are valued at cost as per the First in First Out (FIFO) method and include(s) customs duty wherever paid, and are net of credit availed under CENVAT scheme.

ii) Stock in process is valued at direct cost, i.e., cost of materials and variable manufacturing expenses.

iii) Finished goods are valued at lower of cost or net realizable value.

iv) Stock in transit lying in customs warehouse is valued at cost but does not include custom duty payable, however, non-provision of duty does not affect the profit for the year.

f) Investments:

Long term Investments are stated at cost. A provision for diminution is made to recognize a decline, other than temporary, in the value of long-term investments. Investments in subsidiary company are of long-term strategic value and the diminution if any in the value of these investments is temporary in nature.

g) Foreign currency transactions:

- Income and Expenses in foreign exchange are accounted at the average rate prevailing during the month of transaction.

- Income and expenses on foreign projects are accounted at average rate for the year.

- Assets purchased are capitalized at rates prevailing on date of purchase

- Balances in foreign bank accounts, Exchange Earners Foreign Currency Account are translated into Indian Rupees at rates prevailing at the year-end.

h) Retirement Benefits:

The companys contribution to the provident fund is charged to profit and loss account.

The companys liability in respect of payment of gratuity is provided on accrual basis and actuarial valuation is subject to management.

. Leave Encashment: The Company has provided an adhoc provision as

accrued liability during the year which is subject to acturial valuation.

i) Borrowing Cost:

Borrowing cost that is directly attributable to the acquisition, construction or production of qualifying assets are capitalized as a part of the cost of that asset. Other borrowing costs are recognized as an expense in the period in which they are incurred.

j) Taxation:

Current Tax:

The tax expenses for the year, comprising current tax is included in determining the net profit for the year.

A Provision is made for the current tax based on tax liability computed in accordance with relevant tax rates and tax laws.

Deferred Tax:

Deferred tax liabilities represent the tax effect of temporary differences substantially on account of differences in the written down value of Fixed Assets on account of differing depreciation methods and rates and other timing differences.

k) Expenditure during construction and on new projects

In the case of new industrial units and substantial expansion of existing units, all pre operating expenditure specifically for the project, incurred upto the date of installation, is capitalized and added pro rata to the cost of fixed assets.

l) Management Estimation:

The financial statements are prepared in conformity with generally accepted accounting principles and applicable accounting standards, which may require management to make estimates and assumptions. These may affect the reported amount of assets and liabilities and disclosures of contingent liabilities on the date of financial statements and the reported amount of the revenue and expenses during the reporting period. Actual report later could differ from these estimates.

m) Impairment of Assets:

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

n) Segment Reporting:

The Company is engaged in only one segment i.e. air conditioners and its parts. Hence segment reporting is not applicable.

o) Earning Per Share:

The earnings considered in ascertaining the Companys Earnings per Share (EPS) comprise the net profits after tax. The number of shares used in computing basic EPS is the weighted average number of shares outstanding during the year.

The diluted EPS is calculated on the same basis as basic EPS, after adjusting for the effects of potential dilutive equity shares.

p) Cash Flow Statement:

The Cash Flow statement is prepared by the indirect method set out in Accounting standard –3 issued by the Institute of Chartered Accountants of India as required by the SEBI on Cash Flow Statement and presents cash flows by operating, investing and financing activities of the Company. Cash and cash equivalents presented in the cash flow statement consists of cash in hand and demand deposits with banks as on the Balance Sheet date.

q) Sundry Debtors/Loans & Advances:

Sundry Debtors, Creditors and other advances are subject to confirmation. The effect of the same, if any which is not likely to be material will be adjusted at the time of confirmation.

r) Provisions /Contingencies:

A provision is recognized when there is a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are determined based on best estimate of the amount required to settle the obligation at the Balance Sheet date.

Contingent liabilities are not recognized and are disclosed in the Notes on Accounts.

s) Derivative Instruments:

The Company has not entered into the derivative instruments. Forward Contract other than those entered into, to hedge foreign currency risk on unexecuted firm commitments or of highly probable forecast transactions are treated as foreign currency transactions and accounted accordingly. Exchange difference arising on such contracts is recognized in the period in which they arise and premium paid/received is accounted as expenses/income over the period of the contract.

t) Deferred Revenue Expenditure:

Cost of traveling & Consultancy fees related to Lloyd Coils Europe and Janka Engineering s.r.o. are considered as deferred revenue expenditure.

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