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Accounting Policies of LML Ltd. Company

Mar 31, 2015

(i) System of Accounting

These financial statements have been prepared to comply with the Generally Accepted Accounting Principles in India (Indian GAAP), including the Accounting Standards notified under the relevant provisions of the Companies Act, 2013.

The financial statements are prepared on accrual basis under the historical cost convention. The financial statements are presented in Indian rupees, rounded off to the nearest rupees in lakhs.

(ii) Use of Estimates

The preparation of financial statements in conformity with Indian GAAP requires judgements, estimates and assumptions to be made that affect the reported amount of assets and liabilities, disclosure of contingent liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognised in the period in which the results are known/materialised.

(iii) Fixed Assets

Fixed Assets (tangible and intangible) are stated at cost of acquisition or construction less accumulated depreciation, amortization and impairment loss, if any. Cost is inclusive of duties, taxes, erection/ commissioning expenses, incidental expenses and borrowing cost etc. and where applicable is net of Modvat / Cenvat benefit.

Land acquired on perpetual lease as well as on lease basis for a period of 90 years and above is treated as free hold land.

(iv) Borrowing costs

Borrowing costs, attributable to the acquisition / construction of qualifying fixed assets are capitalized, net of income earned on temporary investments of borrowings, by applying weighted average rate for the eligible period. Other borrowing costs are charged to Profit and Loss Account.

Borrowing costs comprise of interest and other cost incurred in connection with borrowing of funds.

(v) Foreign Currency Transactions

Transactions in foreign currency are accounted at exchange rates prevalent on the date(s) of transactions. Exchange differences arising on adjustment for year end settlement rates are recognized in the Profit and Loss Account. In case of forward contract, the difference between the forward rate and exchange rate on the date of transaction is recognized as income or expense over the period of the contract.

(vi) Research and Development

Research and Development expenditure of revenue nature are charged to the Profit and Loss Account, while capital expenditure are added to the cost of fixed assets in the year in which these are incurred and depreciated in accordance with para 1(x) below.

(vii) Employee Benefits

Short Term Employee Benefits

The undiscounted amount of short term employee benefits expected to be paid in exchange for the services rendered by employees are recognised as an expense during the period when the employees render the services. These benefits include performance incentive if any and compensated absences.

Long Term Employee Bene?ts

a) Defined Contribution Plans

(i) Provident Fund and employees' state insurance schemes

All employees of the Company are entitled to receive benefits under the Provident Fund, which is a defined contribution plan. Both the employee and the employer make monthly contributions to the plan at a predetermined rate (presently 12%) of the employees' basic salary. These contributions are made to the fund administered and managed by the Government of India. In addition, some employees of the Company are covered under the employees' state insurance schemes, which are also defined contribution schemes recognized and administered by the Government of India.

The Company's contributions to both these schemes are expensed in the Statement of Profit and Loss. The Company has no further obligations under these plans beyond its monthly contributions.

(ii) Gratuity

The Company provides for gratuity obligations through a defined benefit retirement plan (the 'Gratuity Plan') covering all eligible employees. The Gratuity Plan provides a lump sum payment to employees who are so entitled at retirement or termination of employment based on the respective employee salary and years of employment with the Company. The Company provides for the Gratuity Plan based on actuarial valuations in accordance with Accounting Standard 15 (revised), "Employee Benefits " The Company makes annual contributions to the LIC Insurance Corporation of India for the Gratuity Plan in respect of employees. The present value of obligation under gratuity is determined based on actuarial valuation using Project Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

b) Other long term benefit

Leave Encashment

The Company has provided for the liability at period end on account of unavailed earned leave as per the actuarial valuation as per the Projected Unit Credit Method.

c) Actuarial gains and losses in respect of long term employment benefits are recognized as and when incurred.

(viii) Investments

Long Term Investments are stated at cost and provision for diminution is made if the decline in value is other than temporary in nature. Current Investments are stated at lower of cost and fair value.

(ix) Sales

(a) Revenue from domestic sales is recognised upon dispatch to customers.

(b) Export sales are recognized upon dispatch from the customs port.

(x) Export Benefits

The Company accounts for Export Benefit Entitlements under the Duty Draw Back and Special Incentive Schemes of the Government of India, in the year of Export Sales.

(xi) Depreciations, Amortization and Impairment

(a) Depreciation on tangible fixed assets is provided on the basis of useful life the assets as prescribed in schedule II to the Companies Act, 2013.

(b) Intangible Assets are amortized over the estimated useful life of such assets. Technical Know How is amortized by Straight Line Method at the rate of 20% per annum over its estimated useful life of five years.

(c) An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. An impairment loss is charged to the profit & loss account in the year in which an asset is identified as impaired.

(xii) Inventories

Inventories are valued at lower of cost and net realizable value. Cost of finished goods, work in process and factory made components include costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Finished goods lying in the factory premises are valued inclusive of Excise Duty.

Cost for raw materials and components, stores and spare parts, loose tools is determined on FIFO basis. Cost of materials is arrived at after adjustment of, where applicable, Cenvat benefit availed or to be availed.

(xiii) Leases

Assets acquired under finance leases are recognized as fixed assets at the lower of the fair value at inception and the present value of minimum lease payments. Lease payments are apportioned between the finance charge and the reduction of the outstanding liabilities. The finance charge is allocated to periods comprised in the lease term at a constant periodic rate of interest on the remaining balance of the liabilities.

(xiv) Product warranty costs are recognized based on technical evaluation and past experience.

(xv) Taxation

Income tax expense/ savings comprise current tax and deferred tax charge or credit. Provision for current tax is made on the estimated taxable income at the tax rate applicable to the relevant assessment year. The deferred tax assets are recognised based on the principles of prudence. Deferred tax asset and deferred tax liabilities are calculated by applying the rate and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are reviewed at each Balance Sheet date.

(xvi) Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is provable that there will be a out flow of resources. Contingent liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognized nor disclosed in the Financial Statements.


Mar 31, 2014

(i) System of Accounting

(a) The Company follows the mercantile system of accounting and recognizes income and expenditure on accrual basis.

(b) Financial statements are based on historical cost.

(ii) Fixed Assets

Fixed Assets (tangible and intangible) are stated at cost of acquisition or construction less accumulated depreciation, amortization and impairment loss, if any. Cost is inclusive of duties, taxes, erection/ commissioning expenses, incidental expenses and borrowing cost etc. and where applicable is net of Modvat / Cenvat benefit.

(iii) Borrowing costs

Borrowing costs, attributable to the acquisition / construction of qualifying fixed assets are capitalized, net of income earned on temporary investments of borrowings, by applying weighted average rate for the eligible period. Other borrowing costs are charged to Profit and Loss Account.

Borrowing costs comprise of interest and other cost incurred in connection with borrowing of funds.

(iv) Foreign Currency Transactions

Transactions in foreign currency are accounted at exchange rates prevalent on the date(s) of transactions. Exchange differences arising on adjustment for year end settlement rates are recognized in the Profit and Loss Account. In case of forward contract, the difference between the forward rate and exchange rate on the date of transaction is recognized as income or expense over the period of the contract.

(v) Research and Development

Research and Development expenditure of revenue nature are charged to the Profit and Loss Account, while capital expenditure are added to the cost of fixed assets in the year in which these are incurred and depreciated in accordance with para 1(x) below.

(vi) Employee Benefits

Gratuity & Leave Encashment

The Company has provided for the liability for future payment of Gratuity and for leave encashment on the basis of actuarial valuation.

(vii) Investments

Long Term Investments are stated at cost and provision for diminution is made if the decline in value is other than temporary in nature. Current Investments are stated at lower of cost and fair value.

(viii) Sales

(a) Revenue from domestic sales is recognised upon dispatch to customers.

(b) Export sales are recognized upon dispatch from the customs port.

(ix) Export Benefits

The Company accounts for Export Benefit Entitlements under the Duty Draw Back and Special Incentive Schemes of the Government of India, in the year of Export Sales.

(x) Depreciations, Amortization and Impairment

(a) No amount is being written off on Leasehold land. Depreciation on vehicles is being provided as calculated under Written Down Value Method at the rates specified in Schedule XIV to the Companies Act, 1956.

(b) On other tangible assets, depreciation is being provided proportionately on Straight Line Method at the rates indicated below :

(I) On capital expenditure incurred on leasehold improvements considering the period of lease; and

(II) On the remaining assets at the rates specified in Schedule XIV to the Companies Act, 1956.

(a) Intangible Assets are amortized over the estimated useful life of such assets. Technical Know How is amortized by Straight Line Method at the rate of 20% per annum over its estimated useful life of five years.

(b) An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. An impairment loss is charged to the profit & loss account in the year in which an asset is identified as impaired.

(xi) Inventories

Inventories are valued at lower of cost and net realizable value. Cost of finished goods, work in process and factory made components include costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Finished goods lying in the factory premises are valued inclusive of Excise Duty.

Cost for raw materials and components, stores and spare parts, loose tools is determined on FIFO basis. Cost of materials is arrived at after adjustment of, where applicable, Cenvat benefit availed or to be availed.

(xii) Leases

Assets acquired under finance leases are recognized as fixed assets at the lower of the fair value at inception and the present value of minimum lease payments. Lease payments are apportioned between the finance charge and the reduction of the outstanding liabilities. The finance charge is allocated to periods comprised in the lease term at a constant periodic rate of interest on the remaining balance of the liabilities.

(xiii) Product warranty costs are recognized based on Technical evaluation and past experience.

(xiv) Taxation

Income tax expense/ savings comprise current tax and deferred tax charge or credit. Provision for current tax is made on the estimated taxable income at the tax rate applicable to the relevant assessment year. The deferred tax assets are recognised based on the principles of prudence. Deferred tax asset and deferred tax liabilities are calculated by applying the rate and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are reviewed at each Balance Sheet date.


Mar 31, 2013

(i) System of Accounting

(a) The Company follows the mercantile system of accounting and recognizes income and expenditure on accrual basis.

(b) Financial statements are based on historical cost.

(ii) Fixed Assets

Fixed Assets (tangible and intangible) are stated at cost of acquisition or construction less accumulated depreciation, amortization and impairment loss, if any. Cost is inclusive of duties, taxes, erection/ commissioning expenses, incidental expenses and borrowing cost etc. and where applicable is net of Modvat / Cenvat benefit.

(iii) Borrowing costs

Borrowing costs, attributable to the acquisition / construction of qualifying fixed assets are capitalized, net of income earned on temporary investments of borrowings, by applying weighted average rate for the eligible period. Other borrowing costs are charged to Profit and Loss Account.

Borrowing costs comprise of interest and other cost incurred in connection with borrowing of funds.

(iv) Foreign Currency Transactions

Transactions in foreign currency are accounted at exchange rates prevalent on the date(s) of transactions. Exchange differences arising on adjustment for year end settlement rates are recognized in the Profit and Loss Account. In case of forward contract, the difference between the forward rate and exchange rate on the date of transaction is recognized as income or expense over the period of the contract.

(v) Research and Development

Research and Development expenditure of revenue nature are charged to the Profit and Loss Account, while capital expenditure are added to the cost of fixed assets in the year in which these are incurred and depreciated in accordance with para 1 (x) below.

(vi) Employee Benefits

Gratuity & Leave Encashment The Company has provided for the liability for future payment of Gratuity and for leave encashment on the basis of actuarial valuation.

(vii) Investments

Long Term Investments are stated at cost and provision for diminution is made if the decline in value is other than temporary in nature. Current Investments are stated at lower of cost and fair value.

(viii)Sales

(a) Revenue from domestic sales is recognised upon dispatch to customers.

(b) Export sales are recognized upon dispatch from the customs port.

(ix) Export Benefits

The Company accounts for Export Benefit Entitlements under the Duty Draw Back and Special Incentive Schemes of the Government of India'', in the year of Export Sales.

(x) Depreciations, Amortization and Impairment

(a) No amount is being written off on Leasehold land.

(b) Depreciation on vehicles is being provided as calculated under Written Down Value Method at the rates specified in Schedule XIV to the Companies Act, 1956.

(c) On other tangible assets, depreciation is being provided proportionately on Straight Line Method at the rates indicated below :

i) On capital expenditure incurred oh leasehold improvements considering the period of lease; and ii) On the remaining assets at the rates specified in Schedule XIV to the Companies Act, 1956.

(d) Intangible Assets are amortized over the estimated useful life of such assets. Technical Know How is amortized by Straight Line Method at the rate of 20% per annum over its estimated useful life of five years.

(e) An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. An impairment loss is charged to the profit & loss account in the year in which an asset is identified as impaired.

(xi) Inventories

Inventories are valued at lower of cost and net realizable value. Cost of finished goods, work in process and factory made components include costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Finished goods lying in the factory premises are valued inclusive of Excise Duty. Cost for raw materials and components, stores and spare parts, loose tools is determined on FIFO basis. Cost of materials is arrived at after adjustment of, where applicable, Cenvat benefit availed or to be availed.

(xii) Leases

Assets acquired under finance leases are recognized as fixed assets at the lower of the fair value at inception and the present value of minimum lease payments. Lease payments are apportioned between the finance charge and the reduction of the outstanding liabilities. The finance charge is allocated to periods comprised in the lease term at a constant periodic rate of interest on the remaining balance of the liabilities.

(xiii) Product warranty costs are recognized based on Technical evaluation and past experience.

(xiv) Taxation

Income tax expense/ savings comprise current tax and deferred tax charge or credit. Provision for current tax is made on the estimated taxable income at the tax rate applicable to the relevant assessment year. The deferred tax assets are recognised based on the principles of prudence. Deferred tax asset and deferred tax liabilities are calculated by applying the rate and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are reviewed at each Balance Sheet date.


Mar 31, 2012

(i) System of Accounting

(a) The Company follows the mercantile system of accounting and recognizes income and expenditure on accrual basis.

(b) Financial statements are based on historical cost.

(ii) Fixed Assets

Fixed Assets (tangible and intangible) are stated at cost of acquisition or construction less accumulated depreciation, amortization and impairment loss, if any. Cost is inclusive of duties, taxes, erection/commissioning expenses, incidental expenses and borrowing cost etc. and where applicable is net of Modvat / Cenvat benefit From 01.10.2003 expenditure on acquisition of Intangible Assets (including Technical Know How / Engineering Fees treated as Miscellaneous Expenditure to the extent not written off or adjusted upto 30 09.2003) ane classified as Fixed Assets (in) Borrowing costs

Borrowing costs, attributable to the acquisition / construction of qualifying fixed assets are capitalized, net of income earned on temporary investments of borrowings, by applying weighted average rate for the eligible period. Other borrowing costs are charged to Profit and Loss Account, Borrowing costs comprise of interest and other cost incurred in connection with borrowing of funds, iiv) Foreign Currency Transactions

Transactions in foreign currency are accounted at exchange rates prevalent on the date(s) of transactions. Exchange differences arising on adjustment for year end settlement rates are recognized in the Profit and Loss Account. In case of forward contract, the difference between the forward rate and exchange rate on the date of transaction is recognized as income or expense over the period of the contract.

(v) Research and Development

Research and Development expenditure of revenue nature are charged to the Profit and Loss Account, while capital expenditure are added to the cost of fixed assets in the year in which these are incurred and depreciated in accordance with para 1 (x) below.

(vi) Employee Benefits

Gratuity & Leave Encashment

The Company has provided for the liability for future payment of Gratuity and for leave encashment on the basis of actuarial valuation.

(vii) Investments

Long Term Investments are stated at cost and provision for diminution is made if the decline in value is other than temporary in nature. Current Investments are stated at lower of cost and fair value.

(viii)Sales

(a) Revenue from domestic sales is recognised upon dispatch to customers.

(b) Export sales are recognized upon dispatch from the customs port.

(ix) Export Benefits

The Company accounts for Export Benefit Entitlements under the Duty Entitlement Pass Book Scheme of the Government of India, in the year of Export Sales.

(x) Depreciations, Amortization and Impairment

(a) No amount is being written off on Leasehold land.

(b) Depreciation on vehicles is being provided as calculated under Written Down Value Method at the rates specified in Schedule XIV to the Companies Act, 1956.

(c) On other tangible assets, depreciation is being provided proportionately on Straight Line Method at the rates indicated below :

i) On capital expenditure incurred on leasehold improvements considering the period of lease; and

ii) On the remaining assets at the rates specified in Schedule XIV to the Companies Act, 1956.

(dj Intangible Assets are amortized over the estimated useful life of such assets. Technical Know How is amortized by Straight Line Method at the rate of 20% per annum over its estimated useful life of five years

(e) An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. An impairment loss is charged to the profit & loss account in the year in which an asset is identified as impaired.

(xi) Inventories

Inventories are valued at lower of cost and net realizable value. Cost of finished goods, work in process and factory' made components include costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Finished goods lying in the factory premises are valued inclusive of Excise Duty. Cost for raw materials and components, stores and spare parts, loose tools is determined on FIFO basis. Cost of materials is arrived at after adjustment of. where applicable. Cenvat benefit availed or to be availed.

(xii) Leases

Assets acquired under finance leases are recognized as fixed assets at the lower of the fair value at inception and the present value of minimum lease payments. Lease payments are apportioned between the finance charge and the reduction of the outstanding liabilities. The finance charge is allocated to periods comprised in the lease term at a constant periodic rate of interest on the remaining balance of the liabilities.

(xiii)Product warranty costs are recognized based on Technical evaluation and past experience..

(xiv)Taxation

Income tax expense/ savings comprise current tax and deferred tax charge or credit. Provision for current tax is made on the estimated taxable income at the tax rate applicable to the relevant assessment year. The deferred tax assets are recognised based on the principles of prudence. Deferred tax asset and deferred tax liabilities are calculated by applying the rate and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are reviewed at each Balance Sheet date.


Mar 31, 2011

(a) The Company follows the mercantile sys- tem of accounting and recognizes income and expenditure on accrual basis.

(b) Financial statements are based on histori- cal cost.

(ii) Fixed Assets

Fixed Assets (tangible and intangible) are stated at cost of acquisition or construction less accu- mulated depreciation, amortization and impair- ment loss, if any. Cost is inclusive of duties, taxes, erection/commissioning expenses, inci- dental expenses and borrowing cost etc. and where applicable is net of Modvat / Cenvat ben- efit. From 01.10.2003 expenditure on acquisi- tion of Intangible Assets (including Technical Know How / Engineering Fees treated as Mis- cellaneous Expenditure to the extent not written off or adjusted upto 30.09.2003) are classified as Fixed Assets.

(iii) Borrowing costs

Borrowing costs, attributable to the acquisition / construction of qualifying fixed assets are capi- talized, net of income earned on temporary in- vestments of borrowings, by applying weighted average rate for the eligible period. Other bor- rowing costs are charged to Profit and Loss Ac- count.

Borrowing costs comprise of interest and other cost incurred in connection with borrowing of funds.

(iv) Foreign Currency Transactions

Transactions in foreign currency are accounted at exchange rates prevalent on the date(s) of transactions. Exchange differences arising on adjustment for year end settlement rates are rec- ognized in the Profit and Loss Account. In case of forward contract, the difference between the forward rate and exchange rate on the date of transaction is recognized as income or expense over the period of the contract.

(v) Research and Development

Research and Development expenditure of rev-enue nature are charged to the Profit and Loss Account, while capital expenditure are added to the cost of fixed assets in the year in which these are incurred and depreciated in accordance with para 1(x) below.

(vi) Employee Benefits

a) Gratuity & Leave Encashment

The Company has provided for the liability for future payment of Gratuity and for leave encashment on the basis of actuarial valu- ation.

(b) Leave travel concession and medical re- imbursement to employees are accounted as and when incurred and claimed.

(vii) Investments

Long Term Investments are stated at cost and provision for diminution is made if the decline in value is other than temporary in nature. Current Investments are stated at lower of cost and fair value.

(viii)Sales

(a) Revenue from domestic sales is recognised upon dispatch to customers.

(b) Export sales are recognized upon dispatch from the customs port.

(ix) Export Benefits

The Company accounts for Export Benefit En- titlements under the Duty Entitlement Pass Book Scheme of the Government of India, in the year of Export Sales.

(x) Depreciations, Amortization and Impairment

(a) No amount is being written off on Lease- hold land.

(b) Depreciation on vehicles is being provided as calculated under Written Down Value Method at the rates specified in Schedule XIV to the Companies Act, 1956.

(c) On other tangible assets, depreciation is being provided proportionately on Straight Line Method at the rates indicated below :

i) On capital expenditure incurred on leasehold improvements considering the period of lease; and

ii) On the remaining assets at the rates specified in Schedule XIV to the Com- panies Act, 1956.

(d) Intangible Assets are amortized over the estimated useful life of such assets. Tech- nical Know How is amortized by Straight Line Method at the rate of 20% per annum over its estimated useful life of five years.

(e) An asset is treated as impaired when the carrying cost of asset exceeds its recover- able value. An impairment loss is charged to the profit & loss account in the year in which an asset is identified as impaired.

(xi) Inventories

Inventories are valued at lower of cost and net realizable value. Cost of finished goods, work in process and factory made components include costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Finished goods lying in the fac- tory premises are valued inclusive of Excise Duty.

Cost for raw materials and components, stores and spare parts, loose tools is determined on FIFO basis. Cost of materials is arrived at after adjustment of, where applicable, Cenvat ben- efit availed or to be availed.

(xii) Leases

Assets acquired under finance leases are rec- ognized as fixed assets at the lower of the fair value at inception and the present value of mini- mum lease payments. Lease payments are ap- portioned between the finance charge and the reduction of the outstanding liabilities. The fi- nance charge is allocated to periods comprised in the lease term at a constant periodic rate of interest on the remaining balance of the liabili- ties.

(xiii)Product warranty costs are recognized based on Technical evaluation and past experience.

(xiv) Taxation

Income tax expense/ savings comprise current tax and deferred tax charge or credit. Provision for current tax is made on the estimated taxable income at the tax rate applicable to the relevant assessment year. The deferred tax assets are recognised based on the principles of prudence.

Deferred tax asset and deferred tax liabilities are calculated by applying the rate and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are reviewed at each Balance Sheet date.


Sep 30, 2009

(i) System of Accounting

(a) The Company follows the mercantile sys- tem of accounting and recognises income and expenditure on accrual basis.

(b) Financial statements are based on histori- cal cost.

(ii) Fixed Assets

Fixed Assets (tangible and intangible) are stated at cost of acquisition or construction less accu- mulated depreciation and amortisation. Cost is inclusive of duties, taxes, erection/commission- ing expenses, incidental expenses and borrow- ing cost etc. and where applicable is net of Modvat / Cenvat benefit. From 01.10.2003 ex- penditure on acquisition of Intangible Assets (in- cluding Technical Know How / Engineering Fees treated as Miscellaneous Expenditure to the extent not written off or adjusted upto 30.09.2003) are classified as Fixed Assets.

(iii) Borrowing costs

Borrowing costs, attributable to the acquisition / construction of qualifying fixed assets are capitalised, net of income earned on temporary investments of borrowings, by applying weighted average rate for the eligible period. Other borrowing costs are charged to Profit and Loss Account. Borrowing costs comprise of interest and other cost incurred in connection with borrowing of funds.

(iv) Foreign Currency Transactions

Transactions in foreign currency are accounted at exchange rates prevalent on the date(s) of transactions. Exchange differences arising on adjustment for year end settlement rates are recognised in the Profit and Loss Account. In case of forward contract, the difference between the forward rate and exchange rate on the date of transaction is recognised as income or expense over the period of the contract.

(v) Research and Development

Research and Development expenditure of revenue nature are charged to the Profit and Loss Account, while capital expenditure are added to the cost of fixed assets in the year in which these are incurred and depreciated in accordance with para 1 (x) below.

(vi) Employee Benefits

(a) Gratuity & Leave Encashment

The Company has provided for the liability for future payment of Gratuity and for leave encashment on the basis of actuarial valu- ation.

(b) Leave travel concession and medical re- imbursement to employees are accounted as and when incurred and claimed.

(vii) Investments

Long Term Investments are stated at cost and provision for dimunition is made if the decline in value is other than temporary in nature. Current Investments are stated at lower of cost and fair value.

(viii) Sales

(a) Revenue from domestic sales is recognised upon dispatch to customers.

(b) Export sales are recognised upon dispatch from the customs port.

(ix) Export Benefits

The Company accounts for Export Benefit En- titlements under the Duty Entitlement Pass Book Scheme of the Government of India, in the year of Export Sales.

(x) Depreciation and Amortisation

(a) No amount is being written off on Lease- hold land.

(b) Depreciation on vehicles is being provided as calculated under Written Down Value Method at the rates specified in Schedule XIV to the Companies Act, 1956.

(c) On other tangible assets, depreciation is being provided proportionately on Straight Line Method at the rates indicated below :

i) On capital expenditure incurred on leasehold improvements considering the period of lease; and

ii) On the remaining assets at the rates specified in Schedule XIV to the Companies Act, 1956.

(d) Intangible Assets are amortised over the estimated useful life of such assets. Tech- nical Know How is amortised by Straight Line Method at the rate of 20% per annum over its estimated useful life of five years.

(xi) Inventories

Inventories are valued at lower of cost and net realisable value. Cost of finished goods, work in process and factory made components include costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Finished goods lying in the fac tory premises are valued inclusive of Excise Duty.

Cost for raw materials and components, stores and spare parts, loose tools is determined on FIFO basis. Cost of materials is arrived at after adjustment of, where applicable, Cenvat benefit availed or to be availed.

(xii) Leases

Assets acquired under finance leases are recognised as fixed assets at the lower of the fair value at inception and the present value of minimum lease payments. Lease payments are apportioned between the finance charge and the reduction of the outstanding liabilities. The fi- nance charge is allocated to periods comprised in the lease term at a constant periodic rate of interest on the remaining balance of the liabili- ties.

(xiii) Product warranty costs are recognised based on Technical evaluation and past experience..

(xiv) Taxation

Income tax expense/ savings comprise current tax and deferred tax charge or credit. Provision for current tax is made on the estimated taxable income at the tax rate applicable to the relevant assessment year. The deferred tax assets are recognised based on the principles of prudence. Deferred tax asset and deferred tax liabilities are calculated by applying the rate and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are reviewed at each Balance Sheet date.

 
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