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Accounting Policies of Lumax Automotive Systems Ltd. Company

Mar 31, 2015

(a) Basis of Preparation :

The financial statements of the company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The financial statements have been prepared to comply in all material respect in accordance with the notified Accounting Standards issued under companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 2013. The financial statements have been prepared under the historical cost convention on an accrual basis except in case of assets for which revaluation is carried out.

The accounting policies have been consistently applied by the Company and are consistent with those applied in the previous year.

(b) Use of estimates :

The preparation of financial statements in conformity with Indian GAAP requires the management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the management's best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.

(c) Tangible Fixed Assets :

Fixed Assets are stated at cost, less accumulated depreciation. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use.

(d) Depreciation on Tangible Fixed assets :

(a) Depreciation of Fixed Tangible Assets has been computed on straight line basis on cost/enhanced cost in accordance with Schedule-XIV read with Section 205(2)(b) of the Companies Act, 1956 except in cases "where the assets have been identified/retired from active use and where the assets are reduced to the estimated realizable value in the year of its retirement". The incremental depreciation on enhanced cost on account of revaluation is adjusted against revaluation reserve. The company made an internal technical evaluation to evaluate the useful lives of the fixed assets of the company in view of applicability of schedule -II of the Companies Act, 2013 which provides for depreciation on useful lives from the accounting periods commencing on or after 01st April, 2014 and they opinion that the useful lives as worked out with the old rate of depreciation are sufficient to provide depreciable amount over its remaining useful life. The company has used following estimated useful life to provide depreciation on its fixed assets which has been calculated on a straight line basis using rates as applied in earlier years in accordance with schedule-XIV of Companies Act, 1956.

Particulars Estimated useful Useful life as per life(years) schedule-II of the Companies Act, 2013 (years)

Building 30 30

Plant & machinery 20/13 15

Furniture and fixtures 15 8

Office equipments 20 5

Vehicles 10 10

Plastic moulds 6 8

Computer 6 3

(e) Intangible assets

Intangible Assets are stated at cost, less accumulated amortization. Intangible Asset (rights with M& M Resorts Ltd) are amortized using straight line method over their estimated useful life of eight years. Cost of leasehold land is not being amortized over the period of lease and shall be amortized on termination / renewal of lease agreements.

(f) Leases

Where the Company is the lessee

Lease where the lessor effectively retains substantially all the risk and benefits of ownership of the leased item are classified as operation lease and rentals and all other expenses are treated as revenue expenditure with reference to the term(s) of the lease(s).

(g) Borrowing costs

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

Expenditure directly relating to construction activity is capitalized. Indirect expenditure incurred during construction period is capitalized as part of construction cost to the extent to which the expenditure is indirectly related to construction or is incidental thereto. Income earned, if any, during construction period is deducted from the total of the indirect expenditure. During the year no expenditure on new project/substantial expansion has been incurred.

(h) Inventories

Raw Materials, Components, Stores and Packing Materials are valued at Cost including taxes. Semi-finished goods are valued at Estimated Cost including taxes. Finished goods are valued at cost inclusive of excise duty for which provision has been made. Custom duty on material lying in bonded warehouse is included in cost when it is actually paid/ incurred at the time of removal from the warehouse and this treatment has no impact on the profits of the Company.

(i) Investments

Investments are stated at cost. Dividend income is accounted for in the year in which it is received.

(j) Research and developments

The revenue expenditure on research & development is expensed out under the relevant head of accounts in the year in which it is incurred. However, expenditure which results in creation of capital tangible assets is treated in the same way as expenditure on other fixed assets.

(k) Treatment of Contingent Liabilities

Liabilities of a contingent nature are accounted for only on actual occurrence/final settlement of the liabilities.

(l) Revenue Recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue in respect of insurance/other claims etc. is recognized only when it is reasonably certain that the ultimate collection will be made.

Sale of Goods

Revenue is recognized when the significant risks and rewards of ownership of the goods have passed to the buyer. Excise Duty deducted from turnover (gross) is the amount that is included in the amount of turnover (gross) and not the entire amount of liability arisen during the year.

(m) Foreign Currency Transactions

Transactions in foreign currencies are translated at the exchange rate prevailing on the date of the transaction. In case where the amount is not received / paid upto the balance sheet date, the conversion of foreign currency items have been accounted for at the rates prevailing as at the year end. Exchange differences arising on the settlement of monetary items or on reinstatement of 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.

(n) Retirement and other employee benefits

i) Retirement benefits in the form of Provident Fund are charged to the Profit and Loss Account of the year when the contributions to the respective funds are due. There are no other obligations other than the contribution payable to the Provident Fund Commissioner as per law.

ii) Provisions for Gratuity & Leave Encashment has been provided under the project unit credit method as per the actuary valuation at the end of the financial year and the details of the same are as under:-

S. Particulars Gratuity Gratuity No Unfunded Unfunded 31.03.2015 31.03.2014

Actuarial Assumptions

1 Discount Rate 8.00 8.50

2 Rate of increase in Compensation levels 5.50 5.50

3 Rate of return on plan assets 0.00 0.00

4. Expected average remaining working lives of employees(years) 13.35 15.13

Amount Amount Rs. Rs.

Expenses Recognized in the Statement of Profit & Loss Account

1 Current Service Cost 15,78,746 15,00,735

2 Past Service Cost - -

3 Interest Cost 19,09,651 20,15,861

4 Expected Return on Plan Assets

5 Net Actuarial (gain)/loss recognized in the year (359,309) 18,84,937

6 Expenses recognized in the statement of profit and loss 31,29,088 54,01,533

Net Assets (Liability) recognized in the Balance Sheet

1 Present Value of Obligation as at the end of the year 2,51,93,943 2,24,66,483

2 Fair Value of Plan Assets as at the end of the year - -

3 Funded Status (2,51,93,943) (2,24,66,483)

4 Current Liability 47,21,896 42,23,846

5 Non Current Liability 2,04,72,047 1,82,42,637

6 Unrecognized Actuarial (gain)/losses - -

7 Net Asset(Liability)Recognized in Balance Sheet (2,51,93,943) (2,24,66,483)

Change in Obligation during the year

1 Present value of Obligation as at the beginning of the year 2,24,66,483 2,37,16,009

2 Current Service Cost 15,78,746 15,00,735

3 Interest Cost 19,09,651 20,15,861

4 Settlement Cost - -

5 Past Service Cost - -

6 Actuarial (gain)/loss on obligation (359,309) 18,84,937

7 Benefits & Payments (401,628) 66,51,059

8 Present Value of Obligation as at the end of the year 2,51,93,943 2,24,66,483

S. Particulars Leave Encashment Leave Encashment No Unfunded Unfunded 31.03.2015 31.03.2014

Actuarial Assumptions

1 Discount Rate 8.00 8.50

2 Rate of increase in Compensation levels 5.50 5.50

3 Rate of return on plan assets 0.00 0.00

4. Expected average remaining working lives of employees(years) 13.35 15.16

Amount Amount Rs. Rs.

Expenses Recognized in the Statement of Profit & Loss Account

1 Current Service Cost 5,96,703 5,75,957

2 Past Service Cost - -

3 Interest Cost 6,67,082 5,76,154

4 Expected Return on Plan Assets - -

5 Net Actuarial (gain)/loss recognized in the year (2,44,934) 476,363

6 Expenses recognized in the statement of profit and loss 10,18,851 16,28,479

Net Assets (Liability) recognized in the Balance Sheet

1 Present Value of Obligation as at the end of the year 8,535,686 78,48,026

2 Fair Value of Plan Assets as at the end of the year - -

3 Funded Status (85,35,636) (78,48,026)

4 Current Liability 33,71,486 30,76,709

5 Non Current Liability 51,64,200 47,71,317

6 Unrecognized Actuarial (gain)/losses - -

7 Net Asset(Liability)Recognized in Balance Sheet (85,35,686) (78,48,026)

Change in Obligation during the year

1 Present value of Obligation as at the beginning of the year 78,48,026 67,78,278

2 Current Service Cost 596,703 5,75,957

3 Interest Cost 6,67,082 5,76,154

4 Settlement Cost - -

5 Past Service Cost - -

6 Actuarial (gain)/loss on obligation (2,44,934) 4,76,368

7 Benefits & Payments 3,31,191 5,58,731

8 Present Value of Obligation as at the end of the year 85,35,686 78,48,026

Note:-The Company has initially set-up its own gratuity fund which is covered under the group gratuity scheme with Life Insurance Corporation of India. However the Company is not contributing to Gratuity fund since F.Y.2008-09. The estimated value of the fund '1,186,000/- has been shown as amount receivable from LIC under Gratuity Trust policy under the head short term loans and advances which the company had already paid to the employees of the company from its own sources.

Liability in respect of gratuity and leave encashment due to the employees as on 31/03/2015 as per actuarial valuation amount to Rs.251.94 Lacs and Rs.85.36 Lacks (Rs. 224.66 Lacs and Rs.78.48 lacks) respectively and which has been duly provided in the books of the Company. The remaining gratuity liability provided in the financial statements are in respect of ex-employees of the Pune unit of the company to whom the payments are outstanding.

(o) Income Taxes

Tax expense comprises of current and deferred Tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act. Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing difference of earlier year.

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. Deferred tax assets are recognized if there is virtual certainty supported by convincing evidence that such deferred tax assets can be realized against future taxable profits.

(p) Impairment of Assets

As stipulated in AS-28, the company assessed potential generation of economic benefits from its business units and is of the view that assets employed in continuing business are capable of generating adequate returns over their useful lives in the usual course of business. There is no indication to the contrary and accordingly the management is of the view that no impairment provision is called for in these accounts.

(q) Earning Per Share

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

(r) Provisions

A provision is recognized when an enterprise has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best management estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best management estimates.


Mar 31, 2014

1) General

The financial statements of the company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The financial statements have been prepared to comply in all material respect in accordance with the notified Accounting Standards issued under companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention on an accrual basis except in case of assets for which revaluation is carried out.

The accounting policies have been consistently applied by the Company and are consistent with those applied in the previous year, except for the change in accounting policy explained below.

2) Change in accounting policy

Presentation and disclosure of financial statements

The accounts have been prepared in accordance with the revised schedule-VI notified under the Companies Act 1956.

3) i) The Company has set-up its own gratuity fund which is covered under the group gratuity scheme with Life Insurance Corporation of India. Liability in respect of gratuity due to the employees as on 31/03/2014 as per actuarial valuation amount to Rs. 287.45 Lacs (Rs. 237.16 Lacs), which has been duly provided in the books of the Company. However the Company is not contributing to Gratuity fund since F. Y.2008-09.

ii) Liability in respect of earned leave due to the employees as on 31/03/2014 as per actuarial valuation amounts to Rs. 78.48 Lacs (Rs.67.78 Lacs), which has been duly provided in the current financial year.

iii) Under the scheme of demerger with Lumax Industries Ltd. sale-tax deferment liability in respect of rear view mirror division was transferred to the Company. The approval and the certificate for transfer of deferment of sale tax liability in the name of the Company from State Authority have been received. The deferment is interest free and relates to financial year 1999-2000 to 2004-05. The amount is repayable in five equal yearly installments commencing from the end of the tenth financial year i.e. 2009-10. The sale-tax deferred liability amounting to Rs 8,959,858/- (Rs. 8,959,858/-) have been included in unsecured loans. The overdue installments repayable amount as on 31/03/2014 is Rs. 2,284,607/-

11) ACCOUNTING POLICIES :

i) Method of Depreciation, Depletion & Amortization:

a) Depreciation of Fixed Tangible Assets has been computed on straight line basis on cost/enhanced cost in accordance with Schedule-XIV read with Section 205(2)(b) of the Companies Act, 1956 except in cases "where the assets have been identified/retired from active use and where the assets are reduced to the estimated realizable value in the year of its retirement". However depreciation on plastic bins has been provided at 25%, keeping in view, the life of expectancy of the bins. The incremental depreciation on enhanced cost on account of revaluation is adjusted against revaluation reserve.

b) Cost of Leasehold Land is not being amortized over the period of lease and shall be amortised on termination/renewal of lease agreements.

c) Intangible Assets-Amortisation of intangible assets is provided on straight- line method to allocate depreciable amount of an asset over its usual life.

ii) Conversion of Foreign Currency items:

Transactions in foreign currencies are translated at the exchange rate prevailing on the date of the transactions and in case of purchase of materials and sales of goods, the exchange gains/losses on settlement during the year, are adjusted to respective accounts. In cases where the amount is not received/paid up to the Balance Sheet date, the conversion of foreign currency items have been accounted for at the rates prevailing as at the year end and material variance has been recognized in the Accounts.

iii) Valuation of Inventories:

Raw Materials, Components, Stores and Packing Materials are valued at Cost including taxes. Semi-finished goods valued at Estimated Cost including taxes. Finished goods are valued at cost inclusive of excise duty for which provision has been made. Custom duty on material lying in bonded warehouse is included in cost when it is actually paid/ incurred at the time of removal from the warehouse and this treatment has no impact on the profits of the Company.

iv) Research & Development:

The revenue expenditure on research & development is expensed out under the relevant head of accounts in the year in which it is incurred. However, expenditure which results in creation of capital tangible assets is treated in the same way as expenditure on other fixed assets.

v) Valuation of Fixed Assets:

The Fixed Assets of the Company are recorded at their historical cost of acquisition except otherwise stated (some of the assets are recorded at revalued amounts) including installation & commissioning expenses as reduced by accumulated depreciation to date. Fixed assets identified under asset rationalization programe are revalued from time to time and the deficit if any on account of the revaluation is recognised in the profit & loss statement of the relevant year.

vi) Investments

Investments are stated at cost. Dividend income is accounted for in the year in which it is received.

vii) Treatment of Contingent Liabilities:

Liabilities of a contingent nature are accounted for only on actual occurrence/final settlement of the liabilities.

viii) Retirement Benefits to Employees:

The company''s contributions to schemes such as Provident Fund & Family Pension Fund are charged to Profit & Loss Account as and when accrued. The company also provides for retirement benefits in the form of gratuity to all employees, and the liability based on actuarial valuation is charged to the Profit & Loss Account.

ix) Expenditure on New projects and Substantial Expansion:

Expenditure directly relating to construction activity is capitalized. Indirect expenditure incurred during construction Period is capitalized as part of construction cost to the extent to which the expenditure is indirectly related to construction or is incidental thereto. Income earned, if any, during construction period is deducted from the total of the indirect expenditure. During the year no expenditure on new project / substantial expansion has been incurred.

x) Revenue Recognition:

Revenue in respect of insurance/other claims and rate differences etc. is recognized only when it is reasonably certain that the ultimate collection will be made.

xi) Leases

In respect of operating lease, rentals and all other expenses are treated as revenue expenditure with reference to the term(s) of the lease(s)


Mar 31, 2013

I) Method of Depreciation, Depletion & Amortization:

a) Depreciation of Fixed Tangible Assets has been computed on straight line basis on cost/enhanced cost in accordance with Schedule-XIV read with Section 205(2)(b) of the Companies Act, 1956 except in cases "where the assets have been identified/retired from active use and where the assets are reduced to the estimated realizable value in the year of its retirement". However depreciation on plastic bins has been provided at 25%, keeping in view, the life of expectancy of the bins. The incremental depreciation on enhanced cost on account of revaluation is adjusted against revaluation reserve.

b) Cost of Leasehold Land is not being amortized over the period of lease and shall be amortised on termination/ renewal of lease agreements.

c) Intangible Assets-Amortisation of intangible assets is provided on straight-line method to allocate depreciable amount of an asset over its usual life.

ii) Conversion of Foreign Currency items:

Transactions in foreign currencies are translated at the exchange rate

prevailing on the date of the transactions and in case of purchase of materials and sales of goods, the exchange gains/losses on settlement during the year, are adjusted to respective accounts. In cases where the amount is not received/paid up to the Balance Sheet date, the conversion of foreign currency items have been accounted for at the rates prevailing as at the year end and material variance has been recognized in the Accounts.

iii) Valuation of Inventories:

Raw Materials, Components, Stores and Packing Materials are valued at Cost including taxes. Semi-finished goods valued at Estimated Cost including taxes. Finished goods are valued at cost inclusive of excise duty for which provision has been made. Custom duty on material lying in bonded warehouse is included in cost when it is actually paid/ incurred at the time of removal from the warehouse and this treatment has no impact on the profits of the Company.

iv) Research & Development:

The revenue expenditure on research & development is expensed out under the relevant head of accounts in the year in which it is incurred. However, expenditure which results in creation of capital tangible assets is treated in the same way as expenditure on other fixed assets.

v ) Valuation of Fixed Assets:

The Fixed Assets of the Company are recorded at their historical cost of acquisition except otherwise stated (some of the assets are recorded at revalued amounts) including installation & commissioning expenses as reduced by accumulated depreciation to date. Fixed assets identified under asset rationalization programe are revalued from time to time and the deficit if any on account of the revaluation is recognised in the profit & loss statement of the relevant year.

vi) Investments

Investments are stated at cost. Dividend income is accounted for in the year in which it is received.

vii) Treatment of Contingent Liabilities:

Liabilities of a contingent nature are accounted for only on actual occurrence/ final settlement of the liabilities.

viii)Retirement Benefits to Employees:

The company''s contributions to schemes such as Provident Fund & Family Pension Fund are charged to Profit & Loss Account as and when accrued. The company also provides for retirement benefits in the form of gratuity to all employees, and the liability based on actuarial valuation is charged to the Profit & Loss Account.

ix) Expenditure on New projects and Substantial Expansion: Expenditure directly relating to construction activity is capitalized. Indirect expenditure incurred during construction Period is capitalized as part of construction cost to the extent to which the expenditure is indirectly related to construction or is incidental thereto. Income earned, if any, during construction period is deducted from the total of the indirect expenditure. During the year no expenditure on new project / substantial expansion has been incurred.

x ) Revenue Recognition:

Revenue in respect of insurance/other claims and rate differences etc. is recognized only when it is reasonably certain that the ultimate collection will be made.

xi) Leases

In respect of operating lease, rentals and all other expenses are treated as revenue expenditure with reference to the term(s) of the lease(s)


Mar 31, 2012

I) Method of Depreciation, Depletion & Amortization:

a) Depreciation of Fixed Tangible Assets has been computed on straight line basis on cost/enhanced cost in accordance with Schedule-XIV read with Section 205(2)(b) of the Companies Act, 1956 except in cases "where the assets have been identi- fied/retired from active use and where the assets are reduced to the estimated realizable value in the year of its retirement". However depreciation on plastic bins has been provided at 25%, keeping in view, the life of expectancy of the bins. The incremental depreciation on enhanced cost on account of revaluation is adjusted against revaluation reserve.

b) Cost of Leasehold Land is not being amortized over the period of lease and shall be amortised on termination/renewal of lease agreements.

c) Intangible Assets-Amortisation of intangible assets is provided on straight-line method to allocate depreciable amount of an asset over its usual life.

ii) Conversion of Foreign Currency items:

Transactions in foreign currencies are translated at the exchange rate prevailing on the date of the transactions and in case of purchase of materials and sales of goods, the exchange gains/losses on settlement during the year, are adjusted to respective accounts. In cases where the amount is not received/paid up to the Balance Sheet date, the conversion of foreign currency items have been accounted for at the rates prevailing as at the year end and material variance has been recognized in the Accounts.

iii) Valuation of Inventories:

Raw Materials, Components, Stores and Packing Materials are valued at Cost including taxes. Semi-finished goods valued at Estimated Cost including taxes. Finished goods are valued at cost inclusive of excise duty for which provision has been made. Custom duty on material lying in bonded warehouse is included in cost when it is actually paid/ incurred at the time of removal from the warehouse and this treatment has no impact on the profits of the Company.

iv) Research & Development:

The revenue expenditure on research & development is expensed out under the relevant head of accounts in the year in which it is incurred. However, expenditure which results in creation of capital tangible assets is treated in the same way as expenditure on other fixed assets.

v) Valuation of Fixed Assets:

The Fixed Assets of the Company are recorded at their historical cost of acquisition except otherwise stated (some of the assets are recorded at revalued amounts) including installation & commissioning expenses as reduced by accumulated depreciation to date. Fixed assets identified under asset rationalization programe are revalued from time to time and the deficit if any on account of the revaluation is recognised in the profit & loss statement of the relevant year.

vi) Investments

Investments are stated at cost. Dividend income is accounted for in the year in which it is received.

vii) Treatment of Contingent Liabilities:

Liabilities of a contingent nature are accounted for only on actual occurrence/final settlement of the liabilities.

viii) Retirement Benefits to Employees:

The company's contributions to schemes such as Provident Fund & Family Pension Fund are charged to Profit & Loss Account as and when accrued. The company also provides for retirement benefits in the form of gratuity to all employees, and the liability based on actuarial valuation is charged to the Profit & Loss Account. Also provision required for leave encashment amounting to Rs. 56.18 Lacs as per actuarial valuation has been duly provided in the current financial year.

ix) Expenditure on New projects and Substantial Expansion:

Expenditure directly relating to construction activity is capitalized. Indirect expenditure incurred during construction Period is capitalized as part of construction cost to the extent to which the expenditure is indirectly related to construction or is incidental thereto. Income earned, if any, during construction period is deducted from the total of the indirect expenditure. During the year no expenditure on new project / substantial expansion has been incurred.

x) Revenue Recognition:

Revenue in respect of insurance/other claims and rate differences etc. is recognized only when it is reasonably certain that the ultimate collection will be made.

xi) Leases

In respect of operating lease, rentals and all other expenses are treated as revenue expenditure with reference to the term(s) of the lease(s)

xii) Taxation:

Tax liability of the company is estimated considering the provisions of the Income Tax Act, 1961. Deferred tax is recognised subject to the consideration of prudence, on timing difference, being the difference between taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.


Mar 31, 2010

I) Method of Depreciation, Depletion & Amortization:

a) Depreciation of Fixed Tangible Assets has been computed on straight line basis on cost/enhanced cost in accordance with Schedule-XIV read with Section 205(2)(b) of the Companies Act, 1956 except in cases "where the assets have been identified/ retired from active use and where the assets are reduced to the estimated realizable value in the year of its retirement". However depreciation on plastic bins has been provided at 25%, keeping in view, the life of expectancy of the bins. The incremental depreciation on enhanced cost on account of revaluation is adjusted against revaluation reserve.

b) Cost of Leasehold Land is not being amortized over the period of lease and shall be amortised on termination/ renewal of lease agreements.

c) Intangible Assets-Amortisation of intangible assets is provided on straight-line method to allocate depreciable amount of an asset over its usual life.

ii) Conversion of Foreign Currency items:

Transactions in foreign currencies are translated at the exchange rate prevailing on the date of the transactions and in case of purchase of materials and sales of goods, the exchange gains/losses on settlement during the year, are adjusted to respective accounts. In cases where the amount is not received/paid up to the Balance Sheet date, the conversion of foreign currency items have been accounted for at the rates prevailing as at the year end and material variance has been recognized in the Accounts.

iii) Valuation of Inventories:

Raw Materials, Components, Stores and Packing Materials are valued at Cost including taxes. Semi-finished goods valued at Estimated Cost including taxes. Finished goods are valued at cost inclusive of excise duty for which provision has been made. Custom duty on material lying in bonded warehouse is included in cost when it is actually paid/ incurred at the time of removal from the warehouse and this treatment has no impact on the profits of the Company.

iv) Research & Development:

The revenue expenditure on research & development is expensed out under the relevant head of accounts in the year in which it is incurred. However, expenditure which results in creation of capital tangible assets is treated in the same way as expenditure on other fixed assets.

v) Valuation of Fixed Assets:

The Fixed Assets of the Company are recorded at their historical cost of acquisition except otherwise stated (some of the assets are recorded at revalued amounts) including installation & commissioning expenses as reduced by accumulated depreciation to date. Fixed assets identified under asset rationalization programme are revalued from time to time and the deficit if any on account of the revaluation is recognised in the profit & loss statement of the relevant year.

vi) Investments:

Investments are stated at cost. Dividend income is accounted for in the year in which it is received.

vii) Treatment of Contingent Liabilities:

Liabilities of a contingent nature are accounted for only on actual occurrence/final settlement of the liabilities.

viii) Retirement Benefits to Employees:

The companys contributions to schemes such as Provident Fund & Family Pension Fund are charged to Profit & Loss Account as and when accrued. The company also provides for retirement/post retirement benefits in the form of Gratuity to all employees under scheme with the LIC wherein, liability towards the premium of the policy, based on actuarial valuation is charged to the Profit & Loss Account. However during the year and of earlier financial year 2008-09 liability for gratuity could not be ascertained as the company has not taken actuarial valuation for the same. Also provision for leave encashment amounting to Rs.63.07 Lacs (Rs.58.58 Lacs) is not made since the liability is of a fluctuating nature from year to year and is accounted for only at the time of retirement of the employees. (Read along with note No. 2(ii))

ix) Expenditure on New projects and Substantial Expansion:

Expenditure directly relating to construction activity is capitalized. Indirect expenditure incurred during construction Period is capitalized as part of construction cost to the extent to which the expenditure is indirectly related to construction or is incidental thereto. Income earned, if any, during construction period is deducted from the total of the indirect expenditure.

x) Revenue Recognition:

Revenue in respect of insurance/other claims and rate differences etc. is recognized only when it is reasonably certain that the ultimate collection will be made.

xi) Leases:

In respect of operating lease, rentals and all other expenses are treated as revenue expenditure with reference to the term(s) of the lease(s)

xii) Taxation:

Tax liability of the company is estimated considering the provisions of the Income Tax Act, 1961. Deferred tax is recognised subject to the consideration of prudence, on timing difference, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

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