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Accounting Policies of Magna Electrocastings Ltd. Company

Mar 31, 2016

Significant Accounting Policies:

1. Basis of preparation

The financial statements of the Company have been prepared under the historical cost convention and on mercantile basis as a going concern in accordance with the applicable accounting standards notified under the Companies (Accounting Standards) and the relevant provisions of the Companies Act.

The accounting policies adopted in the preparation of the financial statements are consistent with the those of the previous year.

2. (a) Fixed Assets :

Fixed Assets are stated at cost, net of cenvat and includes all direct, indirect expenses and allocable borrowing costs relating thereto.

Depreciation on fixed assets is provided on straight line method adopting the useful lives of the respective fixed assets, and the residual value in accordance with Schedule II to the Companies Act, 2013. In respect of additions during the year, depreciation is prorated to the number of days used.

( b) Borrowing Costs

Borrowing costs directly attributable to the acquisition of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur. Borrowing costs includes interest and other ancillary costs, if any, that the Company incurs in connection with the borrowing of funds for acquisition of assets.

(c) Inventories

Inventories are valued at lower of cost and net realizable value Cost is determined as under:

Raw materials and components are valued using Weighted Average Cost.

Finished goods Cost inclusive of excise duty, wherever applicable.

Semi finished goods cost is taken as cost of the materials and other cost of manufacture up to the various stages of completion.

Stores and spares are valued at cost on First in First out basis.

(d) Revenue recognition:

Revenue from sale of goods is recognized when all the significant risks and rewards of ownership of goods have been passed on to the buyer, usually on delivery of goods. Sales are accounted net of duties and taxes. Material consumption is net of Cenvat. Excise duty in respect of goods manufactured other than what is in stock at the close of the year is accounted at the time of removal of goods from the factory for sale.

Value of Power generated by Wind Energy Generators and exported to to the Grid is treated as reduction in power charges to the extent it is adjusted in the bills by the TNEB and the excess, if any, as sale of energy to the TNEB.

(e) Foreign Currency transactions:

Foreign currency transactions are recorded at the rate of exchange prevailing on the date of respective transactions. Resultant gain or loss at the time of realization /payment /restatement is charged to the statement of Profit and Loss. The carrying value of foreign currency assets and liabilities are restated at the yearend rates.

(f) Impairment of Assets:

Impairment in the value of fixed assets is recognized to the extent that the recoverable amount of an asset is less than its carrying value and is charged to the statement of Profit and Loss, as prescribed in AS 28.

(g) Retirement and other employee benefits:

Contributions to the provident fund are charged to the statement of Profit and Loss for the year when the contributions are due for payment.

The Company has set up an Employees Group Gratuity Trust Fund under Group Gratuity (cash accumulation) Scheme of Life Insurance Corporation of India. The cost of providing benefits under this plan is determined on the basis of actuarial valuation at each year end.

The Company also provides benefits in the form of leave encashment and medical reimbursement which are recognized in the statement of Profit and Loss.

(h) Taxation:

Tax expense comprises of current and deferred tax.

Provision for taxation is made in terms of the Income Tax Act,1961 in respect of of income liable to tax at either special or normal rates. In accordance with the Accounting Standard 22.


Mar 31, 2015

1. Basis of Preparation

The financial statements of the Company have been prepared under the historical cost convention and on mercantile basis as a going concern in accordance with the applicable accounting standards notified under the Companies (Accounting Standards) and the relevant provisions of the Companies Act.

The accounting policies adopted in the preparation of the financial statements are consistent with the those of the previous year.

2. (a) Fixed Assets :

Fixed Assets are stated at cost, net of cenvat, and includes all direct indirect expenses and allocable borrowing costs relating thereto.

Depreciation on fixed assets is provided on straight line method adopting the useful lives of the respective fixed assets, and the residual value in accordance with Schedule II to the Companies Act, 2013. In respect of additions during the year, depreciation is prorated to the number of days used.

(b) Borrowing Costs

Borrowing costs directly attributable to the acquisition of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalised as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur. Borrowing costs includes interest and other ancillary costs, if any, that the Company incurs in connection with the borrowing of funds for acquisition of assets.

(c) Inventories

Inventories are valued at lower of cost and net realisable value Cost is determined as under:

Raw materials and components are valued using Weighted Average Cost.

Finished goods Cost inclusive of excise duty, wherever applicable.

Semi finished goods cost is taken as cost of the materials and other cost of manufacture upto the various stages of completion.

Stores and spares are valued at cost on First in First out basis.

(d) Revenue Recognition:

Revenue from sale of goods is recognised when all the significant risks and rewards of ownership of goods have been passed on to the buyer, usually on delivery of goods. Sales are accounted net of duties and taxes. Material consumption is net of Cenvat. Excise duty in respect of goods manufactured other than what is in stock at the close of the year is accounted at the time of removal of goods from the factory for sale.

Value of Power generated by Wind Energy Generators and exported to to the Grid is treated as reduction in power charges to the extent it is adjusted in the bills by the TNEB and the excess, if any, as sale of energy to the TNEB.

(e) Foreign Currency Transactions:

Foreign currency transactions are recorded at the rate of exchange prevailing on the date of respective transactions. Resultant gain or loss at the time of realisation /payment /restatement is charged to the statement of Profit and Loss. The carrying value of foreign currency assets and liabilities are restated at the year end rates.

(f) Impairment of Assets:

Impairment in the value of fixed assets is recognised to the extent that the recoverable amount of an asset is less than its carrying value and is charged to the statement of Profit and Loss, as prescribed in AS 28.

(g) Retirement and Other Employee Benefits:

Contributions to the provident fund are charged to the statement of Profit and Loss for the year when the contributions are due for payment.

The Company has set up an Employees Group Gratuity Trust Fund under Group Gratuity (cash accumulation) Scheme of Life Insurance Corporation of India. The cost of providing benefits under this plan is determined on the basis of actuarial valuation at each year end.

The Company also provides benefits in the form of leave encashment and medical reimbursement which are recognised in the statement of Profit and Loss.

(h) Taxation:

Tax expense comprises of current and deferred tax.

Provision for taxation is made in terms of the Income Tax Act,1961 in respect of of income liable to tax at either special or normal rates. In accordance with the Accounting Standard 22.

Deferred income taxes reflects the impact of current year timing difference between taxable income and accounting income for the year and reversal of timing difference for the earlier years. Deferred tax is measured using the tax rates as at the reporting date.

Minimum Alternate tax (MAT) paid in a year is charged to the statement of Profit and Loss as current tax. MAT credit is recognised as an asset only to the extent that the Company will pay normal income tax during the specified period. The said asset is created by way of a credit to the statement of Profit and loss and shown as MAT credit Entitlement. The Company reviews the MAT credit entitlement asset every year 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.

(i) Segment Reporting:

Identification of Segments

The Company's operating businesses are organised and managed separately according to the nature of business. The Company at present has two operating segments namely Foundry division and Wind Energy division.

Inter Segment Transfers

The Company generally accounts for inter segment transfers at cost.

(j) Earnings Per Share

Basic earnings per share are calculated by dividing the net profit or loss for the period by the weighted average number of equity shares outstanding during the period.


Mar 31, 2014

1. Basis of preparation

The financial statements of the Company have been prepared under the historical cost convention and on mercantile basis as a going concern in accordance with the applicable accounting standards notified under the Companies (Accounting Standards) and the relevant provisions of the Companies Act,1956.

The accounting policies adopted in the preparation of the financial statements are consistent with the those of the previous year.

2. Summary of significant accounting policies (a) Fixed Assets :

Fixed Assets are stated at cost, net of cenvat, and includes all direct and indirect expenses and allocable borrowing costs relating thereto .

Depreciation on fixed assets has been calculated on straight line basis at the rates prescribed under Schedule XIV to the Companies Act, 1956, prorated to the number of days used during the year in accordance with the provisions of Section 205(2)(b) of the Act. In respect of assets costing Rs. 5000/- or less, hundred percent depreciation is provided.

( b) Borrowing Costs

Borrowing costs directly attributable to the acquisition of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalised as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur. Borrowing costs includes interest and other ancillary costs, if any, that the Company incurs in connection with the borrowing of funds for acquisition of assets.

(c) Inventories

Inventories are valued at lower of cost and net realisable value Cost is determined as under:

Raw materials and components are valued using Weighted Average Cost.

Finished goods Cost inclusive of excise duty, wherever applicable.

Semi finished goods cost is taken as cost of the materials and other cost of manufacture upto the various stages of completion.

Stores and spares are valued at cost on First in First out basis.

(d) Revenue recognition:

Revenue from sale of goods is recognised when all the significant risks and rewards of ownership of goods have been passed on to the buyer, usually on delivery of goods. Sales are accounted net of duties and taxes. Material consumption is net of Cenvat.Excise duty in respect of goods manufactured other than what is in stock at the close of the year is accounted at the time of removal of goods from the factory for sale.

Value of Power generated by Wind Energy Generators and exported to to the Grid is treated as reduction in power charges to the extent it is adjusted in the bills by the TNEB and the excess, if any, as sale of energy to the TNEB.

(e) Foreign Currency transactions:

Foreign currency transactions are recorded at the rate of exchange prevailing on the date of respective transactions. Resultant gain or loss at the time of realisation /payment /restatement is charged to the statement of Profit and Loss. The carrying value of foreign currency assets and liabilities are restated at the year end rates.

(f) Impairment of Assets:

Impairment in the value of fixed assets is recognised to the extent that the recoverable amount of an asset is less than its carrying value and is charged to the statement of Profit and Loss, as prescribed in AS 28.

(g) Retirement and other employee benefits:

Contributions to the provident fund are charged to the statement of Profit and Loss for the year when the contributions are due for payment.

The Company has set up an Employees Group Gratuity Trust Fund under Group Gratuity (cash accumulation) Scheme of Life Insurance Corporation of India. The cost of providing benefits under this plan is determined on the basis of actuarial valuation at each year end.

The Company also provides benefits in the form of leave encashment and medical reimbursement which are recognised in the statement of Profit and Loss.

(h) Taxation:

Tax expense comprises of current and deferred tax.

Provision for taxation is made in terms of the Income Tax Act,1961 in respect of of income liable to tax at either special or normal rates, in accordance with the Accounting Standard 22.

Deferred income taxes reflects the impact of current year timing difference between taxable income and accounting income for the year and reversal of timing difference for the earlier years.Deferred tax is measured using the tax rates as at the reporting date.

Minimum Alternate tax (MAT) paid in a year is charged to the statement of Profit and Loss as current tax. MAT credit is recognised as an asset only to the extent that the Company will pay normal income tax during the specified period. The said asset is created by way of a credit to the statement of Profit and loss and shown as MAT credit Entitlement. The Company reviews the MAT credit entitlement asset every year 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.

(i) Segment reporting:

Identification of segments

The Company''s operating busineses are organised and managed separately according to the nature of business. The Company at present has two operating segments namely Foundry division and Wind Energy division.

Inter segment transfers

The Company generally accounts for intersegment transfers at cost.

(j) Earnings per share

Basic earnings per share are calculated by dividing the net profit or loss for the period by the weighted average number of equity shares outstanding during the period.


Mar 31, 2013

(a) Fixed Assets:

Fixed Assets are stated at cost,net of cenvat, and includes all direct and indirect expenses and allocable borrowing costs relating thereto.

Depreciation on fixed assets has been calculated on straight line basis at the rates prescribed under Schedule XIV to the Companies Act, 1956, prorated to the number of days used during the year in accordance with the provisions of Section 205(2)(b) of the Act. In respect of assets costing Rs. 5000/- or less, hundred percent depreciation is provided.

(b) Borrowing Costs

Borrowing costs directly attributable to the acquisition of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalised as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur. Borrowing costs includes interest and other ancillary costs, if any, that the Company incurs in connection with the borrowing of funds for acquisition of assets.

(c) Inventories

Inventories are valued at lower of cost and net realisable value

Cost is determined as under:

Raw materials and components are valued using Weighted Average Cost.

Finished goods Cost inclusive of excise duty, wherever applicable.

Semi finished goods cost is taken as cost of the materials and other cost of manufacture upto the various stages of completion.

Stores and spares are valued at cost on First in First out basis.

(d) Revenue recognition:

Revenue from sale of goods is recognised when all the significant risks and rewards of ownership of goods have been passed on to the buyer, usually on delivery of goods. Sales are accounted net of duties and taxes. Material consumption is net of Cenvat.Excise duty in respect of goods manufactured other than what is in stock at the close of the year is accounted at the time of removal of goods from the factory for sale.

Value of Power generated by Wind Energy Generators and exported to to the Grid is treated as reduction in power charges to the extent it is adjusted in the bills by the TNEB and the excess, if any, as sale of energy to theTNEB.

(e) Foreign Currency transactions:

Foreign currency transactions are recorded at the rate of exchange prevailing on the date of respective transactions. Resultant gain or loss at the time of realisation /payment /restatement is charged to the statement of Profit and Loss. The carrying value of foreign currency assets and liabilities are restated at the year end rates.

(f) Impairment of Assets:

Impairment in the value of fixed assets is recognised to the extent that the recoverable amount of an asset is less than its carrying value and is charged to the statement of Profit and Loss, as prescribed in AS 28.

(g) Retirement and other employee benefits:

Contributions to the provident fund are charged to the statement of Profit and Loss for the year when the contributions are due for payment.

The Company has set up an Employees Group Gratuity Trust Fund under Group Gratuity (cash accumulation) Scheme of Life Insurance Corporation of India. The cost of providing benefits under this plan is determined on the basis of actuarial valuation at each year end.

The Company also provides benefits in the form of leave encashment and medical reimbursement which are recognised in the statement of Profit and Loss.

(h) Taxation:

Tax expense comprises of current and deferred tax.

Provision for taxation is made in terms of the Income Tax Act, 1961 in respect of of income liable to tax at either special or normal rates, in accordance with the Accounting Standard 22.

Deferred income taxes reflects the impact of current year timing difference between taxable income and accounting income for the year and reversal of timing difference for the earlier years.Deferred tax is measured using the tax rates as at the reporting date.

Minimum Alternate tax (MAT) paid in a year is charged to the statement of Profit and Loss as current tax. MAT credit is recognised as an asset only to the extent that the Company will pay normal income tax during the specified period. The said asset is created by way of a credit to the statement of Profit and loss and shown as MAT credit Entitlement. The Company reviews the MAT credit entitlement asset every year 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.

(i) Segment reporting:

Identification of segments

The Company''s operating busineses are organised and managed separately according to the nature of business. The Company at present has two operating segments namely Foundry division and Wind Energy division.

Inter segment transfers

The Company generally accounts for intersegment transfers at cost.

(j) Earnings per share

Basic earnings per share are calculated by dividing the net profit or loss for the period by the weighted average number of equity shares outstanding during the period.


Mar 31, 2012

(a) Fixed Assets :

Fixed Assets are stated at cost, net of cenvat, and includes all direct indirect expenses and allocable borrowing costs relating thereto .

Depreciation on fixed assets has been calculated on straight line basis at the rates prescribed under Schedule XIV to the Companies Act, 1956, prorated to the number of days used during the year in accordance with the provisions of Section 205(2)(b) of the Act. In respect of assets costing Rs. 5000/- or less, hundred percent depreciation is provided.

(b) Borrowing Costs

Borrowing costs directly attributable to the acquisition of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalised as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur. Borrowing costs includes interest and other ancillary costs, if any, that the Company incurs in connection with the borrowing of funds for acquisition of assets.

(c) Inventories

Inventories are valued at lower of cost and net realisable value Cost is determined as under:

Raw materials and components are valued using Weighted Average Cost.

Finished goods Cost inclusive of excise duty, wherever applicable

Semi finished goods cost is taken as cost of the materials and other cost of manufacture upto the various stages of completion.

Stores and spares are valued at cost on First in First out basis.

(d) Revenue recognition:

Revenue from sale of goods is recognised when all the significant risks and rewards of ownership of goods have been passed on to the buyer, usually on delivery of goods. Sales are accounted net of duties and taxes. Material consumption is net of Cenvat.Excise duty in respect of goods manufactured other than what is in stock at the close of the year is accounted at the time of removal of goods from the factory for sale.

Value of Power generated by Wind Energy Generators and exported to to the Grid is treated as reduction in power charges to the extent it is adjusted in the bills by the TNEB and the excess, if any, as sale of energy to the TNEB.

(e) Foreign Currency transactions:

Foreign currency transactions are recorded at the rate of exchange prevailing on the date of respective transactions. Resultant gain or loss at the time of realisation /payment /restatement is charged to the statement of Profit and Loss. The carrying value of foreign currency assets and liabilities are restated at the year end rates.

(f) Impairment of Assets:

includes cost of raw materials and other manufacturing costs, Impairment in the value of fixed assets is recognised to the extent that the recoverable amount of an asset is less than its carrying value and is charged to the statement of Profit and Loss, as prescribed in AS 28.

(g) Retirement and other employee benefits:

Contributions to the provident fund are charged to the statement of Profit and Loss for the year when the contributions are due for payment.

The Company has set up an Employees Group Gratuity Trust Fund under Group Gratuity (cash accumulation) Scheme of Life Insurance Corporation of India. The cost of providing benefits under this plan is determined on the basis of actuarial valuation at each year end.

The Company also provides benefits in the form of leave encashment and medical reimbursement which are recognised in the statement of Profit and Loss.

(h) Taxation:

Tax expense comprises of current and deferred tax.

Provision for taxation is made in terms of the Income Tax Act,1961 in respect of income liable to tax at either special or normal rates. In accordance with the Accounting Standard 22.

Deferred income taxes reflects the impact of current year timing difference between taxable income and accounting income for the year and reversal of timing difference for the earlier years. Deferred tax is measured using the tax rates as at the reporting date.

Minimum Alternate tax (MAT) paid in a year is charged to the statement of Profit and Loss as current tax. MAT credit is recognised as an asset only to the extent that the Company will pay normal income tax during the specified period. The said asset is created by way of a credit to the statement of Profit and loss and shown as MAT credit Entitlement. The Company reviews the MAT credit entitlement asset every year 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.

(i) Segment reporting:

Identification of segments

The Company's operating businesses are organised and managed separately according to the nature of business. The Company at present has two operating segments namely Foundry division and Wind Energy division.

Inter segment transfers

The Company generally accounts for intersegment transfers at cost.

(j) Earnings per share

Basic earnings per share are calculated by dividing the net profit or loss for the period by the weighted average number of equity shares outstanding during the period.


Mar 31, 2010

I) Method of Accounting:

The accounts of the Company are prepared under the historical cost convention and on mercantile basis as a going concern in accordance with the applicable accounting standards referred to in Section 211 (3C) of the Companies Act, 1956.

ii) Revenue Recognition:

Sales are accounted net of Duties & Taxes. Material consumption is net of Cenvat. Excise duty in respect of goods manufactured other than what is in stock at the close of the year is accounted at the time of removal of goods from the factory for sale.

iii) Accounting for Fixed Assets:

a. Fixed Assets are stated at cost net of Cenvat including all direct and indirect expenses and allocable borrowing costs relating thereto.

b. Depreciation has been provided under Straight Line Method at the rates prescribed in Schedule XIV to the Companies Act, 1956 prorated to the number of days used during the year in accordance with the provisions of Section 205 (2)(b) of Act. In respect of assets costing Rs.5,000/- or less hundred percent depreciation is provided.

iv) Valuation of Inventories :-

Valued at lower of cost and net realizable value

a) Raw Material and Components are valued using Weighted Average Cost.

b) Cost of finished goods are determined as cost of raw material and other manufacturing cost on historical basis inclusive of excise duty wherever applicable.

c) In respect of semi-finished goods cost is taken as cost of the materials and other cost of manufacture upto the various stages of completion.

d) Stores and spares are valued at cost on First in First Out basis.

v) Foreign currency transactions:

Foreign currency transactions are recorded at the rate of exchange prevailing on the date of respective transactions. Resultant gain or loss at the time of realization/payment/restatement is charged to Profit & Loss A/c. The carrying value of foreign currency assets and liabilities are restated at the year end rates.

vi) Impairment of Assets :

Impairment in the value of fixed assets is recognized to the extent that the recoverable amount of an asset is less than its carrying value and will be charged to Profit & Loss account as prescribed by ICAI in AS 28.

vii) a) The Company has set up an Employees Group Gratuity Trust Fund under Group Gratuity (Cash Accumulation) Scheme of Life Insurance Corporation of India. Provision has been made for payment of Gratuity up to 31.03.2010 based on actuarial valuation.

b) The Company also provides benefits in the form of leave encashment and medical reimburse- ment. Necessary provision has been made in the books of account.

viii) Taxation:

Provision for taxation is made in terms of the Income tax Act, 1961 in respect of Income liable to tax at either special or normal rates.In accordance with the Accounting Standard 22, the deferred tax for the timing differences between the book profits and taxable income for the year is accounted for, using the tax rates substantively enacted as of the balance sheet date.

ix) The value of Power Generated by Wind Energy Generators and exported to the Grid is treated as reduction in the power charges to the extent it is adjusted in the bills by the TNEB and the excess, if any as sale of electricity.

x) Lease Rent :

The Companys leasing arrangements are operating lease and cancelable in future. The lease rentals paid or received under such agreements are accounted in Profit and Loss Account.

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