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Mahindra Composites Ltd. Accounting Policies | Accounting Policy of Mahindra Composites Ltd.
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Accounting Policies of Mahindra Composites Ltd. Company

Mar 31, 2014

A) The Financial Statements of the company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under Section 211 (3C) of the Companies Act, 1956 ("the 1956 Act'''') (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 ("the 2013 Act'''') in terms of General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs) and the relevant provisions of the 1956 Act/2013 Act, as applicable. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year. The preparation of the accounts requires the Management to make estimated and assumptions considered in the reported amounts of assets and liabilities (including the contingent liabilities) and the reported income and expenses during the reporting period. The Management believes that the estimates used in preparation of accounts are prudent and reasonable. The actual results could differ from the estimates.

b) FIXED ASSETS/INTANGIBLES AND DEPRECIATION/AMORTISATION

i) Fixed assets are stated at cost of acquisition or construction less depreciation/amortisation. Cost comprises the purchase price and other attributable costs.

ii) a) Depreciation on tangible fixed assets is provided for on the straight line method at the rates and in the manner laid down in Schedule XIV to the Companies Act, 1956, except for the following:

* Moulds are depreciated at 33.33% of cost;

* Vehicles are depreciated at 20% of cost;

* Assets costing below Rs.5,000/- each are fully depreciated in the year of purchase.

b) Leasehold land is amortised over the period of lease. Improvements to leased premises are amortised over the period of occupation of premises.

c) Software is capitalised at the cost of acquisition and amortised on a straight line basis over four years. Any such expenditure on maintenance is charged off.

c) INVENTORIES

Inventories are stated at the lower of cost and net realisable value. In determining the cost of inventories the weighted average method is used. Cost of work-in-progress and finished goods include material cost, labour and factory overheads on the basis of full absorption costing.

d) REVENUE RECOGNITION

Sale of goods is recognised when all significant risks and rewards of ownership have been transferred to the buyers and there is no uncertainty in the realisation. Interest income is recognised on a time proportion basis.

e) EMPLOYEE BENEFITS

Employee benefits include gratuity, superannuation & provident fund and compensated absences benefits under the approved schemes of the Company. In respect of defined contribution plans, the contribution payable is charged to the Profit and Loss Statement. In respect of gratuity and compensated absences benefit, the employee benefit cost is accounted for, based on an independent actuarial valuation obtained as at the Balance Sheet date. Actuarial gains and losses are recognised in the Statement of Profit and Loss.

f) FOREIGN CURRENCY TRANSACTIONS

Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction. Monetary assets and liabilities are translated at year end exchange rates and the profit/loss so determined and also the realised exchange gains/losses are recognised in the Statement of Profit and Loss.

g) GOVERNMENT GRANTS

Government grants in the nature of promoters'' contribution is credited to Capital Reserve.

h) TAXES ON INCOME

Tax expense for the year is included in the determination of the net profit for the year. Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax in respect of unabsorbed depreciation and carried forward of losses are recognised if there is virtual certainty supported by convincing evidence that there will be sufficient future taxable income available to realise such losses. Other deferred tax assets are recognised if there is reasonable certainty that there will be sufficient future taxable income to realise such assets.

i) BORROWING COST

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of that asset. Other borrowing costs are recognised as an expense in the year in which they are incurred.

j) EARNING PER SHARE (EPS)

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

k) CASH AND CASH EQUIVALENTS (FOR PURPOSES OF CASH FLOW STATEMENT)

Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

l) CASH FLOW STATEMENT

Cash flows are reported using the indirect method, whereby profit/loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals of accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

m) OPERATING CYCLE

Based on the nature of products/activities of the Company and the normal time between acquisition of assets and their realization in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.


Mar 31, 2013

A) The Financial Statements have been prepared under the historical cost convention, on an accrual basis and are in compliance with the Accounting Standards as notified under the Companies (Accounting Standards) Rules, 2006. The preparation of the accounts requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including the contingent liabilities) and the reported income and expenses during the reporting period. The Management believes that the estimates used in preparation of accounts are prudent and reasonable. The actual results could differ from the estimates.

b) FIXED ASSETS / INTANGIBLES AND DEPRECIATION / AMORTISATION

i) Fixed assets are stated at cost of acquisition or construction less depreciation/amortisation. Cost comprises the purchase price and other attributable costs.

ii) a) Depreciation on tangible fixed assets is provided for on the straight line method at the rates and in the manner laid down in Schedule XIV to the Companies Act, 1956, except for the following:

– Moulds are depreciated at 33.33% of cost;

– Vehicles are depreciated at 20% of cost;

– Assets costing below Rs.5,000/- each are fully depreciated in the year of purchase.

b) Leasehold land is amortised over the period of lease. Improvements to leased premises are amortised over the period of occupation of premises.

c) Software is capitalised at the cost of acquisition and amortised on a straight line basis over four years. Any such expenditure on maintenance is charged off.

c) INVENTORIES

Inventories are stated at the lower of cost and net realisable value. In determining the cost of inventories the weighted average method is used. Cost of work-in-progress and finished goods include material cost, labour and factory overheads on the basis of full absorption costing.

d) REVENUE RECOGNITION

Sale of goods is recognised when all significant risks and rewards of ownership have been transferred to the buyers and there is no uncertainty in the realisation. Interest income is recognised on a time proportion basis.

e) EMPLOYEE BENEFITS

Employee benefits include gratuity, superannuation & provident fund and compensated absences benefits under the approved schemes of the Company. In respect of defined contribution plans, the contribution payable is charged to the Profit and Loss Statement. In respect of gratuity and compensated absences benefit, the employee benefit cost is accounted for, based on an independent actuarial valuation obtained as at the Balance Sheet date. Actuarial gains and losses are recognised in the Statement of Profit and Loss.

f) FOREIGN CURRENCY TRANSACTIONS

Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction. Monetary assets and liabilities are translated at year end exchange rates and the profit/loss so determined and also the realised exchange gains/losses are recognised in the Statement of Profit and Loss.

g) GOVERNMENT GRANTS

Government grants in the nature of promoters'' contribution is credited to Capital Reserve.

h) TAXES ON INCOME

Tax expense for the year is included in the determination of the net profit for the year. Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax in respect of unabsorbed depreciation and carried forward of losses are recognised if there is virtual certainty that there will be sufficient future taxable income available to realise such losses. Other deferred tax assets are recognised if there is reasonable certainty that there will be sufficient future taxable income to realise such assets.

i) BORROWING COST

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of that asset. Other borrowing costs are recognised as an expense in the year in which they are incurred.


Mar 31, 2012

A) The Financial Statements have been prepared under the historical cost convention, on an accrual basis and are in compliance with the Accounting Standards as notified under the Companies (Accounting Standards) Rules, 2006. The preparation of the accounts requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including the contingent liabilities) and the reported income and expenses during the reporting period. The Management believes that the estimates used in preparation of accounts are prudent and reasonable. The actual results could differ from the estimates.

b) FIXED ASSETS/INTANGIBLES AND DEPRECIATION/AMORTISATION

i) Fixed assets are stated at cost of acquisition or construction less depreciation/amortisation. Cost comprises the purchase price and other attributable costs.

ii) (a) Depreciation on tangible fixed assets is provided for on the straight line method at the rates and in the manner laid down in Schedule XIV to the Companies Act, 1956, except for the following:

-Moulds are depreciated at 33.33% of cost;

-Vehicles are depreciated at 20% of cost;

-Assets costing below Rs. 5,000 each are fully depreciated in the year of purchase.

(b) Leasehold land is amortised over the period of lease. Improvements to leased premises are amortised over the period of occupation of premises.

(c) Software is capitalised at the cost of acquisition and amortised on a straight line basis over four years. Any such expenditure on maintenance is charged off.

c) INVENTORIES

Inventories are stated at the lower of cost and net realisable value. In determining the cost of inventories the weighted average method is used. Cost of work-in-progress and finished goods include material cost, labour and factory overheads on the basis of full absorption costing.

d) REVENUE RECOGNITION

Sale of goods is recognised when all significant risks and rewards of ownership have been transferred to the buyers and there is no uncertainty in the realisation. Interest income is recognised on a time proportion basis.

e) EMPLOYEE BENEFITS

Employee benefits includes gratuity, superannuation & provident fund and compensated absences benefits under the approved schemes of the Company. In respect of defined contribution plans, the contribution payable is charged to the Profit and Loss Statement. In respect of gratuity and compensated absences benefit, the employee benefit cost is accounted for, based on an independent actuarial valuation obtained as at the Balance Sheet date. Actuarial gains and losses are recognised in the Profit & Loss Statement.

f) FOREIGN CURRENCY TRANSACTIONS

Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction. Monetary assets and liabilities are translated at year end exchange rates and the profit/loss so determined and also the realised exchange gains/losses are recognised in the Profit and Loss Statement.

g) GOVERNMENT GRANTS

Government grants of the nature of promoters' contribution is credited to Capital Reserve.

h) TAXES ON INCOME

Tax expense for the year is included in the determination of the net profit for the year. Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax in respect of unabsorbed depreciation and carried forward of losses are recognised if there is virtual certainty that there will be sufficient future taxable income available to realise such losses. Other deferred tax assets are recognised if there is reasonable certainty that there will be sufficient future taxable income to realise such assets.

i) BORROWING COST

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of that asset. Other borrowing costs are recognised as an expense in the year in which they are incurred.

ii) The Company has only one class of shares referred to as equity shares having a face value of Rs.10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends to its shareholders which are proposed by the Boards of Directors and approved by the shareholders at the Annual General Meeting. In the event of liquidation of Company, the equity shareholders will be entitled to receive any of the remaining assets of the Company, after distribution of preferential amounts. However, no such preferential amounts exist currently. The distribution will be in proportion to the number of equity shares held by the shareholders.

iii) Refer to Note 31 for shares granted and issued under the Employee Stock Option Scheme.

(j) Other disclosures

a) The discount rate is based on the prevailing market yields of Indian Government securities as at the balance sheet date for the estimated term of the obligations.

b) Expected rate of return on plan assets: This is based on our expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations.

c) Salary escalation rate: The estimates of future salary increases, considered takes into account the inflation, seniority, promotion and other relevant factors.


Mar 31, 2011

(a) Financial statements have been prepared under the historical cost convention, on an accrual basis and are in compliance with the Accounting Standards as notified under the Companies (Accounting Standards) Rules, 2006. The preparation of the accounts requires the management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including the contingent liabilities) and the reported income and expenses during the reporting period. The management believes that the estimates used in preparation of accounts are prudent and reasonable. The actual results could differ from the estimates.

(b) FIXED ASSETS / INTANGIBLES AND DEPRECIATION / AMORTISATION

i) Fixed assets are stated at cost of acquisition or construction less depreciation / amortisation. Cost comprises the purchase price and other attributable costs.

ii) a) Depreciation on tangible fixed assets is provided for on the straight line method at the rates and in the manner laid down in Schedule XIV to the Companies Act, 1956 except for the following:

- Moulds are depreciated at 33.33% of cost;

- Vehicles are depreciated at 20% of cost;

- Assets costing below Rs. 5,000 each are fully depreciated in the year of purchase.

b) Leasehold land is amortised over the period of lease. Improvements to leased premises are amortised over the period of occupation of premises.

c) Software is capitalised at the cost of acquisition and amortised on a straight line basis over four years. Any such expenditure on maintenance is charged off.

(c) INVENTORIES

Inventories are stated at the lower of cost and net realisable value. In determining the cost of inventories the weighted average method is used. Cost of work-in-progress and finished goods include material cost, labour and factory overheads on the basis of full absorption costing.

(d) REVENUE RECOGNITION

Sale of goods is recognised when all significant risks and rewards of ownership have been transferred to the buyers. Interest income is recognised on time proportion as such and there is no uncertainty in the realisation.

(e) EMPLOYEE BENEFITS

Employee benefits include gratuity, superannuation & provident fund and compensated absences benefits under the approved schemes of the Company. In respect of defined contribution plans, the contribution payable is charged to the profit and loss account. In respect of gratuity and compensated absences benefit, the employee benefit cost is accounted for, based on an independent actuarial valuation obtained as at the Balance Sheet date. Actuarial gains and losses are recognised in the profit & loss account.

(f) FOREIGN CURRENCY TRANSACTIONS

Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction. Monetary assets and liabilities are translated at year end exchange rates and the profit / loss so determined and also the realised exchange gains / losses are recognised in the profit and loss account.

(g) GOVERNMENT GRANTS

Government grants of the nature of promoters' contribution are credited to capital reserve.

(h) TAXES ON INCOME

Tax expense for the year is included in the determination of the net profit for the year. Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax in respect of unabsorbed depreciation and carried forward of losses are recognised if there is virtual certainty that there will be sufficient future taxable income available to realise such losses. Other deferred tax assets are recognised if there is reasonable certainty that there will be sufficient future taxable income to realise such assets.

(i) BORROWING COST

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of that asset. Other borrowing costs are recognised as an expense in the year in which they are incurred.

2. The shareholders of the company at the extra-ordinary general meeting held on 19th April, 2011 have approved the increase in the authorised share capital to Rs.15 crores. Further, at the said meeting, the shareholders have also approved a rights issue upto Rs.10 crores on such terms as may be approved by the board of directors.


Mar 31, 2010

(a) Financial Statements have been prepared under the historical cost convention, on an accrual basis and are in compliance with the Accounting Standards as notified under the Companies (Accounting Standards) Rules, 2006. The preparation of the accounts requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including the contingent liabilities) and the reported income and expenses during the reporting period. The Management believes that the estimates used in preparation of accounts are prudent and reasonable. The actual results could differ from the estimates.

(b) FIXED ASSETS / INTANGIBLES AND DEPRECIATION / AMORTISATION

(i) Fixed assets are stated at cost of acquisition or construction less depreciation/amortisation. Cost comprises the purchase price and other attributable costs.

(ii) a) Depreciation on tangible fixed assets is provided for on the straight line method at the rates and in the manner laid down in Schedule XIV to the Companies Act, 1956 except for the following:

Moulds are depreciated at 33.33% of cost- Vehicles are depreciated at 20% of cost; Assets costing below Rs.5,000/- each are fully depreciated in the year of purchase.

b) Leasehold land is amortised over the period of lease. Improvements to leased premises are amortized over the period of occupation of premises.

c) Software is capitalised at the cost of acquisition and amortised on a straight line basis over four years. Any such expenditure on maintenance is charged off.

(C) INVENTORIES

Inventories are stated at the lower of cost and net realisable value. In determining the cost of inventories the weighted average method is used. Cost of work-in-progress and finished goods include material cost, labour and factory overheads on the basis of full absorption costing.

(d) REVENUE RECOGNITION

Sale of goods is recognised when all significant risks and rewards of ownership have been transferred to the buyers. Interest income is recognised on time proportion as such and there is no uncertainty in the realisation.

(e) EMPLOYEE BENEFITS

Employee benefits include gratuity, superannuation & provident fund and compensated absences benefits under the approved schemes of the Company. In respect of defined contribution plans, the contribution payable is charged to the Profit and Loss Account. In respect of gratuity and compensated absences benefit, the employee benefit cost is accounted for, based on an independent actuarial valuation obtained as at the Balance Sheet date. Actuarial gains and losses are recognised in the profit & loss account.

(f) FOREIGN CURRENCY TRANSACTIONS

Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction. Monetary assets and liabilities are translated at year end exchange rates and the profit/loss so determined and also the realised exchange gains/losses are recognised in the Profit and Loss account.

(g) GOVERNMENT GRANTS

Government grant of the nature of promoters contribution is credited to capital reserve.

(h) TAXES ON INCOME

Tax expense for the year is included in the determination of the net profit for the year. Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax in respect of unabsorbed depreciation and carried forward of losses are recognised if there is virtual certainty that there will be sufficient future taxable income available to realise such losses. Other deferred tax assets are recognised if there is reasonable certainty that there will be sufficient future taxable income to realise such assets,

(i) BORROWING COST

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of that asset. Other borrowing costs are recognised as an expense in the year in which they are incurred.

 
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