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Accounting Policies of Phoenix International Ltd. Company

Mar 31, 2015

1. a) BASIS OF PREPARATION OF FINANCIAL STATEMENT

These Financial Statements have been prepared to comply with the Generally Accepted Accounting Principles (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.

b) USE OF ESTIMATES

The preparation of financial statements in conformity with Generally Accepted Accounting Principles (Indian GAAP) requires judgments, estimates and assumptions to be made that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of financial statements and reported amounts of revenue and expenses during the reporting period. Difference between the actual results and estimates are recognised in the period in which the results are known/materealised.

2. FIXED ASSETS

Tangible Assets are stated at cost net of recoverable taxes, trade discount and rebates and include amount added on revaluation, less accumulated depreciation and impairment loss, if any. The cost of tangible assets comprises its purchase price, borrowing cost and any cost directly attributable to bringing the assets to its working condition for its intended use. Projects under which assets are not ready for their intended use are disclosed under Capital Work-in-Progress

3. VALUATION OF INVENTORIES

Items of inventories are measured at lower of cost and net realisable value after providing for obsolescence, if any. Cost of inventories comprises of cost of purchase, cost of conversion and other costs including manufacturing overheads incurred in bringing them to their respective present location and condition.

4. DEPRECIATION

a) Depreciation on Fixed Assets is provided to the extent of depreciable amount on the Written Down Value (WDV) Method except in case of assets pertaining to unit- Noida A-37 where depreciation is provided on Straight Line Method (SLM). Depreciation is provided based on useful life of the assets as prescribed in Schedule II to the Companies Act, 2013.

b) No write off is made in respect of long term lease hold land.

5. FOREIGN EXCHANGE TRANSACTION

a. Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction or that approximates the actual rate at the date of the transaction.

b. Monetary items denominated in foreign currencies at the year end are restated at year end rates. In case of items which are covered by forward exchange contracts, the difference between the year end rate and rate on the date of the contract is recognised as exchange difference and the premium paid on forward contracts is recognised over the life of the contract.

c. Non-monetary foreign currency items are carried at cost.

d. In respect of integral foreign operations, all transactions are translated at rates prevailing on the date of transaction or that approximates the actual rate at the date of transaction. Monetary assets and liabilities are restated at the year end rates.

e. Any income or expense on account of exchange difference either on settlement or on translation is recognised in the Profit and Loss Statement.

6. REVENUE RECOGNITION

Revenue is recognised only when risk and rewards incidental to ownership are transferred to the customer, it can be reliably measured and it is reasonable to expect ultimate collection. Revenue from operation include sale of goods and services. Export Sales are accounted for on the basis of the date of Bill of Lading, Domestic sales are accounted for on the basis of ex-factory/godown dispatches. Sales include excise duty but exclude discounts, sales tax and all other charges. Interest income is recognised on a time proportion basis taking into account the amount outstanding and the interest rate applicable.

7. EXPORT BENEFITS

Sale of advance licenses is accounted for on realizations basis, Duty Drawbacks and Duty entitlement Pass Book benefits are accounted for on accrual basis.

8. RETIREMENT BENEFITS

a) Contributions to Provident fund are made at the prescribed rates in the recognized funds and charged to the Profit and Loss A/c.

b) Provision for Gratuity are to be made on the basis of actuarial valuation.

c) Every employee who has completed five years or more of service gets a gratuity on leaving at 15 days salary (last drawn salary) for each completed year of service. Year end liability on account of retirement benefits to employees are provided.

d) Leave encashment is accounted for on year to year basis and not accumulated to be enchased at the time of retirement.

9. INVESTMENTS

Investments in subsidiary and other companies are treated as long term investments and are stated at cost. Provision of diminution in the market value of long- term investments is made only if such decline is considered permanent by the Management. Dividend is accounted for as and when received.

10. IMPAIRMENT OF FIXED ASSETS

An assets is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the Profit and Loss Statement in the year in which an assets is identified as impaired. The impairment loss is recognised in prior accounting period is reversed if there has been a change in the estimates of recoverable amount.

11. PROVISIONS,CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provision is rcognised in the accounts when there is a present obligation as a result of past events and it is probable that an outfl ow of resources will be required to settle the obligation and reliable estimates can be made. Provision are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates at each reporting date and adjusted to refl ect the current best estimates.


Mar 31, 2014

1. a) BASIS OF PREPARATION OF FINANCIAL STATEMENT

The financial statements have been prepared under the historical cost convention on accrual basis, in accordance with Generally Accepted Accounting Principles (GAAP) and comply in all material respect with the mandatory applicable accounting standards and relevant provisions and presentational requirements of the Companies Act, 1956.

b) USE OF ESTIMATES

The preparations of financial statements in conformity with Generally Accepted Accounting Principles (GAAP) requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of fi nancial statements and reported amounts of revenue and expenses for that year. Actual results could differ from these estimates. Any revision to accounting estimates is recognized prospectively in current and future periods

2. FIXED ASSETS

Fixed assets are stated at cost of acquisition or construction less accumulated depreciation. All cost relating to the acquisition and installation of Fixed Assets are capitalized and include fi nancing costs relating to the borrowed funds attributable to construction or acquisition of fi xed asset up to the assets is put to use. Capital Work in Progress is stated at amount expended up to the date of Balance Sheet.

3. VALUATION OF INVENTORIES

a) Raw materials, stores and spares are valued at lower cost or net realizable value.

b) Works in Progress are valued at lower of cost or net realizable value and includes cost of raw materials, direct labour and proportionate overheads including fabrication charges.

c) Finished goods are valued at lower of cost or net realizable value. Finished Goods lying in the factory bonded premises are valued inclusive of excise duty.

d) Goods in Transit are valued at lower of cost or net realizable value.

e) Cost is determined on FIFO basis for all categories of inventories.

4. DEPRECIATION

a) Depreciation on fi xed assets has been provided on prorate basis on the Straight Line Method at the rates and in the manner prescribed under Schedule XIV of the Companies Act, 1956. Fixed Assets shifted from erstwhile two units, H.O. and Chennai are depreciated at Written Down Value Method as per past practice

b) No write off is made in respect of long term lease hold land.

5. FOREIGN EXCHANGE TRANSACTION

Transactions in foreign currency are recorded at the exchange rates existing at the time of the transaction. All current assets and liabilities are converted at exchange rates prevailing on the last working day of the accounting year and loss or gain on conversion, if any has been charged to the Profit & Loss Account. Foreign Exchange differences relating to acquisition of fixed assets are adjusted to the carrying cost of the relevant fixed assets.

6. SALES

Export Sales are accounted for on the basis of the date of Bill of Lading, Domestic sales are accounted for on the basis of ex-factory / godown dispatches. Sales include excise duty but exclude discounts, sales tax and all other charges.

7. EXPORT BENEFITS

Sale of advance licenses is accounted for on realizations basis, Duty Drawbacks and Duty entitlement Pass Book benefi ts are accounted for on accrual basis.

8. RETIREMENT BENEFITS

a) Contributions to Provident fund are made at the prescribed rates in the recognized funds and charged to the Profit and Loss A/c.

b) Provision for Gratuity are to be made on the basis of actuarial valuation.

c) Every employee who has completed five years or more of service gets a gratuity on leaving at 15 days salary (last drawn salary) for each completed year of service. Year end liability on account of retirement benefi ts to employees are provided and funded to approved Gratuity Fund under the Group Gratuity cum Life Assurance scheme of Life Insurance corporation of India.

d) Leave encashment is accounted for on year to year basis and not accumulated to be enchased at the time of retirement.

9. INVESTMENTS

Investments in subsidiary and other companies are treated as long term investments and are stated at cost. Provision of diminution in the market value of long- term investments is made only if such decline is considered permanent by the Management. Dividend is accounted for as and when received.

10. IMPAIRMENT OF FIXED ASSETS

(a) Consideration is given at each balance sheet date to determine whether there is any indication of impairment of the carrying amount of the company''s Fixed Assets. If any indication exists, an asset''s recoverable amount is estimated. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value based on an appropriate discount factor.

(b) Reversal of impairment losses recognized in prior years is recorded when there is an indication that impairment losses recognized for the assets no longer exist or have decreased. However, the increase in carrying amount of an asset due to reversal of an impairment loss is recognized to the extent it does not exceed the carrying amount that would have been determined (net of depreciation ) had no impairment loss been recognized for the assets in prior year.

11. CONTINGENCIES

The company creates a provision when there is present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is possible obligation or a present obligation that may, but probably will not; require an out flow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outfl ow of resources is remote, no provision or disclosure is made.

Notes:

Term Loan from Oriental Bank of Commerce of Rs. 5,033.62 Lacs (Previous year Rs. 5,417.74 Lacs) is secured by way of Equitable Mortgage of Land and Building measuring 61,690 Sq. Meters at A–37, Sector 60, Noida assigned by way of security of the rights of borrower under sub lease/lease agreements including assignment of receivables of future rentals/lease money and fi rst charge on all moveable / Fixed Assets & Inventory (existing and future) of the Company. The Loan is repayable in 120 Equated monthly installments from the date of disbursement. Due with in a year Rs. 1,091.16 Lacs including interest (Previous Year Rs. 1,044.00 Lacs including interest). Term Loan from Oriental Bank of Commerce Amount Rs. 1,473.50 Lacs are repayble over a period of 2 to 5 years.


Mar 31, 2013

1. a) BASIS OF PREPRATION OF FINANCIAL STATEMENT

The financial statements have been prepared under the historical cost convention on accrual basis, in accordance with Generally Accepted Accounting Principles (GAAP) and comply in all material respect with the mandatory applicable accounting standards and relevant provisions and presentational requirements of the Companies Act, 1956.

b) USE OF ESTIMATES

The preparations of financial statements in conformity with Generally Accepted Accounting Principles (GAAP) requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of financial statements and reported amounts of revenue and expenses for that year. Actual results could differ from these estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.

2. FIXED ASSETS

Fixed assets are stated at cost of acquisition or construction less accumulated depreciation. All cost relating to the acquisition and installation of Fixed Assets are capitalized and include financing costs relating to the borrowed funds attributable to construction or acquisition of fixed asset up to the assets is put to use. Capital Work in Progress is stated at amount expended up to the date of Balance Sheet.

3. VALUATION OF INVENTORIES

a) Raw materials, stores and spares are valued at lower cost or net realizable value.

b) Works in Progress are valued at lower of cost or net relizable value and inclueds cost of raw materials, direct labour and proportionate overheads including fabrication charges.

c) Finished goods are valued at lower of cost or net realizable value. Finished Goods lying in the factory bonded premises are valued inclusive of excise duty.

d) Goods in Transit are valued at lower of cost or net realizable value.

e) Cost is determined on FIFO basis for all categories of inventories.

4. DEPRECIATION

a) Depreciation on fixed assets has been provided on prorate basis on the Straight Line Method at the rates and in the manner prescribed under Schedule XIV of the Companies Act, 1956. Fixed Assets shifted from erstwhile two units, H.O. and Chennai are depreciated at Writted Down Value Method as per past practice

b) No write off is made in respect of long term lease hold land.

5. FOREIGN EXCHANGE TRANSACTION

Transactions in foreign currency are recorded at the exchange rates existing at the time of the transaction. All current assets and liabilities are converted at exchange rates prevailing on the last working day of the accounting year and loss or gain on conversion, if any has been charged to the Profit & Loss Account. Foreign Exchange differences relating to acquisition of fixed assets are adjusted to the carrying cost of the relevant fixed assets.

6. SALES

Export Sales are accounted for on the basis of the date of Bill of Lading, Domestic sales are accounted for on the basis of ex-factory / godown dispatches. Sales include excise duty but exclude discounts, sales tax and all other charges.

7. EXPORT BENEFITS

Sale of advance licenses is accounted for on relizations basis, Duty Drawbacks and Duty entitlement Pass Book benefits are accounted for on accrual basis.

8. RETIREMENT BENEFITS

a) Contributions to Provident fund are made at the prescribed rates in the recognized funds and charged to the Profit and Loss A/c.

b) Provision for Gratuity are to be made on the basis of actuarial valuation.

c) The company operate defined benefits plans for its employees viz gratuity The costs of providing benefits under these plans are determined on the basis of actuarial valuation at each year end.

d) Leave encashment is accounted for on year to year basis and not accumulated to be encashed at the time of retirement.

9. INVESTMENTS

Investments in subsidiary and other companies are treated as long term investments and are stated at cost. Provision of diminution in the market value of long- term investments is made only if such decline is considered permanent by the Management. Dividend is accounted for as and when received.

10. IMPAIRMENT OF FIXED ASSETS

(a) Consideration is given at each balance sheet date to determine whether there is any indication of impairment of the carrying amount of the company''s Fixed Assets. If any indication exists, an asset''s recoverable amount is estimated. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value based on an appropriate discount factor

(b) Reversal of impairment losses recognized in prior years is recorded when there is an indication that impairment losses recognized for the assets no longer exist or have decreased. However, the increase in carrying amount of an asset due to reversal of an impairment loss is recognized to the extent it does not exceed the carrying amount that would have been determined (net of depreciation) had no impairment loss been recognized for the assets in prior year.

11. RENOVATION EXPENSES

Renovation Expenses on building have been amortized over a period 3 years.

12. CONTINGENCIES

The company creates a provision when there is present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is possible obligation or a present obligation that may, but probably will not; require an out flow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.


Mar 31, 2012

1. a) BASIS OF PREPRATION OF FINANCIAL STATEMENT

"The financial statements have been prepared under the historical cost convention on accrual basis, in accordance with Generally Accepted Accounting Principles (GAAP) and comply in all material respect with the mandatory applicable accounting standards and relevant provisions and presentational requirements of the Companies Act, 1956."

b) During the year ended 31March 2012, the revised Schedule VI notified under the Companies Act 1956, has become applicable to the company, for Presentation and disclosure of its financial statements. The adoption of revised schedule VI dose not impact recognition and measurement principal followed for preparation of financial statement. However, it has significant impact on presentation and disclosure made in financial statement. The company has reclassified the previous year figures in accordance with the requirement applicable in current year.

c) USE OF ESTIMATES

The preparations of financial statements in conformity with Generally Accepted Accounting Principles (GAAP) requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of financial statements and reported amounts of revenue and expenses for that year. Actual results could differ from these estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.

2. FIXED ASSETS

Fixed assets are stated at cost of acquisition or construction less accumulated depreciation. All cost relating to the acquisition and installation of Fixed Assets are capitalized and include financing costs relating to the borrowed funds attributable to construction or acquisition of fixed asset up to the assets is put to use. Capital Work in Progress is stated at amount expended up to the date of Balance Sheet.

3. VALUATION OF INVENTORIES

a) Raw materials, stores and spares are valued at lower cost or net realizable value.

b) Works in Progress are valued at lower of cost or net realizable value and includes cost of raw materials, direct labour and proportionate overheads including fabrication charges.

c) Finished goods are valued at lower of cost or net realizable value. Finished Goods lying in the factory bonded premises are valued inclusive of excise duty. “

d) Goods in Transit are valued at lower of cost or net realizable value.

e) Cost is determined on FIFO basis for all categories of inventories.

4. DEPRECIATION

a) Depreciation on fixed assets has been provided on prorate basis on the Straight Line Method at the rates and in the manner prescribed under Schedule XIV of the Companies Act, 1956. Fixed Assets shifted from erstwhile two units, H.O. and Chennai are depreciated at Writted Down Value Method as per past practice."

b) No write off is made in respect of long term lease hold land

5. FOREIGN EXCHANGE TRANSACTION

"Transactions in foreign currency are recorded at the exchange rates existing at the time of the transaction. All current assets and liabilities are converted at exchange rates prevailing on the last working day of the accounting year and loss or gain on conversion, if any has been charged to the Profit & Loss Account. Foreign Exchange differences relating to acquisition of fixed assets are adjusted to the carrying cost of the relevant fixed assets.”

6. SALES

Export Sales are accounted for on the basis of the date of Bill of Lading, Domestic sales are accounted for on the basis of ex-factory/ godown dispatches. Sales include excise duty but exclude discounts, sales tax and all other charges.

7. EXPORT BENEFITS

"Sale of advance licenses is accounted for on realizations basis, Duty Drawbacks and Duty entitlement Pass Book benefits are accounted for on accrual basis."

8. RETIREMENT BENEFITS

a) Contributions to Provident fund are made at the prescribed rates in the recognized funds and charged to the Profit and Loss A/c.

b) Provision for Gratuity is made on the basis of actuarial valuation.

9. INVESTMENTS

"Investments in subsidiary and other companies are treated as long term investments and are stated at cost. Provision of diminution in the market value of long- term investments is made only if such decline is considered permanent by the Management. Dividend Is accounted for as and when received."

10. IMPAIRMENT OF FIXED ASSETS

(a) Consideration is given at each balance sheet date to determine whether there is any indication of impairment of the carrying amount of the company's Fixed Assets. If any indication exists, an asset’s recoverable amount is estimated. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value based on an appropriate discount factor.

(b) Reversal of impairment losses recognized in prior years is recorded when there is an indication that impairment losses recognized for the assets no longer exist or have decreased. However, the increase in carrying amount of an asset due to reversal of an impairment loss is recognized to the extent it does not exceed the carrying amount that would have been determined (net of depreciation ) had no impairment loss been recognized for the assets in prior year.

11. RENOVATION EXPENSES

Renovation Expenses on building have been amortized over a period 3 years.

12. CONTINGENCIES

The company creates a provision when there is present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is possible obligation or a present obligation that may, but probably will not; require an out flow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.


Mar 31, 2010

1. a) Basis of Preparation of Financial Statements

The Financial Statements have been prepared under the historical cost convention, on accrual basis, in accordance with Generally Accepted Accounting Principles (GAAP) and comply in all respect with the mandatory applicable accounting standards and relevant provisions and presentational requirements of the Companies Act, 1956.

b) Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent liabilities on the date of financial statements and reported amounts of revenue and expenses for that year. Actual results could differ from these estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.

2. Fixed Assets

Fixed Assets are stated at cost of acquisition or construction less accumulated depreciation. All costs relating to the acquisition and installation of Fixed Assets are capitalized and include financing costs relating to borrowed funds attributable to construction or acquisition of fixed asset up to the asset is put to use. Capital work in progress is stated at amount expended up to the date of Balance Sheet.

3. Valuation of Inventories

a) Raw materials, stores and spares are valued at lower of cost or net realizable value.

b) Works in progress are valued at lower of cost or net realizable value and includes cost of raw material, direct labour and proportionate overheads including fabrication charges.

c) Finished goods and trade goods are valued at lower of cost or net realizable value. Finished Goods lying in the factory-bonded premises are valued inclusive of excise duty.

d) Goods in transit are valued at lower of cost or net realizable value.

e) Cost is determined on FIFO basis for all categories of inventories

4. Depreciation

a) Depreciation on fixed assets has been provided on prorata basis on Straight Line Method at the rates and in the manner prescribed under Schedule XIV to the Companies Act, 1956. Fixed Assets shifted from erstwhile two units , H.O and Chennai are depreciated at written Down Value Method as per past practice.

b) No write off is made in respect of long term leasehold land.

5. Foreign Exchange Transactions

Transactions in foreign currency are recorded at the exchange rates existing at the time of the transaction. All current assets and liabilities are converted at the exchange rates prevailing on the last working day of the accounting year and loss or gain on conversion, if any has been charged to the Profit and Loss Account. Foreign Exchange differences relating to acquisition of fixed assets are adjusted to the carrying cost of the relevant fixed assets.

6. Sales

Export sales are accounted for on the basis of the date of Bill of Lading. Domestic sales are accounted for on the basis of ex-factory/ godown dispatches. Sales include excise duty but exclude discounts, sales tax and all other charges.

7. Export Benefits

Sale of advance licenses is accounted for on realization basis. Duty Drawbacks and Duty Entitlement Pass Book benefits are accounted for on accrual basis.

8. Employee Benefits

Employee Benefits are recognized/accounted for on the basis of revised AS-15 detailed as under :-

i) Short Term Employee benefits are recognized as expense at the undiscounted amount in the Profit & Loss account of the year in which they are incurred.

ii) Employee benefits under defined contribution plans comprise of contribution to Provident Fund. Contributions to Provident Fund are deposited with appropriate authorities and charged to Profit & Loss account.

iii) Employee Benefits under defined benefit plans comprise of gratuity and leave encashment which are accounted for as at the year end based on actuarial valuation by following the Projected Unit Credit (PUC) method.

iv) Termination benefits are recognized as an Expense as and when incurred.

v) The actuarial gains and losses arising during the year are recognized in the Profit & Loss account of the year without resorting to any amortization.

9. Investments

Investment in subsidiary and other companies are treated as long-term investments and are stated at cost. Provision for diminution in the market value of long-term investments is made only if such decline is considered permanent by the management.

10. Impairment of Fixed Assets

Consideration is given at each balance sheet date to determine whether there is any indication of impairment of the carrying amount of the Companys Fixed Assets. If any indication exists, an assets recoverable amount is estimated. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value based on an appropriate discount factor.

Reversal of impairment losses recognized in prior years is recorded when there is an indication that the impairment losses recognized for the asset no longer exist or have decreased. However, the increase in carrying amount of an asset due to reversal of an impairment loss is recognized to the extent it does not exceed the carrying amount that would have been determined (net of depreciation) had no impairment loss been recognized for the assets in prior year.

11. Contingencies

The company creates a provision when there is present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation, in respect of which the likelihood of outflow of resources, is remote, provision or disclosure will be made.


Mar 31, 2009

1. a) Basis of Preparation of Financial Statements

The Financial Statements have been prepared under the historical cost convention, on accrual basis, in accordance with Generally Accepted Accounting Principles (GAAP) and comply in all respect with the mandatory applicable accounting stan- dards and relevant provisions and presentational requirements of the Companies Act, 1956

b) Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires Manage- ment to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent liabilities on the date of financial statements and reported amounts of revenue and expenses for that year. Actual results could differ from these estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.

2. Fixed Assets

Fixed Assets are stated at cost of acquisition or construction less accumulated depreciation. All costs relating to the acquisition and installation of Fixed Assets are capitalized and include financing costs relating to borrowed funds attributable to construction or acquisition of fixed asset up to the asset is put to use. Capital work in progress is stated at amount expended up to the date of Balance Sheet.

3. Valuation of Inventories

a) Raw materials, stores and spares are valued at lower of cost or net realizable value.

b) Works in progress are valued at lower of cost or net realizable value and includes cost of raw material, direct labour and proportionate overheads including fabrication charges.

c) Finished goods and trade goods are valued at lower of cost or net realizable value. Finished Goods lying in the factory-bonded premises are valued inclusive of excise duty.

d) Goods in transit are valued at lower of cost or net realizable value.

e) Cost is determined on FIFO basis for all categories of inventories

4. Depreciation

a) Depreciation on fixed assets has been provided on prorata basis on Straight Line Method at the rates and in the manner prescribed under Schedule XIV to the Companies Act, 1956. Fixed Assets shifted from erstwhile two units, H.O and Chennai are depreciated at written Down Value Method as per past practice.

b) No write off is made in respect of long term leasehold land.

5. Foreign Exchange Transactions

Transactions in foreign currency are recorded at the exchange rates existing at the time of the transaction. All current assets and liabilities are converted at the exchange rates prevailing on the last working day of the accounting year and loss or gain on conversion, if any has been charged to the Profit and Loss Account. Foreign Exchange differences relating to acquisition of fixed assets are adjusted to the carrying cost of the relevant fixed assets.

6. Sales

Export sales are accounted for on the basis of the date of Bill of Lading. Domestic sales are accounted for on the basis of ex-factory/ godown dispatches. Sales include excise duty but exclude discounts, sales tax and all other charges.

7. Export Benefits

Sale of advance licenses is accounted for on realization basis. Duty Drawbacks and Duty Entitlement Pass Book benefits are accounted for on accrual basis.

8. Employee Benefits

Employee Benefits are recognized/accounted for on the basis of revised AS-15 detailed as under :-

i) Short Term Employee benefits are recognized as expense at the undiscounted amount in the Profit & Loss account of the year in which they are incurred.

ii) Employee benefits under defined contribution plans comprise of contribution to Provident Fund. Contributions to Provident Fund are deposited with appropriate authorities and charged to Profit & Loss account.

iii) Employee Benefits under defined benefit plans comprise of gratuity and leave encashment which are accounted for as at the year end based on actuarial valuation by following the Projected Unit Credit (PUC) method.

iv) Termination benefits are recognized as an Expense as and when incurred.

v) The actuarial gains and losses arising during the year are recognized in the Profit & Loss account of the year without resorting to any amortization.

9. Investments

Investment in subsidiary and other companies are treated as long-term investments and are stated at cost. Provision for diminution in the market value of long-term investments is made only if such decline is considered permanent by the management.

10. Impairment of Fixed Assets

Consideration is given at each balance sheet date to determine whether there is any indication of impairment of the carrying amount of the Companys Fixed Assets. If any indication exists, an assets recoverable amount is estimated. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value based on an appropriate discount factor.

Reversal of impairment losses recognized in prior years is recorded when there is an indication that the impairment losses recognized for the asset no longer exist or have decreased. However, the increase in carrying amount of an asset due Jo reversal of an impairment loss is recognized to the extent it does not exceed the.carrying amount that would have been determined (net of depreciation) had no impairment loss been recognized for the assets in prior year.

11. Contingencies

The company creates a provision when there is present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation, in respect of which the likelihood of outflow of resources, is remote, provision or disclosure will be made.

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