Mar 31, 2015
(a) Basis of Preparation
The financial statements of the Company have been prepared in
accordance with the generally accepted accounting principles in India
(Indian GAAP). The Company has prepared these financial statements to
comply in all material respects with the accounting standards notified
under Section 133 of the Companies Act 2013, read together with
paragraph 7 of the Companies (Accounts) Rules 2014. The financial
statements have been prepared on an accrual basis and under the
historical cost convention. The accounting policies adopted in the
preparation of financial statements are consistent with those of
previous year.
(b) Use of Estimates
The preparation of financial statements in conformity with Indian GAAP
requires the management to make judgments, 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 year and results for operations during the reporting
year. 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 years.
(c) Tangible Fixed Assets
Tangible Fixed assets are stated at cost, net of accumulated
depreciation and accumulated impairment losses, if any. The cost
comprises purchase price, borrowing costs if capitalization criteria
are met and directly attributable cost of bringing the asset to its
working condition for the intended use. Any trade discounts and rebates
are deducted in arriving at the purchase price.
Subsequent expenditure related to an item of fixed asset is added to
its book value only if it increases the future benefits from the
existing asset beyond its previously assessed standard of performance.
All other expenses on existing fixed assets, including day-to-day
repair and maintenance expenditure and cost of replacing parts, are
charged to the statement of profit and loss for the period during which
such expenses are incurred.
Gains or losses arising from derecognition of fixed assets are measured
as the difference between the net disposal proceeds and the carrying
amount of the asset and are recognized in the statement of profit and
loss when the asset is derecognized.
(d) Depreciation on tangible fixed assets
i) Lease hold land is amortized on straight line basis over the period
of lease ranging from 78 to 99 years.
ii) Lease hold improvements are amortised on a straight line basis over
the primary period of lease.
iii) Fixed assets costing Rs. 5,000 or less are depreciated in the year
of purchase.
iv) The Company has reassessed the remaining useful life of certain
plant and machinery, office equipment and furniture & fixtures having
gross block of Rs. 550.77 lacs and accordingly has provided accelerated
depreciation on these assets to depreciate them fully during the year
(Refer Note 45 (ii)).
v) Depreciation on all other tangible fixed assets is provided on
straight line basis using the rates arived at based on the useful lives
estimated by the management which are equal to the corresponding rates
prescribed in Schedule II to the Companies Act, 2013.
(e) Intangible Assets Softwares
Softwares acquired separately are measured on initial recognition at
cost. Following initial recognition, softwares are carried at cost less
accumulated amortization and accumulated impairment losses, if any.
Softwares are amortized on a straight line basis over the estimated
useful economic life not exceeding five years.
Research and Development Costs
Research costs are expensed as incurred. Development expenditure
incurred on an individual project is recognized as an intangible asset
when the Company can demonstrate all the following:
- The technical feasibility of completing the intangible asset so that
it will be available for use or sale.
- Its intention to complete the asset.
- Its ability to use or sell the asset.
- How the asset will generate future economic benefits.
- The availability of adequate resources to complete the development
and to use or sell the asset.
- The ability to measure reliably the expenditure attributable to the
intangible asset during development.
Following the initial recognition of the development expenditure as an
asset, the cost model is applied requiring the asset to be carried at
cost less any accumulated amortization and accumulated impairment
losses. Amortization of the asset begins when development is complete
and the asset is available for use.
Development costs carried forward is amortised over the period of
expected future sales from the related project, not exceeding five
years.
Gains or losses arising from derecognition of an intangible asset are
measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognized in the statement of
profit and loss when the asset is derecognized.
(f) Impairment of Tangible and Intangible Fixed Assets
The Company assesses at each reporting date whether there is any
indication of impairment of the carrying amount of the Company's fixed
assets. If any indication exists or when annual impairement testing is
required, 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 greater of the net
selling price and the value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value using
a pretax discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset. 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 asset in prior years.
(g) Retirement and other employee benefits
Retirement benefit in the form of provident fund is a defined
contribution scheme. The Company has no obligation, other than the
contribution payable to the provident fund. The Company recognizes
contribution payable to the provident fund scheme as an expenditure,
when an employee renders the related service. If the contribution
payable to the scheme for service received before the balance sheet
date exceeds the contribution already paid, the deficit payable to the
scheme is recognized as a liability after deducting the contribution
already paid. If the contribution already paid exceeds the contribution
due for services received before the balance sheet date, then excess is
recognized as an asset to the extent that the pre payment will lead to,
for example, a reduction in future payment or a cash refund.
Gratuity liability is a defined benefit obligation and is provided for
on the basis of an actuarial valuation on Projected Unit Credit (PUC)
method at the end of each year. The Company has formed a Gratuity Fund,
maintained by the Life Insurance Corporation of India (LIC). The
difference between actuarial valuation of gratuity of employees and
fund balance with LIC at year end is provided in books. Actuarial
gains/losses are immediately taken to the statement of profit and loss
and are not deferred.
Accumulated leave, which is expected to be utilized within the next 12
months, is treated as short-term employee benefit. The Company measures
the expected cost of such absences as the additional amount that it
expects to pay as a result of the unused entitlement that has
accumulated at the reporting date.
The Company treats accumulated leave expected to be carried forward
beyond twelve months, as long-term employee benefit for measurement
purposes. Such long-term compensated absences are provided for based on
the actuarial valuation using the projected unit credit method at the
year-end. Actuarial gains/losses are immediately taken to the statement
of profit and loss and are not deferred. The Company presents the leave
as a current liability in the balance sheet since it does not have an
unconditional right to defer its settlement for 12 months after the
reporting date.
(h) Foreign Exchange Transaction Initial Recognition:
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
Conversion:
Foreign currency monetary items are reported using the exchange rate
prevailing at the reporting date. Non- monetary items which are carried
in terms of historical cost denominated in a foreign currency are
reported using the exchange rate at the date of the transaction, and
non monetary items which are carried at fair value or other similar
valuation denominated in a foreign currency are reported using the
exchange rates that existed when the values were determined.
Exchange Difference:
Exchange differences arising on the settlement of monetary items or on
restatement of reporting Company's 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 in the year in which they arise.
(i) Inventory Valuation:
Inventories are valued as follows:
Raw materials, stores and spares, consumables, packing materials and
fuels :
Lower of cost and net realizable value. However, materials and other
items held for use in the production of inventories are not written
down below cost if the finished products, in which they will be
incorporated, are expected to be sold at or above cost. Cost is
determined on transaction moving weighted average basis.
Work in Progress and Finished Goods :
Lower of cost and net realizable value. Cost includes direct materials
and labour and a proportion of manufacturing overheads based on normal
operating capacity. Cost of finished goods includes excise duty
wherever applicable. Cost is determined on weighted average basis.
Traded goods:
Traded goods are valued at lower of cost and net realizable value. Cost
includes cost of purchase and other costs incurred in bringing the
inventories to their present location and condition. Cost is determined
on transaction moving weighted average basis.
Scrap :- Net realizable value.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and to make the
sale.
(j) Leases:
Where the Company is lessee
Leases, where the lessor effectively retains substantially all the
risks and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the statement of profit and loss on a straight-line basis over the
lease term.
(k) 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. The following specific recognition criteria must
also be met before revenue is recognized:
Sale of goods
Revenue from sale of goods is recognized when all the significant risks
and rewards of ownership of the goods have been passed to the buyer,
usually on delivery of the goods. The Company collects sales taxes and
value added taxes (VAT) on behalf of the government and, therefore,
these are not economic benefits flowing to the Company. Hence, they are
excluded from revenue. Excise duty deducted from revenue (gross) is the
amount that is included in the revenue (gross) and not the entire
amount of liability arising during the year.
Interest
Interest income is recognized on a time proportion basis taking into
account the amount outstanding and the applicable interest rate.
Interest income is included under the head "other income" in the
statement of profit and loss.
(l) Investments
Investments, which are readily realizable and intended to be held for
not more than one year from the date on which such investments are
made, are classified as current investments. All other investments are
classified as long-term investments.
On initial recognition, all investments are measured at cost. The cost
comprises purchase price and directly attributable acquisition charges
such as brokerage, fees and duties.
Current investments are carried in the financial statements at lower of
cost and fair value determined on an individual investment basis.
Long-term investments are carried at cost. However, provision for
diminution in value is made to recognize a decline other than temporary
in the value of the investments.
On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is charged or credited to the
statement of profit and loss.
(m) Income Taxes
Tax expense comprises current and deferred tax. Current income-tax is
measured at the amount expected to be paid to the tax authorities in
accordance with the Income-tax Act, 1961 enacted in India. The tax
rates and tax laws used to compute the amount are those that are
enacted or substantively enacted, at the reporting date.
Deferred income taxes reflect the impact of timing differences between
taxable income and accounting income originating during the current
year and reversal of timing differences for the earlier years. Deferred
tax is measured using the tax rates and the tax laws enacted or
substantively enacted at the reporting date.
Deferred tax liabilities are recognized for all taxable timing
differences. Deferred tax assets are recognized for deductible timing
differences 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. In situations where the Company
has unabsorbed depreciation or carry forward tax losses, all deferred
tax assets are recognized only if there is virtual certainty supported
by convincing evidence that they can be realized against future taxable
profits.
In the situations where the Company is entitled to a tax holiday under
the Income-tax Act, 1961 enacted in India or tax laws prevailing in the
respective tax jurisdictions where it operates, no deferred tax (asset
or liability) is recognized in respect of timing differences which
reverse during the tax holiday period, to the extent the Company's
gross total income is subject to the deduction during the tax holiday
period. Deferred tax in respect of timing differences which reverse
after the tax holiday period is recognized in the year in which the
timing differences originate. However, the Company restricts
recognition of deferred tax assets to the extent that it has become
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available against which such
deferred tax assets can be realized. For recognition of deferred taxes,
the timing differences which originate first are considered to reverse
first.
At each reporting date, the Company re-assesses unrecognized deferred
tax assets. It recognizes unrecognized deferred tax asset to the extent
that it has become reasonably certain or virtually certain, as the case
may be, that sufficient future taxable income will be available against
which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each
reporting date. The Company writes-down the carrying amount of deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realized. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
Minimum alternate tax (MAT) paid in a year is charged to the statement
of profit and loss as current tax. The Company recognizes MAT credit
available as an asset only to the extent that there is convincing
evidence that the Company will pay normal income tax during the
specified period, i.e., the period for which MAT credit is allowed to
be carried forward. In the year in which the Company recognizes MAT
credit as an asset in accordance with the Guidance Note on Accounting
for Credit Available in respect of Minimum Alternative Tax under the
Income- tax Act, 1961, the said asset is created by way of credit to
the statement of profit and loss and shown as "MAT Credit
Entitlement." The Company reviews the "MAT credit entitlement"
asset at each reporting date 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.
(n) Provisions:
A provision is recognized when the Company 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 estimates.
Warranty Provisions
Provisions for warranty related costs are recognised when the product
is sold. Provision is based on historical experience and future
estimate of claims by the management. The estimate of such warranty
related costs is revised annually.
(o) Borrowing Cost
Borrowing cost includes interest and amortization of ancillary costs
incurred in connection with the arrangement of borrowings. 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 part
of the cost of the respective asset. All other borrowing costs are
expensed in the period they occur.
(p) Earnings Per Share:
Basic earnings per share is calculated by dividing the net profit or
loss for the year attributable to equity shareholders (after deducting
preference dividends and attributable taxes) by the weighted average
number of equity shares outstanding during the year. For the purpose of
calculating diluted earning per share, the net profit or loss for the
year attributable to equity shareholders and the weighted average
number of shares outstanding during the year are adjusted for the
effects of all dilutive potential equity shares.
(q) Segment reporting Identification of segments
The Company's operating businesses are organized and managed separately
according to the nature of products and services provided, with each
segment representing a strategic business unit that offers different
products and serves different markets. The analysis of geographical
segments is based on the areas in which major operating divisions of
the Company operate.
Inter-segment transfers
The Company generally accounts for intersegment sales and transfers at
cost plus appropriate margins. Allocation of common costs Common
allocable costs are allocated to each segment according to the relative
contribution of each segment to the total common costs.
Unallocated items
Unallocated items include general corporate income and expense items
which are not allocated to any business segment.
Segment accounting policies
The Company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the Company as a whole.
(r) Contingent liabilities
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the Company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be
required to settle the obligation. A contingent liability also arises
in extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably. The Company does not
recognize a contingent liability but discloses its existence in the
financial statements.
(s) Cash and cash equivalents
Cash and cash equivalents for the purposes of cash flow statement
comprise cash at bank and in hand and short- term investments with an
original maturity of three months or less.
Mar 31, 2013
(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 Company has prepared these financial statements to
comply in all material respects with the accounting standards notified
under the Companies (Accounting Standards) Rules, 2006, (as amended)
and the relevant provisions of the Companies Act, 1956. The financial
statements have been prepared on an accrual basis and under the
historical cost convention. "The accounting policies adopted in the
preparation of financial statements are consistent with those of
previous year."
(b) Use of Estimates
The preparation of financial statements in conformity with Indian GAAP
requires the management to make judgments, 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, net of accumulated depreciation and
accumulated impairment losses, if any. The cost comprises purchase
price, borrowing costs if capitalization criteria are met and directly
attributable cost of bringing the asset to its working condition for
the intended use. Any trade discounts and rebates are deducted in
arriving at the purchase price.
Subsequent expenditure related to an item of fixed asset is added to
its book value only if it increases the future benefits from the
existing asset beyond its previously assessed standard of performance.
All other expenses on existing fixed assets, including day-to-day
repair and maintenance expenditure and cost of replacing parts, are
charged to the statement of profit and loss for the period during which
such expenses are incurred.
Gains or losses arising from derecognition of fixed assets are measured
as the difference between the net disposal proceeds and the carrying
amount of the asset and are recognized in the statement of profit and
loss when the asset is derecognized.
(d) Depreciation on tangible fixed assets
i) Lease hold land is amortized on straight line basis over the period
of lease ranging from 78 to 99 years.
ii) Lease hold improvements are amortised on a straight line basis over
the primary period of lease.
iii) Fixed assets costing Rs. 5,000 or less are depreciated in the year
of purchase.
iv) The Company has on April 1, 2012 reassessed the remaining useful
life of certain plant and machinery having Gross block of Rs. 2,544.13
lacs as one year and accordingly has depreciated these assets on
straight line basis over their remaining useful life of one year.
v) Depreciation on all other tangible fixed assets is provided on
straight line basis using the rates arrived at based on the useful
lives estimated by the Management which are equal to the corresponding
rates prescribed in Schedule XIV to the Companies Act, 1956.
(e) Intangible Assets
Intangible assets acquired separately are measured on initial
recognition at cost. Following initial recognition, intangible assets
are carried at cost less accumulated amortization and accumulated
impairment losses, if any. Intangible assets are amortized on a
straight line basis over the estimated useful economic life not
exceeding five years.
Research and Development Costs
Research costs are expensed as incurred. Development expenditure
incurred on an individual project is recognized as an intangible asset
when the Company can demonstrate all the following:
- The technical feasibility of completing the intangible asset so that
it will be available for use or sale.
- Its intention to complete the asset.
- Its ability to use or sell the asset.
- How the asset will generate future economic benefits.
- The availability of adequate resources to complete the development
and to use or sell the asset.
- The ability to measure reliably the expenditure attributable to the
intangible asset during development.
Following the initial recognition of the development expenditure as an
asset, the cost model is applied requiring the asset to be carried at
cost less any accumulated amortization and accumulated impairment
losses. Amortization of the asset begins when development is complete
and the asset is available for use.
Development costs carried forward is amortised over the period of
expected future sales from the related project, not exceeding five
years.
Gains or losses arising from derecognition of an intangible asset are
measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognized in the statement of
profit and loss when the asset is derecognized.
(f) Impairment of Tangible and Intangible Fixed Assets
The Company assesses at each reporting date whether there is any
indication of impairment of the carrying amount of the Company''s fixed
assets. If any indication exists or when annual impairement testing is
required, 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 greater of the net
selling price and the value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value using
a pretax discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset.
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 asset in prior years.
(g) Retirement and other employee benefits
Retirement benefit in the form of provident fund is a defined
contribution scheme. The Company has no obligation, other than the
contribution payable to the provident fund. The Company recognizes
contribution payable to the provident fund scheme as an expenditure,
when an employee renders the related service. If the contribution
payable to the scheme for service received before the balance sheet
date exceeds the contribution already paid, the deficit payable to the
scheme is recognized as a liability after deducting the contribution
already paid. If the contribution already paid exceeds the
contribution due for services received before the balance sheet date,
then excess is recognized as an asset to the extent that the pre
payment will lead to, for example, a reduction in future payment or a
cash refund.
Gratuity liability is a defined benefit obligation and is provided for
on the basis of an actuarial valuation on Projected Unit Credit (PUC)
method at the end of each year. The Company has formed a Gratuity Fund,
maintained by the Life Insurance Corporation of India (LIC). The
difference between actuarial valuation of gratuity of employees and
fund balance with LIC at year end is provided in books. Actuarial
gains/losses are immediately taken to the statement of profit and loss
and are not deferred.
Accumulated leave, which is expected to be utilized within the next 12
months, is treated as short-term employee benefit. The Company measures
the expected cost of such absences as the additional amount that it
expects to pay as a result of the unused entitlement that has
accumulated at the reporting date.
The Company treats accumulated leave expected to be carried forward
beyond twelve months, as long-term employee benefit for measurement
purposes. Such long-term compensated absences are provided for based on
the actuarial valuation using the projected unit credit method at the
year-end. Actuarial gains/losses are immediately taken to the statement
of profit and loss and are not deferred. The Company presents the leave
as a current liability in the balance sheet since it does not have an
unconditional right to defer its settlement for 12 months after the
reporting date.
(h) Foreign Exchange Transaction Initial Recognition:
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
Conversion:
Foreign currency monetary items are reported using the exchange rate
prevailing at the reporting date. Non- monetary items which are carried
in terms of historical cost denominated in a foreign currency are
reported using the exchange rate at the date of the transaction, and
non monetary items which are carried at fair value or other similar
valuation denominated in a foreign currency are reported using the
exchange rates that existed when the values were determined.
Exchange Difference:
Exchange differences arising on the settlement of monetary items or on
restatement of reporting Company''s 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 in the year in which they arise.
Forward exchange contracts entered into to hedge foreign currency risk
of an existing asset/ liability
The premium or discount arising at the inception of forward exchange
contract is amortized and recognized as an expense/ income over the
life of the contract. Exchange differences on such contracts are
recognized in the statement of profit and loss in the period in which
the exchange rates change. Any profit or loss arising on cancellation
or renewal of such forward exchange contract is also recognized as
income or as expense for the period.
(i) Inventory Valuation:
Inventories are valued as follows:
Raw materials, stores and spares, consumables, packing materials and
fuels:
Lower of cost and net realizable value. However, materials and other
items held for use in the production of inventories are not written
down below cost if the finished products, in which they will be
incorporated, are expected to be sold at or above cost. Cost is
determined on transaction moving weighted average basis.
Work in Progress and Finished Goods :
Lower of cost and net realizable value. Cost includes direct materials
and labour and a proportion of manufacturing overheads based on normal
operating capacity. Cost of finished goods includes excise duty where
ever applicable. Cost is determined on weighted average basis.
Traded goods:
Traded goods are valued at lower of cost and net realizable value. Cost
includes cost of purchase and other costs incurred in bringing the
inventories to their present location and condition. Cost is determined
on transaction moving weighted average basis.
Scrap: Net realizable value.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and to make the
sale.
(j) Leases:
Where the Company is lessee
Finance leases, which effectively transfer to the Company substantially
all the risks and benefits incidental to ownership of the leased item,
are capitalized at the inception of the lease term at the lower of the
fair value of the leased property and present value of minimum lease
payments. Lease payments are apportioned between the finance charges
and reduction of the lease liability so as to achieve a constant rate
of interest on the remaining balance of the liability. Finance charges
are recognized as finance costs in the statement of profit and loss.
Lease management fees, legal charges and other initial direct costs of
lease are capitalized.
A leased asset is depreciated on a straight-line basis over the useful
life of the asset or the useful life envisaged in Schedule XIV to the
Companies Act, 1956, whichever is lower. However, if there is no
reasonable certainty that the Company will obtain the ownership by the
end of the lease term, the capitalized asset is depreciated on a
straight-line basis over the shorter of the estimated useful life of
the asset, the lease term or the useful life envisaged in Schedule XIV
to the Companies Act, 1956.
Leases, where the lessor effectively retains substantially all the
risks and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the statement of profit and loss on a straight-line basis over the
lease term.
(k) 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. The following specific recognition criteria must
also be met before revenue is recognized:
Sale of goods
Revenue from sale of goods is recognized when all the significant risks
and rewards of ownership of the goods have been passed to the buyer,
usually on delivery of the goods. The Company collects sales taxes and
value added taxes (VAT) on behalf of the government and, therefore,
these are not economic benefits flowing to the Company. Hence, they are
excluded from revenue. Excise duty deducted from revenue (gross) is the
amount that is included in the revenue (gross) and not the entire
amount of liability arising during the year."
Interest
Interest income is recognized on a time proportion basis taking into
account the amount outstanding and the applicable interest rate.
Interest income is included under the head "other income" in the
statement of profit and loss.
(l) Investments
Investments, which are readily realizable and intended to be held for
not more than one year from the date on which such investments are
made, are classified as current investments. All other investments are
classified as long-term investments. On initial recognition, all
investments are measured at cost. The cost comprises purchase price and
directly attributable acquisition charges such as brokerage, fees and
duties.
Current investments are carried in the financial statements at lower of
cost and fair value determined on an individual investment basis.
Long-term investments are carried at cost. However, provision for
diminution in value is made to recognize a decline other than temporary
in the value of the investments.
On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is charged or credited to the
statement of profit and loss.
(m) Income Taxes
Tax expense comprises current and deferred tax. Current income-tax is
measured at the amount expected to be paid to the tax authorities in
accordance with the Income-tax Act, 1961 enacted in India. The tax
rates and tax laws used to compute the amount are those that are
enacted or substantively enacted, at the reporting date.
Deferred income taxes reflect the impact of timing differences between
taxable income and accounting income originating during the current
year and reversal of timing differences for the earlier years. Deferred
tax is measured using the tax rates and the tax laws enacted or
substantively enacted at the reporting date.
Deferred tax liabilities are recognized for all taxable timing
differences. Deferred tax assets are recognized for deductible timing
differences 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. In situations where the Company
has unabsorbed depreciation or carry forward tax losses, all deferred
tax assets are recognized only if there is virtual certainty supported
by convincing evidence that they can be realized against future taxable
profits.
At each reporting date, the Company re-assesses unrecognized deferred
tax assets. It recognizes unrecognized deferred tax asset to the extent
that it has become reasonably certain or virtually certain, as the case
may be, that sufficient future taxable income will be available against
which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each
reporting date. The Company writes-down the carrying amount of deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realized. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available
Minimum alternate tax (MAT) paid in a year is charged to the statement
of profit and loss as current tax. The Company recognizes MAT credit
available as an asset only to the extent that there is convincing
evidence that the Company will pay normal income tax during the
specified period, i.e., the period for which MAT credit is allowed to
be carried forward. In the year in which the Company recognizes MAT
credit as an asset in accordance with the Guidance Note on Accounting
for Credit Available in respect of Minimum Alternative Tax under the
Income-tax Act, 1961, the said asset is created by way of credit to the
statement of profit and loss and shown as "MAT Credit Entitlement." The
Company reviews the "MAT credit entitlement" asset at each reporting
date 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.
(n) Provisions:
A provision is recognized when the Company 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 estimates.
Warranty Provisions
Provisions for warranty related costs are recognised when the product
is sold. Provision is based on historical experience and future
estimate of claims by the management. The estimate of such warranty
related costs is revised annually.
(o) Borrowing Cost
Borrowing cost includes interest and amortization of ancillary costs
incurred in connection with the arrangement of borrowings. 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 part
of the cost of the respective asset. All other borrowing costs are
expensed in the period they occur.
(p) Earnings Per Share:
Basic earnings per share is calculated by dividing the net profit or
loss for the year attributable to equity shareholders (after deducting
preference dividends and attributable taxes) by the weighted average
number of equity shares outstanding during the year. For the purpose of
calculating Diluted Earnings per Share, the net profit or loss for the
year attributable to equity shareholders and the weighted average
number of shares outstanding during the year are adjusted for the
effects of all dilutive potential Equity Shares.
(q) Segment reporting
Identification of segments
The Company''s operating businesses are organized and managed separately
according to the nature of products and services provided, with each
segment representing a strategic business unit that offers different
products and serves different markets. The analysis of geographical
segments is based on the areas in which major operating divisions of
the Company operate.
Inter-segment transfers
The Company generally accounts for intersegment sales and transfers at
cost plus appropriate margins.
Allocation of common costs
Common allocable costs are allocated to each segment according to the
relative contribution of each segment to the total common costs.
Unallocated items
Unallocated items include general corporate income and expense items
which are not allocated to any business segment.
Segment accounting policies
The Company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the Company as a whole.
(r) Contingent liabilities
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the Company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be
required to settle the obligation. A contingent liability also arises
in extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably. The Company does not
recognize a contingent liability but discloses its existence in the
financial statements.
(s) Cash and cash equivalents
Cash and cash equivalents for the purposes of cash flow statement
comprise cash at bank and in hand and short-term investments with an
original maturity of three months or less.
Mar 31, 2012
A) Basis of Preparation :
The financial statements have been prepared to comply in all material
respects with the mandatory Accounting Standards issued by the
Institute of Chartered Accountants of India and the relevant provisions
of the Companies Act, 1956. The financial statements have been prepared
under the historical cost convention, except where otherwise stated,
and on an accrual basis. The accounting policies have been consistently
applied by the Company and are consistent with those used in the
previous year.
b) Use of Estimates :
The preparation of financial statements are in conformity with
generally accepted accounting principles & it requires management to
make estimates and assumptions that effect the reported amounts of
assets and liabilities and disclosure of contingent liabilities at the
date of the financial statements and the results of operations during
the reporting period end. Although these estimates are based upon
management's best knowledge of current events and actions, actual
results could differ from these estimates.
c) Fixed Assets :
Fixed Assets are stated at cost less accumulated depreciation and
impairment losses, if any. Cost comprises the purchase price and any
directly attributable cost of bringing the asset to its working
condition for its intended use. Financing cost relating to acquisition
of fixed assets are also included to the extent they relate to the
period till such assets are ready to be put to use. Expenditure for
addition, improvement and renewal are capitalized and expenditure for
repairs and maintenance are charged to Profit & Loss Account. Expenses
specifically attributable to completion of project are considered as
part of project cost.
d) Borrowing Cost :
Borrowing cost related to acquisition or construction of the qualifying
fixed assets for the period up to the completion of their acquisition
or construction are included in the book value of the respective assets
and other borrowing costs are charged to Profit & Loss Account.
e) Depreciation :
i) Depreciation on fixed assets(other than lease hold improvements) is
provided on Straight Line Method as prescribed in Schedule XIV of the
Companies Act, 1956.
ii) Lease hold land is amortized over the period of lease.
iii) Depreciation on the amount of addition made to fixed assets due to
upgradation/improvement is provided at the rate applied to the existing
assets.
iv) Intangible assets are accounted for at their cost of acquisition &
amortized over their estimated economic life not exceeding 5 years.
v) Depreciation on lease hold improvement is amortised over the primary
period of lease.
f) Employee Benefits :
(a) Short-term Employee Benefits :
All employee benefits payable wholly within twelve months of rendering
the service are classified as short-term employee benefits. These
benefits include compensated absences such as paid annual leave .The
undiscounted amount of short-term employee benefits expected to be paid
in exchange for the services rendered by employees is recognized during
the period.
(b) Post-employment benefits :
(i) Retirement benefits in the form of the Company's contribution to
Provident Fund are charged to the Profit & Loss Account of the year
when the contributions to the respective funds are due.
(ii) The Company's gratuity benefit scheme is a defined benefit plan.
The Company's net obligation in respect of the gratuity benefit scheme
is calculated by estimating the amount of future benefit that employees
have earned in return for their service in the current and prior
periods; that benefit is discounted to determine its present value, and
the fair value of any plan assets is deducted.
The present value of the obligation under such defined benefit plan is
determined based on actuarial valuation using the Projected Unit Credit
method, which recognizes each period of service as giving rise to
additional unit of employee benefit entitlement and measures each unit
separately to build up the final obligation.
The obligation is measured at the present value the estimated future
cash flows. The discount rates used for determining the present value
of the obligation under defined benefit plan, are based on the market
yields on government securities as at the balance sheet date.
When the calculation results in a benefit to the Company, the
recognized asset is limited to the net total of any unrecognized
actuarial losses and past service costs and the present value of any
future refunds from the plan or reductions in future contributions to
the plan.
Actuarial Gains and Losses are recognized immediately in the Profit &
Loss Account.
(c) Other Long-term employment benefits :
Compensated absences which are not expected to occur within twelve
months after the end of the period in which an employee renders the
related services, are provided for on the basis of actuarial valuation
made at the end of each financial year.
g) Foreign Exchange Transaction :
Initial Recognition:
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency transactions.
Conversion :
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction, and non monetary items which are
carried at fair value or other similar valuation denominated in a
foreign currency are reported using the exchange rates that existed
when the values were determined.
Exchange Difference :
Exchange differences arising on the settlement of monetary items or on
restatement of reporting Company's 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 in the year in which they arise.
Forward Exchange Contracts : (Derivative Instruments) Not intended for
trading or speculation purposes:-
The Company uses derivative financial instruments including forward
exchange contracts to hedge its risk associated with foreign currency
fluctuations. The premium or discount arising at the inception of
forward exchange contracts is amortised as expense or income over the
life of the contract. Exchange differences on such contracts are
recognised in the statement of profit & loss in the year in which the
exchange rates change. Any profit or loss arising on cancellation or
renewal of forward exchange contract is recognized as income or as
expense for the year.
h) Inventory Valuation :
Inventories are valued as follows :
Raw Materials & Others :
Lower of cost and net realizable value. However, materials and other
items held for use in the production of inventories are not written
down below cost if the finished products, in which they will be
incorporated, are expected to be sold at or above cost. Cost is
determined on transaction moving weighted average.
Work in Progress and Finished Goods :
Lower of cost and net realizable value. Cost includes direct materials
and labour and a proportion of manufacturing overheads based on normal
operating capacity. Cost of finished goods includes excise duty where
ever applicable.
By Products and Waste- Net realizable value.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and to make the
sale.
i) Leases :
Where the Company is lessee:- Finance leases, which effectively
transfer to the Company substantially all the risks and benefits
incidental to ownership of the leased item, are capitalized at the
lower of the fair value and present value of the minimum lease payments
at the inception of the lease term and are disclosed as leased assets.
Lease payments are apportioned between the finance charges and
reduction of the lease liability based on the implicit rate of return.
Finance charges are charged directly against income. Lease management
fees, legal charges and other initial direct costs are capitalized.
If there is no reasonable certainty that the Company will obtain the
ownership by the end of the lease term, capitalized leased assets are
depreciated over the shorter of the estimated useful life of the asset
or the lease term.
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased item are classified as
operating leases. Operating lease payments are recognized as an expense
in the Profit & Loss Account on a straight line basis over the lease
term.
j) 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
measured. Sale of Goods revenue is recognized when the significant
risks and rewards of ownership of the goods have been passed to the
buyer. Sales are net of return, volume discount and sales/vat tax but
including excise duty.
i) Claims in the nature of guaranteed sales requiring replacement
/money back are adjusted against sales.
ii) Interest: Interest is recognized on a time proportion basis taking
into account the amount outstanding at the applicable date.
iii) Dividend: Dividend is recognized when the shareholder's right to
receive payment is established by the balance sheet date.
k) Investment :
Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long-term investments. Current
investments and investments held for sale are carried at lower of cost
and fair value determined on an individual investment basis. Long term
investments are carried at cost. However, provision for diminution in
value is made to recognize a decline other than temporary in the value
of such investments.
l) Income Tax :
Tax expense comprises of current Deferred Tax. Current income tax is
measured at the amount expected to be paid to the tax authorities in
accordance with the Income Tax Act, 1961. 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 taxes are measured based on the tax rates and the tax law
enacted or substantively enacted at the balance sheet date. Deferred
assets are recognized only to the extend that there is reasonable
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realized. If the Company
has carry forward of unabsorbed depreciation and tax losses, deferred
tax assets are recognized only if there is virtual certainty that such
deferred tax assets can be realized against future taxable profits.
Unrecognized deferred tax assets of earlier year are reassessed and
recognized to the extent that it has become reasonable certain that
future taxable income will be available against which such deferred tax
assets be realised.
Minimum Alternative Tax (MAT) Credit is recognised as an asset only
when and to the extent there is convincing evidence that the Company
will pay normal Income Tax during the specified period. In the year in
which the Minimum Alternative Tax (MAT) Credit becomes eligible to be
recognized as an asset in accordance with the recommendations contained
in guidance note issued by the Institute of Chartered Accounts of
India, the said asset is created by way of a Credit to the Profit &
Loss account and shown as MAT Credit Entitlement. The Company reviews
the same at each Balance Sheet date and writes down the carrying amount
of MAT Credit Entitlement to the extent there is no longer convincing
evidence to the effect that Company will pay normal Income Tax during
the specified period.
m) 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 management estimates.
n) 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
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 greater of the net selling price and
the 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 asset in prior years.
o) Intangible Assets :
Research and Development Costs
Research & development costs which relate to the design and testing of
new or improved materials, products or processes which are recognized
as an intangible asset to the extent that it is expected that such
assets will generate future economic benefits. Research and development
expenditure of a capital nature is added to fixed assets. Development
costs carried forward is amortised over the period of expected future
sales from the related project, not exceeding five years.
Other Research and development costs, incurred for development of
products are expensed as incurred.
p) Earnings Per Share :
Basic earnings per share is calculated by dividing the net profit or
loss for the year attributable to equity shareholders (after deducting
preference dividends and attributable taxes) by the weighted average
number of equity shares outstanding during the year. For the purpose of
calculating Diluted Earning per Share, the net profit or loss for the
year attributable to equity shareholders and the weighted average
number of shares outstanding during the year are adjusted for the
effects of all dilutive potential Equity Shares.
q) Segment Reporting Policies :
Identification of segments: Primary Segment ; Business Segment During
the year the Company has bifurcated its business in two separate
segments. Accordingly operating businesses are organized and managed
separately according to the nature of products, with each segment
representing a strategic business unit that offers different products
and serves different markets. The identified segments are Manufacturing
& Sale of Auto Lamps and General Lighting Lamps.
Mar 31, 2011
A) BASIS OF PREPARATION
The financial statements have been prepared to comply in all material
respects with the mandatory Accounting Standards issued by the
Institute of Chartered Accountants of India and the relevant provisions
of the Companies Act, 1956. The financial statements have been prepared
under the historical cost convention, except where otherwise stated,
and on an accrual basis. The accounting policies have been consistently
applied by the Company and are consistent with those used in the
previous year.
b) USE OF ESTIMATES
The preparation of financial statements are in conformity with
generally accepted accounting principles & it requires management to
make estimates and assumptions that effect the reported amounts of
assets and liabilities and disclosure of contingent liabilities at the
date of the financial statements and the results of operations during
the reporting period end. Although these estimates are based upon
managements best knowledge of current events and actions, actual
results could differ from these estimates.
c) FIXED ASSETS
Fixed Assets are stated at cost less accumulated depreciation and
impairment losses, if any. Cost comprises the purchase price and any
directly attributable cost of bringing the asset to its working
condition for its intended use. Financing cost relating to acquisition
of fixed assets are also included to the extent they relate to the
period till such assets are ready to be put to use. Expenditure for
addition, improvement and renewal are capitalized and expenditure for
repairs and maintenance are charged to Profit & Loss Account. Expenses
specifically attributable to completion of project are considered as
part of project cost.
d) BORROWING COST
Borrowing cost related to acquisition or construction of the qualifying
fixed assets for the period up to the completion of their acquisition
or construction are included in the book value of the respective assets
and other borrowing costs are charged to profit & loss account.
e) DEPRECIATION
i) Depreciation is provided on straight line method as prescribed in
Schedule XIV of the Companies Act, 1956.
ii) Lease hold land is amortized over the period of lease.
iii) Depreciation on the amount of addition made to fixed assets due to
up gradation /improvement is provided at the rate applied to the
existing assets.
iv) Intangible assets are accounted for at their cost of acquisition &
amortized over their estimated economic life not exceeding 5years.
v) Research & Development are accounted for at their cost of
acquisition /generation .
f) EMPLOYEE BENEFITS
(a) Short-term Employee benefits :
All employee benefits payable wholly within twelve months of rendering
the service are classified as short-term employee benefits. These
benefits include compensated absences such as paid annual leave .The
undiscounted amount of short-term employee benefits expected to be paid
in exchange for the services rendered by employees is recognized during
the period.
(b) Post-employment benefits:
(i) Retirement benefits in the form of the Companys contribution to
Provident Fund are charged to the Profit & Loss Account of the year
when the contributions to the respective funds are due.
(ii) The Companys gratuity benefit scheme is a defined benefit plan.
The Companys net obligation in respect of the gratuity benefit scheme
is calculated by estimating the amount of future benefit that employees
have earned in return for their service in the current and prior
periods; that benefit is discounted to determine its present value, and
the fair value of any plan assets is deducted.
The present value of the obligation under such defined benefit plan is
determine based on actuarial valuation using the projected unit Credit
method, which recognizes each period of service as giving rise to
additional unit of employee benefit entitlement and measures each unit
separately to build up the final obligation.
The obligation is measured at the present value the estimated future
cash flows. The discount rates used for determining the present value
of the obligation under defined benefit plan, are based on the market
yields on government securities as at the balance sheet date.
When the calculation results in a benefit to the company, the
recognized asset is limited to the net total of any unrecognized
actuarial losses and past service costs and the present value of any
future refunds from the plan or reductions in future contributions to
the plan.
Actuarial gains and losses are recognized immediately in the profit &
loss account.
(c) Other Long-term employment benefits:
Compensated absences which are not expected to occur within twelve
months after the end of the period in which the employee renders the
related services, are provided for on the basis of actuarial valuation
made at the end of each financial year.
g) FOREIGN EXCHANGE TRANSACTION
Initial Recognition:
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency transactions.
Conversion:
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction, and non monetary items which are
carried at fair value or other similar valuation denominated in a
foreign currency are reported using the exchange rates that existed
when the values were determined.
Exchange Difference:
Exchange differences arising on the settlement of monetary items or on
restatement of reporting Companys 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 in the year in which they arise.
Forward Exchange Contracts :( Derivative Instruments) not intended for
trading or speculation purposes:-
The company uses derivative financial instruments including forward
exchange contracts to hedge its risk associated with foreign currency
fluctuations. The premium or discount arising at the inception of
forward exchange contracts is amortised as expense or income over the
life of the contract. Exchange differences on such contracts are
recognised in the statement of profit & loss in the year in which the
exchange rates change. Any profit or loss arising on cancellation or
renewal of forward exchange contract is recognized as income or as
expense for the year.
h) INVENTORY VALUATION
Inventories are valued as follows:
Raw Materials & Others:
Lower of cost and net realizable value. However, materials and other
items held for use in the production of inventories are not written
down below cost if the finished products, in which they will be
incorporated, are expected to be sold at or above cost. Cost is
determined on transaction moving weighted average.
Work in Progress and Finished Goods
Lower of cost and net realizable value. Cost includes direct materials
and labour and a proportion of manufacturing overheads based on normal
operating capacity. Cost of finished goods includes excise duty where
ever applicable.
By Products and Waste à Net realizable value.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and to make the
sale.
i) Leases:
Where the company is lessee:- Finance leases, which effectively
transfer to the company substantially all the risks and benefits
incidental to ownership of the leased item, are capitalized at the
lower of the fair value and present value of the minimum lease payments
at the inception of the lease term and are disclosed as leased assets.
Lease payments are apportioned between the finance charges and
reduction of the lease liability based on the implicit rate of return.
Finance charges are charged directly against income. Lease management
fees, legal charges and other initial direct costs are capitalized.
It there is no reasonable certainty that the company will obtain the
ownership by the end of the lease term, capitalized leased assets are
depreciated over the shorter of the estimated useful life of the asset
or the lease term.
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased item are classified as
operating leases. Operating lease payments are recognized as an expense
in the Profit & Loss Account on a straight line basis over the lease
term.
j) 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
measured. Sale of Goods Revenue is recognized when the significant
risks and rewards of ownership of the goods have been passed to the
buyer. Sales are net of return, volume discount and sales/vat tax but
including excise duty.
i) Warranty claims settled including replacements are adjusted against
sales.
ii) Interest: Interest is recognized on a time proportion basis taking
into account the amount outstanding at the applicable date.
iii) Dividend:
Dividend is recognized when the shareholders right to receive payment
is established by the balance sheet date.
k) INVESTMENT
Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long-term investments. Current
investments and investments held for sale are carried at lower of cost
and fair value determined on an individual investment basis. Long term
investments are carried at cost. However, provision for diminution in
value is made to recognize a decline other than temporary in the value
of such investments.
l) INCOME TAX
Tax expense comprises of current, deferred tax. Current income tax is
measured at the amount expected to be paid to the tax authorities in
accordance with the Income Tax Act, 1961. 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 taxes are measured based on the tax rates and the tax law
enacted or substantively enacted at the balance sheet date. Deferred
assets are recognized only to the extend that there is reasonable
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realized. If the company
has carry forward of unabsorbed depreciation and tax losses, deferred
tax assets are recognized only if there is virtual certainty that such
deferred tax assets can be realized against future taxable profits.
Unrecognized deferred tax assets of earlier year are reassessed and
recognized to the extent that it has become reasonable certain that
future taxable income will be available against which such deferred tax
assets be realised.
Minimum Alternative Tax (MAT) Credit is recognised as an asset only
when and to the extent there is convincing evidence that the company
will pay normal Income Tax during the specified period. In the year in
which the Minimum Alternative Tax (MAT) Credit becomes eligible to be
recognized as an asset in accordance with the recommendations contained
in guidance note issued by the Institute of Chartered Accountants of
India, the said asset is created by way of a Credit to the Profit &
Loss account and shown as MAT Credit Entitlement. The Company reviews
the same at each Balance Sheet date and writes down the carrying amount
of MAT Credit Entitlement to the extent there is no longer convincing
evidence to the effect that company will pay normal Income Tax during
the specified period.
m) 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 management estimates.
n) 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 greater of the net selling price and
the 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 asset in prior years.
o) Intangible Assets
Research and Development Costs
Research & development costs which relate to the design and testing of
new or improved materials, products or processes which are recognized
as an intangible asset to the extent that it is expected that such
assets will generate future economic benefits. Research and development
expenditure of a capital nature is added to fixed assets. Development
costs carried forward is amortised over the period of expected future
sales from the related project, not exceeding five years.
The carrying value of development costs is reviewed for impairment
annually when the asset is not yet in use, and otherwise when events or
changes in circumstances indicate that the carrying value may not be
recoverable.
Other Research and development costs, incurred for development of
products are expensed as incurred,
p) EARNINGS PER SHARE:
Basic earnings per share is calculated by dividing the net profit or
loss for the year attributable to equity shareholders (after deducting
preference dividends and attributable taxes) by the weighted average
number of equity shares outstanding during the year. For the purpose of
calculating Diluted Earning per Share, the net profit or loss for the
year attributable to equity shareholders and the weighted average
number of shares outstanding during the year are adjusted for the
effects of all dilutive potential Equity Shares.
q) Segment Reporting Policies
Identification of segments:
Primary Segment
Business Segment
During the year the company has bifurcated its business in two separate
segments. Accordingly operating businesses are organized and managed
separately according to the nature of products, with each segment
representing a strategic business unit that offers different products
and serves different markets. The identified segments are Manufacturing
& Sale of Auto Lamps and General Lighting Lamps.
a) Revenue and expenses have been identified to a segment on the basis
of relationship to operating activities of the segment. Revenue and
expenses which relate to enterprise as a whole and are not allocable to
a segment on reasonable basis have been disclosed as "Unallocable".
b) Segment assets and segment liabilities represent assets and
liabilities in respective segments. Investments, tax related assets and
other assets and liabilities that cannot be allocated to a segment on
reasonable basis have been disclosed as " Unallocable".
Secondary Segment
Geographical Segment
The analysis of geographical segments is based on the geographical
location of the customers.
The geographical segments considered for disclosure are as follows:
- Sales within India include sales to customers located within India.
- Sales outside India include sales to customers located outside India.
Mar 31, 2010
A) BASIS OF PREPARATION
The financial statements have been prepared to comply in all material
respects with the mandatory Accounting Standards issued by the
Institute of Chartered Accountants of India and the relevant provisions
of the Companies Act, 1956. The financial statements have been prepared
under the historical cost convention, except where otherwise stated,
and on an accrual basis. The accounting policies have been consistently
applied by the Company and are consistent with those used in the
previous year.
b) USE OF ESTIMATES
The preparation of financial statements are in conformity with
generally accepted accounting principles & it requires management to
make estimates and assumptions that effect the reported amounts of
assets and liabilities and disclosure of contingent liabilities at the
date of the financial statements and the results of operations during
the reporting period end. Although these estimates are based upon
managementÃs best knowledge of current events and actions, actual
results could differ from these estimates.
c) FIXED ASSETS
Fixed Assets are stated at cost less accumulated depreciation and
impairment losses, if any. Cost comprises the purchase price and any
directly attributable cost of bringing the asset to its working
condition for its intended use. Financing cost relating to acquisition
of fixed assets are also included to the extent they relate to the
period till such assets are ready to be put to use. Expenditure for
addition, improvement and renewal are capitalized and expenditure for
repairs and maintenance are charged to Profit & Loss Account. Expenses
specifically attributable to completion of project are considered as
part of project cost.
d) BORROWING COST
Borrowing cost related to acquisition or construction of the qualifying
fixed assets for the period up to the completion of their acquisition
or construction are included in the book value of the respective assets
and other borrowing costs are charged to profit & loss account.
e) DEPRECIATION
i) Depreciation is provided on straight line method as prescribed in
Schedule XIV of the Companies Act, 1956.
ii) Lease hold land is amortized over the period of lease.
iii) Depreciation on the amount of addition made to fixed assets due to
up gradation /improvement is provided at
the rate applied to the existing assets. iv) Intangible assets are
accounted for at their cost of acquisition & amortized over their
estimated economic life
not exceeding 5years. v) Research & Development are accounted for at
their cost of acquisition /genration .
f) EMPLOYEE BENEFITS
(a) Short-term Employee benefits :
All employee benefits payable wholly within twelve months of rendering
the service are classified as short- term employee benefits. These
benefits include compensated absences such as paid annual leave .The
undiscounted amount of short-term employee benefits expected to be paid
in exchange for the services rendered by employees is recognized during
the period.
(b) Post-employment benefits:
(i) Retirement benefits in the form of the Companys contribution to
Provident Fund charged to the Profit & Loss Account of the year when
the contributions to the respective funds are due.
(ii) The Companys gratuity benefit scheme is a defined benefit plan.
The Companys net obligation in respect of the gratuity benefit scheme
is calculated by estimating the amount of future benefit that employees
have earned in return for their service in the current and prior
periods; that benefit is discounted to determine its present value, and
the fair value of any plan assets is deducted.
The present value of the obligation under such defined benefit plan is
determine based on actuarial valuation using the projected unit credit
method, which recognizes each period of service as giving rise to
additional unit of employee benefit entitlement and measures each unit
separately to build up the final obligation.
The obligation is measured at the present value the estimated future
cash flows. The discount rates used for determining the present value
of the obligation under defined benefit plan, are based on the market
yields on government securities as at the balance sheet date.
When the calculation results in a benefit to the company, the
recognized asset is limited to the net total of any unrecognized
actuarial losses and past service costs and the present value of any
future refunds from the plan or reductions in future contributions to
the plan.
Actuarial gains and losses are recognized immediately in the profit &
loss account.
(c) Other Long-term employment benefits:
Compensated absences which are not expected to occur within twelve
months after the end of the period in which the employee renders the
related services are provided for on the basis of actuarial valuation
made at the end of each financial year.
g) FOREIGN EXCHANGE TRANSACTION
Initial Recognition:
Foreign current transactions are recorded in the reporting currency, by
applying to the foreign currency amount the
exchange rate between the reporting currency and the foreign currency
transactions.
Conversion:
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction, and non monetary items which are
carried at fair value or other similar valuation denominated in a
foreign currency are reported using the exchange rates that existed
when the values were determined.
Exchange Difference:
Exchange differences arising on the settlement of monetary items or on
restatement of reporting CompanyÃs 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 in the year in which they arise.
Forward Exchange Contracts :( Derivative Instruments) not intended for
trading or speculation purposes:-
The company uses derivative financial instruments including forward
exchange contracts to hedge its risk associated with foreign currency
fluctuations. The premium or discount arising at the inception of
forward exchange contracts is amortised as expense or income over the
life of the contract. Exchange differences on such contracts are
recognised in the statement of profit & loss in the year in which the
exchange rates change. Any profit or loss arising on cancellation or
renewal of forward exchange contract is recognized as income or as
expenses for the year.
h) INVENTORY VALUATION
Inventories are valued as follows:
Raw Materials & Others:
Lower of cost and net realizable value. However, materials and other
items held for use in the production of inventories are not written
down below cost if the finished products, in which they will be
incorporated, are expected to be sold at or above cost. Cost is
determined on transaction moving weighted average.
Work in Progress and Finished Goods
Lower of cost and net realizable value. Cost includes direct materials
and labour and a proportion of manufacturing overheads based on normal
operating capacity. Cost of finished goods includes excise duty where
ever applicable.
By Products and Waste à Net realizable value.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion
and to make the sale.
i) Leases:
Where the company is lessee Finance leases, which effectively transfer
to the company substantially all the risks and benefits incidental to
ownership of the leased item, are capitalized at the lower of the fair
value and present value of the minimum lease payments at the inception
of the lease term and disclosed as leased assets. Lease payments are
apportioned between the finance charges and reduction of the lease
liability based on the implicit rate of return. Finance charges are
charged directly against income. Lease management fees, legal charges
and other initial direct costs are capitalised.
It there is no reasonable certainty that the company will obtain the
ownership by the end of the lease term, capitalized leased assets are
depreciated over the shorter of the estimated useful life of the asset
or the lease term.
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased item are classified as
operating leases. Operating lease payments are recognized as an expense
in the Profit & Loss Account on a straight line basis over the lease
term.
j) 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
measured. Sale of Goods Revenue is recognized when the significant
risks and rewards of ownership of the goods have been passed to the
buyer. Sales are net of return, volume discount and sales/vat tax but
including excise duty.
Warranty claims settled including supply of material free of cost are
adjusted against sales.
Interest: Interest is recognized on a time proportion basis taking into
account the amount outstanding at the applicable date.
Dividend:
Dividend is recognised when the shareholderÃs right to receive payment
is established by the balance sheet date.
k) INVESTMENT
Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long-term investments. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. Long term investments are carried at
cost. However, provision for diminution in value is made to recognize
a decline other than temporary in the value of such investments.
l) INCOME TAX
Tax expense comprises of current, deferred and fringe benefit tax.
Current income tax and fringe benefit tax is
measured at the amount expected to be paid to the tax authorities in
accordance with the Income Tax Act, 1961. 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 taxes measured based on the tax rates and the tax law enacted
or substantively enacted at the balance sheet date. Deferred assets are
recognized only to the extend that there is reasonable certainty that
sufficient future taxable income will be available against which such
deferred tax assets can be realized. If the company has carry forward
of unabsorbed depreciation and tax losses, deferred tax assets are
recognized only if there is virtual certainty that such deferred tax
assets can be realized against future taxable profits. Unrecognized
deferred tax assets of earlier year are reassessed and recognized to
the extent that it has become reasonable certain that future taxable
income will be available against which such deferred tax assets be
realised.
Mat credit is recognised as an asset only when and to the extent there
is convincing evidence that the company will pay normal Income Tax
during the specified period. In the year in which the Minimum
Alternative Tax (MAT) credit becomes eligible to be recognized as an
asset in accordance with the recommendations contained in guidance note
issued by the Institute of Chartered Accounts of India, the said asset
is created by way of a credit to the profit & loss account and shown as
MAT credit Entitlement. The Company reviews the same at each balance
sheet date and writes down the carrying amount of MAT credit
Entitlement to the extent there is no longer convincing evidence to the
effect that company will pay normal Income Tax during the specified
period.
m) 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 management estimates.
n) 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
CompanyÃs fixed assets. If any indication exists, an assetÃs
recoverable amount is estimated. An impairment loss is recognized
whenever the carrying amount of an asset exceeds its recoverable
amount. The recoverable amount is greater of the net selling price and
the 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 asset in prior years.
o) INTANGIBLE ASSETS
Research and Development Costs
Research & development costs which relate to the design and testing of
new or improved materials, products or processes which are recognized
as an intangible asset to the extent that it is expected that such
assets will generate future economic benefits. Research and development
expenditure of a capital nature is added to fixed assets. Development
costs carried forward is amortised over the period of expected future
sales from the related project, not exceeding five years.
The carrying value of development costs is reviewed for impairment
annually when the asset is not yet in use, and otherwise when events or
changes in circumstances indicate that the carrying value may not be
recoverable. Other Research and development costs, incurred for
development of products are expensed as incurred,
p) EARNINGS PER SHARE:
Basic earnings per share is calculated by dividing the net profit or
loss for the year attributable to equity shareholders (after deducting
preference dividends and attributable taxes) by the weighted average
number of equity shares outstanding during the year. For the purpose of
calculating Diluted Earning per Share, the net profit or loss for the
year attributable to equity shareholders and the weighted average
number of shares outstanding during the year are adjusted for the
effects of all dilutive potential Equity Shares.