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Accounting Policies of PTC Industries Ltd. Company

Mar 31, 2015

1.1 Basis of preparation of financial statements

The financial statements have been prepared to comply with the accounting principles generally accepted in India ("Indian GAAP"), including the Accounting Standards specified under Section 133 of the Companies Act 2013 (the'Act1), read with Rule 7 of the Companies (Accounts) Rules, 2014 (as amended). The financial statements have been prepared on a going concern basis under the historical cost convention on the accrual basis of accounting. The accounting policies have been consistently applied bytheCompany.

1.2 Use of estimates

In preparing the Company's financial statements in conformity with the accounting principles generally accepted in India, management is reguired to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Examples of such estimates includes estimated provision fordoubtful debts/advances, employee retirement benefit plans, provision for income taxes, useful life of fixed assets, diminution in value of investments, other probable obligations and inventory write down. Actual results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in the current and future periods.

1.3 Fixed assets

(a) Tangible assets

Fixed assets are stated at cost less accumulated depreciation and impairment losses if any. Cost comprises the purchase price and any attributable costs of bringing the asset to its working condition for i ts intended use. When an asset is scrapped or otherwise disposed off, the cost and related depreciation are removed from the books of account and resultant profit or loss, if any, is reflected in the Statement of Profit and Loss. Project under commissioning and other assets under erection/installation are shown under capital work in progress and are carried at cost, comprising of direct cost and related incidental expenses. Subseguent expenditure relating to fixed assets is capitalised only if such expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance.

Foreign currency loans availed for acguisition of fixed assets are converted at the rate prevailing on the due date for installments repayable during the year and at the rate prevailing on the date of balance sheet for the outstanding loan. The fluctuation is adjusted in the original cost of fixed assets.

(b) Intangibleassets

Intangibles are stated at cost less accumulated amortization and impairment losses (if any). Cost related to technical assistance for new projects are capitalized.The software and technical assistance are amortised over a period of 10 years.

1.4 Depreciation

(a) Tangible and Intangible assets

(I) Depreciation on fixed assets is provided pursuant to the enactment of the Companies Act 2013 (the Act1), the Company has, effective from 1st April 2014, revised the estimated useful lives of its fixed assets, which are either less than or in accordance with the provisions of Schedule II to the Act as follows:

Blockof asset Life (in years)

Free hold land N.A.

Leasehold land Lease period

Factory building 30years

Plant and Machinery 10years (Plant-1)

15 years (Other Plants)

Computer 3 years

Lab Equipment 1O years

Mouldsand Dies 8 years

Vehicles 8 years

Motorcycles and scooters lOyears

Furniture and fixtures lOyears

Officeequipments 5years

Windmill 22years

Intangibleassets

Software 6 years

Licenses 5 years

(II) Leasehold land is depreciated overthe period of lease.

(I) Cost of License is amortized over a period offive years, which is the tenure of licence agreement.

1.5 Investments

Investments that are readily realizable and intended to be held for not more than oneyear are classified as current investments; all other investments are classified as long term investments. Long term investments are carried at cost less provision (if any) for decline in value which is otherthan temporary in nature. Current investments are carried at lower of cost and fair value.

1.6 Inventories

Inventories are valued at the lower of costand net realisable value. Cost of inventories comprises all costs of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition:

- ;t of raw materials, stores and spares includes direct expenses and is determined on the basis of first in first out method.

- in progress is carried at lower of cost or net realisable value.

- shed products are valued at lower of cost or net realisable value and net of excise duty.

1.7 Employee benefits

(a) Providentfund

The Company makes contribution to statutory provident fund in accordance with Employees' Provident Fund and Miscellaneous Provisions Act, 1952. The plan is a defined contribution plan and contribution paid or payable is recognized as an expense i n the period i n which services are rendered by the employee. The Company makes monthly contributions and has no further obligation under the plan beyond its contributions.

(b) Gratuity

Gratuity is a post-employment benefit and is in the nature of defined benefit plan.The liability recognized in the balance sheet in respect of gratuity is the present value of the defined benefit obi igation at the balance sheet date together with adjustments for unrecognized actuarial gains or losses and past service costs. The defined benefit obligation is calculated annually by an independent actuary using the projected unit credit method.

Actuarial gains and losses arising from adjustments and changes in actuarial assumptions are charged or credited to the Statement of Profit and Loss in the year in which such gains or losses arise.

The Company also has a defined contribution superannuation plan in respect of eligible employees under a scheme of Life I nsurance Corporation of India; contributions in respect of such scheme are recognized in the Statement of Profit and Loss.

(c) Compensated absences

Provision for compensated absences when determined to be a long term benefit is made on the basis of actuarial valuation as at the end of the year. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to the Statement of Profit and Loss in theyear in which such gains or losses arise. Provision related to short term compensated absences of workers is provided on actual basis.

(d) ShortTerm employee benefits

The undiscounted amount of short-terrn employee benefits expected to be paid in exchange for the services rendered by employees is recognised during the period when the employee renders the service.

1.8 Research and development costs

Revenue expenditure is charged to the Statement of Profit and Loss under respective heads of account in theyear in which it is incurred. Capital expenditure i s i ncluded i n fixed assets and depreciated as per t he depreciation policy of t he Company.

1.9 Impairment

The Company assesses at each Balance Sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the Statement of Profit and Loss. If at the Balance Sheet date there is an indication that a previously assessed impairment loss no longer exists then the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum ofdepreciated historical cost.

1.10 Foreign currency transactions

(a) 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.

(b) Conversion

Foreign currency monetary items air 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; ad 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.

(c) Exchange differences

Exchange differences arising on the settlement of monetary items or on restatement of the 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 theyear in whichi they arise.

The Company generally uses foreign exchange forward contracts to hedge its exposure for movement in foreign exchange rates. The use of these foreign exchange forward contracts reduces the risk or cost to the Company and the Company does not use the foreign exchange forward contracts or options for trading or speculation purpose.

Foreign exchange forward contracts where there i s an underlying are accounted i n accordance with AS 11-"The Effects of changes in Foreign Exchange Rates" i.e.,

(a) the premium or discount on all such contracts arising at the inception of each contract is amortised as income or expenditure overthe life of contract.

(b) the exchange difference is calculated as the difference between the foreign currency amount of the contract translated at the exchange rate at the reporting date, or the settlement date where the transaction is settled during the reporting period, and the corresponding foreign currency amount translated at the later of the date of inception of the forward exchange contract and the last reporting date. Such exchange differences are recognised in the Statement of Profit and Loss in the reporting period in which the exchange rates change.

(c) any profit or loss arising on the cancellation or renewal of such contracts is recognised as income or as expense for the year.

(d) The Company has elected to account for exchange difference arising on reporting of long-term foreign currency items in accordance with Companies (Accounting Standards) Amendment Rules, 2009 pertaining to (AS-11) notified by Government of India on 31st March, 2009 (as amended on 29th December, 2011). Accordingly, the effect of exchange differences on long term foreign currency loans of the Company is accounted by addition or deduction to the cost of fixed assets so far it relates to depreciable capital assets.

1.1 Taxation

The tax expense comprises of current taxes and deferred taxes. Current tax is the amount of income tax determined to be payable in respect of taxable income for a period as per the provisions of Income Tax Act, 1961. Deferred tax is the effect of timing differences between taxable income and accounting income that originate in one period and are capable of reversal in one or more subseguent periods. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are reviewed at each Balance Sheet date and recognized/derecognized only to the extent that there is reasonableA/irtual certainty, depending on the nature of the timing differences, that sufficient future taxable income will be available against which such deferred tax assets can be realized.

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 there isconvincing evidencethatthecompany will pay normal income tax during the specified period, i.e., the period for which MAT Credit is allowed to be carried forward. In theyear in which the Company recognizes MAT Credit as an asset, the said asset is created by way ofcreditto 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.

1.12 Revenue recognition

(a) Revenue from sale of goods is recognised upon transfer of all significant risks and rewards incident to ownership to the buyer which general ly coincides with the dispatch of goods to the customers.

i) Domestic sales are recorded net of sale returns, sales tax and excise duty. Export sales are stated net of returns and include export incentives.

ii) No significant uncertainty exists regarding the amount of the consideration that will be derived from the sale of goods.

(b) Revenue generated from Windmill l ocated i n district Kutch, Gujarat i s adjusted against the consumption of power at the manufacturing unit of the Company located in Mehsana, Gujarat. The monetary value of the unit so adjusted, calculated at the prevail ing Gujarat EnergyTransmission Corporation Limited (GETCO) rate net of wheeling charge is included in the Power and Fuel Account. The value of the unadjusted units as at the balance sheet date has been included under Sundry Debtors.

The Company has been permitted by the Gujarat Energy Development Agency (GEDA) to set up a Wind Farm of 0.75 MW in district Kutch, Gujarat in accordance with the provisions of the Wind Power Generation Policy, 2002. A tripartite Wheeling and Banking agreement has been entered into by tine Company with GEDA and Gujarat EnergyTransmission Corporation Limited (GETCO).

(c) Income from interest on deposits, loans and interest bearing securities i s recognised on the time proportionate method taking into account the amount invested and the underlying rate of interest.

1.13 Export benefits/incentives

Revenue in respect of duty entitlement pass book scheme, focus claims and duty drawback scheme is recognized on an accrual basis on export of goods if the entitlement can be estimated with reasonable accuracy.

1.14 Leases

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.

1.15 Provisions and contingent liabilities

The Company creates a provision when there is a present obligation as a result of a past event, where the outflow of economic resources is probable and a reliable estimate of the amount of obi igation can be made.

A disclosure for a contingent I iability is made where there is a :

(i) possible obligation, the existence of which will be confirmed by the occurrence/non-occurrence of one or more uncertain events, not fully within the control of the Company;

(ii) present obligation, where it is not probable that an outflow of resources embodying economic benefits will be reguired to settle the obi igation.

(iii) or where reliable estimate of the obi igation cannot be made.

Where there is a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

1.16 Earning per share

Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to eguity shareholders by the weighted average number of eguity shares outstanding during the period. The weighted average number of eguity shares outstanding during the period is adjusted for events of bonus issue and share split. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to eguity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

1.17 Cash and bankequivalents

Cash and cash equivalents comprise cash on hand, in current accounts and deposits accounts with an original maturity of three months or less and exclude restricted cash. Restricted cash represents deposits that have been pledged with banks against performance guarantees issued to customers as security to meet contractual obligations.

1.18 Governmentgrants

Grants in the nature of contribution towards capital cost of setting up projects are treated as capital reserve.

1.19 Borrowing costs

Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying asset are capitalized as part of the cost of that asset. Other borrowing costs are recognized as an expense in the period in which they are incurred. Capitalization of borrowing costs ceases when substantially all the activities necessary to prepare the qualifying assets for its intended usearecomplete.

1.20 Segment reporting Identification of segments:

The Company's operating businesses are organized and managed separately according to the nature of goods produced, with each segment representing a strategic business unit that serves different markets. The Company operates in I ndia and othercountries and accordingly geographical segments have been reported.

Intersegment transfers:

Inter segment revenues have been accounted for based on the transaction price agreed to between segments which is primarily market led.

Allocation of costs:

Direct revenues and direct expenses have been identified to segments on the basis of their relationship to the operating activities of the segment.

Revenues and expenses, which relate to the Company as a whole and are not allocable to segments on a reasonable basis are presented as"Unallocable"in the segment disclosure.

b) Shares issued on conversion of Compulsory Convertible Debentures (CCDs)

Pursuant to the resolution passed by the shareholders of the Company at the Annual General Meeting held on 16 July 2013, the Company had issued Zero Coupon Compulsory Convertible Debentures of face value ofRs. 1,000 each for a consideration ofRs. 40,00,00,000 to Pragati India Fund Limited and PI International LP through preferential issue. CCDs were converted as under in two tranches during the financial year:


Mar 31, 2014

1.1 Basis of preparation of financial statements

The financial statements have been prepared and presented under the historical cost convention on the accrual basis of accounting in accordance with the accounting principles generally accepted in India ("Indian GAAP") and in compliance with the mandatory accounting standards ("AS") as prescribed under the Companies (Accounting Standards) Rules, 2006 (as amended) ("the Rules"), the provisions of the Companies Act, 1956 and the Companies Act, 2013 (to the extent applicable).The accounting policies have been consistently applied by the Company and are consistent with those used in previous year.

1.2 Use of estimates

In preparing the Company's financial statements in conformity with the accounting principles generally accepted in India, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent Iiabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Examples of such estimates includes estimated provision for doubtful debts/advances, employee retirement benefit plans, provision for income taxes, useful life of fixed assets, diminution in value of investments, other probable obligations and inventory write down. Actual results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in the current and future periods.

1.3 Fixed assets

(a) Tangible assets

Fixed assets are stated at cost less accumulated depreciation and impairment losses if any. Cost comprises the purchase price and any attributable costs of bringing the asset to its working condition for its intended use. When an asset is scrapped or otherwise disposed off, the cost and related depreciation are removed from the books of account and resultant profit or loss, if any, is reflected in the Statement of Profit and Loss. Project under commissioning and other assets under erection/installation are shown under capital work in progress and are carried at cost, comprising of direct cost and related incidental expenses. Subseguent expenditure relating to fixed assets is capitalised only if such expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance. However, assets acguired upto 2nd April, 1993 are stated at their net replacement value, less accumulated depreciation.

Foreign currency Ioans availed for acquisition of fixed assets are converted at the rate prevailing on the due date for installments repayable during the year and at the rate prevailing on the date of balance sheet for the outstanding loan. The fluctuation is adjusted in the original cost of fixed assets.

(b) Intangible assets

Intangibles are stated at cost less accumulated amortization and impairment losses (if any). Cost related to technical assistance for new projects are capitalized.The software and technical assistance are amortised over a period of 10 years.

1.4 Depreciation

(a) Tangible and Intangible assets

(I) Depreciation on fixed assets is provided on straight line method (SLM) at rates which are either greater than or equal to the corresponding rates in Schedule XIV to the Act, based on management estimates of useful life as follows:

Block of asset Method of depreciation Life (in years)

Free hold land N.A.

Lease hold land Lease period

Factory building Straight Line 28-29years

Plant and Machinery StraightLine 12-13 years (Plant-1)

20years (Other Plants)

Computer StraightLine 5-6years

Moulds and Dies StraightLine 8-9years

Vehicles StraightLine lO years

Furniture and fixtures StraightLine 15 years

Office equipments StraightLine 20years

Windmill StraightLine 18years Intangible assets

Software StraightLine 5-6years

Licences StraightLine 5 years

(II) Leasehold land is depreciated over the period of lease.

(I) Cost of Licence is amortized over a period of five years, which is the tenure of licence agreement.

1.5 Investments

Investments that are readily realizable and intended to be held for not more than one year are classified as current investments; all other investments are classified as long term investments. Long term investment is carried at cost less provision (if any) for decline in value which is other than temporary in nature. Current investments are carried at lower of cost and fair value.

1.6 Inventories

Inventories are valued at the lower of cost and net realisable value. Cost of inventories comprises all cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition: *Cost of raw materials, stores and spares includes direct expenses and is determined on the basis of first in first out method. Work in progress is carried at lower of cost or net realisable value. Finished products are valued at lower of cost or net realisable value and net of excise duty.

1.7 Employee benefits

(a) Provident fund

The Company makes contribution to statutory provident fund in accordance with Employees' Provident Fund and Miscellaneous Provisions Act, 1952. The plan is a defined contribution plan and contribution paid or payable is recognized as an expense in the period in which services are rendered by the employee.The Company makes monthly contributions and has no further obligation under the plan beyond its contributions.

(b) Gratuity

Gratuity is a post-employment benefit and is in the nature of defined benefit plan.The liability recognized in the balance sheet in respect of gratuity is the present value of the defined benefit obligation at the balance sheet date together with adjustments for unrecognized actuarial gains or losses and past service costs. The defined benefit obligation is calculated annually by an independent actuary using the projected unit credit method.

Actuarial gains and losses arising from adjustments and changes in actuarial assumptions are charged or credited to the Statement of Profit and Loss in the year in which such gains or losses arise.

The Company also has a defined contribution superannuation plan in respect of eligible employees under a scheme of Life Insurance Corporation of India; contributions in respect of such scheme are recognized in the Statement of Profit and Loss.

(c) Compensated absences

Provision for compensated absences when determined to be a long term benefit is made on the basis of actuarial valuation as at the end of the year. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to the Statement of Profit and Loss in the year in which such gains or losses arise. Provision related to short term compensated absences of workers is provided on actual basis.

(d) Short Term employee benefits

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees is recognised during the period when the employee renders the service.

1.8 Research and development costs

Revenue expenditure is charged to the Statement of Profit and Loss under respective heads of account in the year in which it is incurred. Capital expenditure is included in fixed assets and depreciated as per the depreciation policy of the Company.

1.9 Impairment

The Company assesses at each Balance Sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the Statement of Profit and Loss. If at the Balance Sheet date there is an indication that a previously assessed impairment loss no longer exists then the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciated historical cost.

1.10 Foreign currency transactions

(a) 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.

(b) 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.

(c) Exchange differences

Exchange differences arising on the settlement of monetary items or on restatement of the 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.

The Company generally uses foreign exchange forward contracts to hedge its exposure for movement in foreign exchange rates. The use of these foreign exchange forward contracts reduces the risk or cost to the Company and the Company does not use the foreign exchange forward contracts or options for trading or speculation purpose.

Foreign exchange forward contracts where there is an underlying are accounted in accordance with AS 11-"The Effects of changes in Foreign Exchange Rates" i.e.,

(a) the premium or discount on all such contracts arising at the inception of each contract is amortised as income or expenditure over the life of contract.

(b) the exchange difference is calculated as the difference between the foreign currency amount of the contract translated at the exchange rate at the reporting date, or the settlement date where the transaction is settled during the reporting period, and the corresponding foreign currency amount translated at the later of the date of inception of the forward exchange contract and the last reporting date. Such exchange differences is recognised in the Statement of Profit and Loss in the reporting period in which the exchange rates change.

(c) any profit or loss arising on the cancellation or renewal of such contracts is recognised as income or as expense for the year.

(d) The Company has elected to account for exchange difference arising on reporting of long-term foreign currency items in accordance with Companies (Accounting Standards) Amendment Rules, 2009 pertaining to (AS-11) notified by Government of India on 31st March, 2009 (as amended on 29th December, 2011). Accordingly, the effect of exchange differences on long term foreign currency loans of the Company is accounted by addition or deduction to the cost of fixed assets so far it relates to depreciable capital assets.

1.11 Taxation

The tax expense comprises of current taxes and deferred taxes. Current tax is the amount of income tax determined to be payable in respect of taxable income for a period as per the provisions of Income Tax Act, 1961. Deferred tax is the effect of timing differences between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are reviewed at each Balance Sheet date and recognized/derecognized only to the extent that there is reasonable/irtual certainty, depending on the nature of the timing differences, that sufficient future taxable income will be available against which such deferred tax assets can be realized.

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 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, 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 sufficient period.

1.12 Revenue recognition

(a) Revenue from sale of goods is recognised upon transfer of all significant risks and rewards incident to ownership to the buyer which generally coincides with the dispatch of goods to the customers.

Domestic sales are recorded net of sale returns, sales tax and excise duty. Export sales are stated net of returns and include export incentives.

(b) Revenue generated from Windmill located in district Kutch, Gujarat is adjusted against the consumption of power at the manufacturing unit of the Company located in Mehsana, Gujarat. The monetary value of the unit so adjusted, calculated at the prevailing Gujarat Energy Transmission Corporation Limited (GETCO) rate net of wheeling charge is included in the Power and Fuel Account. The value of the unadjusted units as at the balance sheet date has been included under Sundry Debtors.

The Company has been permitted by the Gujarat Energy Development Agency (GEDA) to set up a Wind Farm of 0.75 MW in district Kutch, Gujarat in accordance with the provisions of the Wind Power Generation Policy, 2002. A tripartite Wheeling and Banking agreement has been entered into by tine Company with GEDA and Gujarat Energy Transmission Corporation Limited (GETCO).

(c) Income from interest on deposits, loans and interest bearing securities is recognised on the time proportionate method taking into account the amount invested and the underling rate of interest.

1.13 Export benefits/incentives

Revenue in respect of duty entitlement pass book scheme, focus claims and duty drawback scheme is recognized on an accrual basis on export of goods if the entitlement can be estimated with reasonable accuracy

1.14 Leases

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.

1.15 Provisions and contingent liabilities

The Company creates a provision when there is a present obligation as a result of a past event, where the outflow of economic resources is probable and a reliable estimate of the amount of obligation can be made.

A disclosure for a contingent liability is made where there is a:

(i) possible obligation, the existence of which will be confirmed by the occurrence/non-occurrence of one or more uncertain events, not fully within the control of the Company;

(ii) present obligation, where it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation.

(iii) or where reliable estimate of the obligation cannot be made.

Where there is a present obligation in respect of which the Iikelihood of outflow of resources is remote, no provision or disclosure is made.

1.16 Earning per share

Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to eguity shareholders by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted for events of bonus issue and share split. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

1.17 Cash and bank balances

Cash and cash equivalents comprise cash on hand, in current accounts and deposits accounts with an original maturity of three months or less and exclude restricted cash. Restricted cash represents deposits that have been pledged with banks against performance guarantees issued to customers as security to meet contractual obligations.

1.18 Government grants

Grants in the nature of contribution towards capital cost of setting up projects are treated as capital reserve.

1.19 Borrowing costs

Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying asset are capitalized as part of the cost of that asset. Other borrowing costs are recognized as an expense in the period in which they are incurred. Capitalization of borrowing costs ceases when substantially all the activities necessary to prepare the qualifying assets for its intended use are complete.

1.20 Segment reporting

Identification of segments:

The Company's operating businesses are organized and managed separately according to the nature of goods produced, with each segment representing a strategic business unit that serves different markets.The Company operates only in India and accordingly there are no geographical segments.

Intersegment transfers:

Inter segment revenues have been accounted for based on the transaction price agreed to between segments which is primarily market led.

Allocation of costs:

Direct revenues and direct expenses have been identified to segments on the basis of their relationship to the operating activities of the segment.

Revenues and expenses, which relate to the Company as a whole and are not allocable to segments on a reasonable basis are presented as"Unallocable"in the segment disclosure.


Mar 31, 2013

1. Basis of preparation of Financial Statements

The financial statements have been prepared to comply with the Accounting Standards referred to in the Companies (Accounting Standards) Rule 2006 issued by the Central Government in exercise of the power conferred under sub- section (II) (a) of Section 642 and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention on accrual basis. The accounting policies have been consistently applied except where a newly issued accounting standard, if initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use. Management evaluates all recently issued or revised accounting standards on an ongoing basis.

2. Change in accounting policy

Presentation and disclosure of financial statements

From the year ended March 31, 2012, the revised Schedule VI notified under the Companies Act, 1956, has become applicable to the Company, for preparation and presentation of its financial statements. The adoption of revised Schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However, it has significant impact on presentation and disclosures made in the financial statements. The Company has also reclassified the previous year figures in accordance with the requirements applicable in the current year.

3. Measurement of EBITDA

As permitted by the Guidance note on the Revised Schedule VI to the Companies Act, 1956, the Company has elected to present earnings before interest, tax, depreciation and amortisation (EBITDA) as a separate line item on the face of the statement of profit and loss. The Company measure EBITDA on the basis of profit/(loss) from continuing operations. In its measurement, the Company does not include depreciation and amortisation expenses, finance costs and tax expense.

4. Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities disclosure of contingent liabilities on the date of the financial statements and the reported amounts of revenues and expense during the reporting period. Example of such estimates includes estimated provision for doubtful debts. Actual results could differ from these estimates. Any revision to accounting estimates is recognised prospectively in current and future periods.

5. Fixed Assets

(a) Tangible Assets

Fixed Assets are carried at cost of acquisition or construction less accumulated Depreciation. Cost is inclusive of inward freight, duties and taxes net of CENVAT/UP-VAT, technical fee for their drawing/design and development, borrowing costs and other directly attributable costs to bring the assets to their working condition for intended use. However assets acquired upto 2nd April, 1993 are stated at their net replacement value, less accumulated depreciation.

(b) Intangible Assets

Intangible assets are stated at the cost of acquisition.

6. Depreciation

(a) Tangible Assets

(I) Depreciation on fixed assets is provided on Straight Line Method at the rates prescribed in Schedule XIV to the Companies Act, 1956.

(II) Leasehold land is written off over the period of lease.

(III) Additional depreciation consequent to revaluation is charged to Profit and Loss Account and the corresponding amount is recouped from the Revaluation Reserve.

(b) Intangible Assets

(I) Computer software is amortized on Straight Line Method at the rates prescribed in Schedule XIV to the Companies Act, 1956.

(II) Cost of Licence is amortized over a period of five years, which is the tenure of licence agreement.

5. Investments

Long Term Investments are carried at cost. Provision for diminution, other than temporary, in the value of long-term investments is recognized. Current Investments are carried at lower of cost or fair value.

6. Inventories

Inventories are valued at lower of cost or net realizable value. Cost comprises of cost of purchase or conversion and other costs incurred in bringing the inventories to their present location and condition. Finished goods are stated net of excise duty. Raw Material, Indirect Material, Stores and Spares etc. are valued on FIFO basis net of CENVAT/UP-VAT benefits availed or to be availed.

7. Employee Benefits

(a) Defined Benefit Plans

The Company''s gratuity plan is a defined benefit plan. The present value of gratuity obligation under such defined benefit plan is determined based on an actuarial valuation carried out by an independent actuary using the Projected Unit Credit Method, which recognises 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. Actuarial gains and losses are recognised immediately in the Profit and Loss Account.

(b) Defined contribution Plans

The Company deposits the contributions for provident fund and Pension Fund to the appropriate government authorities of India and these contribution are recognised in the Profit and Loss Account in the financial year to which they relate. The Company makes monthly contribution and has no further obligation under the plan beyond its contributions.

The Company also has a defined contribution superannuation plan in respect of eligible employees under a scheme of Life Insurance Corporation of India; contributions in respect of such scheme are recognized in the Profit and Loss Account.

(c) Other long term employee benefits

Other long term employee benefits comprise of leave encashment which is provided for based on the actuarial valuation in accordance with revised AS 15 as at the end of the year. Actuarial gains and losses are recognised immediately in the Profit and Loss Account.

(d) Short Term employee benefits

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees is recognised during the period when the employee renders the service.

8. Research & Development Costs

Revenue expenditure is charged to Profit & Loss Account under respective heads of account in the year in which it is incurred. Capital expenditure is included in fixed assets and depreciated as per the depreciation policy of the Company.

9. Impairment

The carrying amounts of the assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount of the asset is estimated. For assets that are not yet available for use, the recoverable amount is estimated at each balance sheet date. An impairment loss is recognised whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount. Impairment losses are recognised in the profit and loss account. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the assets'' carrying amount does not exceed the carrying amount that would have been determined net of depreciation or amortisation, if no impairment loss had been recognised.

10. Foreign currency transactions

Foreign exchange transactions are recorded at the rates prevailing at the date of transaction. Realised gains and losses on foreign exchange transactions during the year are recognised in the Profit and Loss Account. Exchange differences arising on foreign exchange transactions settled during the year are recognised in the Profit and Loss Account of the year.

Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date are translated at the exchange rates of forward covers and in other cases at the exchange rate as at the Balance Sheet date.

The Company generally uses foreign exchange forward contracts and options to hedge its exposure for movement in foreign exchange rates. The use of these foreign exchange forward contracts and options reduces the risk or cost to the Company and the Company does not use the foreign exchange forward contracts or options for trading or speculation purpose.

Foreign exchange forward contracts where there is an underlying are accounted in accordance with AS 11-"The Effects of changes in Foreign Exchange Rates" i.e.,

(a) the premium or discount on all such contracts arising at the inception of each contract is amortised as income or expenditure over the life of contract.

(b) the exchange difference is calculated as the difference between the foreign currency amount of the contract translated at the exchange rate at the reporting date, or the settlement date where the transaction is settled during the reporting period, and the corresponding foreign currency amount translated at the later of the date of inception of the forward exchange contract and the last reporting date. Such exchange differences is recognised in the Profit and Loss Account in the reporting period in which the exchange rates change.

(c) any profit or loss arising on the cancellation or renewal of such contracts is recognised as income or as expense for the year.

(d) The Company has elected to account for exchange difference arising on reporting of long-term foreign currency items in accordance with Companies (Accounting Standards) Amendment Rules, 2009 pertaining to (AS-11) notified by Government of India on 31st March, 2009 (as amended on 29th December, 2011). Accordingly, the effect of exchange differences on foreign currency loans of the Company is accounted by addition or deduction to the cost so far it relates to depreciable capital assets.

11. Taxation

Income tax liability is ascertained on the basis of assessable profits computed in accordance with the provisions of the Income Tax Act, 1961.

The differences that result between the profit offered for income taxes and the profit as per the financial statements are identified and thereafter a deferred tax asset or a deferred tax liability is recorded for timing differences, namely the differences that originate in one accounting period and reverse in another, based on the tax effect of the aggregate amount being considered. The tax effect is calculated on the accumulated timing differences at the end of an accounting period based on prevailing enacted or substantially enacted regulations. Where there are unabsorbed depreciation and carry forward losses under tax laws, deferred tax assets are recognised only if there is virtual certainly supported by convincing evidence that such deferred tax assets can be realised in future. Such assets are reviewed at each Balance Sheet date and written down or written up to reflect the amount that is reasonably/virtually certain (as the case may be) to be realised.

12. Revenue Recognition

(a) Revenue from sales is recognised on transfer of all significant risks and rewards of ownership which is generally as and when goods are cleared from factory premises.

(b) Domestic sales (net) are stated net of returns, sales tax and excise duty. Export sales are stated net of returns at F.O.B. value and include export incentives.

(c) Revenue generated from Windmill located in district Kutch, Gujarat is adjusted against the consumption of power at the manufacturing unit of the Company located in Mehsana, Gujarat. The monetary value of the unit so adjusted, calculated at the prevailing Gujarat Energy Transmission Corporation Limited (GETCO) rate net of wheeling charge is included in the Power and Fuel Account. The value of the unadjusted units as at the balance sheet date has been included under Sundry Debtors.

13. Export benefits/incentives

Export entitlements under the Duty Entitlement Pass Book (DEPB), focus claim and Duty Draw Back schemes are recognized in the profit and loss account on accrual basis when Export Sales are recognised in Books of Accounts

14. Leases

Lease rental in respect of assets taken on operating lease are charged to the Profit and Loss account on a straight line basis over the lease term.

15. Provisions and Contingent Liabilities

The Company recognises a provision when there is a present obligation as a result of a past event and it is probable that it would involve an outflow of resources and a reliable estimate can be made of the amount of obligation. Provisions are not discounted to its present value, and are determined based on the management''s estimation of the obligation required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflected current management estimates.

A disclosure for a contingent liability is made where it is more likely than not that a present obligation or possible obligation would result in or involve an outflow of resources. When no present obligation or possibility exists and the possibility of an outflow of resources is remote, no disclosure or provision is made.


Mar 31, 2012

1. Basis of preparation of Financial Statements

The financial statements have been prepared to comply with the Accounting Standards referred to in the Companies (Accounting Standards) Rule 2006 issued by the Central Government in exercise of the power conferred under sub- section (II) (a) of Section 642 and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention on accrual basis. The accounting policies have been consistently applied except where a newly issued accounting standard, if initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use. Management evaluates all recently issued or revised accounting standards on an ongoing basis.

2. Change in accounting policy

Presentation and disclosure of financial statements

During the year ended March 31,2012, the revised Schedule VI notified under the Companies Act, 1956, has become applicable to the Company, for preparation and presentation of its financial statements. The adoption of revised Schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However, it has significant impact on presentation and disclosures made in the financial statements. The Company has also reclassified the previous year figures in accordance with the requirements applicable in the current year.

3. Measurement of EBITDA

As permitted by the Guidance note on the Revised Schedule VI to the Companies Act, 1956, the Company has elected to present earnings before interest, tax, depreciation and amortisation (EBITDA) as a separate line item on the face of the statement of profit and loss. The Company measure EBITDA on the basis of prof it/(loss) from continuing operations. In its measurement, the Company does not include depreciation and amortisation expenses, finance costs and tax expense.

4. Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities disclosure of contingent liabilities on the date of the financial statements and the reported amounts of revenues and expense during the reporting period. Example of such estimates includes estimated provision for doubtful debts. Actual results could differ from these estimates. Any revision to accounting estimates is recognised prospectively in current and future periods.

5. Fixed Assets

(a) Tangible Assets

Fixed Assets are carried at cost of acquisition or construction less accumulated Depreciation. Cost is inclusive of inward freight, duties and taxes net of CENVAT/UP-VAT, technical fee for their drawing/design and development, borrowing costs and other directly attributable costs to bring the assets to their working condition for intended use. However assets acquired upto 2nd April, 1993 are stated at their net replacement value, less accumulated depreciation.

(b) Intangible Assets

Intangible assets are stated at the cost of acquisition.

6. Depreciation

(a) Tangible Assets

(I) Depreciation on fixed assets is provided on Straight Line Method at the rates prescribed in Schedule XIV to the Companies Act, 1956.

(II) Leasehold land is written off over the period of lease.

(III) Additional depreciation consequent to revaluation is charged to Profit and Loss Account and the corresponding amount is recouped from the Revaluation Reserve.

(b) Intangible Assets

(I) Computer software is amortized on Straight Line Method at the rates prescribed in Schedule XIV to the Companies Act, 1956.

(II) Cost of Licence is amortized over a period of five years, which is the tenure of licence agreement.

5. Investments

Long Term Investments are carried at cost. Provision for diminution, other than temporary, in the value of long-term investments is recognized. Current Investments are carried at lower of cost or fair value.

6. Inventories

Inventories are valued at lower of cost or net realizable value. Cost comprises of cost of purchase or conversion and other costs incurred in bringing the inventories to their present location and condition. Finished goods are stated net of excise duty. Raw Material, Indirect Material, Stores and Spares etc. are valued on FIFO basis net of CENVAT/UP-VAT benefits availed or to be availed.

7. Employee Benefits

(a) Defined Benefit Plans

The Company''s gratuity plan is a defined benefit plan. The present value of gratuity obligation under such defined benefit plan is determined based on an actuarial valuation carried out by an independent actuary using the Projected Unit Credit Method, which recognises 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. Actuarial gains and losses are recognised immediately in the Profit and Loss Account.

(b) Defined contribution Plans

The Company deposits the contributions for provident fund and Pension Fund to the appropriate government authorities of India and these contribution are recognised in the Profit and Loss Account in the financial year to which they relate. The Company makes monthly contribution and has no further obligation under the plan beyond its contributions.

The Company also has a defined contribution superannuation plan in respect of eligible employees under a scheme of Life Insurance Corporation of India; contributions in respect of such scheme are recognized in the Profit and Loss Account.

(c) Other long term employee benefits

Other long term employee benefits comprise of leave encashment which is provided for based on the actuarial valuation in accordance with revised AS 15 as at the end of the year. Actuarial gains and losses are recognised immediately in the Profit and Loss Account.

(d) Short Term employee benefits

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees is recognised during the period when the employee renders the service.

8. Research & Development Costs

Revenue expenditure is charged to Profit & Loss Account under respective heads of account in the year in which it is incurred. Capital expenditure is included in fixed assets and depreciated as per the depreciation policy of the Company.

9. Impairment

The carrying amounts of the assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount of the asset is estimated. For assets that are not yet available for use, the recoverable amount is estimated at each balance sheet date. An impairment loss is recognised whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount. Impairment losses are recognised in the profit and loss account. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the assets'' carrying amount does not exceed the carrying amount that would have been determined net of depreciation or amortisation, if no impairment loss had been recognised.

10. Foreign currency transactions

Foreign exchange transactions are recorded at the rates prevailing at the date of transaction. Realised gains and losses on foreign exchange transactions during the year are recognised in the Profit and Loss Account. Exchange differences arising on foreign exchange transactions settled during the year are recognised in the Profit and Loss Account of the year.

Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date are translated at the exchange rates of forward covers and in other cases at the exchange rate as at the Balance Sheet date.

The Company generally uses foreign exchange forward contracts and options to hedge its exposure for movement in foreign exchange rates. The use of these foreign exchange forward contracts and options reduces the risk or cost to the Company and the Company does not use the foreign exchange forward contracts or options for trading or speculation purpose.

Foreign exchange forward contracts where there is an underlying are accounted in accordance with AS 11 - "The Effects of changes in Foreign Exchange Rates "i.e.,

(a) the premium or discount on all such contracts arising at the inception of each contract is amortised as income or expenditure over the life of contract.

(b) the exchange difference is calculated as the difference between the foreign currency amount of the contract translated at the exchange rate at the reporting date, or the settlement date where the transaction is settled during the reporting period, and the corresponding foreign currency amount translated at the later of the date of inception of the forward exchange contract and the last reporting date. Such exchange differences is recognised in the Profit and Loss Account in the reporting period in which the exchange rates change.

(c) any profit or loss arising on the cancellation or renewal of such contracts is recognised as income or as expense for the year.

(d) The Company has elected to account for exchange difference arising on reporting of long-term foreign currency items in accordance with Companies (Accounting Standards) Amendment Rules, 2009 pertaining to (AS-11) notified by Government of India on 31 st March, 2009 (as amended on 29th December, 2011. Accordingly, the effect of exchange differences on foreign currency loans of the Company is accounted by addition or deduction to the cost so far it relates to depreciable capital assets.

11. Taxation

Income tax liability is ascertained on the basis of assessable profits computed in accordance with the provisions of the Income Tax Act, 1961.

The differences that result between the profit offered for income taxes and the profit as per the financial statements are identified and thereafter a deferred tax asset or a deferred tax liability is recorded for timing differences, namely the differences that originate in one accounting period and reverse in another, based on the tax effect of the aggregate amount being considered. The tax effect is calculated on the accumulated timing differences at the end of an accounting period based on prevailing enacted or substantially enacted regulations. Where there are unabsorbed depreciation and carryforward losses under tax laws, deferred tax assets are recognised only if there is virtual certainly supported by convincing evidence that such deferred tax assets can be realised in future. Such assets are reviewed at each Balance Sheet date and written down or written up to reflect the amount that is reasonably/virtually certain (as the case may be) to be realised.

12. Revenue Recognition

(a) Revenue from sales is recognised on transfer of all significant risks and rewards of ownership which is generally as and when goods are cleared from factory premises.

(b) Domestic sales (net) are stated net of returns, sales tax and excise duty. Export sales are stated net of returns at F.O.B. value and include export incentives.

(c) Revenue generated from Windmill located in district Kutch, Gujarat is adjusted against the consumption of power at the manufacturing unit of the Company located in Mehsana, Gujarat. The monetary value of the unit so adjusted, calculated at the prevailing Gujarat Energy Transmission Corporation Limited (GETCO) rate net of wheeling charge is included in the Power and Fuel Account. The value of the unadjusted units as at the balance sheet date has been included under Sundry Debtors.

13. Export benefits/incentives

Export entitlements under the Duty Entitlement Pass Book (DEPB), focus claim and Duty Draw Back schemes are recognized in the profit and loss account on accrual basis when Export Sales are recognised in Books of Accounts

14. Leases

Lease rental in respect of assets taken on operating lease are charged to the Profit and Loss account on a straight line basis over the lease term.

15. Provisions and Contingent Liabilities

The Company recognises a provision when there is a present obligation as a result of a past event and it is probable that it would involve an outflow of resources and a reliable estimate can be made of the amount of obligation. Provisions are not discounted to its present value, and are determined based on the management''s estimation of the obligation required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflected current management estimates.

A disclosure for a contingent liability is made where it is more likely than not that a present obligation or possible obligation would result in or involve an outflow of resources. When no present obligation or possibility exists and the possibility of an outflow of resources is remote, no disclosure or provision is made.

The Company has submitted a project proposal amounting to Rs.1800 lakhs to the Department of Scientific & Industrial Research, Ministry of Science & Technology, New Delhi for development and commercialiation of Rapid Cast Technology of single piece Stainless Steel Casting of upto 5000 Kgs. The department has committed partial support as a grant of Rs. 500 lakhs out of a total cost of Rs. 1800 lakhs under The Technology Development and Demonstration Programme (TDDP) of Department of Scientific and Industrial Research (DSIR) for a project duration of 24 months vide their letter no. DSIR/TDDP/PTCIL-41/2010-11 dated 20th September, 2011 . The company has received the first Instalment of Rs. 200 lakhs during the year and incurred the expense of Rs. 440.09 lakhs towards the project.

SECURITIES

(a) Term loans from State Bank of India & Punjab National Bank are secured byway of:

-First charge ranking pari-passu on the whole of the present and future fixed assets of the Company. -Personal guarantee of five directors, pari-passu charge on the whole of the present and future current assets of the Company. -Secured by the additional security of residential house at Lucknow owned by a director (mortgaged with SBI). -Vehicle loans from ICICI Bank Limited & Tata Capital Limited are secured by way of absolute charge on specific assets purchased under the scheme and repayable within a period of 36 months as per the repayment schdeule.


Mar 31, 2011

1. Basis of preparation of Financial Statements

The financial statements have been prepared to comply with the Accounting Standards referred to in the Companies (Accounting Standards) Rule 2006 issued by the Central Government in exercise of the power conferred under sub-section (II) (a) of Section 642 and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention on accrual basis. The accounting policies have been consistently applied except where a newly issued accounting standard, if initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use. Management evaluates all recently issued or revised accounting standards on an ongoing basis.

2. Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities disclosure of contingent liabilities on the date of the financial statements and the reported amounts of revenues and expense during the reporting period. Example of such estimates includes estimated provision for doubtful debts. Actual results could differ from these estimates. Any revision to accounting estimates is recognised prospectively in current and future periods.

3. Fixed Assets

(a) Tangible Assets

Fixed Assets are carried at cost of acquisition or construction less accumulated Depreciation. Cost is inclusive of inward freight, duties and taxes net of CENVAT/UP-VAT, technical fee for their drawing/design and development, borrowing costs and other directly attributable costs to bring the assets to their working condition for intended use. However assets acquired upto 2nd April, 1993 are stated at their net replacement value, less accumulated depreciation.

(b) Intangible Assets

Intangible assets are stated at the cost of acquisition.

4. Depreciation

(a) Tangible Assets

(I) Depreciation on fixed assets is provided on Straight Line Method at the rates prescribed in Schedule XIV to the Companies Act, 1956.

(II) Leasehold land is written off over the period of lease.

(III) Additional depreciation consequent to revaluation is charged to Profit and Loss Account and the corresponding amount is recouped from the Revaluation Reserve.

5. Investments

Long Term Investments are carried at cost. Provision for diminution, other than temporary, in the value of long-term investments is recognized. Current Investments are carried at lower of cost or fair value.

6. Inventories

Inventories are valued at lower of cost or net realizable value. Cost comprises of cost of purchase or conversion and other costs incurred in bringing the inventories to their present location and condition. Finished goods are stated net of excise duty. Raw Material, Indirect Material, Stores and Spares etc. are valued on FIFO basis net of CENVAT/UP-VAT benefits availed or to be availed.

7. Employee Benefits

(a) Defined Benefit Plans

The Company''s gratuity plan is a defined benefit plan. The present value of gratuity obligation under such defined benefit plan is determined based on an actuarial valuation carried out by an independent actuary using the Projected Unit Credit Method, which recognises 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. Actuarial gains and losses are recognised immediately in the Profit and Loss Account.

(b) Defined contribution Plans

The Company deposits the contributions for provident fund and Pension Fund to the appropriate government authorities of India and these contribution are recognised in the Profit and Loss Account in the financial year to which they relate. The Company makes monthly contribution and has no further obligation under the plan beyond its contributions.

The Company also has a defined contribution superannuation plan in respect of eligible employees under a scheme of Life Insurance Corporation of India; contributions in respect of such scheme are recognized in the Profit and Loss Account.

(c) Other long term employee benefits

Other long term employee benefits comprise of leave encashment which is provided for based on the actuarial valuation in accordance with revised AS 15 as at the end of the year. Actuarial gains and losses are recognised immediately in the Profit and Loss Account.

(d) Short Term employee benefits

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employ- ees is recognised during the period when the employee renders the service.

8. Research & Development Costs

Revenue expenditure is charged to Profit & Loss Account under respective heads of account in the year in which it is incurred. Capital expenditure is included in fixed assets and depreciated as per the depreciation policy of the Company.

9. Impairment

The carrying amounts of the assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount of the asset is estimated. For assets that are not yet available for use, the recoverable amount is estimated at each balance sheet date. An impairment loss is recognised whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount. Impairment losses are recognised in the profit and loss account. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the assets'' carrying amount does not exceed the carrying amount that would have been determined net of depreciation or amortisation, if no impairment loss had been recognised.

10. Foreign currency transactions

Foreign exchange transactions are recorded at the rates prevailing at the date of transaction. Realised gains and losses on foreign exchange transactions during the year are recognised in the Profit and Loss Account. Exchange differences arising on foreign exchange transactions settled during the year are recognised in the Profit and Loss Account of the year.

Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date are translated at the exchange rates of forward covers and in other cases at the exchange rate as at the Balance Sheet date.

The Company generally uses foreign exchange forward contracts and options to hedge its exposure for movement in foreign exchange rates. The use of these foreign exchange forward contracts and options reduces the risk or cost to the Company and the Company does not use the foreign exchange forward contracts or options for trading or speculation purpose.

Foreign exchange forward contracts where there is an underlying are accounted in accordance with AS 11-"The Effects of changes in Foreign Exchange Rates" i.e.,

(a) the premium or discount on all such contracts arising at the inception of each contract is amortised as income or expenditure over the life of contract.

(b) the exchange difference is calculated as the difference between the foreign currency amount of the contract translated at the exchange rate at the reporting date, or the settlement date where the transaction is settled during the reporting period, and the corresponding foreign currency amount translated at the later of the date of inception of the forward exchange contract and the last reporting date. Such exchange differences is recognised in the Profit and Loss Account in the reporting period in which the exchange rates change.

(c) any profit or loss arising on the cancellation or renewal of such contracts is recognised as income or as expense for the year.

11. Taxation

Income tax liability is ascertained on the basis of assessable profits computed in accordance with the provisions of the Income Tax Act, 1961.

The differences that result between the profit offered for income taxes and the profit as per the financial statements are identified and thereafter a deferred tax asset or a deferred tax liability is recorded for timing differences, namely the differences that originate in one accounting period and reverse in another, based on the tax effect of the aggregate amount being considered. The tax effect is calculated on the accumulated timing differences at the end of an accounting period based on prevailing enacted or substantially enacted regulations. Where there are unabsorbed depreciation and carry forward losses under tax laws, deferred tax assets are recognised only if there is virtual certainly supported by convincing evidence that such deferred tax assets can be realised in future. Such assets are reviewed at each Balance Sheet date and written down or written up to reflect the amount that is reasonably/virtually certain (as the case may be) to be realised.

12. Revenue Recognition

(a) Revenue from sales is recognised on transfer of all significant risks and rewards of ownership which is generally as and when goods are cleared from factory premises.

(b) Domestic sales (net) are stated net of returns, sales tax and excise duty. Export sales are stated net of returns at F.O.B. value and include export incentives.

(c) Revenue generated from Windmill located in district Kutch, Gujarat is adjusted against the consumption of power at the manu- facturing unit of the Company located in Mehsana, Gujarat. The monetary value of the unit so adjusted, calculated at the prevailing Gujarat Energy Transmission Corporation Limited (GETCO) rate net of wheeling charge is included in the Power and Fuel Account. The value of the unadjusted units as at the balance sheet date has been included under Sundry Debtors.

13. Export benefits/incentives

Export entitlements under the Duty Entitlement Pass Book (DEPB) Scheme are recognized in the profit and loss account on accrual basis when Export Sales are recognised in Books of Accounts

14. Leases

Lease rental in respect of assets taken on operating lease are charged to the Profit and Loss account on a straight line basis over the lease term.

15. Provisions and Contingent Liabilities

The Company recognises a provision when there is a present obligation as a result of a past event and it is probable that it would involve an outflow of resources and a reliable estimate can be made of the amount of obligation. Provisions are not discounted to its present value, and are determined based on the management''s estimation of the obligation required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflected current management estimates.

A disclosure for a contingent liability is made where it is more likely than not that a present obligation or possible obligation would result in or involve an outflow of resources. When no present obligation or possibility exists and the possibility of an outflow of resources is remote, no disclosure or provision is made.

16. Miscellaneous Expenditure

Miscellaneous Expenditure is stated to the extent not written off or adjusted.

(a) Expenses on increase in share capital are amortised over a period of ten years.

(b) Product Development Expenses are written-off over a period of three years on straight line basis commencing from the year in which confirmed sale orders are received. However in case the product is not accepted, the entire expenditure incurred is written off in the year of rejection.

(c) Expenditure incurred on Development Studies is written off over a period of three years on straight line basis.

(d) Hire purchase interest and other expenses thereon are amortized over the period of the underlying agreement.

17. Contingent Liabilities

Contingent Liabilities are stated by way of notes.

18. Borrowing Costs :

Borrowing Costs that are directly attributable to the acquisition, construction or production of any qualifying asset have been capitalised as part of the cost of such assets. A qualifying assets is one that takes substantial period of time to get ready for its use or in intended sale.

 
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