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Accounting Policies of Punjab Communications Ltd. Company

Mar 31, 2015

I. Basis of preparation

a) 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, read with General Circular 15/2013 dated 13thSeptember, 2013 issued by the Ministry of Corporate Affairs in respect of Sec 133 of Companies Act, 2013. The financial statements have been prepared under the historical cost convention on an accrual basis and treating the entity as going concern. Accounting policies unless referred to otherwise are consistent with generally accepted accounting principles. The accounting policies adopted in the preparation of financial statements are consistent with those of previous year except for change in accounting policy for depreciation (Refer Note IV below).

b) The Company generally follows mercantile system of accounting and recognizes significant items of income and expenditure on accrual basis, However certain items of income and expenditure are recognised as and when they are incurred, ascertained or settled, i.e.

i) Additional demand for taxes arising on completion of assessments are accounted for as and when paid.

ii) Refunds on account of octroi, excise duty, custom duty, income tax and insurance claims are accounted for on settlement.

iii) Customer claims, recoveries, liquidated damages and penal interest for delay in execution of the contracts are provided for as and when settled.

iv) Ex-gratia payments to employees are accounted for as and when incurred.

v) The claims for price escalation on sales are accounted for on settlement.

vi) Expenditure on warranty and guarantee of satisfactory performance of equipments is accounted for when incurred.

II. Use of estimates

The preparation of financial statements is in conformity with generally accepted accounting principles in India (Indian GAAP) and requires management to make estimates and assumptions that affect 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. Although these estimates are based upon management's best knowledge of current events and actions, actual results could differ from these estimates.

III. Fixed Assets

Fixed assets are stated at cost of acquisition, net of CENVAT credit, but inclusive of duties, taxes, freight, incidental expenses and erection / commissioning expenses.

IV. Depreciation :

a) Effective from April 1, 2014, method of depreciation is changed from Written Down Value to Straight-Line Method taking into account the prescribed useful life for respective class of assets in order to comply with the Schedule II of the Companies Act, 2013. Accordingly, the carrying amount of the assets as on April 1, 2014 has been depreciated over the remaining revised useful life of the fixed assets. Where the remaining useful life of an asset is NIL, the carrying amount of the assets has been charged to Statement of Profit and loss after retaining their residual value. For the current year, Residual value has been taken as 5% of original cost of asset or WDV as on 31.3.2014 whichever is lower. Had been there no change in this accounting policy the depreciation for the year would have been higher by Rs. 9,36,030/-.

Asset Class Period (Years)

Buildings - Factory 30

Building (Other than Factory) 60

Temporary Structure 3

Plant and Equipment* 15

Electrical Installations and Equipment 10

Furniture and Fixture 10

Vehicles 8

Office Equipment (Other than Computers) 5

Computers 3

* Includes Computers & Data Processing units which are part of Plant and machinery and classified under P & E head and their useful life is also taken accordingly.

b) Depreciation also includes amount written off in respect of leasehold properties and assets (if any) over the respective lease period.

c) Calculation of depreciation on the additions during the year is done on pro-rata basis from the date of its receipt plus 10 days for installations.

V. Intangible Assets

Technical know-how fees amortized in accordance with the provisions of the Accounting Standard-AS 26 (Intangible Assets) issued by the Institute of Chartered Accountants of India.

VI. Impairment

As mandated by Accounting Standard 28 "Impairment of Assets", the carrying values of assets are reviewed at each Balance Sheet date to determine if there is an indication of any impairment of an asset. If such an indication exists, the asset's recoverable amount is estimated. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The impairment loss is reversed, if there has been any change in the estimates used to determine the recoverable amount.

VII. Borrowing Costs

Borrowing Costs directly attributable to the acquisition of qualifying assets are capitalized in accordance with Accounting Standard 16 issued by the Institute of Chartered Accountants of India Other borrowing costs are charged to the Statement of Profit and Loss in the period in which they are incurred.

VIII. Investments :

Long term investments are carried at cost less provision for permanent diminution in value of such investments.

IX. Cash and Cash Equivalents

Cash and Cash Equivalents in the cash flow comprises cash at bank, cash in hand and short term Investments/Fixed Deposits with an original maturity of three months or less.

X. Inventories :

a) Inventories are valued at the lower of cost or estimated net realisable value. Inventories are valued according to FIFO method of valuation.

b) Cost of Work in process includes cost of material plus direct labour.

c) Cost of Finished sub assemblies includes cost of material plus overheads apportioned on the basis of actual stage of completion as at year end.

d) Finished goods are valued at lower of cost or net realisable value.

e) Goods received after the cut off date (for physical verification as at the year end) and goods for which the documents are retired are treated as goods i n transit.

f) Any Shortage/excess in Raw Material detected at the time of physical verification is included in consumption of goods.

g) CENVAT on inputs is reduced from purchases. Inventories are valued at net of CENVAT credit.

h) Provision for obsolete inventories is reviewed periodically and provided for as per the assessment of management.

XI. Revenue Recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and can be reliably measured.

Sale of Goods

Revenue from sale of goods is recognised net of rebates and discounts on transfer of significant risks and rewards of ownership to the buyer. Sale of goods is recognised gross of excise duty but net of sales tax/value added tax.

Services

Revenue from services are recognised as and when they are rendered based on agreements/arrangements with the respective parties and recognised net of Service Tax.

"Revenues from turnkey contracts, which are generally time bound fixed price contracts, are recognised over the life of the contract using the proportionate completion method, with contract costs determining the degree of completion. For AMC contracts, the company follows completed service contract method as a method of accounting and recognizes service revenue in the statement of profit and loss when the rendering of service under a AMC contract is completed or substantially completed in accordance with the provisions of AS-9 "Revenue Recognition"

XII. Government Grants

Government Grants are recognised when there is a reasonable assurance that the same will be received and all attaching conditions will be complied with. Revenue grants are recognised in the Statement of Profit and Loss. Capital grants relating to depreciable assets are treated as deferred income which is recognised in the statement of profit and loss on a systematic and rational basis over the useful life of the asset in accordance with Accounting Standard-12 issued by the Institute of Chartered Accountants of India.

XIII. Transactions in Foreign currency

"Current assets and liabilities in foreign currencies are recorded at the exchange rate prevailing at the time of transaction and converted at exchange rate prevailing at the year end. Resultant loss/gain is charged to Statement of Profit and Loss. When the transaction is settled within the same accounting period as that in which it occurred, all the exchange difference is recognised in that period."

XIV. Employee Benefits

a) Short term employee benefits are recognised as an expense on accrual basis.

b) Post Employment Benefits

i) Defined Contribution Plans: The Company's state governed Provident Fund scheme, Employee State Insurance scheme etc are defined contribution plans. The contribution paid/payable under the schemes is recognised during the period in which the employee renders the related service.

ii) Defined Benefit Plans: The Employees' Gratuity liability is covered under the qualifying Insurance policy of Life Insurance Corporation of India. The Company's liability is determined on the basis of an actuarial valuation using the projected unit credit method as at Balance Sheet date. Expenses are recognised in the Statement of Profit and Loss in the manner laid down in AS-15. In case of funded plans, the fair value of the plan assets is reduced from the gross obligation under the defined benefit plans, to recognise the obligation on net basis in Balance Sheet. For the purpose of presentation of net obligation, the allocation between short term and long term provisions has been done on the basis of AS 15 Valuation certificates received from LIC.

c) Other Long term Employee benefits: Accumulated compensated absences/Leave encashment -

The Employees' Leave encashment liability is also covered under the qualifying Insurance policy of Life Insurance Corporation of India. The obligation for long term compensated absences/Leave encashment is recognised in the same manner as in the case of defined benefit plans as mentioned in XIV (b) (ii) above. Long Term service awards which are expected to be availed beyond 12 months from the end of the balance Sheet date, are treated as other long term employee benefits. The present value of the said liability determined as per prescribed method in AS-15 as on Balance Sheet date is recognized in the books of accounts. Liability towards Service awards due with in 12 months from the date of Balance Sheet is classified under head Short term Provisions.

XV Income Tax

Tax expense comprises of current and deferred tax and includes any adjustments related to past periods in current and / or deferred tax adjustments that may become necessary due to certain developments or reviews during the relevant period. 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 reflect the impact of current year's timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. 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 recognised 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 realised.

The carrying amount of deferred tax assets are reviewed at each Balance Sheet date. The Company writes-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain that sufficient future taxable income will be available against which deferred tax asset can be realised. Any such write-down is reversed to the extent that it becomes reasonably certain that sufficient future taxable income will be available.

XVI Earnings per share

Basic earnings per share is computed by dividing the profit / (loss) for the year after tax (including the post tax effect of extraordinary items, if any) attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

Diluted earnings per share is computed by dividing the profit / (loss) for the year after tax (including the post tax effect of extraordinary items, if any) attributable to equity shareholders by the weighted average number of equity shares outstanding during the year adjusted for the effects of all dilutive potential equity shares.

XVII Provision, Contingent Liabilities and Contingent Assets

a) A provision is recognised when the Company has a present obligation as a result of past events 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.

b) 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 or cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.

c) Contingent Assets are neither recognised, nor disclosed.

Provision & Contingent Liabilities are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.

XVIII Classification of Current / Non Current Assets

All assets and liabilities are presented as Current or Non-current as per the Company's normal operating cycle and other criteria set out in Schedule III to The Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realisation, the Company has assumed its operating cycle as 12 months for the purpose of Current / Non current classification of assets and liabilities.


Mar 31, 2014

I. Accounting conventions:

a) The accounts are prepared on historical cost basis treating the entity as a going concern. Accounting policies unless referred to otherwise are consistent with generally accepted accounting principles.

b) The Company generally follows mercantile system of accounting and recognizes significant items of income and expenditure on accrual basis, except:-

i) Additional demand for taxes arising on completion of assessments are accounted for as and when paid.

ii) Refunds on account of octroi, excise duty, custom duty, income tax and insurance claims are accounted for on settlement.

iii) Customer claims, recoveries, liquidated damages and penal interest for delay in execution of the contracts are provided for as and when settled.

iv) Ex-gratia payments to employees are accounted for as and when incurred.

v) The claims for price escalation on sales are accounted for on settlement.

vi) Expenditure on warranty and guarantee of satisfactory performance of equipments is accounted for when incurred.

II. Fixed Assets and Depreciation:

i. Fixed Assets:

Fixed assets are stated at cost of acquisition net of CENVAT credit, but inclusive of duties, taxes, freight, incidental expenses and erection / commissioning expenses.

ii. Depreciation :

a) Depreciation on fixed assets is provided for on Written Down Value (WDV) method at the rates specified in Schedule XIV to the Companies Act, 1956. Changes in historical cost of fixed assets on account of fluctuations in exchange rate of liabilities for acquisition of fixed assets are accounted for by the amounts being amortized over the residual useful life of respective assets.

b) Depreciation also includes amount written off in respect of leasehold properties and assets over the respective lease period.

c) Calculation of depreciation on the additions during the year is done on pro-rata basis from the date of its receipt plus 10 days for installations.

iii. Impairment:

As mandated by Accounting Standard 28 "Impairment of Assets", the carrying values of assets are reviewed at each reporting date to determine if there is an indication of any impairment of an asset. If such an indication exists, the asset's recoverable amount is estimated. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The impairment loss is reversed, if there has been any change in the estimates used to determine the recoverable amount.

III. Technical know-how fee:

Technical know-how fees are amortized in accordance with the provisions of the Accounting Standard-AS 26 (Intangible Assets) issued by the Institute of Chartered Accountants of India.

IV. Inventories:

a) Inventories are valued at the lower of cost or estimated net realisable value. Inventories are valued according to FIFO method of valuation.

b) Cost of Work in process includes cost of material plus direct labour.

c) Cost of Finished sub assemblies includes cost of material plus overheads apportioned on the basis of actual stage of completion as at year end.

d) Finished goods are valued at lower of cost or net realisable value.

e) Goods received after the cut off date (for physical verification as at the year end) and goods for which the documents are retired are treated as goods in transit.

f) Any Shortage/ excess in Raw Material detected at the time of physical verification is included in consumption of goods.

g) CENVAT on inputs is reduced from purchases. Inventories are valued at net of CENVAT credit.

h) Provision for obsolete inventories is reviewed periodically and provided for as per the assessment of management.

V. Sales:

Sales are accounted for at the time of dispatch and are inclusive of excise duty but exclusive of sales tax.

VI. AMC Service Revenue:

The company follows completed service contract method as a method of accounting and recognizes service revenue in the statement of profit and loss when the rendering of service under a AMC contract is completed or substantially completed in accordance with the provisions of AS-9 "Revenue Recognition"

VII. Investments:

Long term investments are carried at cost less provision for permanent diminution in value of such investments.

VIII. Transactions in Foreign currency

Current assets and liabilities in foreign currencies are recorded at the exchange rate prevailing at the time of transaction and converted at exchange rate prevailing at the year end. Resultant loss/gain is charged to P&L account.

IX. Retirement benefits

Gratuity, Superannuation and Leave encashment benefits payable to employees are covered under the Policies of Life Insurance Corporation of India.

X. Borrowing Costs

Borrowing Costs directly attributable to the acquisition of qualifying assets are capitalized in accordance with Accounting Standard 16 issued by the Institute of Chartered Accountants of India.


Mar 31, 2013

I. Accounting conventions:

a) The accounts are prepared on historical cost basis treating the entity as a going concern. Accounting policies unless referred to otherwise are consistent with generally accepted accounting principles.

b) The Company generally follows mercantile system of accounting and recognizes significant items of income and expenditure on accrual basis, except :-

i) Additional demand for taxes arising on completion of assessments are accounted for as and when paid.

ii) Refunds on account of octopi, excise duty, custom duty, income tax and insurance claims are accounted for on settlement.

iii) Customer claims, recoveries, liquidated damages and penal interest for delay in execution of the contracts are provided for as and when settled.

iv) Ex-gratia payments to employees are accounted for as and when incurred.

v) The claims for price escalation on sales are accounted for on settlement.

vi) Expenditure on warranty and guarantee of satisfactory performance of equipments is accounted for when incurred.

II. Fixed Assets and Depreciation :

i. Fixed Assets :

Fixed assets are stated at cost of acquisition net of CENVAT credit, but inclusive of duties, taxes, freight, incidental expenses and erection / commissioning expenses.

ii. Depreciation :

a) Depreciation on fixed assets is provided for on Written Down Value (WDV) method at the rates specified in Schedule XIV to the Companies Act, 1956. Changes in historical cost of fixed assets on account of fluctuations in exchange rate of liabilities for acquisition of fixed assets are accounted for by the amounts being amortized over the residual useful life of respective assets.

b) Depreciation also includes amount written off in respect of leasehold properties and assets over the respective lease period.

c) Calculation of depreciation on the additions during the year is done on pro-rata basis from the date of its receipt plus 10 days for installations.

iii. Impairment :

As mandated by Accounting Standard 28 "Impairment of Assets", the carrying values of assets are reviewed at each reporting date to determine if there is an indication of any impairment of an asset. If such an indication exists, the asset''s recoverable amount is estimated. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The impairment loss is reversed, if there has been any change in the estimates used to determine the recoverable amount.

III. Technical know-how fee :

Technical know-how fees are amortized in accordance with the provisions of the Accounting Standard-AS 26 (Intangible Assets) issued by the Institute of Chartered Accountants of India.

IV. Inventories :

a) Inventories are valued at the lower of cost or estimated net realizable value. Inventories are valued according to FIFO method of valuation.

b) Cost of Work in process includes cost of material plus direct labour.

c) Cost of Finished sub assemblies includes cost of material plus overheads apportioned on the basis of actual stage of completion as at year end.

d) Finished goods are valued at lower of cost or net realizable value.

e) Goods received after the cutoff date (for physical verification as at the yearend) and goods for which the documents are retired are treated as goods in transit.

f) Any Shortage/ excess in Raw Material detected at the time of physical verification is included in consumption of goods.

g) CENVAT on inputs is reduced from purchases. Inventories are valued at net of CENVAT credit.

h) Provision for obsolete inventories is reviewed periodically and provided for as per the assessment of management.

V. Sales :

Sales are accounted for at the time of dispatch and are inclusive of excise duty but exclusive of sales tax.

VI. Investments :

Long term investments are carried at cost less provision for permanent diminution in value of such investments.

VII. Transactions in Foreign currency

Current assets and liabilities in foreign currencies are recorded at the exchange rate prevailing at the time of transaction and converted at exchange rate prevailing at the year end. Resultant loss/gain is charged to P&L account.

VIII. Retirement benefits

Gratuity, Superannuation and Leave encashment benefits payable to employees are covered under the Policies of Life Insurance Corporation of India.

IX. Borrowing Costs

Borrowing Costs directly attributable to the acquisition of qualifying assets are capitalized in accordance with Accounting Standard 16 issued by the Institute of Chartered Accountants of India.


Mar 31, 2010

I. Accounting conventions:

a) The accounts are prepared on historical cost basis treating the entity as a going concern. Accounting policies unless referred to otherwise are consistent with generally accepted accounting principles.

b) The Company generally follows mercantile system of accounting and recognises significant items of income and expenditure on accrual basis, except.-

i) Additional demand for taxes arising on completion of assessments are accounted for as and when raised.

ii) Refunds on account of octroi, excise duty, custom duty, income tax and insurance claims are accounted for on settlement.

iii) Customer claims, recoveries, liquidated damages and penal interest for delay in execution of the contracts are provided for as and when settled.

iv) Ex-gratia payments to employees are accounted for as and when incurred.

v) The claims for price escalation on sales are accounted for on settlement.

vi) Expenditure on warranty and guarantee of satisfactory performance of equipments is accounted for when incurred.

II. Fixed Assets and Depreciation:

i. Fixed Assets:

Fixed assets are stated at cost of acquisition net of CENVAT credit, but inclusive of duties, taxes, freight, incidental expenses and erection / commissioning expenses.

ii. Depreciation:

a) Depreciation on fixed assets is provided for on Written Down Value(WDV) method at the rates specified in Schedule XIV to the Companies Act, 1956. Changes in historical cost of fixed assets on account of fluctuations in exchange rate of liabilities for acquisition of fixed assets are accounted for by the amounts being amortised over the residual useful life of respective assets.

b) Depreciation also includes amount written off in respect of leasehold properties and assets over the respective lease period.

c) Calculation of depreciation on the additions during the year is done on pro-rata basis from the date of its receipt plus 10 days for installations.

iii. Impairment:

As mandated by Accounting Standard 28 "Impairment of Assets", the carrying values of assets are reviewed at each reporting date to determine if there is an indication of any impairment of an asset. If such an indication exists, the assets recoverable amount is estimated. An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount. The impairment loss is reversed, if there has been any change in the estimates used to determine the recoverable amount.

III. Technical know-howfee:

Technical know-how fees are amortized in accordance with the provisions of the Accounting Standard- AS 26 (Intangible Assets) issued by the Institute of Chartered Accountants of India.

IV. Inventories:

a) Inventories are valued at the lower of cost or estimated net realisable value. Inventories are valued according to FIFO method of valuation.

b) Cost of Work in process includes cost of material plus direct labour.

c) Cost of Finished sub assemblies includes cost of material plus over heads apportioned on the basis of actual stage of completion as at year end.

d) Finished goods are valued at lower of cost or net realisable value.

e) Goods received after the cut off date (for physical verification as at the year end) and goods for which the documents are retired are treated as goods in transit.

f) Any Shortage/excess in Raw Material detected at the time of physical verification is included in consumption of goods.

g) CENVATon inputs is reduced from purchases; inventories are valued at net of CENVAT credit.

V. Sales:

Sales are accounted for at the time of despatch and are inclusive of excise duty but exclusive of sales tax.

VI. Investments:

Long term investments are carried at cost less provision for permanent diminution in value of such investments. Current investments are carried at lower of cost and fair value.

VII. Transactions in Foreign currency

Current assets and liabilities in foreign currencies are recorded at the exchange rate prevailing at the time of transaction and converted at exchange rate prevailing at the year end. Resultant loss/gain is charged to P&L account.

VIII. Retirement benefits

Gratuity, Superannuation and Leave encashment benefits payable to employees are covered underthe Policies of Life Insurance Corporation of India.

IX. Borrowing Costs

Borrowing Costs are treated in accordance with Accounting Standard 16 issued by the Institute of Chartered Accountants of India.

(figures in brackets denote previous year figures)

A. (Rs. In Lacs)

1. Contingent liabilities not provided for in the accounts .-

a) Bank guarantees and Letter of credits * 3070.79 (3230.41)

b) Claims against company, not acknowledged as debts,

-by Sales Tax authorities" 05.04 (5.04)

-by Excise & Custom authorities 31.90 (32.82)

- by other parties 38.82 (39.36)

c) Court cases 83.07 (240.63)

d) PSEB Demand"* 27.96 (27.96)

e) Interest on Employees Security deposits payable 0.93 (0.89) after completion of 5 years of service

*Includes expired guarantees for Rs. 21.86 Lacs (171.02) lacs against which neither any claims have been lodged nor reversed by issuing banks pending returning of original guarantee by beneficiary.

** The company has filed appeal which has been admitted by the competant authority.

*** Company received a Demand Notice from PSEB Mohali which is being contested through the Lessee as per Lease Agreement.