Accounting Policies of Krishanveer Forge Ltd. Company

Mar 31, 2018

1 Significant accounting policies

1.01 Ind ASs which are not applicable to the Company:

i Ind AS 11 - Construction Contracts: This Ind AS is not applicable since the Company is engaged in the business of manufacturing and selling steel open die and close die forgings in both domestic and international markets and not in execution of construction contracts.

ii Ind AS 26 - Accounting & Reporting by Retirement Benefit Plans: This Ind AS is not applicable since the Company is not in business of offering Retirement Benefit Plans.

iii Ind AS 27 & Ind AS 110 - Consolidated and separate Financial Statements: These Ind ASs are not applicable since the Company has no subsidiaries.

iv Ind AS 28 & Ind AS 111 - Investment in associates and joint ventures: These Ind ASs are not applicable since the Company has no associates or joint ventures.

v Ind AS 29 - Financial Reporting in the Hyperinflationary Economies: This Ind AS is not applicable since the Company does not operate in Hyperinflationary Economies.

vi Ind AS 34 - Interim Financial Reporting: This Ind AS is not applicable since the financial statements under review are not interim statements.

vii Ind AS 40 - Investment Property: This Ind AS is not applicable since the Company did not hold any investment property at the balance sheet date.

viii Ind AS 41 - Agriculture: This Ind AS is not applicable since the Company is not engaged in agriculture.

ix Ind AS 102 - Share-based Payments: This Ind AS is not applicable since the Company has not entered into contracts which require share-based payments.

x Ind AS 103 - Business Combinations: This Ind AS is not applicable since the Company has not entered into any arrangements of the nature of mergers & / or demergers.

xi Ind AS 104 - Insurance Contracts: This Ind AS is not applicable since the Company is not engaged in the business of issuing insurance contracts.

xii Ind AS 105 - Non-current assets held for sale & discontinued operations: This Ind AS is not applicable since the Company did not hold any assets to which this Ind AS applies.

xiii Ind AS 106 - Exploration & Evaluation of Mineral Resources: This Ind AS is not applicable since the Company is not engaged in the business of exploration of mineral resources.

xiv Ind AS 112 - Disclosure of interest in other entities: This Ind AS is not applicable since the Company has no interest in other entities which requires disclosure.

xv Ind AS 114 - Regulatory Deferral Accounts: This Ind AS is not applicable since the Company does not conduct rate-regulated activities.

2.02 Ind AS 1 - Presentation of Financial Statements:

i According to Ind AS 1, a ‘complete set of financial statements'' comprises:

a a balance sheet as at the end of the period;

b a statement of profit and loss for the period;

c a statement of changes in equity for the period;

d a statement of cash flow for the period;

e notes, comprising significant accounting policies and other explanatory information;

f comparative information in respect of the preceding period; and

g if the entity has applied an accounting policy retrospectively, made a retrospective restatement of items or has reclassified items in its financial statements; a balance sheet as at the beginning of the earliest comparative period.

ii The identification of an entity''s significant accounting policies is an important aspect of the financial statements. Ind AS

1.117 requires disclosure of the significant accounting policies comprising:

a the measurement basis (or bases) used in preparing the financial statements; and

b. the other accounting policies used that are relevant to an understanding of the financial statements.

iii As required by Ind AS 101 the Company has used the same accounting policies in its opening Ind AS balance sheet and throughout all periods presented in its first Ind AS financial statements (the first annual financial statements in which an entity adopts Ind AS by an explicit and unreserved statement of compliance with Ind AS). Those accounting policies comply with each Ind AS effective at the end of its first Ind AS reporting period, except as specified in Ind AS 101 (e.g., when the exceptions in Ind AS 101 prohibit retrospective application or the Company avails itself of one of Ind AS 101''s voluntary exemptions). The Company does not apply different versions of Ind AS that were effective at earlier dates. The Company may apply a new Ind AS that is not yet mandatory if that Ind AS permits early application.

iv Current versus non-current classification - Ind AS 1.60

a The Company presents assets and liabilities in the balance sheet based on current / non-current classification, except when a presentation based on liquidity provides information that is reliable and is more relevant. When that exception applies, all assets and liabilities are presented broadly in order of liquidity. However, it is to be noted that Schedule III to the Act does not permit presentation in the order of liquidity. b An asset is treated as current when it is:

- Expected to be realised or intended to be sold or consumed in normal operating cycle. Current assets include assets (such as inventories and trade receivables) that are sold, consumed or realised as part of the normal operating cycle even when they are not expected to be realised within 12 months after the reporting period.

- Held primarily for the purpose of trading;

- Expected to be realised within twelve months after the reporting period;

- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

c All other assets are classified as non-current.

d A liability is treated as current when:

- It is expected to be settled in normal operating cycle. Some current liabilities, such as trade payables and some accruals for employee and other operating costs, are part of the working capital used in the entity''s normal operating cycle and are classified as current liabilities even if they are due to be settled more than 12 months after the reporting period.

- It is held primarily for the purpose of trading;

- It is due to be settled within twelve months after the reporting period; or

- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

e The Company classifies all other liabilities as non-current.

f Deferred tax assets and liabilities are classified as non-current assets and liabilities.

g The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. The Company has identified 3-6 months as its operating cycle.

2.03 Ind AS 101 - First time Adoption of Indian Accounting Standards

Ind AS 101 requires an entity to explain how an entity transitioned from Indian GAAP to Ind AS and how the transition is reported in the balance sheet, statement of profit and loss and cash flows which are prepared in accordance with Ind ASs. The principal adjustments made by the Company in restating its Indian GAAP financial statements, including the balance sheet as at April 1, 2016 and the financial statements as at and for the year ended March 31, 2017 are stated in Notes 41, 42 & 43.

Ind AS 101 also requires that the carrying amount of goodwill as per Indian GAAP must be used in the opening Ind AS balance sheet (apart from adjustments for goodwill impairment and recognition or derecognition of intangible assets). The Company’s assets do not include any goodwill.

Ind AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has considered the issues arising out of the following exemptions in preparing its first Ind AS compliant financial statements:

i Accounting for share-based payment transactions of issue of equity instruments (Paras d2 & D3 of Ind AS 101): Ind AS 102 requires disclosure of the fair value of equity instruments at the measurement date and accounting for liabilities arising from such transactions. Paras D2 & D3 permit the Company not to make such disclosures in respect of share-based transactions that were settled before the date of transition to Ind ASs. The Company has not entered into share-based transactions in the past.

ii Insurance contracts (Para D4 of Ind AS 101): Ind AS 104 applies to contracts of insurance. The Company does not issue insurance contracts.

iii Deemed cost (Para D5 to D8B of Ind AS 101): Ind AS 16 & 38 require the Company to carry items of property, plant & equipment (PPE) and intangible assets at fair value, if the Company has opted for the revaluation model for measurement of the carrying value of PPE & intangible assets. However, Para D5 to D8B permit treatment of carrying value as per past revaluation as deemed cost of PPE and intangible assets on the date of transition to Ind ASs. The Company has not revalued its PPE or intangible assets in the past and has opted for the cost model for measurement of the carrying value of PPE & intangible assets.

As required by Ind AS 101, the Company has determined whether impairment indicators or indicator of reversal of any prior impairment exist for items of PPE or intangible assets with definite or indefinite life. Consequently, the Company has performed impairment tests and determined the recoverable amount and impairment or impairment reversals.

iv Leases (Para D9 & D9AA): Ind AS 17 requires the Company to determine whether an arrangement is, or contains, a lease, particularly when a lease includes both land and building elements. Para D9 & 9AA permit such determination with effect from the date of transition to Ind ASs. The Company has not entered into leases which require such determination.

v Cumulative translation differences (Para D12 & D13 of Ind AS 101): Ind AS 21 requires the Company to recognize some translation differences in other comprehensive income and accumulate these in a separate component of equity. However, Para D12 & D13 exempt the Company from compliance with these requirements for cumulative translation differences that existed at the date of transition to Ind ASs. The Company has availed of this exemption.

vi Investment in subsidiaries, joint ventures & associates (Para D14 & D15 of Ind AS 101): Ind AS 27 requires the Company to account, in its separate financial statements, for its investment in subsidiaries, joint ventures & associates at cost or in accordance with Ind AS 109. If the Company opts for measurement of the carrying value of such investments at cost in accordance with Ind AS 27, Para D14 & D15 permit the carrying value of such investments in the separate opening Ind AS Balance Sheet to be the cost determined as per Ind AS 27 or the deemed cost. The deemed cost is the fair value at the date of transition to Ind ASs or the carrying value as per Indian GAAP at the date of transition. The Company does not have investment in subsidiaries, joint ventures & associates.

vii Compound financial instruments (Para D18 of Ind AS 101): Ind AS 32 requires the Company to split a compound financial instrument at inception into separate liability and equity components. If the liability component is no longer outstanding, retrospective application of Ind AS 32 involves separating two portions of equity. The first portion is in retained earnings and represents the cumulative interest accreted on the liability component. The other portion represents the original equity component. However, Para D 18, the Company is exempted from separating these two portions if the liability component is no longer outstanding at the date of transition to Ind ASs. The Company has not issued compound financial instruments in the form of convertible debentures or preference shares.

viii Designation of previously recognized financial instruments (Para D19-19C of Ind AS 101): Ind AS 109 requires a financial liability (provided it meets certain criteria) to be designated as a financial liability through profit or loss. However, Para D19 permits the Company to designate at the date of transition to Ind ASs any financial liability through profit or loss provided the liability meets the criteria in para 4.2.2 of Ind AS 109 at that date. The Company has not designated any previously recognised financial instruments as financial liability through profit or loss.

ix Fair value measurement of financial assets or financial liabilities at initial recognition (Para D20 of Ind AS 101): Ind AS 101.7 requires the Company to use the same accounting policies in its opening Ind AS Balance Sheet and throughout all periods presented in its first Ind AS financial statements. However, Para D 20 permits the Company to apply the requirements of fair value determination as per Para B5.1.2A(b) prospectively to transactions entered into on or after the date of transition to Ind ASs. The Company does not have financial assets or liabilities measured at fair value.

x Decommissioning liabilities included in the cost of property, plant & equipment (Para D21 & 21A of Ind AS 101): Appendix A to Ind AS 16 requires the Company to make specified changes in a decommissioning, restoration or similar liability and add or deduct it from the cost of the asset to which it relates and to depreciate the adjusted amount of the asset prospectively over its remaining useful life. However, Para D21 & 21A exempt the Company from compliance with these requirements for changes in these liabilities that occurred before the date of transition to Ind ASs. The Company does not have any obligation to dismantle, remove and restore items of property, plant & equipment.

xi Service concession arrangements referred to in Appendix C of Ind AS 115 (Para D22 of Ind AS 101): Appendix A to Ind AS 11 applies to service concession arrangements in infrastructure for public services traditionally constructed, operated and maintained by the public sector and financed through public budget appropriation. The Company has not entered into any such service concession arrangements.

xii Borrowing costs (Para D23 of Ind AS 101): Ind AS 23 requires the Company to capitalize certain borrowing costs. However, Para D 23 permits the Company not to capitalize the borrowing costs incurred before the date of transition to Ind ASs. The Company has always followed AS 16 and hence the exemption under Ind AS 23 is not relevant.

xiii Extinguishing financial liabilities with equity instruments (Para D25 of Ind AS 101): Appendix E of Ind AS 109 deals with extinguishing financial liabilities with equity instruments. Para D 25 permits the Company to apply Appendix E from the date of transition to Ind ASs. The Company has no obligations to extinguish financial liabilities with equity instruments.

xiv Severe hyperinflation (Paras D26 to D30 of Ind AS 101): Ind AS 29 deals with translation of financial statements in which the functional currency is the currency of a hyperinflationary economy. The functional currency for the financial statements of the Company is INR which is not the currency of a hyperinflationary economy.

xv Joint arrangements (Paras D31 to D31AL of Ind AS 101): Ind AS 111 deals with transition for proportionate consolidation to equity method in the case of joint ventures and transition from the equity method to proportionate consolidation in the case of joint operations. The Company does not have joint arrangements in the form of joint ventures or joint operations.

xvi Stripping costs in the production phase of a surface mine (Para D 32 of Ind AS 101): Appendix B of Ind AS 16 deals with stripping costs in the production phase of a surface mine. Para D32 permits the Company to apply Appendix B from the date of transition to Ind ASs. The Company does not own or operate any mines.

xvii Designation of contracts to buy or sell a non-financial item as measured through profit or loss (Para D33 of Ind AS 101): Ind AS 109 permits the Company to designate at inception some contracts to buy or sell non-financial items as measured through profit or loss. However, Para D33 permits the Company to so designate, at the date of transition to Ind ASs contracts that already exist on that date, if they meet the requirements of Para 2.5 of Ind AS 109 at that date. The Company has not entered into any such contract before the date of transition to Ind ASs.

xviii Revenue from contracts with customers (Para D34-35 of Ind AS 101): Para D34-35 of IFRS 101 refer to Ind AS 115 (not yet notified) which deals with recognition of revenue from contracts with customers.

xix Non-current assets held for sale and discontinued operations (Para D 35AA of Ind AS 101): Ind AS 105 requires the Company to classify separately non-current assets held for sale or distribution to owners or for discontinued operations and carry them at the lower of the carrying cost and fair value less costs to sell at the date of classification. Para D35AA permits the Company to value such assets at the lower of the carrying cost and fair value less costs to sell at the date of transition to Ind ASs. The Company does not hold any non-current assets for sale and discontinued operations.

xx Business combinations and goodwill (Ind AS 101 Appendix C): The Company has elected to apply Ind AS 103 - Accounting for Business Combinations prospectively from April 1, 2015. As such, the Indian GAAP carrying amounts of assets and liabilities acquired in business combinations, that are required to be recognised under Ind AS 103, is their deemed cost at the date of the acquisition. These balances relating to business combinations entered into before that date, including goodwill, have been carried forward with minimal adjustment. The same first time adoption exemption is also used for associates and joint ventures.

The Company has recognised all assets acquired and liabilities assumed in past business combinations. The Company did not derecognise or exclude any previously recognised amounts as a result of Ind AS recognition requirements. As a first-time adopter, the Company has used the exemption in Ind AS 101 from having to apply Ind AS 103 retrospectively. As required by Ind AS 101, the Company has tested goodwill for impairment in accordance with Ind AS 36 at the date of transition to Ind AS (Ind AS 101.C4(g)(ii)). The goodwill impairment test and the recognition of any additional impairment is based on conditions existing at the date of transition to Ind AS. However, the Company has not made any further adjustments to the carrying amount of goodwill at the date of transition to Ind AS, except for the adjustments in Ind AS 101.C4(g) related to the goodwill impairment test or certain reclassifications of intangible assets. Accordingly, the Company has not reversed any previous GAAP goodwill impairment.

Ind AS 103 provides a very specific definition of a business combination. Therefore, it is possible that under Indian GAAP, transactions that are not business combinations (e.g., asset acquisitions) may have been accounted for as if they were business combinations. A first-time adopter will need to restate any transactions that it accounted for as a business combination under Indian GAAP, but which are not business combinations under Ind AS. However, the Company has not entered into any such transactions which require restatement.

2.04 Ind AS 2 - Inventories

i Inventories are valued at the lower of cost and net realisable value except scrap and by products which are valued at net realisable value.

ii Costs incurred in manufacture of forgings are accounted for as follows:

a Raw materials: cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on first in, first out basis.

b Finished goods and work in progress: cost includes cost of direct materials and labour and a proportion of overheads based on the normal operating capacity. Cost is determined on first in, first out basis.

c Traded goods: cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on weighted average basis.

iii Initial cost of inventories includes the transfer of gains and losses on qualifying cash flow hedges, recognised in OCI, in respect of the purchases of raw materials.

iv Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

v Obsolete, slow moving and defective inventories are identified and written down to net realisable value.

2.05 Ind AS 7 - Statement of Cash Flows

i Ind AS 7.18 allows entities to report cash flows from operating activities using either direct method or indirect method. The regulation 34(2)(c ) of Chapter IV of Securities & Exchange Board of India (Listing Obligations & Disclosure Requirements) Regulations, 2015, requires listed companies to present cash flow from operating activities only under indirect method. The Company presents its cash flows using indirect method as set out in Ind AS -7 whereby profit / (loss) before tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

ii Certain working capital adjustments and other adjustments included in the accompanying statement of cash flows reflect the change in balances between March 31, 2017 and March 31, 2016.

iii Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.

2.06 Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors

The Company''s Profit & Loss Statement presents profit / loss from ordinary activities. The extra-ordinary or exceptional items or changes in accounting estimates and policies during the year under review are disclosed separately as per Ind AS 8.

2.07 Ind AS 10 - Events after Reporting period

i These financial statements consider appropriately the impact of events which occur after the reporting period but before the financial statements are approved and which have an effect on the balance sheet and profit and loss statement.

ii The Company recognises a liability to make cash or noncash distributions to equity holders of the parent when the distribution is authorised and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in equity.

iii Non-cash distributions are measured at the fair value of the assets to be distributed with fair value re-measurement recognised directly in equity.

iv Upon distribution of non-cash assets, any difference between the carrying amount of the liability and the carrying amount of the assets distributed is recognised in the statement of profit and loss.

2.08 Ind AS 12 - Income taxes

i Tax expense comprises current and deferred tax.

ii Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date in the countries where the Company operates and generates taxable income.

iii Current income tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit and loss. Current income tax relating to items recognised outside profit or loss is recognised in correlation to the underlying transaction outside profit or loss (either in other comprehensive income or directly in equity). Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

iv Deferred tax assets and liabilities are recognized for future tax consequences attributable to the temporary differences between taxable income and accounting income that are capable of reversal in one or more subsequent periods, the carry forward of unused tax credits and any unused tax losses and are measured using tax rates enacted or substantively enacted as at the reporting date. Deferred income tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit and loss. Deferred tax relating to items recognised outside profit or loss is recognised in correlation to the underlying transaction outside profit or loss (either in other comprehensive income or directly in equity).

v Deferred tax liabilities are recognized for all taxable temporary differences, except:

a When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss;

b In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future;

c In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised;

vi Deferred tax assets are recognized for deductible temporary differences only to the extent that there is reasonable probability that sufficient future taxable income will be available against which such deferred tax assets can be realized. In situations where the company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual probability supported by convincing evidence that they can be realized against future taxable profits.

vii In the situations where the company is entitled to a tax holiday under the Income-tax Act, 1961 enacted in India or tax laws prevailing in the respective tax jurisdictions where it operates, no deferred tax (asset or liability) is recognized in respect of temporary differences which reverse during the tax holiday period, to the extent the company''s gross total income is subject to the deduction during the tax holiday period. Deferred tax in respect of temporary differences which reverse after the tax holiday period is recognized in the year in which the temporary differences originate. However, the company restricts recognition of deferred tax assets to the extent that it has become reasonably probable or virtually probable, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realized. For recognition of deferred taxes, the temporary differences which originate first are considered to reverse first.

viii At each reporting date, the company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax asset to the extent that it has become reasonably probable or virtually probable, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realized.

ix The carrying amount of deferred tax assets are reviewed at each reporting date. The company writes-down the carrying amount of deferred tax asset to the extent that it is no longer reasonably probable or virtually probable, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably probable or virtually probable, as the case may be, that sufficient future taxable income will be available. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

x Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set-off current tax assets against current tax liabilities and the deferred tax assets and deferred taxes relate to the same taxable entity and the same taxation authority.

xi Minimum alternate tax (MAT) paid in a year is charged to the statement of profit and loss as current tax. MAT paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company. The company recognizes MAT credit available for a particular assessment year as an asset only after the assessment for that year is complete and such credit is finally quantified and only to the extent that there is convincing evidence that the company will pay normal income tax during the specified period, i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the company recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternative Tax under the Income-tax Act, 1961, the said asset is created by way of credit to the statement of profit and loss and shown as “MAT Credit Entitlement” under the head “Current Assets”. The company reviews the “MAT credit entitlement” asset at each reporting date and writes down its carrying amount to the extent such credit is set-off u/s 115JAA or to the extent the company does not have convincing evidence that it will pay normal tax during the specified period.

xii Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at that date, are recognised subsequently if new information about facts and circumstances change. Acquired deferred tax benefits recognised within the measurement period reduce goodwill related to that acquisition if they result from new information obtained about facts and circumstances existing at the acquisition date. If the carrying amount of goodwill is zero, any remaining deferred tax benefits are recognised in OCI/ capital reserve depending on the principle explained for bargain purchase gains. All other acquired tax benefits realised are recognised in profit or loss.

Sales/ value added taxes paid on acquisition of assets or on incurring expenses.

xiii Expenses and assets are recognised net of the amount of sales/ value added taxes paid, except:

- When the tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case, the tax paid is recognised as part of the cost of acquisition of the asset or as part of the expense item, as applicable;

- When receivables and payables are stated with the amount of tax included.

xiv The net amount of tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet.

2.09 Ind AS 16 - Property Plant and Equipment

i Under the previous GAAP (Indian GAAP), PPE were carried in the balance sheet at cost of acquisition less accumulated depreciation and accumulated impairment losses, if any. The Company has applied Ind AS 16 with retrospective effect for all of its property, plant and equipment as at the transition date, viz., April 1, 2016. In exercise of the option vested in the Company as per Para 29 of Ind AS 16, the Company has chosen the cost model as per Para 30 of Ind AS 16 for all items of PPE. Accordingly, the Company has not revalued the PPE at April 1, 2016.

ii Under the Ind AS compliant Schedule III, land and building are presented as two separate classes of PPE. In contrast, paragraph 37 of Ind AS 16 appears to be having flexibility to treat land and building either as one class or as two separate classes. It also states that a class of PPE is a grouping of assets of a similar nature and use in an entity''s operations. However, in accordance with Para 58 of Ind AS 16 and based on the nature, characteristics and risks of land and building, the management has determined that they constitute two separate classes of property for presentation in the financial statements.

iii The Company has recognized items of property, plant & equipment (PPE) in accordance with Ind AS 16.07 only if it is probable that future economic benefits associated with the item will flow to the entity and if the cost of acquisition or construction of the items of PPE can be measured reliably in accordance with Ind AS 16.10-16.27.

iv The initial cost of PPE comprises;

a its purchase price, including import duties and non-refundable purchase taxes;

b attributable borrowing cost if capitalization criteria are met;

c any other directly attributable costs of bringing an asset to working condition and location for its intended use;

d the present value of the expected cost for the decommissioning and removing of an asset and restoring the site after its use, if the recognition criteria for a provision are met;

e the cost of replacing part of the plant and equipment if the recognition criteria are met. When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognised in the statement of profit and loss as incurred;

f the cost of a major inspection for replacement of PPE, if the recognition criteria are satisfied.

v Subsequent expenditure related to an item of fixed asset is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance. All other expenses on existing fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.

vi Assets in the course of construction are capitalized in capital work in progress account. At the point when an asset is capable of operating in the manner intended by management, the cost of construction is transferred to the appropriate category of PPE. Costs associated with the commissioning of an asset are capitalised when the asset is available for use but incapable of operating at normal levels until the period of commissioning has been completed. Revenue generated from production during the trial period is credited to capital work in progress.

vii As required by Schedule II to the Companies Act, 2013, the management estimate every year, on the basis of technical assessment, the useful life and residual value of items of PPE, if the useful life / residual value are different from that specified in Schedule II.

viii Depreciation:

a Depreciation commences when the assets are ready for their intended use. Assets in the course of development or construction and freehold land are not depreciated. b Depreciation is calculated on the depreciable amount, which is the cost of an asset less its residual value, at rates calculated to write off the depreciable amount of each asset on a straight-line basis over its expected useful life (determined by the management based on technical estimates) or in accordance with Schedule II to the Companies Act, 2013. c The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate. d When significant spare parts of an item of PPE have different useful lives, they are accounted for as separate items (major components) of PPE. e Major inspection and overhaul costs are depreciated over the estimated life of the economic benefit derived from such costs. The carrying amount of the remaining previous overhaul cost is charged to the statement of profit and loss if the next overhaul is undertaken earlier than the previously estimated life of the economic benefit. f Depreciation methods, useful lives and residual values are reviewed at each financial year end and changes in estimates, if any, are accounted for prospectively. g Leasehold land is amortized on a straight line basis over the period of the lease.

ix An item of PPE and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement when the asset is derecognised.

x Gains or losses arising from derecognition of fixed assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.

2.10 Ind AS 17 - Leases

i The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement. For arrangements entered into prior to April 1, 2016, the Company has determined whether the arrangement contains lease on the basis of facts and circumstances existing on the date of transition.

ii A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers substantially to the lessee all the risks and rewards incidental to ownership is classified as a finance lease. A lease in which the lessor does not transfer substantially to the lessee all the risks and rewards of ownership of an asset is classified as an operating lease.

iii Finance leases are capitalised at the commencement of the lease at the inception date fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in finance costs in the statement of profit and loss, unless they are directly attributable to qualifying assets, in which case they are capitalized in accordance with the Company''s general policy on the borrowing costs. Contingent rentals are recognised as expenses in the periods in which they are incurred.

iv Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income.

v A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.

vi Where the Company is the lessee,

a finance leases are capitalised at the commencement of the lease at the inception date fair value of the leased property or, if lower, at the present value of the minimum lease payments. b lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. c finance charges are recognised in finance costs in the statement of profit and loss, unless they are directly attributable to qualifying assets, in which case they are capitalized in accordance with the Company''s general policy on the borrowing costs.

d contingent rentals are recognised as expenses in the periods in which they are incurred. e operating lease payments are not recognised as an expense in the statement of profit and loss on a straight-line basis over the lease term because the payments to the lessor are structured to increase in line with expected general inflation to compensate for the lessor''s expected inflationary cost increases.

vi Where the Company is the lessor,

a finance lease income is not allocated to accounting periods so as to reflect a constant periodic rate of return on the net investment outstanding in respect of the lease because the Company does not, having regard to the totality of facts & circumstances, follow the policy of straight-lining of lease rent income.

b rental income from operating lease is recognised over the term of the relevant lease. c contingent rents are recognised as revenue in the period in which they are earned. d amounts due from lessees under finance leases are recorded as receivables at the Company''s net investment in the leases. e In accordance with Ind AS 17 lease payments under an operating lease are not recognised as an expense / income on a straight-line basis over the lease term because the payments to the lessor are structured to increase in line with expected general inflation to compensate for the lessor''s expected inflationary cost increases.

2.11 Ind AS 18 - Revenue

i Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made.

ii Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment such as discounts and volume rebates and excluding taxes or duties collected on behalf of the Government such as VAT / Service Tax / GST.

iii The Company has concluded that it is the principal in all of its revenue arrangements since it is the primary obligor in all the revenue arrangements as it has pricing latitude and is also exposed to inventory and credit risks.

iv The specific recognition criteria described below must also be met before revenue is recognised:

a Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on delivery of the goods.

b Export benefits are accounted on accrual basis on recognition of export sales.

c Revenue in the form of interest on moneys advanced by the Company is recognized only if recovery of both the interest and principal is certain or if required by the provisions of Section 186(7) of the Companies Act, 2013.

d Revenue in the form of dividend is recognised when the Company''s right to receive the payment is established, which is generally when shareholders approve the dividend.

e Rental income arising from operating leases on investment properties is not accounted for on a straight-line basis over the lease terms and is included in revenue in the statement of profit or loss due to its operating nature because the Company has determined that it does not meet criteria for recognition of lease rental income on straight-line basis i.e.-

- Another systematic basis is more representative of the time pattern in which use benefit derived from the leased asset is diminished, even if the payments to the lessors are not on that basis, or

- The payments to the lessor are structured to increase in line with expected general inflation to compensate for the lessor''s expected inflationary cost increases.

f Revenues from maintenance contracts are recognized prorata over the period of the contract as and when services are rendered.

g Plant and equipment received from customers: A corresponding credit to deferred revenue is made. The Company may agree to deliver one or more services in exchange for the transferred item of property, plant and equipment, such as connecting the customer to a network, providing the customer with ongoing access to a supply of goods or services, or both. The Company identifies the separately identifiable services included in the agreement.

- If only one service is identified, the Company recognises revenue when the service is performed.

- If an ongoing service is identified as part of the agreement, the period over which revenue is recognised for that service is generally determined by the terms of the agreement with the customer. If the agreement does not specify a period, the revenue is recognised over a period no longer than the useful life of the transferred asset used to provide the ongoing service.

- If more than one separately identifiable service is identified, the fair value of the total consideration received or receivable for the agreement will be allocated to each service and the recognition criteria of Ind AS 18 are then applied to each service.

However, during the year under review, the Company has not received any plant & equipment from its customers.

v In the case of composite contracts, the fair consideration attributable to each component of the contract is identified and recorded as revenue. However, the Company has not entered into composite contracts during the year under review.

2.12 Ind AS 19 - Employee Benefits

i Ind AS 19 does not specifically require an entity to distinguish the current and non- current portions of assets and liabilities arising from post-employment benefits because such a distinction may sometimes be arbitrary and difficult to prepare. This is particularly the case for funded plans, where the funded status of the plan to be reflected in the statement of financial position reflects the net of plan assets and liabilities.

ii The Company applies the principles in the Guidance Note on Division II - Ind AS Schedule III for classification of postemployment benefits. As per the Guidance Note, in respect of funded post- employment defined benefit plans, amounts due for payment within 12 months to the fund may be treated as ‘current''. Regarding unfunded post-employment benefit plans, settlement obligations which are due within 12 months in respect of employees who have resigned or expected to resign or are due for retirement within the next 12 months is ‘current''. The remaining amount attributable to other employees, who are likely to continue in the services for more than a year, is classified as “non-current”. Accordingly, the Company has assessed the nature of its employee benefits and made the relevant disclosures.

Short-term employee benefits

iii Employee benefits payable wholly within twelve months of receiving employee services are classified as short-term employee benefits. These benefits include salaries and wages, performance incentives and compensated absences which are expected to occur in next twelve months. The undiscounted amount of short-term employee benefits to be paid in exchange for employee services is recognised as an expense as the related service is rendered by employees.

Compensated absences:

iv Compensated absences accruing to employees and which can be carried to future periods but where there are restrictions on availment or encashment or where the availment or encashment is not expected to occur wholly in the next twelve months, the liability on account of the benefit is determined actuarially using the projected unit credit method. Post-employment benefits

Defined contribution plan

v Contribution to Superannuation Fund: Retirement benefits in form of superannuation is a defined contribution scheme. The Company has no obligation, other than the contribution payable to the superannuation fund. The Company recognizes contribution payable to the superannuation scheme as an expenditure, when an employee renders the related service. If the contribution payable to the scheme for service received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognised as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the balance sheet date, then excess is recognised as an asset to the extent that the pre-payment will lead to a reduction in future payment or a cash refund.

vi Contribution to Provident Fund: Retirement benefit in the form of provident fund is a defined contribution scheme.

The Company has no obligation, other than the contribution payable to the provident fund. The Company recognizes contribution payable to the provident fund scheme as an expense, when an employee renders the related service. If the contribution payable to the scheme for service received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognized as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the balance sheet date, then excess is recognized as an asset to the extent that the pre-payment will lead to, for example, a reduction in future payment or a cash refund. Defined benefit plans

vii Gratuity: The Company operates a defined benefit gratuity plan in India, which requires contributions to be made to a separately administered fund managed by the Life Insurance Corporation of India. The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method. Presently the Company’s gratuity plan is unfunded.

The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation. The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets if any. This cost is included in employee benefit expense in the statement of profit and loss.

The liability or asset recognised in the balance sheet in respect of gratuity plan is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets if any. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method. Re-measurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income and are never reclassified to profit or loss. Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in the statement of profit and loss as past service cost.

Past service costs are recognised in profit or loss on the earlier of:

- The date of the plan amendment or curtailment; and

- The date that the Company recognises related restructuring costs

Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Company recognises the following changes in the net defined benefit obligation as an expense in the statement of profit and loss:

- Service costs comprising current service costs, past-service costs, gains and losses on curtailments and nonroutine settlements; and

- Net interest expense or income.

Termination benefits

viii Termination benefits are payable when employment is terminated by the Company before the normal retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits. The Company recognises termination benefits at the earlier of the following dates:

a when the Company can no longer withdraw the offer of those benefits; and

b when the Company recognises costs for a restructuring that is within the scope of Ind AS 37 and involves the payment of termination benefits. In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling due more than 12 months after the end of the reporting period are discounted to present value.

x The Company is also required to state its policy for termination benefits, employee benefit reimbursements and benefit risk sharing. Since these are not applicable to the Company, the disclosures related to such benefits have not been made.

2.13 Ind AS 20 - Government grants

i Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be complied with.

ii When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed.

iii When the grant relates to an asset, it is recognised as income in equal amounts over the expected useful life of the related asset.

iv When the Company receives grants of non-monetary assets, the asset and the grant are recorded at fair value amounts and released to profit or loss over the expected useful life in a pattern of consumption of the benefit of the underlying asset i.e. by equal annual instalments.

v When loans or similar assistance are provided by governments or related institutions, with an interest rate below the current applicable market rate, the effect of this favourable interest is regarded as a government grant. The loan or assistance is initially recognised and measured at fair value and the government grant is measured as the difference between the initial carrying value of the loan and the proceeds received. The loan is subsequently measured as per the accounting policy applicable to financial liabilities.

vi The Company has chosen to present grants related to an expense item as other income in the statement of profit and loss.

However, the Company has not received any grants from the Government during the year under review.

2.14 Ind AS 21 - Effects of changes in Foreign Exchange Rates

i The Company''s financial statements are presented in INR, which is the company''s functional currency.

ii Transactions in foreign currencies are initially recorded by the Company at the functional currency spot rates at the date the transaction first qualifies for recognition. However, for practical reasons, the Company uses an average rate if the average approximates the actual rate at the date of the transaction.

iii Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date.

iv Exchange differences arising on settlement or translation of monetary items are recognised in profit or loss with the exception of the following:

a Exchange differences arising on monetary items that form part of a reporting entity''s net investment in a foreign operation are recognised in profit or loss in the separate financial statements of the reporting entity or the individual financial statements of the foreign operation, as appropriate.

b Exchange differences arising on monetary items that are designated as part of the hedge of the Company''s net investment of a foreign operation are recognised in OCI until the net investment is disposed of, at which time, the cumulative amount is reclassified to profit or loss.

c Tax charges and credits attributable to exchange differences on those monetary items are also recorded in OCI.

v Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognised in OCI or profit or loss are also recognised in OCI or profit or loss, respectively).

vi The Company considered the two options available under Indian GAAP, AS 11 -The Effects of changes in Foreign Exchange Rates with regard to accounting for exchange differences arising on long-term (i.e. having a term of 12 months or more at the date of its origination) foreign currency monetary items and decided to recognize such exchange differences as income or expense in profit or loss in the period in which they arise. The Company continues this accounting practice because it is in compliance with Ind AS 21.

2.15 Ind AS 23 - Borrowing Costs

i Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs. Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset.

ii A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use or sale.

iii All other borrowing costs are recognized as an expense in the period in which those are incurred.

2.16 Ind AS 24 - Related party and Disclosures

i The Company has identified related parties as required by Ind AS 24.

ii In compliance with Ind AS 24, the Company has recognized independent directors & investor directors as key management personnel.

2.17 Ind AS 32, Ind AS 107 & Ind AS 109 - Financial Instruments : Presentation & Disclosures:

i A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

Financial assets

ii Initial recognition and measurement: All financial assets are recognised initially at amortized cost plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset.

iii Subsequent measurement of financial assets: For purposes of subsequent measurement, financial assets are classified in four categories:

a - Debt instruments at amortised cost;

b - Debt instruments at fairvalue through other comprehensive income (FVTOCI);

c - Debt instruments, derivatives and equity instruments at fair value through profit or loss (FVTPL);

d - Equity instruments measured at fair value through other comprehensive income (FVTOCI).

iv Debt instruments at amortised cost: A ‘debt instrument'' is measured at the amortised cost if both the following conditions are met:

a - The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and

b - Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.

This category is the most relevant to the Company. After initial measurement, such financial assets are subsequently measured at amortised cost. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs. The losses arising from impairment are recognised in the profit or loss. This category generally applies to trade and other receivables.

v Debt instrument at FVTOCI: A ‘debt instrument'' is classified as at the FVTOCI if both of the following criteria are met:

a - The objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets, and

b - The asset''s contractual cash flows represent SPPI.

Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognized in the other comprehensive income (OCI). However, the Company recognizes interest income, impairment losses & reversals and foreign exchange gain or loss in the P&L. On derecognition of the asset, cumulative gain or loss previously recognised in OCI is reclassified from the equity to P&L. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the Effective Interest Rate (EIR) method.

The Company does not have any financial asset in the form of debt instruments at FVTOCI.

vi Debt instrument at FVTPL: FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL.

In addition, the Company may elect to designate a debt instrument, which otherwise meets amortized cost or FVTOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as ‘accounting mismatch'').

Debt instruments included within the FVTPL category are measured at fair value with all changes recognized in the P&L. The Company has not designated any debt instrument as at FVTPL.

vii Equity investments at FVTPL: All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments which are held for trading and contingent consideration recognised by an acquirer in a business combination to which Ind AS103 applies are classified as at FVTPL.

Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the P&L.

The Company does not have any financial asset in the form of equity instruments at FVTPL.

viii Equity investments at FVTOCI: For all other equity instruments, the Company may make an irrevocable election to present in other comprehensive income subsequent changes in the fair value. The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.

If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to P&L, even on sale of investment. However, the Company may transfer the cumulative gain or loss within equity.

The Company does not have any financial asset in the form of equity instruments at FVTOCI.

ix Derecognition: A financial asset (or, w

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Mar 31, 2016

1. Corporate Information

Rajkumar Forge Limited (“the Company”) was incorporated under the provisions of the Companies Act, 1956 and engaged in manufacture and export of Medium and Heavy Open Die Forgings from India. The Major Production which the Company deal in are mill roller shafts, gear shafts, tail bars, gear rings, blanks, table rolls, pinions, spindles, rolls for slab & continuous caster, blooming mill & hot rolling mill rolls, elongator rolls, wobblers and gearing components etc. The registered office of the Company is situated in the state of Maharashtra, India.

2. Basis of preparation

The financial statements are prepared and presented under the historical cost convention on accrual basis of accounting in accordance with the generally accepted accounting principles in India (Indian GAAP).These financial statements comply in all material aspects with the Accounting Standards(AS) as specified under Section 133 of the Companies Act, 2013 (“the 2013 Act”), read with Rule 7 of the Companies (Accounts) Rules, 2014), the relevant provisions of the 2013 Act, as applicable and guidelines issued by the Securities and Exchange Board of India (SEBI), as applicable.

The accounting policies adopted in the preparation of these financial statements are consistent with those of the previous year.

2.1 Summary of Significant Accounting Policies

a) Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles in India requires management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenues and expenses and disclosure of contingent liabilities on the date of the financial statements. The estimates and assumptions used in the accompanying financial statements are based upon management’s evaluation of the relevant facts and circumstances as of the date of financial statements which in management’s opinion are prudent and reasonable. Actual results may differ from the estimates used in preparing the accompanying financial statements. Any revision to accounting estimates is recognized prospectively in current and future periods.

c) Depreciation

-Depreciation on cost of fixed assets is provided on straight line method at estimated useful live, which is in line with the estimated useful life as specified in Schedule II of the Companies Act, 2013 except for second hand machines which are provided based on technical estimate by the management.

-Depreciation on additions is provided on a pro-rata basis from the month of installation or acquisition and in case of Projects from the date of commencement of commercial production. Depreciation on deductions/disposals is provided on a prorata basis up to the month preceding the month of deduction/ disposal.

d) Cash flow statement

The cash flow statement is prepared using the “indirect method” set out in Accounting Standard 3 “Cash Flow Statements” and presents the cash flows by operating, investing and financing activities of the Company.

Cash and cash equivalent for the purposes of cash flow statement comprise cash at bank and in hand and short term investments with as original maturity of three months or less.

e) Revenue Recognition

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

-Sales of goods

Revenue from sale of goods is recognized on transfer of all significant risks and rewards of ownership to the buyer which is normally on dispatch of goods. Sales are stated net of returns and trade discount. Sales tax and VAT are excluded.

-Service income

Service income is recognized as per the terms of the contract when the related services are rendered. It is stated net of service tax

-Interest income

Interest income is recognized on time proportion basis.

f) Tangible fixed assets

Fixed assets are stated on cost less accumulated depreciation. The total cost of assets comprises its purchase price, freight, duties, taxes and any other incidental expenses directly attributable to bringing the asset to the working condition for its intended use.

Capital work in progress are carried at cost, comprising direct cost, related incidental expenses and attributable borrowing cost if applicable.

g) Intangible assets and amortization

Intangible assets are carried at cost less accumulated amortization and impairment losses, if any. The cost of an intangible asset comprises its purchase price and any directly attributable expenditure on making the asset ready for its intended use and net of any trade discounts and rebates. The costs relating to acquisition of software with perpetual license are capitalized as ‘Intangible Assets’ and amortized on a straight line basis over a period of three years, which is the management’s estimate of the useful life of such assets.

h) Foreign Currency Transactions

-Initial recognition

Foreign currency transactions are recorded in the reporting currency which is Indian Rupee, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

-Conversion

Monetary assets and liabilities in foreign currency, which are outstanding as at the year-end, are translated at the year-end at the closing exchange rate and the resultant exchange differences are recognized in the Statement of Profit and Loss. Non-monetary foreign currency items are carried at cost.

-Exchange Differences

Exchange differences arising on the settlement of monetary items or on reporting monetary items of the Company 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, except exchange differences on long term foreign currency monetary items related to acquisition of fixed assets, which are included in the cost of fixed assets.

i) Government grants and subsidies

Grants and subsidies from the government are recognized when there is reasonable assurance that (i) the company will comply with the conditions attached to them and (ii) the grant/ subsidy will be received

j) Employee Benefits

Short term employee benefits

All employee benefits payable wholly within twelve months of rendering the services are classified as short term employee benefits. These benefits include salary, wages, bonus, ex-grantia, short term compensated absences . The undiscounted amount of short term employee benefits expected to be paid in exchange for the services rendered by employees is recognized as an expense during the period.

Post employment employee benefits

Defined Contribution schemes

Company’s contribution to Provident Fund and Superannuation Fund are charged to the Statement of Profit and Loss of the year when the contribution to respective funds are due. There are no other obligations other than the contribution payable to the respective authorities.

Defined benefits plans

The company operates a defined benefit plan for its employees, viz., gratuity. The costs of providing benefit under these plans are determined on the basis of actuarial valuation at each year-end, using the projected unit credit method. The discount rate used for determining the present value of the obligation under defined benefit plan are based on the market yields on government securities as at the Balance Sheet date. Actuarial gains and losses are recognized in full in the period in which they occur in the Statement of Profit and Loss.

Other long term employee benefits

Company’s liabilities towards long term compensated absences to employees are accrued on the basis of valuations, as at the Balance Sheet date, carried out by an independent actuary using Projected Unit Credit Method. Actuarial gains and losses comprise experience adjustments and the effects of changes in actuarial assumptions and are recognized immediately in the Statement of Profit and Loss.

k) Borrowing Cost

Borrowing costs to the extent related/attributable to the acquisition/construction of assets that takes substantial period of time to get ready for their intended use are capitalized along with the respective fixed asset, up to the date such asset is ready for use. Other borrowing costs are charged to the Statement of Profit and Loss.

l) Leases

Assets taken under leases, where the lessor effectively retains substantially all the risks and benefits of ownership of the leased term, 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.

m) Earnings Per Share

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.

Diluted earnings per share are calculated after adjusting effects of potential equity shares (PES).PES are those shares which will convert into equity shares at a later stage. Profit / loss is adjusted by the expenses incurred on such PES. Adjusted profit/loss is divided by the weighted average number of ordinary plus potential equity shares.

n) Taxation

Income-tax expense comprises current tax, deferred tax charge or credit, minimum alternative tax (MAT).

Current tax

Provision for current tax is made for the tax liability payable on taxable income after considering tax allowances, deductions and exemptions determined in accordance with the prevailing tax laws.

Deferred tax

Deferred tax liability or asset is recognized for timing differences between the profits/losses offered for income tax and profits/losses as per the financial statements. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted at the Balance Sheet date.

Deferred tax asset is recognized only to the extent there is reasonable certainty that the assets can be realized in future; however, where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax asset is recognized only if there is a virtual certainty of realization of such asset. Deferred tax asset is reviewed as at each Balance Sheet date and written down or written up to reflect the amount that is reasonably/virtually certain to be realized.

Minimum alternative tax

Minimum alternative tax (MAT) obligation in accordance with the tax laws, which give rise to future economic benefits in the form of adjustment of future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal tax during the specified period. Accordingly, it is recognized as an asset in the Balance Sheet when it is probable that the future economic benefit associated with it will flow to the Company and the asset can be measured reliably.

o) Impairment of Assets

The Company assesses at each Balance Sheet date whether there is any indication that an asset or a group of assets (cash generating unit) may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset or a group of assets. The recoverable amount of the asset (or where applicable, that of the cash generating unit to which the asset belongs) is estimated as the higher of its net selling price and its value in use. 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. After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.

Value in use is the present value of estimated future cash flow expected to arise from the continuing use of the assets and from its disposal at the end of its useful life.

If at the Balance Sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciable historical cost.

p) Provisions and Contingencies

A provision is recognized when an enterprise has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to their present values and are determined based on management estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current management estimates.

Contingent liabilities are disclosed in respect of possible obligations that have arisen from past events and the existence of which will be confirmed only by the occurrence or nonoccurrence of future events not wholly within the control of the Company.

When there is an obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

q) Segment reporting

The Company has identified open die Forging as its sole primary operating segment. The Company secondary geographical segments have been identified based on the location of customers and are demarcated into Indian and Market.

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Mar 31, 2015

A) Basis of Accounting and preparation of Financial Statements

The financial statements are prepared and presented under the historical cost convention on accrual basis of accounting in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP).These financial statements comply in all material aspects with the Accounting Standards(AS) as specified under Section 133 of the Companies Act, 2013 ("the 2013 Act"), read with Rule 7 of the Companies (Accounts) Rules, 2014), the relevant provisions of the 2013 Act, as applicable and guidelines issued by the Securities and Exchange Board of India (SEBI), as applicable.

The accounting policies adopted in the preparation of these financial statements are consistent with those of the previous year.

b) Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles in India (Indian GAAP) requires management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenues and expenses and disclosure of contingent liabilities on the date of the financial statements. The estimates and assumptions used in the accompanying financial statements are based upon management's evaluation of the relevant facts and circumstances as of the date of financial statements which in management's opinion are prudent and reasonable. Actual results may differ from the estimates used in preparing the accompanying financial statements. Any revision to accounting estimates is recognised prospectively in current and future periods.

c) Inventories

Inventories are valued at lower of cost or net realizable value. Basis of determination of cost remain as follows:

Raw materials, components, stores and spares

Lower of Cost/NRV, Cost is determined on a weighted average method. Materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.

Work-in-progress and finished goods

Lower of Cost/NRV, Cost is determined on a weighted average method. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity.

Goods in Transits are valued exclusive of custom duty, where applicable

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.

d) Cash flow statement

The cash flow statement is prepared using the "indirect method" set out in Accounting Standard 3 "Cash Flow Statements" and presents the cash flows by operating, investing and financing activities of the Company.

Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank and in hand and short term investments with an original maturity of three months or less.

e) Depreciation

- Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life and is provided on a straight-line basis over the useful lives as prescribed in Schedule II to the Companies Act, 2013.

- The useful life of an asset is the period over which an asset is expected to be available for use by an entity, or the number of production or similar units expected to be obtained from the asset by the entity.

- Depreciation on additions is provided on a pro-rata basis from the month of installation or acquisition and in case of Projects from the date of commencement of commercial production. Depreciation on deductions/disposals is provided on a pro-rata basis upto the month preceding the month of deduction/disposal.

f) Revenue Recognition

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

- Sales of goods

Revenue from sale of goods is recognised on transfer of all significant risks and rewards of ownership to the buyer which is normally on dispatch of goods. Sales are stated net of returns and trade discount. Sales tax and VAT are excluded.

- Interest income

Interest income is recognized on time proportion basis.

- Other Income

Export Incentives i.e Duty Drawback are accounted on cash basis.

g) Tangible fixed assets

Fixed Assets are stated on cost less accumulated depreciation. The total cost of assets comprises its purchase price, freight, duties, taxes and any other incidental expenses directly attributable to bringing the asset to the working condition for its intended use. Capital Work in progress are carried at cost, comprising direct cost, related incidental expenses and attributable interest.

h) Intangible assets

Intangible assets are carried at cost less accumulated amortization and impairment losses, if any. The cost of an intangible asset comprises its purchase price and any directly attributable expenditure on making the asset ready for its intended use and net of any trade discounts and rebates.

i) Foreign Currency Transactions

- Initial recognition

Foreign currency transactions are recorded in the reporting currency which is Indian Rupee, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

- Conversion

Monetary assets and liabilities in foreign currency, which are outstanding as at the year-end, are translated at the year-end at the closing exchange rate and the resultant exchange differences are recognized in the Statement of Profit and Loss. Non-monetary foreign currency items are carried at cost.

- Exchange Differences

Exchange differences arising on the settlement of monetary items or on reporting monetary items of the Company at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognised as income or as expenses in the year in which they arise, except exchange differences on long term foreign currency monetary items related to acquisition of fixed assets, which are included in the cost of fixed assets.

j) Investments

Investments, which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as non-current investments. 'Non-current Investments are carried at acquisition /amortized cost. A provision is made for diminution, other than temporary on an individual basis.

'Current Investments' are carried at the lower of cost or fair value on an individual basis.

k) Retirement and Other Employee Benefits

Short term employee benefit

All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits. These benefits include short term compensated absences such as paid annual leave. The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees is recognized as an expense during the period. Benefits such as salaries and wages, etc. and the expected cost of the bonus / ex-gratia are recognised in the period in which the employee renders the related service.

Post employment employee benefits Defined Contribution schemes

Company's contributions to the Provident Fund and Employee's State Insurance Fund are charged to the Statement of Profit and Loss of the year when the contributions to the respective funds are due.

Defined benefits plans

The Company's gratuity benefit scheme is a defined benefit plan. The Company's net obligation in respect of the gratuity benefit scheme is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any plan assets is deducted.

The present value of the obligation under such defined benefit plan is determined based on actuarial valuation, carried out by an independent actuary at each Balance Sheet date, using the Projected Unit Credit Method, which recognizes each period of service as giving rise to an additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

The obligation is measured at the present value of the estimated future cash flows. The discount rates used for determining the present value of the obligation under defined benefit plan are based on the market yields on Government Securities as at the Balance Sheet date.

Actuarial gains and losses are recognized immediately in the Statement of Profit and Loss.

Other long term employee benefits

Company's liabilities towards compensated absences to employees are accrued on the basis of valuations, as at the Balance Sheet date, carried out by an independent actuary using Projected Unit Credit Method. Actuarial gains and losses comprise experience adjustments and the effects of changes in actuarial assumptions and are recognised immediately in the Statement of Profit and Loss.

l) Borrowing Cost

Borrowing costs to the extent related/attributable to the acquisition/construction of assets that takes substantial period of time to get ready for their intended use are capitalized along with the respective fixed asset, up to the date such asset is ready for use. Other borrowing costs are charged to the Statement of Profit and Loss.

m) Leases

Assets taken under leases, where the company assumes substantially all the risks and rewards of ownership are classified as Finance Leases. Such assets are capitalized at the inception of the lease at the lower of fair value or the present value of minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost, so as to obtain a constant periodic rate of interest on outstanding liability for each period.

Assets taken under leases, where the lessor effectively retains substantially all the risks and benefits of ownership of the leased term, 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.

n) Earnings Per Share

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.

Diluted earnings per share are calculated after adjusting effects of potential equity shares (PES).PES are those shares which will convert into equity shares at a later stage. Profit / loss is adjusted by the expenses incurred on such PES. Adjusted profit/loss is divided by the weighted average number of ordinary plus potential equity shares.

o) Taxation

Income-tax expense comprises current tax, deferred tax charge or credit, minimum alternative tax (MAT).

Current tax

Provision for current tax is made for the tax liability payable on taxable income after considering tax allowances, deductions and exemptions determined in accordance with the prevailing tax laws.

Deferred tax

Deferred tax liability or asset is recognized for timing differences between the profits/losses offered for income tax and profits/ losses as per the financial statements. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted at the Balance Sheet date.

Deferred tax asset is recognized only to the extent there is reasonable certainty that the assets can be realized in future; however, where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax asset is recognized only if there

is a virtual certainty of realization of such asset. Deferred tax asset is reviewed as at each Balance Sheet date and written down or written up to reflect the amount that is reasonably/virtually certain to be realized.

Minimum alternative tax

Minimum alternative tax (MAT) obligation in accordance with the tax laws, which give rise to future economic benefits in the form of adjustment of future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal tax during the specified period. Accordingly, it is recognized as an asset in the Balance Sheet when it is probable that the future economic benefit associated with it will flow to the Company and the asset can be measured reliably.

p) Impairment of Assets

The Company assesses at each Balance Sheet date whether there is any indication that an asset or a group of assets (cash generating unit) may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset or a group of assets. The recoverable amount of the asset (or where applicable, that of the cash generating unit to which the asset belongs) is estimated as the higher of its net selling price and its value in use. 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. After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life. Value in use is the present value of estimated future cash flow expected to arise from the continuing use of the assets and from its disposal at the end of its useful life.

If at the Balance Sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciable historical cost.

q) Provisions and Contingencies

A provision is recognised when an enterprise has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to their present values and are determined based on management estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current management estimates. Contingent liabilities are disclosed in respect of possible obligations that have arisen from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of future events not wholly within the control of the Company.

When there is an obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

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Mar 31, 2014

A) System Of Accounting :

i. The Company follows mercantile system of accounting and recognizes income and expenditure on an accrual basis except those with significant uncertainties.

ii. The Financial Statements are prepared under the historical cost convention in accordance with applicable accounting standards and relevant presentation requirements of the Companies Act, 1956.

iii. Estimates and Assumptions used in preparation of the Financial Statements are based upon Managements evaluations of the relevant facts and circumstances as of the date of the Financial Statements, which may differ from the actual result at a subsequent date.

B) Fixed Assets:

Tangible Fixed Assets are stated at their original cost of acquisition including expenses related to acquisition and installation of the concerned assets. Intangible Fixed Assets such as Software are recognized, if it is expected that such assets will generate sufficient future economic benefits. Fixed Assets are shown net of accumulated depreciation (except free hold land).

Provision for Impairment loss if any, is recognized to the extent by which the carrying amount of an asset exceeds its recoverable amount. Recoverable amount is the higher of an asset''s net selling price and its value in use. Value in use is determined on the basis of the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life.

C) Depreciation

Depreciation has been charged on the Fixed Assets under Straight Line Method at the rates prescribed in Schedule XIV to the Companies Act, 1956, as amended. Depreciation on additions and deductions to assets during the year is being provided on pro-rata basis.

D) Inventories

Inventories are stated at lower of cost and net realizable value. The material costs are determined on weighted average basis/FIFO as applicable. The valuation of Work in progress and Finished goods represents the combined cost of material, labor and all manufacturing overheads.

E) Foreign Currency Conversion:

The Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction. Current assets and current liabilities are translated at the year end exchange rates and the profit/loss so determined and also the realized exchange gains/ losses are recognized in the profit and loss account.

Premium on forward cover contracts is reflected in the profit and loss account. The net amount payable to Bank against Foreign Currency payable and Amount Receivable from Bank against Forward Contracts are reflected under current liabilities.

F) Investments

Long term investments are stated at cost. A provision for diminution is made to recognize a decline, other than temporary, in the value of long term investments. Current investments are stated at the lower of cost and fair value.

G) Employee Benefits

1. Provident Fund: Liability is determined on the basis of contribution as required under the statutory rules.

2. Superannuation Fund: Contribution is made to Life Insurance Corporation of India in respect of employees covered under the Scheme.

3. Gratuity: Liability under the Payment of Gratuity Act, 1972 has been actuarially valued. However the liability is not funded externally.

4. Privilege Leave entitlements Liability has been actuarially valued. However the liability is not funded externally.

H) Taxation

1. Provision for Taxation is made on the Basis of the Taxable Profits computed for the current accounting period in accordance with the Income-Tax Act, 1961.

2. Deferred Tax resulting from timing differences between book profits and tax profits is accounted for at the current rates of tax to the extent the timing differences are expected to crystallize, in case of Deferred Tax Liabilities with reasonable certainty and in case of Deferred Tax Assets with virtual certainty that there would be adequate future taxable income against which such Deferred Tax Assets can be realized.

I) Provisions and Contingent Liabilities

Contingent Liabilities are disclosed after a careful evaluation of the facts and legal aspects of the matter involved. Provisions are recognized when the Company has a legal/constructive obligation and on management discretion as a result of a past event, for which it is probable that a cash outflow may be required and a reliable estimate can be made of the amount of the obligation.

J) Revenue Recognition

a) Sale of goods is recognized at the point of dispatch to the customer. Sales include excise duty but exclude value added tax/sales tax. In order to comply with the Accounting Standards Interpretation (ASI-14) issued by the Institute of Chartered Accountants of India, gross sales (including excise duty) and net sales (excluding excise duty) is disclosed in the profit and loss account.

b) Export Incentives i.e Duty Drawback are accounted on cash basis.

K) Research and Development expenditure

Research and Development expenditure is charged to Revenue under the natural heads of Account in the year in which it is incurred. However the expenditure incurred at development phase, where it is reasonably certain that outcome of research will be commercially exploited to yield economic benefits to the company, is considered as an intangible assets.

L) Borrowing Costs

Borrowing Costs on Working Capital is charged to profit and loss statement in the year of incurrence.

1. Borrowing costs that are attributable to the acquisition of tangible fixed assets are capitalized till the date of substantial completion of the activities necessary to prepare the relevant asset for its intended use.

2. Borrowing costs that are attributable to the acquisition or development of intangible assets are capitalized till the date they are put to use.

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Mar 31, 2013

A) System Of Accounting :

i. The Company follows mercantile system of accounting and recognizes income and expenditure on an accrual basis except those with significant uncertainties. ii The Financial Statements are prepared under the historical cost convention in accordance with applicable accounting standards and relevant presentation requirements of the Companies Act, 1956. iii Estimates and Assumptions used in preparation of the Financial Statements are based upon Managements evaluations of the relevant facts and circumstances as of the date of the Financial Statements, which may differ from the actual result at a subsequent date.

B) Fixed Assets:

Tangible Fixed Assets are stated at their original cost of acquisition including expenses related to acquisition and installation of the concerned assets. Intangible Fixed Assets such as Software are recognized, if it is expected that such assets will generate sufficient future economic benefits. Fixed Assets are shown net of accumulated depreciation (except free hold land).

Provision for Impairment loss if any, is recognized to the extent by which the carrying amount of an asset exceeds its recoverable amount. Recoverable amount is the higher of an asset''s net selling price and its value in use. Value in use is determined on the basis of the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life.

C) Depreciation :

Depreciation has been charged on the Fixed Assets under Straight Line Method at the rates prescribed in Schedule XIV to the Companies Act, 1956, as amended. Depreciation on additions and deductions to assets during the year is being provided on pro-rata basis.

D) Inventories :

Inventories are stated at lower of cost and net realizable value. The material costs are determined on weighted average basis/FIFO as applicable. The valuation of Work in progress and Finished goods represents the combined cost of material, labor and all manufacturing overheads.

E) Foreign Currency Conversion:

The Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction. Current assets and current liabilities are translated at the year end exchange rates and the profit / loss so determined and also the realized exchange gains / losses are recognized in the profit and loss account.

Premium on forward cover contracts is reflected in the profit and loss account. The net amount payable to Bank against Foreign Currency payable and Amount Receivable from Bank against Forward Contracts are reflected under current liabilities.

F) Investments

Long term investments are stated at cost. A provision for diminution is made to recognize a decline, other than temporary, in the value of long term investments. Current investments are stated at the lower of cost and fair value.

G) Employee Benefits :

1. Provident Fund: Liability is determined on the basis of contribution as required under the statutory rules.

2. Superannuation Fund: Contribution is made to Life Insurance Corporation of India in respect of employees covered under the Scheme.

3. Gratuity: Liability under the Payment of Gratuity Act, 1972 has been actuarially valued. However the liability is not funded externally.

4. Privilege Leave entitlements Liability has been actuarially valued. However the liability is not funded externally. H) Taxation :

1. Provision for Taxation is made on the Basis of the Taxable Profits computed for the current accounting period in accordance with the Income-Tax Act, 1961.

2. Deferred Tax resulting from timing differences between book profits and tax profits is accounted for at the current rates of tax to the extent the timing differences are expected to crystallize, in case of Deferred Tax Liabilities with reasonable certainty and in case of Deferred Ta x Assets with virtual certainty that there would be adequate future taxable income against which such Deferred Ta x Assets can be realized.

I) Provisions and Contingent Liabilities

Contingent Liabilities are disclosed after a careful evaluation of the facts and legal aspects of the matter involved. Provisions are recognize when the Company has a legal/constructive obligation and on management discretion as a result of a past event, for which it is probable that a cash outflow may be required and a reliable estimate can be made of the amount of the obligation.

J) Revenue Recognition:

a) Sale of goods is recognized at the point of dispatch to the customer. Sales include excise duty but exclude value added tax/sales tax. In order to comply with the Accounting Standards Interpretation (ASI-14) issued by the Institute of Chartered Accountants of India, gross sales (including excise duty) and net sales (excluding excise duty) is disclosed in the profit and loss account.

b) Export Incentives i.e DEPB License Sales are provided on actual physical License received by the company & Duty Drawback are accounted on cash basis.

K) Research and Development expenditure

Research and Development expenditure is charged to Revenue under the natural heads of Account in the year in which it is incurred. However the expenditure incurred at development phase, where it is reasonably certain that outcome of research will be commercially exploited to yield economic

benefits to the company, is considered as an intangible assets. L) Borrowing Costs

Borrowing Costs on Working Capital is charged to profit and loss statement in the year of incurrence

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Mar 31, 2012

A) System Of Accounting :

i. The Company follows mercantile system of accounting and recognizes income and expenditure on an accrual basis except those with significant uncertainties.

ii The Financial Statements are prepared under the historical cost convention in accordance with applicable accounting standards and relevant presentation requirements of the Companies Act, 1956.

iii Estimates and Assumptions used in preparation of the Financial Statements are based upon Managements evaluations of the relevant facts and circumstances as of the date of the Financial Statements, which may differ from the actual result at a subsequent date.

B) Fixed Assets:

Tangible Fixed Assets are stated at their original cost of acquisition including expenses related to acquisition and installation of the concerned assets. Intangible Fixed Assets such as Software are recognized, if it is expected that such assets will generate sufficient future economic benefits. Fixed Assets are shown net of accumulated depreciation (except free hold land).

Provision for Impairment loss if any, is recognized to the extent by which the carrying amount of an asset exceeds its recoverable amount. Recoverable amount is the higher of an asset's net selling price and its value in use. Value in use is determined on the basis of the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life.

C) Depreciation :

Depreciation has been charged on the Fixed Assets under Straight Line Method at the rates prescribed in Schedule XIV to the Companies Act, 1956, as amended. Depreciation on additions and deductions to assets during the year is being provided on pro-rata basis.

D) Inventories :

Inventories are stated at lower of cost and net realizable value. The material costs are determined on weighted average basis/FIFO as applicable. The valuation of Work in progress and Finished goods represents the combined cost of material, labor and all manufacturing overheads.

E) Foreign Currency Conversion:

The Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction. Current assets and current liabilities are translated at the year end exchange rates and the profit / loss so determined and also the realized exchange gains / losses are recognized in the profit and loss account.

Premium on forward cover contracts is reflected in the profit and loss account over the period of contracts. The net amount payable to Bank against Foreign Currency payable and Amount Receivable from Bank against Forward Contracts are reflected under current liabilities.

F) Investments

Long term investments are stated at cost. A provision for diminution is made to recognize a decline, other than temporary, in the value of long term investments. Current investments are stated at the lower of cost and fair value.

G) Employee Benefits :

1. Provident Fund: Liability is determined on the basis of contribution as required under the statutory rules.

2. Superannuation Fund: Contribution is made to Life Insurance Corporation of India in respect of employees covered under the Scheme.

3. Gratuity: Liability under the Payment of Gratuity Act, 1972 has been actuarially valued. However the liability is not funded externally.

4. Privilege Leave entitlements Liability has been actuarially valued. However the liability is not funded externally.

H) Taxation :

1. Provision for Taxation is made on the Basis of the Taxable Profits computed for the current accounting period in accordance with the Income-Tax Act, 1961.

2. Deferred Tax resulting from timing differences between book profits and tax profits is accounted for at the current rates of tax to the extent the timing differences are expected to crystallize, in case of Deferred Tax Liabilities with reasonable certainty and in case of Deferred Tax Assets with virtual certainty that there would be adequate future taxable income against which such Deferred Tax Assets can be realized.

I) Provisions and Contingent Liabilities

Contingent Liabilities are disclosed after a careful evaluation of the facts and legal aspects of the matter involved. Provisions are recognized when the Company has a legal/constructive obligation and on management discretion as a result of a past event, for which it is probable that a cash outflow may be required and a reliable estimate can be made of the amount of the obligation.

J) Revenue Recognition:

a) Sale of goods is recognized at the point of dispatch to the customer. Sales include excise duty but exclude value added tax/sales tax. In order to comply with the Accounting Standards Interpretation (ASI-14) issued by the Institute of Chartered Accountants of India, gross sales (including excise duty) and net sales (excluding excise duty) is disclosed in the profit and loss account.

b) Export Incentives i.e DEPB License Sales are provided on actual physical License received by the company & Duty Drawback are accounted on cash basis.

K) Research and Development expenditure

Research and Development expenditure is charged to Revenue under the natural heads of Account in the year in which it is incurred. However the expenditure incurred at development phase, where it is reasonably certain that outcome of research will be commercially exploited to yield economic benefits to the company, is considered as an intangible assets.

L) Borrowing Costs

Borrowing Costs on Working Capital is charged to profit and loss statement in the year of incurrence.

1. Borrowing costs that are attributable to the acquisition of tangible fixed assets are capitalized till the date of substantial completion of the activities necessary to prepare the relevant asset for its intended use.

2. Borrowing costs that are attributable to the acquisition or development of intangible assets are capitalized till the date they are put to use.

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Mar 31, 2010

A) System Of Accounting :

i. The Company follows mercantile system of accounting and recognizes income and expenditure on an accrual basis except those with significant uncertainties

ii The Financial Statements are prepared under the historical cost convention in accordance with applicable accounting standards and relevant presentation requirements of the Companies Act, 1956.

iii Estimates and Assumptions used in preparation of the Financial Statements are based upon Managements evaluations of the relevant facts and circumstances as of the date of the Financial Statements, which may differ from the actual result at a subsequent date.

B) FixedAssets:

Tangible Fixed Assets are stated at their original cost of acquisition including expenses related to acquisition and installation of the concerned assets. Intangible Fixed Assets such as Software are recognized, if it is expected that such assets will generate sufficient future economic benefits. Fixed Assets are shown net of accumulated depreciation (except free hold land).

Provision for Impairment loss if any, is recognized to the extent by which the carrying amount of an asset exceeds its recoverable amount. Recoverable amount is the higher of an assets net selling price and its value in use. Value in use is determined on the basis of the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life.

C) Depreciation:

Depreciation has been charged on the Fixed Assets under Straight Line Method at the rates prescribed in Schedule XIV to the Companies Act, 1956, as amended. Depreciation on additions and deductions to assets during the year is being provided on pro-rata basis.

D) Inventories:

Inventories are stated at lower of cost and net realizable value. The material costs are determined on weighted average basis/FIFO as applicable. The valuation of Work in progress and Finished goods represents the combined cost of material, labour and all manufacturing overheads.

E) Foreign Currency Conversion:

The Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction. Current assets and current liabilities are translated at the year end exchange rates and the profit / loss so determined and also the realized exchange gains / losses are recognized in the profit and loss account.

Premium on forward cover contracts is reflected in the profit and loss account over the period of contracts. The net amount payable to Bank against Foreign Currency payable and Amount Receivable from Bank against Forward Contracts are reflected under current liabilities.

F) Investments

Long term investments are stated at cost. A provision for diminution is made to recognize a decline, other than temporary, in the value of long term investments. Current investments are stated at the lower of cost and fair value.

G) Employee Benefits:

a) Provident Fund : Liability is determined on the basis of contribution as required under the statutory rules.

b) Superannuation Fund : Contribution is made to Life Insurance Corporation of India in respect of employees covered under the Scheme.

c) Gratuity: Liability under the Payment of Gratuity Act, 1972 has been actuarially valued. However the liability is not funded externally.

d) Privilege Leave entitlements Liability has been actuarially valued. However the liability is not funded externally. H) Taxation:

a) Provision for Taxation is made on the Basis of the Taxable Profits computed for the current accounting period in accordance with the Income-Tax Act, 1961.

b) Deferred Tax resulting from timing differences between book profits and tax profits is accounted for at the current rates of tax to the extent the timing differences are expected to crystallise, in case of Deferred Tax Liabilities with reasonable certainty and in case of Deferred Tax Assets with virtual certainty that there would be adequate future taxable income against which such Deferred Tax Assets can be realised.

I) Provisions and Contingent Liabilities

Contingent Liabilities are disclosed after a careful evaluation of the facts and legal aspects of the matter involved. Provisions are recognized when the Company has a legal/constructive obligation and on management discretion as a result of a past event, for which it is probable that a cash outflow may be required and a reliable estimate can be made of the amount of the obligation.

J) Revenue Recognition :

a) Sale of goods is recognized at the point of dispatch to the customer. Sales include excise duty but exclude value added tax/sales tax. In order to comply with the Accounting Standards Interpretation (ASI-14) issued by the Institute of Chartered Accountants of India, gross sales (including excise duty) and net sales (excluding excise duty) is disclosed in the profit and loss account.

b) Export Incentives i.e DEPB License Sales is provided for based on actual physical License received by the company.

K) Research and Development expenditure

Research and Development expenditure is charged to Revenue under the natural heads of Account in the year in which it is incurred. However the expenditure incurred at development phase, where it is reasonably certain that outcome of research will be commercially exploited to yield economic benefits to the company, is considered as an intangible assets.

L) Borrowing Costs

a) Borrowing Costs on Working Capital is charged to profit and loss statement in the year of incurrence.

b) Borrowing costs that are attributable to the acquisition of tangible fixed assets are capitalized till the date of substantial completion of the activities necessary to prepare the relevant asset for its intended use.

c) Borrowing costs that are attributable to the acquisition or development of intangible assets are capitalized till the date they are put to use.