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Accounting Policies of Ratnamani Metals & Tubes Ltd. Company

Mar 31, 2016

1 CORPORATE INFORMATION

Ratnamani Metals & Tubes Limited (the Company) is a public Company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on two stock exchanges in India. The Company is engaged in the manufacturing of stainless steel pipes and tubes and carbon steel pipes at Kutch, Indrad and Chhatral in the state of Gujarat. The Company caters to both domestic and international markets.

2 BASIS OF ACCOUNTING

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all material respects with the accounting standards notified under Section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Account) Rules 2014. The financial statements have been prepared on an accrual basis and under the historical cost convention.

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

2.1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

a. USE OF ESTIMATES

The preparation of financial statements in conformity with Indian GAAP requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the management''s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets and/or liabilities in future periods.

b. TANGIBLE FIXED ASSETS

Fixed assets are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises purchase price and borrowing costs if capitalization criteria are met, the cost of replacing part of the fixed assets and directly attributable cost of bringing the asset to its working condition for the intended use. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately. This applies mainly to components for machinery. When significant parts of fixed assets are required to be replaced at intervals, the Company recognizes such parts as individual assets with specific useful lives and depreciates them accordingly. Likewise, when a major overhauling is performed, its cost is recognized in the carrying amount of the fixed assets as a replacement if the recognition criteria are satisfied. Any trade discounts and rebates are deducted in arriving at the purchase price.

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

The Company adjusts exchange differences arising on translation/ settlement of long-term foreign currency monetary items pertaining to the acquisition of a depreciable asset to the cost of the asset and depreciates the same over the remaining life of the asset. In accordance with MCA circular dated 09 August 2012, exchange differences adjusted to the cost of fixed assets are total differences, arising on long-term foreign currency monetary items pertaining to the acquisition of a depreciable asset for the period. In other words, the Company does not differentiate between exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost and other exchange difference.

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 assets and are recognized in the Statement of Profit and Loss as and when the assets is derecognized.

c. INTANGIBLE FIXED ASSETS

Intangible Assets are carried at cost less accumulated amortization and accumulated impairment, if any.

Intangible assets are amortized on a straight-line basis over six years. The amortization period and the amortization method are reviewed at least at each financial year end.

d. DEPRECIATION AND AMORTISATION

Depreciation on fixed assets is calculated on a straight-line basis using the rates arrived at based on the useful lives defined under Schedule II except in respect of following fixed assets:

(i) The amount of Long Term Lease hold land: It is amortized in equal installments during the last fifteen years of the residual lease period.

(ii) Furnace and X-ray machines are depreciated at an annual rate of 20% to bring the depreciation rates in line with the useful life of assets as estimated by the Technical Team of the Company.

(iii) The useful life of Wind Mills is estimated as 20 years based on sublease period of the land and the PPA/Wheeling Agreements entered into with the local authorities.

e. INVESTMENTS

Investments that are readily realizable and intended to be held for not more than a year from the date on which investments are made, are classified as current investments. All other investments are classified as non-current investments.

Current investments are carried at lower of cost and fair value determined on an individual investment basis. Non-current investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of the investments.

On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the Statement of Profit and Loss.

f. INVENTORIES

Raw materials, work-in-process, finished goods, traded goods and stores and spares are valued at lower of cost and net realizable value after providing for obsolescence and other losses, wherever considered necessary. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Scrap is valued at net realizable value. 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, incurred in bringing them in their respective present location and condition. Cost of finished goods includes excise duty.

Net realizable value is the estimated selling price in the ordinary course of business.

g. REVENUE

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognized:

i) Revenue from sale of goods is recognized only when all the significant risks and rewards of ownership of the goods have been passed to the buyer. Revenue from operations (gross) represents the amounts receivable for goods and services sold including excise duty thereon and Export incentives but excludes VAT/CST, trade discounts & other taxes, adjustments for late delivery charges and material returned/rejected.

Excise duty deducted from revenue (gross) is the amount that is included in the revenue (gross) and not the entire amount of liability arising during the year.

ii) The Company accounts for pro forma credits, refunds of duty of customs or excise, or refunds of sales tax in the year of admission of such claims by the concerned authorities. Benefits in respect of Export Licenses are recognised on application. Export benefits are accounted for as other operating income in the year of export based on eligibility and when there is no uncertainty on receiving the same.

iii) Interest income is recognized on time proportion basis taking into account the amounts outstanding and the rates applicable. Interest income is included under the head "other income" in the Statement of Profit and Loss.

iv) Dividend is recognized when the Company''s right to receive dividend is established by the Balance Sheet date.

v) Revenue from windmills is recognized on unit generation basis.

h. EMPLOYEE BENEFITS

Retirement benefits in the form of provident fund and superannuation fund are defined contribution plans. The Company has no obligation, other than the contributions payable to provident fund and super-annotation fund. The Company recognizes contribution payable to these funds as an expenditure, when an employee renders the related service.

In respect of gratuity liability, the Company operates defined benefit plan. The costs of providing benefits under this plan are determined on the basis of actuarial valuation at each year-end. Actuarial valuation is carried out using the projected unit credit method. Based on the determined valuation, the Company recognizes the amount in full to the Statement of Profit and Loss account. Actuarial gain and loss is recognize in full in the period in which they occur in the Statement of Profit and Loss.

The liability in respect of unused leave entitlement of the employees as at the reporting date is determined on the basis of an independent actuarial valuation carried out and the liability is recognized in the Statement of Profit and Loss. The

Company presents the entire leave as a current liability in the Balance Sheet, since it does not have an unconditional right to defer its settlement beyond 12 months after the reporting date. Actuarial gain and loss is recognized in full in the period in which they occur in the Statement of Profit and Loss.

i. INCOME TAXES

Tax expenses comprise of current and deferred tax. Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.

Deferred income taxes reflect the impact of timing differences between taxable income and accounting income originating during the current year and reversal of timing differences for the earlier years. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted at the reporting date.

Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized for deductible timing differences only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

The Company restricts recognition of deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realized. For recognition of deferred taxes, the timing differences which originate first are considered to reverse first.

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

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

The carrying amount of deferred tax assets are reviewed at each reporting date. The Company writes-down the carrying amount of deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.

j. FOREIGN CURRENCY TRANSACTIONS

i) Foreign currency transactions are accounted at exchange rates prevailing on the date when the transactions take place or that approximates the actual rate on the date of the transaction. All exchange differences arising in respect of foreign currency transactions are dealt with in statement of profit & loss except in respect of long term liabilities incurred for acquiring fixed assets, in which case such differences are adjusted in the carrying amount of the respective fixed assets and depreciated over the remaining useful life of the assets.

ii) All monetary foreign currency assets and liabilities, if any, as at the Balance Sheet date are restated at the applicable exchange rates prevailing on the reporting date of financial statements.

k. FOREIGN EXCHANGE CONTRACTS ENTERED INTO TO HEDGE FOREIGN CURRENCY RISK OF AN EXISTING ASSETS/LIABILITIES

In respect of forward contracts, the premium or discount is amortized over the period of forward contracts and the proportionate premium/discount for the period up to the reporting date of Balance Sheet is recognized in the Statement of Profit and Loss. The exchange difference measured by the exchange rate between the inception of the forward contracts and reporting date of Balance Sheet is applied on foreign currency amount of the forward contracts and exchange differences on such contracts are recognized in the Statement of Profit and Loss in the period in which the exchange rates changes. Any profit or loss arising on cancellation or renewal of such forward exchange contracts is also recognized as income or expense for the period.

l. BORROWING COSTS

Borrowing costs include interest and amortization of ancillary costs incurred in connection with the arrangement of borrowing.

Borrowing costs those are directly attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is the one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to Statement of Profit and Loss.

m. IMPAIRMENT OF ASSETS

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

n. PROVISIONS

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

o. CONTINGENT LIABILITY

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements. A contingent asset is neither recognized nor disclosed.

p. SEGMENT REPORTING

The Company''s operating businesses are organized and managed separately according to the nature of products provided, with each segment representing a strategic business unit that offers different products and serves different markets. The analysis of geographical segment is based on the geographical location of the customers.

The Company accounts for intersegment sales at cost.

Unallocated items include general corporate income and expense items which are not allocated to any business segment.

The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.

q. EARNINGS PER SHARE

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

r. CASH AND CASH EQUIVALENT

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

s. OPERATING LEASE

Leases, where the less or effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognized as an expense in the Statement of Profit and Loss on a straight-line basis over the lease term.

3.2 Terms/Rights attached to Equity Shares

The Company has only one class of Equity Shares having a par value of Rs, 2/- per share. Each holder of Equity Shares is entitled to one vote per share. The Company declares and pays dividend in Indian Rupees. The dividend proposed by the Board of Directors is subject to approval of the Shareholders at the ensuing Annual General Meeting. In the event of liquidation of the Company, the holders of Equity Shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of Equity Shares held by Share holders.

External (Foreign) Commercial Borrowing of Rs, 890.27 Lacs (P.Y. Rs, 1,681.60 Lacs) from ICICI Bank Ltd. Hong Kong branch is carrying interest @ 6M Libor 4.52% P.A. The loan is repayable in 12 half yearly installments of USD 6,66,666.67 each from 22.07.2011. The loan is secured by an exclusive charge over movable assets in respect of 3Layer PE Coating Line and Offline Welding & Finishing Lines for HSAW plant situated at Survey No.474, Village Bhimasar, Tal. Anjar, Dist. Kutch.

7.1 Working Capital Loans are secured by - i) Hypothecation of Inventories, Books Debts, all other movables; ii) Second charge on Fixed Assets of the Company except: a) 8 wind mills along with related equipments/machineries situated at Moti Sindholi, Kutch, Gujarat and b) movable assets in respect of 3 Layer PE Coating Line and Offline Welding & Finishing Lines for HSAW plant situated at Survey No.474,village Bhimasar, Tal. Anjar, Dist. Kutch; iii) Personal guarantees of Shri Prakash M. Sanghvi, Chairman and Managing Director, Shri Jayanti M. Sanghvi, Whole-time Director and Shri Shanti M. Sanghvi, Whole-time Director, of the Company; iv) Joint equitable mortgage of all immovable properties held as free-hold and leasehold lands of the Company, except: a) Leasehold land related to 8 wind mills situated at Moti Sindholi, Kutch, b) Lease hold land situated at 3306-09, GIDC Chhatral, Taluka Kalol and

c) 3 Layer PE Coating Line and Offline Welding & Finishing Lines for HSAW plant situated at Survey No.474, Village Bhimasar, Tal. Anjar, Dist. Kutch.

There are no Micro, Small and Medium Enterprise, as defined in the Micro, Small, Medium Enterprises Development Act, 2006, to whom the Company owes dues on account of principal amount together with interest and accordingly no additional disclosure have been made. The above information regarding Micro, Small and Medium Enterprise has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors.

Note-1 Consolidated tax payable to GIDC is demanded by GIDC, Chhatral modified under circular dated 9/7/2010 for levying and recovering "infrastructure up gradation fund" from the Company. The amount comprises of the per square meter charges towards infrastructure up gradation as well as interest and penalty thereupon. The Company has paid the demand in the current year.

Note-2 Excise duty comprises of various demands from the Excise Authorities for payment of Rs, 3,338.86 Lacs ( P.Y. Rs, 3,315.13 Lacs). The Company has filed appeals against these demands. The Company has been advised by its legal counsel that the demand is likely to be deleted and accordingly no provision for liability has been recognized in the financial statements.


Mar 31, 2015

A. USE OF ESTIMATES

The preparation of financial statements in conformity with Indian GAAP requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the management''s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets and / or liabilities in future periods.

b. TANGIBLE FIXED ASSETS:

Fixed assets are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any, The cost comprises purchase price and borrowing costs if capitalization criteria are met, the cost of replacing part of the fixed assets and directly attributable cost of bringing the asset to its working condition for the intended use. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately, This applies mainly to components for machinery, When significant parts of fixed assets are required to be replaced at intervals, the Company recognizes such parts as individual assets with specific useful lives and depreciates them accordingly. Likewise, when a major overhauling is performed, its cost is recognized in the carrying amount of the fixed assets as a replacement if the recognition criteria are satisfied. Any trade discounts and rebates are deducted in arriving at the purchase price.

Subseauent 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 parts replaced are charged to the Statement of Profit and Loss for the period during which such expenses are incurred,

The Company adjusts exchange differences arising on translation / settlement of long-term foreign currency monetary Items pertaining to the acquisition of a depreciable asset to the cost of the asset and depreciates the same over the remaining life of the asset, In accordance with MCA circular dated 09 August 2012, exchange differences adjusted to the cost of fixed assets are total differences, arising on long-term foreign currency monetary items pertaining to the acquisition of a depreciable asset for the period. In other words, the Company does not differentiate between exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost and other exchange difference.

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 assets and are recognized in the Statement of Profit and Loss as and when the assets is derecognized.

c. INTANGIBLE FIXED ASSETS

Intangible Assets are carried at cost less accumulated amortisation and accumulated impairment, if any. Intangible assets are amortised on a straight-line basis over sixyears,

d. DEPRECIATION AND AMORTISATION

Depreciation on fixed assets is calculated on a straight-line basis using the rates arrived at based on the useful lives defined under Schedule II except in respect of following fixed assets:

(i) The amount of Long Term Lease hold land: It is amortised in equal instalments during the last fifteen years of the residual lease period,

(ii) Furnace and X-ray machines are depreciated at an annual rate of 20% to bring the depreciation rates in line with the useful life of assets as estimated by the Technical Team of the Company.

(iii) The useful life of Wind Mills is estimated as 20 years based on sublease period of the land and the PPA/Wheeling Agreements entered into with the local authorities.

e. INVESTMENTS

Investments that are readily realisable and Intended to be held for not more than a year from the date on which investments are made are classified as current investments. All other investments are classified as non-current Investments,

Current investments are carried at lower of cost and fair value determined on an individual investment basis. Non-current investments are carried at cost,

However, provision for diminution in value is made to recognize a decline other than temporary in the value of the investments.

On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the Statement of Profit and Loss.

f. INVENTORIES

Raw materials, work-in-process, finished goods, traded goods and stores and spares are valued at lower of cost and net realizable value after providing for obsolescence and other losses, wherever considered necessary. However, materials and other items held for use In the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Scrap is valued at net realisable value. 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, incurred in bringing them in their respective present location and condition. Cost of finished goods includes excise duty.

Net realizable value is the estimated selling price in the ordinary course of business.

g. REVENUE

i) Revenue from operations is recognized only when it can be reliably measured and it is reasonable to expect ultimate collection. Revenue from operations (gross) & Income from operations (gross) represents the amounts receivable for goods and services sold including excise duty thereon. Export incentives and VAT/ CST incentives in respect of Kutch Unit but excludes VAT / CST, trade discounts & other taxes, adjustments for late delivery charges and material returned / rejected.

Interest income is recognized on time proportion basis taking into account the amounts outstanding and the rates applicable. Interest income is included under the head "other income" in the Statement of Profit and Loss.

ii) The Company accounts for pro forma credits, refunds of duty of customs or excise, or refunds of sales tax in the year of admission of such claims by the concerned authorities. Benefits in respect of Export Licenses are recognised on application. Export benefits are accounted for as other operating income in the year of export based on eligibility and when there is no uncertainty on receiving the same.

iil) Dividend is recognized when the Company''s right to receive dividend is established by the Balance Sheet date,

iv) Revenue from windmills is recognised on unit generation basis,

h. EXCISE DUTY

Excise duty is accounted on the basis of both, payment made in respect of goods cleared / Services provided, and provided on manufactured goods remaining in the inventory which is included as a part of valuation of finished goods and scrap,

i. EMPLOYEE BENEFITS

Retirement benefits in the form of provident fund and superannuation fund are defined contribution plans. The Company has no obligation, other than the contributions payable to provident fund and super-annuation fund. The Company recognises contribution payable to these funds as an expenditure, when an employee renders the related service.

In respect of gratuity liability, the Company operates defined benefit plan. The costs of providing benefits under this plan are determined on the basis of actuarial valuation at each year-end. Actuarial valuation is carried out using the projected unit credit method. Based on the determined valuation, the Company recognizes the amount in full to the Statement of Profit and Loss account. Actuarial gain and loss Is recognised in full in the period in which they occur In the Statement of Profit and Loss,

The liability in respect of unused leave entitlement of the employees as at the reporting date Is determined on the basis of an independent actuarial valuation carried out and the liability Is recognized in the Statement of Profit and Loss. The Company presents the entire leave as a current liability in the Balance Sheet, since it does not have an unconditional right to defer its settlement for 12 months after the reporting date. Actuarial gain and loss is recognise in full in the period in which they occur in the Statement of Profit and Loss.

ESOS:

In respect of Employees Stock Options, the excess of fair price on the date of grant over the exercise price is recognised as deferred compensation cost amortised over the vesting period,

j. INCOME TAXES

Tax expenses comprise current and deferred tax. Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.

Deferred income taxes reflect the impact of timing differences between taxable income and accounting income originating during the current year and reversal of timing differences for the earlier years. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted at the reporting date, Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized for deductible timing differences only to the extent that there is reasonable certainly that sufficient future taxable income will be available against which such deferred tax assets can be realized.

The Company restricts recognition of deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realized. For recognition of deferred taxes, the timing differences which originate first are considered to reverse first.

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

The carrying amount of deferred tax assets are reviewed at each reporting date. The Company writes- down the carrying amount of deferred tax asset to the extent that It is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable Income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.

k. FOREIGN CURRENCY TRANSACTIONS

i) Foreign currency transactions are accounted at exchange rates prevailing on the date the transactions take place or that approximates the actual rate on the date of the transaction. All exchange differences arising in respect of foreign currency transactions are dealt with In statement of profit & loss except in respect of long term liabilities incurred for acquiring fixed assets, in which case such differences are adjusted in the carrying amount of the respective fixed assets and depreciated over the remaining useful life of the assets.

ii) All monetary foreign currency assets and liabilities, if any, as at the Balance Sheet date are restated at the applicable exchange rates prevailing on the reporting date of financial statements.

I. FOREIGN EXCHANGE CONTRACTS ENTERED INTO TO HEDGE FOREIGN CURRENCY RISK OF AN EXISTING ASSETS / LIABILITIES

In respect of forward contracts, the premium or discount is amortised over the period of forward contract and the proportionate premium/discount for the period up to the reporting date of Balance Sheet is recognized in the Statement of Profit and Loss. The exchange difference measured by the exchange rate between the inception of the forward contract and reporting date of Balance Sheet is applied on foreign currency amount of the forward contract and exchange difference on such contracts, are recognized in the Statement of Profit and Loss in the period in which the exchange rates changes. Any profit or loss arising on cancellation or renewal of such forward exchange contracts is also recognized as income or expense for the period,

m. FINANCE COSTS

Finance costs include interest and amortisation of ancillary costs incurred in connection with the arrangement of borrowing. Finance costs that are directly attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing cost are charged to Statement of Profit and Loss.

n. IMPAIRMENT OF ASSETS

The Company assesses at each Balance Sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the assets. If such recoverable amount of the assets is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the Statement of Profit and Loss. If at the Balance Sheet date there is an indication that if 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 depreciated historical cost,

o. PROVISIONS

A provision is recognised when an enterprise has a present obligation as a result of past event; it is probable that an outflow of resources will be reauired to settle the obligation and a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate reauired to settle the obligation at the Balance Sheet date. These are reviewed at each reporting date and adjusted to reflect the current best estimates.

p. CONTINGENT LIABILITY

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be reauired to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements. A contingent asset is neither recognized not disclosed.

q. SEGMENT REPORTING

The Companys operating businesses are organised and managed separately according to the nature of products provided, with each segment representing a strategic business unit that offers different products and serves different markets. The analysis of geographical segment is based on the geographical location of the customers.

The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.

r. EARNING PER SHARE

Basic earnings per share are calculated by dividing the net profit for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted for issue of shares under Employee Stock Option Scheme-2006 that have changed the number of equity shares outstanding. For the purpose of calculating diluted earnings per share, the net profit for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

s. CASH AND CASH EQUIVALENT

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.

t. OPERATING LEASE

Leases, where the lessor effectively retains substantially all the risks and benefits of ownership of the leased Item, are classified as operating leases, Operating lease payments are recognized as an expense in the Statement of Profit and Loss on a straight-line basis over the lease term,


Mar 31, 2014

A. USE OF ESTIMATES

The preparation of financial statements in conformity with Indian GAAP requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the management''s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets and / or liabilities in future periods.

b. TANGIBLE FIXED ASSETS

Fixed assets are stated at cost less accumulated depreciation, impairment losses, and net of tax/ duty / credits availed, if any. Cost comprises the purchase price and any attributable cost of bringing an assets to Its working condition for its intended use,

The company adjusts exchange differences arising on translation / settlement of long-term foreign currency monetary items pertaining to the acquisition of a depreciable asset to the cost of the asset and depreciates the same over the remaining life of the asset. In accordance with MCA circular dated 09 August 2012, exchange differences adjusted to the cost of fixed assets are total differences, arising on long-term foreign currency monetary items pertaining to the acquisition of a depreciable asset, for the period. In other words, the company does not differentiate between exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost and other exchange difference.

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 assets 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 for which such expenditure are incurred.

Gain or losses arising from derecognition of fixed assets are measured as the difference between the net disposal proceeds and the carrying amount of the assets and are recognized in the Statement of Profit and Loss as and when the assets is derecognized.

c. INTANGIBLE FIXED ASSETS

Intangible Assets are carried at cost less accumulated amortisation and accumulated impairement, if any. Intangible assets are amortised on a straight-line basis over six years.

d. DEPRECIATION

Depreciation on fixed assets is calculated on a straight-line basis using the rates arrived at based on those prescribed under the Schedule XIV to the Companies Act, 1956, except In respect of following fixed assets:

(i) The amount of Long Term Lease hold land: It is amortised in equal installments during the last fifteen years of the residual lease period,

(ii) Furnace and X-ray machines are depreciated at an annual rate of 20% to bring the depreciation rates in line with the useful life of assets as estimated by the management.

Individual assets not exceeding Rs. 5,000 are depreciated fully in the year of purchase,

e. INVESTMENTS

Investments that are readily realisable and intended to be held for not more than a year from the date on which investments are made are classified as current investments. All other investments are classified as non-current investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Non-current investments are carried at cost. Diminution in value, if any, which is of temporary nature, is not provided.

f. INVENTORIES

Raw materials, work-in-process, finished goods, components, stores and spares are valued at lower of cost and net realizable value after providing for obsolescence and other losses, where-ever considered necessary. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Scrap is valued at net realisable value. 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, incurred in bringing them in their respective present location and condition, Cost of finished goods includes excise duty.

Net realizable value is the estimated selling price in the ordinary course of business.

g. REVENUE

i) Revenue from operations is recognized only when it can be reliably measured and it is reasonable to expect ultimate collection. Revenue from operations (gross) & Income from operations (gross) represents the amounts receivable for goods and services sold including excise duty thereon, Export incentives and VAT / CST Incentives in respect of Kutch Unit but excludes VAT / CST, trade discounts & other taxes, adjustments for late delivery charges and material returned / rejected,

Interest income is recognized on time proportion basis taking into account the amounts outstanding and the rates applicable.

ii) The Company accounts for pro forma credits, refunds of duty of customs or excise, or refunds of sales tax in the year of admission of such claims by the concerned authorities. Benefits In respect of Export Licenses are recognised on application. Export benefits are accounted for as other operating income in the year of export based on eligibility and when there is no uncertainty on receiving the same,

iii) Dividend is recognized when the Company''s right to receive dividend is established by the balance sheet date.

iv) Revenue from windmill is recognised on unit generation basis.

h. EXCISE DUTY

Excise duty is accounted on the basis of both, payment made in respect of goods cleared / Services provided and provided on manufactured goods remaining in the inventory is included as a part of valuation of finished goods and scrap.

i. EMPLOYEE BENEFITS

Retirement benefits in the form of provident fund and superannuation fund are defined contribution plans. The company has no obligation, other than the contributions payable to provident fund and super-annuation fund. The company recognises contribution payable to these funds as an expenditure, when an employee renders the related service,

In respect of gratuity liability, the Company operates defined benefit plan. The costs of providing benefits under this plan are determined on the basis of actuarial valuation at each year-end, Actuarial valuation is carried out using the projected unit credit method. Based on the determined valuation, the Company recognizes the amount in full to the statement of profit and loss account, Actuarial gain and loss is recognise in full in the period in which they occur in the statement of profit and loss.

The Mobility in respect of unused leave entitlement of the employees as at the reporting date is determined on the basis of an independent actuarial valuation carried out and the liability is recognized in the Statement of Profit and Loss. The Company presents the entire leave as a current liability in the balance sheet, since it does not have an unconditional right to defer its settlement for 12 months after the reporting date. Actuarial gain and loss is recognise in full In the period in which they occur in the statement of profit and loss.

ESOS:

In respect of Employees Stock Options, the excess of fair price on the date of grant over the exercise price is recognised as deferred compensation cost amortised over the vesting period,

j. INCOME TAXES

Tax expenses comprise current and deferred tax. Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.

Deferred income taxes reflect the impact of timing differences between taxable income and accounting income originating during the current year and reversal of timing differences for the earlier years. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted at the reporting date,

Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized for deductible tinning differences only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

The Company restricts recognition of deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realized. For recognition of deferred taxes, the timing differences which originate first are considered to reverse first,

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

The carrying amount of deferred tax assets are reviewed at each reporting date. The Company writes-down the carrying amount of deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write- down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available,

k. FOREIGN CURRENCY TRANSACTIONS

i) Foreign currency transactions are accounted at exchange rates prevailing on the date the transactions take place or that approximates the actual rate on the date of the transaction. All exchange differences arising in respect of foreign currency transactions are dealt with in statement of profit & loss except in respect of long term liabilities incurred for acauiring fixed assets, in which case such differences are adjusted in the carrying amount of the respective fixed assets and depreciated over the remaining useful life of the assets,

ii) All monetary foreign currency assets and liabilities, if any, as at the Balance Sheet date are restated at the applicable exchange rates prevailing on the reporting date of financial statements,

I. FOREIGN EXCHANGE CONTRACT ENTERED INTO TO HEDGE FOREIGN CURRENCY RISK OF AN EXISTING ASSETS / LIABILITIES

In respect of forward contracts, the premium or discount is amortise over the period of forward contract and the proportionate premium / discount for the period up to the reporting date of Balance Sheet is recognized in the statement of profit and loss. The exchange difference measured by the exchange rate between the inception of the forward contract and reporting date of Balance Sheet Is applied on foreign currency amount of the forward contract and exchange difference on such contracts, are recognized in the statement of Profit and Loss in the period in which the exchange rates changes. Any profit or loss arising on cancellation or renewal of such forward exchange contracts is also recognized as income or expense for the period.

m. FINANCE COSTS

Finance costs includes interest, bank charges, amortisation of ancialliary costs incurred in connection with the arrangement of borrowing.

Finance costs that are directly attributable to the acquisition or construction of aualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing cost are charged to statement of profit and loss,

n. IMPAIRMENT OF ASSETS

The Company assesses at each Balance Sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the assets. If such recoverable amount of the assets is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the statement of profit and loss. If at the Balance Sheet date there is an indication that If 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 depreciated historical cost,

o. PROVISIONS

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

p. CONTINGENT LIABILITY

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements. A contingent assets is neither recognized not disclosed,

q. SEGMENT REPORTING

The Companys operating businesses are organised and managed separately according to the nature of products provided, with each segment representing a strategic business unit that offers different products and serves different markets. The analysis of geographical segment is based on the geographical location of the customers.

The company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the company as a whole,

r. EARNING PER SHARE

Basic earnings per share are calculated by dividing the net profit for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted for issue of shares under Employee Stock Option Scheme-2006 that have changed the number of equity shares outstanding.

For the purpose of calculating diluted earnings per share, the net profit for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

s. CASH AND CASH EQUIVALENT

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.

t. CASH FLOW STATEMENT

Cash flow statement is prepared using the indirect method, whereby profit before extraordinary items and 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 flow from operating, investing and financing activities of the Company are segregated based on the available information.

u. OPERATING LEASE

Leases, where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term.

3.4 Shares Reserved for issue under option

The Company reserved issuance of 22,50,000 (R Y. 22,50,000) Equity Shares of Rs. 2/- each for offering to eligible employees of the Company under Employees Stock Option Scheme 2006 at a price of Rs. 59.40 per option plus all applicable taxes, as may be levied in this regard on the Company. The options were granted on 31 st October, 2006 and have vested completely. Out of the reserved Equity Shares, 16,83,450 Equity Shares (R Y. 14,15,609) have been issued till date. The maximum exercise period is 8 years from the date of grant of options. (Also refer note no. 30)

5. LONG TERM BORROWINGS (SECURED)

- External (Foreign) Commercial Borrowing of Rs. Nil Lacs (RY. Rs. 2,898.35 Lacs) from ICICI Bank Ltd. Hong Kong branch is carrying Interest for the first seven years @3M Libor 1.52% R A., eighth year @3M Ubor 2.04% R A., ninth year @3M Libor 2.54% R A. The loan is repayable in 32 quarterly installments of USD 4,06,250.00 each from 22.07.2008. The loan Is secured by an exclusive charge over all the 8 windmills along with related equipments/ machineries situated at Moti Sindholi, Kutch, Gujarat and personal guarantee of Shri Prakash M. Sanghvi, Chairman and Managing Director of the Company,

- External (Foreign) Commercial Borrowing of Rs. 2,419.60 Lacs (RY Rs. 2,926.93 Lacs) from ICICI Bank Ltd. Hong Kong branch is carrying interest @ 6M Libor 4.52% RA. The loan is repayable in 12 half yearly installments of USD 6,66,666.67 each from 22.07.2011. The loan is secured by an exclusive charge over movable assets in respect of 3Layer PE Coating Line and Offline Welding & Finishing Lines for HSAW plant situated at Survey No. 474, village Bhimasar, Tal. Anjar, Dist. Kutch.

7.1 Working Capital Loans are secured by - i) Hypothecation of Inventories, Books Debts, all other movables; ii) Second charge on Fixed Assets of the Company except, a) 8 wind mills along with related equipments/ machineries situated at Motl Slndholi, Kutch, Gujarat and, b) movable assets In respect of 3Layer PE Coating Line and Offline Welding & Finishing Lines for HSAW plant situated at Survey No.474,village Bhimasar, Tal. Anjar, Dist. Kutch; iii) Personal guarantees of Sh. Prakash M. Sanghvl, Chairman and Managing Director, Sh. Jayanti. M. Sanghvi, Whole-time Director and Sh. Shanti M. Sanghvi, Whole-time Director, of the Company; tv) Joint equitable mortgage of all Immovable properties held as free-hold and leasehold lands of the Company, except: a) Leasehold land related to 8 wind mills situated at Moti Sindholi, Kutch. b) Lease hold land situated at 3306-09, GIDC Chhatral, Taluka Kalol and c) 3Layer PE Coating Line and Offline Welding & Finishing Lines for HSAW plant situated at Survey No.474, Village Bhimasar, Tal. Anjar, Dist. Kutch,

7.2 Other Loans and Advances from banks payable on demand are secured by personal guarantee of Sh. Prakash M. Sanghvi, Chairman and Managing Director of the Company.

8. TRADE PAYABLES

There are no Micro, Small and Medium Enterprise, as defined in the Micro, Small, Medium Enterprises Development Act, 2006, to whom the company owes dues on account of principal amount together with interest and accordingly no additional disclosure have been made. The above information regarding Micro, Small and Medium Enterprise has been determined to the extent such parties have been identified on the basis of information available with the company. This has been relied upon by the auditors,


Mar 31, 2013

A. CHANGE IN ACCOUNTING POLICY

Till the previous year, cost of raw materials, work-in-process, finished goods, components, stores and spares were valued at FIFO (First-In-First-Out) method. In the current year, the company changed its accounting policy from the FIFO (First-In-First-Out) method to weighted Average method. The management believes that such change would result in a more appropriate presentation of the financial statement in line with industrial practise.

Consequently, inventories and profit before taxation are higher by Rs. 98.37 Lacs.

b. USE OF ESTIMATES

The preparation of financial statements in conformity with Indian GAAP requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the management''s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets and/or liabilities in future periods.

c. TANGIBLE FIXED ASSETS

Fixed assets are stated at cost less accumulated depreciation, impairment losses, and net of tax/duty/credits availed, if any. Cost comprises the purchase price and any attributable cost of bringing an assets to its working condition for its intended use.

The company adjusts exchange differences arising on translation/ settlement of long-term foreign currency monetary items pertaining to the acquisition of a depreciable asset to the cost of the asset and depreciates the same over the remaining life of the asset. In accordance with MCA circular dated 09 August 2012, exchange differences adjusted to the cost of fixed assets are total differences, arising on long-term foreign currency monetary items pertaining to the acquisition of a depreciable asset, for the period. In other words, the company does not differentiate between exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost and other exchange difference.

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 assets 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 for which such expenditure are incurred.

Gain or losses arising from derecognition of fixed assets are measured as the difference between the net disposal proceeds and the carrying amount of the assets and are recognized in the Statement of Profit and Loss as and when the assets is derecognized.

d. INTANGIBLE FIXED ASSETS

Intangible Assets are carried at cost less accumulated amortisation and accumulated impairement, if any.

Intangible assets are amortised on a straight-line basis over the estimated useful economic life.

e. DEPRECIATION

Depreciation on fixed assets is calculated on a straight-line basis using the rates arrived at based on those prescribed under the Schedule xrv to the Companies Act, 1956, except in respect of following fixed assets:

(i) The amount of Long Term Lease hold land: It is amortised in equal installments during the last fifteen years of the residual lease period.

(ii) Furnace and X-ray machines are depreciated at an annual rate of 20% to bring the depreciation rates in line with the useful life of assets as estimated by the management. Individual assets not exceeding Rs. 5,000 are depreciated fully in the year of purchase.

f. INVESTMENTS

Investments that are readily realisable and intended to be held for not more than a year from the date on which investments are made are classified as current investments. All other investments are classified as non-current investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Non-current investments are carried at cost. Diminution in value, if any, which is of temporary nature, is not provided.

g. INVENTORIES

Raw materials, work-in-process, finished goods, components, stores and spares are valued at lower of cost and net realizable value after providing for obsolescence and other losses, where-ever considered necessary. Scrap is valued at net realisable value. 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, incurred in bringing them in their respective present location and condition. Cost of finished goods includes excise duty.

Net realizable value is the estimated selling price in the ordinary course of business.

h. REVENUE

i) Revenue from operations is recognized only when it can be reliably measured and it is reasonable to expect ultimate collection. Revenue from operations (gross) & Income from operations (gross) represents the amounts receivable for goods and services sold including excise duty thereon, Export incentives and VAT/CST incentives in respect of Kutch Unit but excludes VAT/CST, trade discounts & other taxes, adjustments for late delivery charges and material returned/rejected.

Interest income is recognized on time proportion basis taking into account the amounts outstanding and the rates applicable.

ii) The Company accounts for pro forma credits, refunds of duty of customs or excise, or refunds of sales tax in the year of admission of such claims by the concerned authorities. Benefits in respect of Export Licenses are recognised on application.Export benefits are accounted for in the year of export based on eligibility and when there is no uncertainty on receiving the same.

iii) Dividend is recognized when the Company''s right to receive dividend is established by the balance sheet date.

iv) Revenue from windmill is recognised on unit generation basis.

i. EXCISE/SERVICE TAX/CUSTOMS DUTIES/SALES TAX/VALUE ADDED TAX

Excise duty/Service Tax is accounted on the basis of both, payment made in respect of goods cleared/Services provided and provided on manufactured goods remaining in the inventory is included as a part of valuation of finished goods and scrap. The customs duty on raw materials, stores, spares & components is accounted on clearance thereof.

Sales tax/Value added tax paid/liability accrued is charged to Statement of Profit and Loss account.

j. EMPLOYEE BENEFITS

Retirement benefits in the form of provident fund and superannuation fund are defined contribution plans. The company has no obligation, other than the contributions payable to provident fund and super-annuation fund. The company recognises contribution payable to these funds as an expenditure, when an employee renders the related service.

In respect of gratuity liability, the Company operates defined benefit plan. The costs of providing benefits under this plan are determined on the basis of actuarial valuation at each year-end. Actuarial valuation is carried out using the projected unit credit method. Based on the determined valuation, the Company recognizes the amount in full to the statement of profit and loss account.

Actuarial gain and loss is recognise in full in the period in which they occur in the statement of profit and loss.

The liability in respect of unused leave entitlement of the employees as at the reporting date is determined on the basis of an independent actuarial valuation carried out and the liability is recognized in the Statement of Profit and Loss. The Company presents the entire leave as a current liability in the balance sheet, since it does not have an unconditional right to defer its settlement for 12 months after the reporting date. Actuarial gain and loss is recognise in full in the period in which they occur in the statement of profit and loss.

ESOS

In respect of Employees Stock Options, the excess of fair price on the date of grant over the exercise price is recognised as deferred compensation cost amortised over the vesting period.

k. INCOME TAXES

Tax expenses comprise current and deferred tax. Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.

Deferred income taxes reflect the impact of timing differences between taxable income and accounting income originating during the current year and reversal of timing differences for the earlier years. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted at the reporting date.

Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized for deductible timing differences only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

The Company restricts recognition of deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realized. For recognition of deferred taxes, the timing differences which originate first are considered to reverse first.

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

The carrying amount of deferred tax assets are reviewed at each reporting date. The Company writes-down the carrying amount of deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.

1. FOREIGN CURRENCY TRANSACTIONS

i) Foreign currency transactions are accounted at exchange rates prevailing on the date the transactions take place or that approximates the actual rate on the date of the transaction. All exchange differences arising in respect of foreign currency transactions are dealt with in statement of profit & loss except in respect of long term liabilities incurred for acquiring fixed assets, in which case such differences are adjusted in the carrying amount of the respective fixed assets and depreciated over the remaining useful life of the assets.

ii) All monetary foreign currency assets and liabilities, if any, as at the Balance Sheet date are restated at the applicable exchange rates prevailing on the reporting date of financial statements.

m. FOREIGN EXCHANGE CONTRACT ENTERED INTO TO HEDGE FOREIGN CURRENCY RISK OF AN EXISTING ASSETS/LIABILITIES

In respect of forward contracts, the premium or discount is amortise over the period of forward contract and the proportionate premium/discount for the period up to the reporting date of Balance Sheet is recognized in the statement of profit and loss. The exchange difference measured by the exchange rate between the inception of the forward contract and reporting date of Balance Sheet is applied on foreign currency amount of the forward contract and exchange difference on such contracts, are recognized in the statement of Profit and Loss in the period in which the exchange rates changes. Any profit or loss arising on cancellation or renewal of such forward exchange contracts is also recognized as income or expense for the period.

n. FINANCE COSTS

Finance costs includes interest, bank charges, amortisation of ancialliary costs incurred in connection with the arrangement of borrowing.

Finance costs that are directly attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing cost are charged to statement of profit and loss.

o. IMPAIRMENT OF ASSETS

The Company assesses at each Balance Sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the assets. If such recoverable amount of the assets is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the statement of profit and loss. If at the Balance Sheet date there is an indication that if 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 depreciated historical cost.

p. PROVISIONS

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

q. CONTINGENT LIABILITY

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements. A contingent assets is neither recognized nor disclosed.

r. SEGMENT REPORTING

The Company''s operating businesses are organised and managed separately according to the nature of products provided, with each segment representing a strategic business unit that offers different products and serves different markets. The analysis of geographical segment is based on the geographical location of the customers.

The company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the company as a whole.

s. EARNING PER SHARE

Basic earnings per share are calculated by dividing the net profit for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted for issue of shares under Employee Stock Option Scheme-2006 that have changed the number of equity shares outstanding.

For the purpose of calculating diluted earnings per share, the net profit for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

t. CASH AND CASH EQUIVALENT

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.

u. CASH FLOW STATEMENT

Cash flow statement is prepared using the indirect method, whereby profit before extraordinary items and 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 flow from operating, investing and financing activities of the Company are segregated based on the available information.


Mar 31, 2012

A. USE OF ESTIMATES:

The preparation of financial statements in conformity with Indian GAAP requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the management's best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets and/or liabilities in future periods.

b. PRESENTATIONS AND DISCLOSURE OF FINANCIAL STATEMENTS:

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

c. TANGIBLE FIXED ASSETS:

Fixed assets are stated at cost less accumulated depreciation, impairment losses, and net of tax/duty/credits availed, if any. Cost comprises the purchase price and any attributable cost of bringing the assets to its working condition for its intended use.

d. DEPRECIATION:

Depreciation on fixed assets is calculated on a straight-line basis using the rates arrived at based on those prescribed under the Schedule XIV to the Companies Act, 1956, except in respect of following fixed assets:

i) Individual assets not exceeding Rs. 5,000: These are depreciated fully in the year of purchase.

ii) The amount of Long Term Lease hold land: It is amortised in equal installments during the last fifteen years of the residual lease period.

e. INTANGIBLE FIXED ASSETS:

Intangible Assets are carried at cost less accumulated amortisation and accumulated impairment, if any.

Intangible assets are amortised using straight-line basis method at the rates specified under Schedule XIV to the Companies Act, 1956.

f. INVESTMENTS:

Investments that are readily realisable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. Diminution in value, if any, which is of temporary nature, is not provided.

g. INVENTORIES:

Raw materials, work-in-process, finished goods, components, stores and spares are valued at lower of cost and net realisable value after providing for obsolescence, if any. Scrap is valued at net realisable value. Cost is determined on a FIFO (First-In-First Out) method.

Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity, incurred in bringing them in their respective present location and condition. Cost of finished goods includes excise duty.

Net realisable 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.

h. REVENUE:

i) Revenue from operations is recognised only when it can be reliably measured and it is reasonable to expect ultimate collection. Sales & Income from operations represents the amounts receivable for goods sold including excise duty thereon, and VAT/CST incentives in respect of Kutch Unit but excludes VAT/CST, trade discounts & other taxes, adjustments for late delivery charges and material returned/rejected.

Interest income is recognised on time proportion basis taking into account the amounts outstanding and the rates applicable.

ii) The Company accounts for pro forma credits, refunds of duty of customs or excise, or refunds of sales tax in the year of admission of such claims by the concerned authorities. Benefits in respect of Export Licenses are recognised on application.

iii) Dividend is recognised when the Company's right to receive dividend is established by the balance sheet date.

i. EXCISE/CUSTOMS DUTIES:

Excise duty on manufactured goods remaining in the inventory is included as a part of valuation of finished goods and scrap. The customs duty on raw materials, stores, spares & components is accounted on clearance thereof.

j. EMPLOYEE BENEFITS:

Retirement benefits in the form of provident fund and superannuation fund are defined contribution plans. The contributions are charged to the Statement of Profit and Loss for the year when the contributions are due. The Company has no obligation, other than the contribution payable towards these funds.

In respect of gratuity liability, the Company operates defined benefit plan. The costs of providing benefits under this plan are determined on the basis of actuarial valuation at each year-end. Actuarial valuation is carried out using the projected unit credit method.

Accumulated leave, which is expected to be utilised within the next 12 months, is treated as short-term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.

ESOS- In respect of Employees Stock Options, the excess of fair price on the date of grant over the exercise price is recognised as deferred compensation cost amortised over the vesting period.

k. INCOME TAXES:

Tax expenses comprise current and deferred tax. Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.

Deferred income taxes reflect the impact of timing differences between taxable income and accounting income originating during the current year and reversal of timing differences for the earlier years. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted at the reporting date.

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

In the situations where the Company is entitled to a tax holiday under the Income-tax Act, 1961 enacted in India, no deferred tax (asset or liability) is recognised in respect of timing differences which reverse during the tax holiday period, to the extent the Company's gross total income is subject to the deduction during the tax holiday period. Deferred tax in respect of timing differences which reverse after the tax holiday period is recognised in the year in which the timing differences originate. However, the Company restricts recognition of deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realised.

For recognition of deferred taxes, the timing differences which originate first are considered to reverse first.

At each reporting date, the Company re-assesses unrecognised deferred tax assets. It recognises unrecognised deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realised.

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

l. FINANCIAL DERIVATIVES AND FOREIGN CURRENCY TRANSACTIONS:

i) Foreign currency transactions are accounted at exchange rates prevailing on the date the transactions take place or that approximates the actual rate on the date of the transaction. All exchange differences arising in respect of foreign currency transactions are dealt with in statement of profit & loss except in respect of long term liabilities incurred for acquiring fixed assets, in which case such differences are adjusted in the carrying amount of the respective fixed assets and depreciated over the remaining useful life of the assets.

ii) All foreign currency assets and liabilities, if any, as at the Balance Sheet date are restated at the applicable exchange rates prevailing on the date of financial statements.

m. FOREIGN EXCHANGE CONTRACT ENTERED INTO TO HEDGE FOREIGN CURRENCY RISK OF AN EXISTING ASSETS/LIABILITIES: In respect of forward contracts assigned to the foreign currency assets as at Balance Sheet date, the proportionate premium/discount for the period up to the date of Balance Sheet is recognised in the statement of profit and loss. The exchange difference measured by the exchange rate between the inception of the forward contract and date of Balance Sheet is applied on foreign currency amount of the forward contract.

n. FINANCE COSTS:

Finance costs includes interest, bank charges, amortisation of ancilliary costs incurred in connection with the arrangement of borrowing and applicable gain/loss on foreign currency transactions and translation arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Finance costs that are directly attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing cost are charged to statement of profit and loss.

o. IMPAIRMENT OF ASSETS:

The Company assesses at each Balance Sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the assets. If such recoverable amount of the assets 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 recognised in the statement of profit and loss. If at the Balance Sheet date there is an indication that if 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 depreciated historical cost.

p. PROVISIONS:

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

q. CONTINGENT LIABILITY:

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognised because it cannot be measured reliably. The Company does not recognise a contingent liability but discloses its existence in the financial statements.

r. SEGMENT REPORTING:

The Company's operating businesses are organised and managed separately according to the nature of products provided with each segment representing a strategic business unit that offers different products and serves different markets. The analysis of geographical segment is based on the geographical location of the customers.

s. EARNING PER SHARE:

Basic earnings per share are calculated by dividing the net profit for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted for issue of shares under Employee Stock Option Scheme-2006 that have changed the number of equity shares outstanding.

For the purpose of calculating diluted earnings per share, the net profit for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

t. CASH AND CASH EQUIVALENT:

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


Mar 31, 2011

A. BASIS OF ACCOUNTING: Financial statements are prepared under historical cost convention on accrual basis in accordance with the generally accepted accounting principles in India and the provisions of the Companies Act, 1956 as adopted consistently by the Company.

B. USE OF ESTIMATES: The preparation of financial statements in confirmity with generally accepted accounting principles requires management to make estimates and assumptions that effect the reported amount of assets and liabilities and disclosure of contingent liabilities at the date of financial statements and the results of operations during the reporting period. Although these estimates are based upon managements best knowledge of current events and actions, actual results could differ from these estimates. Difference between the actual results and estimates are recognised in the period in which the results are known/materialised.

C. FIXED ASSETS: The Fixed Assets are shown at cost, net of tax/duty /credits availed, if any, and include expenses capitalised during construction period less accumulated depreciation and impairment losses, if any.

D. DEPRECIATION: The Company has provided depreciation on straight line method at the rates and the manner specified in Schedule XIV to the Companies Act, 1956. The amount of Long Term Lease hold land is amortised in equal installments during the last fifteen years of the residual lease period.

E. INVENTORIES: Inventories are valued at lower of cost or net realisable value except for Scrap. Scrap is valued at net realisable value. Cost is determined on FIFO (First-In-First Out) method.

F. REVENUE:

a) Revenue is recognized only when it can be reliably measured and it is reasonable to expect ultimate collection. Sales & Income from operations represent the amounts receivable for goods sold including excise duty thereon, VAT/CST and Excise incentives in respect of Kutch Unit but excludes VAT/CST, trade discount & other taxes, adjustments for late delivery charges and material returned/rejected. Interest income is recognized on time proportion basis taking into account the amount outstanding and rate applicable.

b) The Company accounts for pro forma credits, refunds of duty of customs or excise, or refunds of sales tax in the year of admission of such claims by the concerned authorities. Benefits in respect of Export Licenses are recognised on utilisation/ sale of the licenses.

c) Dividend income is recongised when the right to receive is established.

G. EXCISE / CUSTOMS DUTIES: Excise Duty on manufactured goods remaining in the inventory is included as a part of valuation of finished goods. The customs duty on raw materials, stores, spares & components is accounted on clearance thereof.

H. EMPLOYEE BENEFITS:

RETIREMENT BENEFITS: The Company contributes to group gratuity policy with Life Insurance Corporation of India as per actuarial valuation as on the Balance Sheet date for future payment of Gratuity to employees. Accrued liability towards leave encashment is provided on the balance of unutilized leaves on the Balance Sheet date.

In respect of eligible employees, the Company contributes to approved superannuation fund under a definite contribution plan, under the policy of Life Insurance Corporation of India.

ESOS - In respect of Employees Stock Options, the excess of fair price on the date of grant over the exercise price is recognized as deferred compensation cost amortised over the vesting period.

I. FINANCIAL DERIVATIVES AND FOREIGN CURRENCY TRANSACTIONS:

a) Foreign currency transactions are accounted at exchange rates prevailing on the date the transactions take place. All exchange differences arising in respect of foreign currency transactions are dealt with in Profit & Loss Account except in respect of long term liabilities incurred for acquiring Fixed Assets, in which case such differences are adjusted in the carrying amount of the respective Fixed Assets.

b) All foreign currency assets and liabilities, if any, as at the Balance Sheet date are restated at the applicable exchange rates prevailing on the date of financial statements.

c) The Company is exposed to currency fluctuations on foreign currency transactions. With a view to minimize the volatility arising from fluctuations in the currency rates, the Company follows the formulated risk management policies including forwards contract and other derivative instruments. Profit/loss on such transactions including unsettled transactions at year end is recognised in the Profit and Loss account.

d) In respect of forward contracts assigned to the foreign currency assets as at Balance Sheet date, the proportionate premium/discount for the period up to the date of Balance sheet is recognized in the Profit and Loss account. The exchange difference measured by the exchange rate between the inception of the forward contract and date of balance sheet is applied on foreign currency amount of the forward contract.

J. INCOME TAXES : The expenses comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-Tax Act,1961 enacted in India. Deferred income taxes reflects the impact of current year timining differences between taxable income and accounting income for the year and reversal of timing differences of earlier years.

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable profits.

At each balance sheet date the Company re-assesses unrecognised deferred tax assets. It recognises unrecognised deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be that sufficient future taxable income will be available against which such deferred tax assets can be realised.

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

K. INVESTMENTS: Investments are stated at cost. Diminution in value, if any, which is of a temporary nature, is not provided.

L. BORROWING COSTS: Borrowing costs that are directly attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing cost are charged to Profit and Loss Account

M. IMPAIRMENT OF ASSETS: The Company assesses at each Balance Sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the assets. If such recoverable amount of the assets 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 Profit and Loss account. If at the Balance Sheet date there is an indication that if 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 depreciated historical cost.

N. PROVISION AND CONTINGENT LIABILITIES :

a) Provisions are recognized when the present obligation of a past event gives rise to a probable outflow, embodying economic benefits on settlement, and the amount of obligation can be reliably estimated.

b) Contingent Liabilities are disclosed after a careful evaluation of facts and legal aspects of the matter involved.

c) Provisions and Contingent Liabilities are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.


Mar 31, 2010

A. BASIS OF ACCOUNTING: Financial statements are prepared under historical cost convention on accrual basis in accordance with the generally accepted accounting principles in India and the provisions of the Companies Act, 1956 as adopted consistently by the Company.

B. USE OF ESTIMATES: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets & liabilities and disclosures of contingent liabilities at the date of financial statements and the results of operation during the reporting period, although these estimates are based upon managements best knowledge of current events and actions, actual results could differ from these estimates.

C. FIXED ASSETS: The Fixed Assets are shown at cost, net of tax/duty /credits availed, if any, and include expenses capitalised during construction period.

D. DEPRECIATION: The Company has provided depreciation on straight line method at the rates and the manner specified in Schedule XIV to the Companies Act, 1956. The amount of Long Term Lease hold land is amortised by equal instalments during the last fifteen years of the residual lease period.

E. INVENTORIES: Inventories are valued at lower of cost or net realisable value except for Scrap. Scrap is valued at net realisable value. Cost is determined on FIFO (First-In-First Out) method.

F. REVENUE:

a) Sales & Income from operations represents the amounts receivable for goods sold including excise duty thereon and VAT/CST incentives in respect of Kutch Unit but excludes VAT/CST, trade discounts & other taxes, adjustments for late delivery charges and material returned/rejected.

b) Excise benefits available to the Company in respect of its unit in Kutch District of Gujarat in terms of Notification No. 39/2001 of Central Excise, are netted off from the Excise Duty amount.

c) The Company accounts for pro forma credits, refunds of duty of customs or excise, or refunds of sales tax in the year of admission of such claims by the concerned authorities. Benefits in respect of Export Licenses are recognised on utilisation/sate of the licenses.

d) Dividend income is recognised when the right to receive is established.

G. EXCISE / CUSTOMS DUTIES: Excise Duty on manufactured goods remaining in the inventory is included as a part of valuation of finished goods. The customs duty on raw materials, stores, spares & components is accounted on clearance thereof.

H. EMPLOYEE BENEFITS:

RETIREMENT BENEFITS: The Company contributes to group gratuity policy with Life Insurance Corporation of India as per actuarial valuation as on the Balance Sheet date for future payment of gratuity to employees. Accrued liability towards leave encashment is provided on the balance of unutilized leaves on the Balance Sheet date.

In respect of eligible employees, the Company contributes to approved superannuation fund under a definite contribution plan, under the policy of Life Insurance Corporation of India.

ESOS - In respect of Employees Stock Options, the excess of fair price on the date of grant over the exercise price is recognized as deferred compensation cost amortised over vesting period.

I. FOREIGN CURRENCY TRANSACTIONS:

a) Foreign currency transactions are accounted at exchange rates prevailing on the date the transactions take place. All exchange differences arising in respect of foreign currency transactions are dealt with in Profit & Loss Account except in respect of long term liabilities incurred for acquiring Fixed Assets, in which case such differences are adjusted in the carrying amount of the respective Fixed Assets.

b) All foreign currency assets and liabilities, rf any, as at the Balance Sheet date are restated at the applicable exchange rates prevailing on the date of financial statements.

c) The Company is exposed to currency fluctuations on foreign currency transactions. With a view to minimize the volatility arising from fluctuations in the currency rates, the Company follows the formulated risk management policies including forwards contract and other derivative instruments. Profit/loss on such transactions including unsettled transactions at year end is recognised in the Profit and Loss account.

d) In respect of forward contracts assigned to the foreign currency assets as at Balance Sheet date, the proportionate premium/discount for the period up to the date of Balance sheet is recognized in the Profit and Loss account. The exchange difference measured by the exchange rate between the inception of the forward contract and date of balance sheet is applied on foreign currency amount of the forward contract.

J. INCOME TAXES: The expenses comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act,1961 enacted in India. Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years.

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable profits.

At each balance sheet date the Company re-assesses unrecognised deferred tax assets. It recognises unrecognised deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be that sufficient future taxable income will be available against which such deferred tax assets can be realised.

The carrying amount of deferred tax assets are reviewed at each balance sheet date. The company writes- down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realised. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.

K. INVESTMENTS: Investments are stated at cost. Diminution in value, if any, which is of a temporary nature, is not provided.

L. BORROWING COSTS: Borrowing costs that are directly attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing cost are charged to Profit and Loss Account

M. IMPAIRMENT OF ASSETS: The Company assesses at each Balance Sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the assets. If such recoverable amount of the assets 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 Profit and Loss account. If at the Balance Sheet date there is an indication that if 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 depreciated historical cost.

N. PROVISION AND CONTINGENT LIABILITIES:

a) Provisions are recognized when the present obligation of a past event gives rise to a probable outflow, embodying economic benefits on settlement, and the amount of obligation can be reliably estimated.

b) Contingent Liabilities are disclosed after a careful evaluation of facts and legal aspects of the matter involved.

c) Provisions and Contingent Liabilities are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.