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Accounting Policies of REIL Electricals India Ltd. Company

Mar 31, 2014

1. USE OF ACCOUNTING ESTIMATES

The preparation of financial statements in conformity with the generally accepted accounting principle in India (Indian GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Management believes that the estimates used in the preparation of financial statements are prudent and reasonable. Actual result could differ from these estimates. Any revision to such accounting estimates is recognized prospectively in future periods.

2. INVENTORIES

Raw materials and Packing materials are valued at lower of cost, calculated on "First-in-First out" basis, and net realizable value.

Finished goods and work-in-progress are valued at lower of cost and net realizable value. Cost includes materials, labour and a proportion of appropriate overheads. Cost of finished goods includes excise duty. Net realizable value is the estimated selling price in the ordinary course of business, reduced by the estimated costs of completion and costs to affect the sale.

3. FIXED ASSETS AND DEPRECIATION

Fixed assets are carried at the cost of acquisition or construction less accumulated depreciation and impairment losses, if any. The cost of fixed assets includes non-refundable taxes, duties, freight and other incidental expenses related to the acquisition and installation of the respective assets.

Depreciation on fixed assets has been provided using written down value method at the rates specified in Schedule XIV to the Companies Act, 1956. Depreciation is calculated on a pro-rata basis from the date of installation till the date the assets are sold or disposed

4. SIGNIFICANT EVENTS OCCURRING AFTER THE BALANCE SHEET DATE

The treatment of contingencies and significant events occurring after balance sheet date are in accordance with AS- 4 ''Contingencies and Events Occurring after the Balance Sheet Date'' as notified in Section 211(3C) of the Companies Act,1956.

5. REVENUE RECOGNITION

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

Revenue from sale of goods is recognized when significant risks and rewards in respect of ownership of products are transferred to customers. Revenue from domestic sales is recognized on delivery of products to customers from the factory of the company. Revenue from export sales is recognized when the significant risks and rewards of ownership

of products are transferred to the customers, which is based upon the terms of the applicable contract. Gross Sales are exclusive of returns, applicable trade discounts and allowances and inclusive of Excise Duty and Sales Tax.

6. SALES

Sales are inclusive of excise duty, and export incentives.

7. WARRANTY CLAIMS

Liability for warranty claims is charged to revenue in the year in which it is settled by the company.

8. TREATMENT OF EXCISE DUTY

Excise Duty recovered is included in ''Sales''. Excise Duty on despatches is shown as item of expense. It is included as an element of cost in the valuation of duty paid stocks.

The CENVAT Credit available on Raw Material, Components, Stores and Spares and Fixed Assets are correspondingly reduced from these accounts and unutilised part of credit available is reflected as Balance with Excise department under Current Assets

9. FOREIGN CURRENCY TRANSACTIONS AND BALANCES

Foreign currency transactions are recorded using the exchange rates prevailing on the dates of the respective transactions. Exchange differences arising on foreigncurrency transactions settled during the year are recognized in the profit and loss account.

Monetary assets and liabilities denominated in foreign currencies as at the date of balance sheet are translated at year-end rates. The resultant exchange differences are recognized in the profit and loss account. Non-monetary assets are recorded at the rates prevailing on the date of thetransaction.

10. INVESTMENTS

Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long term investments. Current investments are carried at lower of cost and fair value determined on individual investment basis. Long-term investments are carried at cost. However, diminution in value is provided to recognize a decline, other than temporary, in the value of the investments.

11. PROVISIONS AND CONTINGENT LIABILITIES

Provisions are recognized when the company has a legal and constructive obligation as a result of a past event, for which it is probable that a cash flow will be required and a reliable estimate can be made of the amount of the obligation. However, where such obligations are not likely to entail outflows in future periods and are contingent on the future outcome of events, they are disclosed as a matter of information as "Contingent Liabilities".

12. TAXATION

Tax expense 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 Indian Income Tax Act, 1961.

Deferred income taxes reflect 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 recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits. Deferred tax assets are reviewed at each balance sheet date and are written-down or written-up to reflect the amount that is reasonably / virtually certain (as the case may be) to be realised

13. EMPLOYEE BENEFITS

A) PROVIDENT FUND AND FAMILY PENSION FUND

The Contributions to Provident Fund and Employee State Insurance Schemes, which are defined contributionschem to the relevant funds administered and managed by the Central Government of India, are charged offto the Profit Loss Account as and when respective funds are due. The Company has no further obligations under thesepl beyond its monthly contributions.

B) BONUS

Short term employee benefits including bonus as at the balance sheet date are recognized as an expense based on expected obligation on an undiscounted basis.

C) GRATUITY

The Company has an obligation towards Gratuity, a defined benefit retirement plan covering eligible Employe The plan provides a lump sum payment to vested employees at retirement, death while in employment or on terminat of employment of an amount equivalent to 15 days salary payable for each completed year of service. Vesting occ upon completion of 5 years of service. Contributions to Gratuity Fund are made to Life Insurance Corporation India.

14. RELATED PARTIES DISCLOSURES :

List of Key Managerial personnel:

(1) B.S.Sahney, Managing Director, managerial remuneration shown below:

Relatives of Key management personnel:

(a) Brijween Kaur Sahney, Director

(b) Jasmine Pillai, Director Enterprises over which key management personnel or relatives exercise significant influence:

(a) Bhupinder Investment Co.Pvt.Ltd., - short term loan balance Rs 368.63 lakhs.

(b) Daaj Hotels and Resorts Pvt.Ltd., - short term loan balance Rs.170 lakhs

The Company had transactions with the following related parties.


Mar 31, 2013

01. GENERAL

Financial Statements are prepared under historical cost convention and in accordance with generally accepted accounting practices. Revenues are recognized and expenses are accounted on accrual basis with necessary provisions for all known Liabilities and Losses.

02. FIXED ASSETS AND DEPRECIATION

i) Fixed Assets are stated at cost, net of cenvat, less accumulated depreciation. Cost of acquisition of fixed assets is inclusive of freight, duties, taxes and incidental expenses thereto; and

ii) Depreciation is provided on fixed assets, except on Technical know how, on Straight Line Method at the rates and in the manner specified under Schedule – XIV to the Companies Act, 1956. Depreciation on technical know-how is provided at 20% per annum on straight-line method.

03. INVESTMENTS:

Long term investments are stated at cost. Provision for diminution in the value of investments, if any, will be made if it is permanent in nature. Current investments are stated at net realisable value.

04. INVENTORIES (As certified by the Management)

a. Finished goods are valued at cost or market value which ever is lower.

b. Work-in-progress, Raw Materials, Components, Stores, Spares etc., are valued at cost or realisable value, whichever is lower.

05. SALES:

Sales are inclusive of excise duty, and export incentives.

06. WARRANTY CLAIMS

Liability for warranty claims is charged to revenue in the year in which it is settled by the company.

0 7 . EXPORT BENEFITS:

Export benefits are accounted on estimated amount of benefits which the company is entitled to.

0 8 . TREATMENT OF CUSTOMS DUTY

The customs duty payable on imported material lying as at the end of the year in customs bonded warehouse is neither included in expenses nor considered in valuation of the inventories of such material/goods. The duty is accounted for on actual payment on clearance of such material/goods.

09. TREATMENT OF EXCISE DUTY

i. Excise Duty recovered is included in ''Sales''. Excise Duty on despatches is shown as item of expense. It is included as an element of cost in the valuation of duty paid stocks.

ii. The Cenvat credit available on Raw Material, Components, Stores and Spares and Fixed Assets are correspondingly reduced from these accounts and unutilised part of credit available is reflected as Balance with Excise department under Current Assets.

10 . CONTINGENT LIABILITIES IN RESPECT OF :

March 31,2013 March31,2012 Rs/Lakhs Rs/Lakhs

Central Excise demands in Appeal 108.00 123.86


Mar 31, 2012

01. GENERAL

Financial Statements are prepared under historical cost convention and in accordance with generally accepted accounting practices. Revenues are recognized and expenses are accounted on accrual basis with necessary provisions for all known Liabilities and Losses.

02. FIXED ASSETS AND DEPRECIATION

i) Fixed Assets are stated at cost, net of cenvat, less accumulated depreciation. Cost of acquisition of fixed assets is inclusive of freight, duties, taxes and incidental expenses thereto; and

ii) Depreciation is provided on fixed assets, except on Technical know how, on Straight Line Method at the rates and in the manner specified under Schedule - XIV to the Companies Act, 1956. Depreciation on technical know-how is provided at 20% per annum on straight-line method.

03. INVESTMENTS:

Long term investments are stated at cost. Provision for diminution in the value of investments, if any, will be made if it is permanent in nature. Current investments are stated at net realisable value.

04. INVENTORIES

(As certified by the Management)

a. Finished goods are valued at cost or market value which ever is lower.

b. Work-in-progress, Raw Materials, Components, Stores, Spares etc., are valued at cost or realisable value, whichever is lower.

05. SALES:

Sales are inclusive of excise duty, and export incentives.

06. WARRANTY CLAIMS

Liability for warranty claims is charged to revenue in the year in which it is settled by the company.

07. EXPORT BENEFITS:

Export benefits are accounted on estimated amount of benefits which the company is entitled to.

08. TREATMENT OF CUSTOMS DUTY

The customs duty payable on imported material lying as at the end of the year in customs bonded warehouse is neither included in expenses nor considered in valuation of the inventories of such material/goods. The duty is accounted for on actual payment on clearance of such material/goods.

09. TREATMENT OFEXCISE DUTY

i Excise Duty recovered is included in 'Sales'. Excise Duty on despatches is shown as item of expense. It is included as an element of cost in the valuation of duty paid stocks.

ii. The Cenvat credit available on Raw Material, Components, Stores and Spares and Fixed Assets are correspondingly reduced from these accounts and unutilised part of credit available is reflected as Balance with Excise department under Current Assets.

10. CONTINGENT LIABILITIES IN RESPECT OF :

March 31,2012 March31,2011 Rs/Lakhs Rs/Lakhs

Central Excise demands in Appeal 123.86 123.86


Mar 31, 2011

01. GENERAL

Financial Statements are prepared under historical cost convention and in accordance with generally accepted accounting practices. Revenues are recognized and expenses are accounted on accrual basis with necessary provisions for all known Liabilities and Losses.

02. FIXED ASSETS AND DEPRECIATION

i) Fixed Assets are stated at cost, net of cenvat, less accumulated depreciation. Cost of acquisition of fixed assets is inclusive of freight, duties, taxes and incidental expenses thereto; and

ii) Depreciation is provided on fixed assets, except on Technical know how, on Straight Line Method at the rates and in the manner specified under Schedule - XIV to the Companies Act, 1956. Depreciation on technical know-how is provided at 20% per annum on straight-line method.

03. INVESTMENTS:

Long term investments are stated at cost. Provision for diminution in the value of investments, if any, will be made if it is permanent in nature. Current investments are stated at net realisable value.

04. INVENTORIES

(As certified by the Management)

a. Finished goods are valued at cost or market value which ever is lower.

b. Work-in-progress, Raw Materials, Components, Stores, Spares etc., are valued at cost or realisable value, whichever is lower.

05. SALES:

Sales are inclusive of excise duty, and export incentives.

06. WARRANTY CLAIMS

Liability for warranty claims is charged to revenue in the year in which it is settled by the company.

07. EXPORT BENEFITS:

Export benefits are accounted on estimated amount of benefits which the company is entitled to.

08. TREATMENT OF CUSTOMS DUTY

The customs duty payable on imported material lying as at the end of the year in customs bonded warehouse is neither included in expenses nor considered in valuation of the inventories of such material/goods. The duty is accounted for on actual payment on clearance of such material/goods.

09. TREATMENT OF EXCISE DUTY

i. Excise Duty recovered is included in 'Sales'. Excise Duty on despatches is shown as item of expense. It is included as an element of cost in the valuation of duty paid stocks.

ii. The Cenvat credit available on Raw Material, Components, Stores and Spares and Fixed Assets are correspondingly reduced from these accounts and unutilised part of credit available is reflected as Balance with Excise department under Current Assets.


Mar 31, 2010

01. GENERAL

Financial Statements are prepared under historical cost convention and in accordance with generally accepted accounting practices. Revenues are recognized and expenses are accounted on accrual basis with necessary provisions for all known Liabilities and Losses.

02. FIXED ASSETS AND DEPRECIATION

i) Fixed Assets are stated at cost, net of modvat, less accumulated depreciation. Cost of acquisition of fixed assets is inclusive of freight, duties, taxes and incidental expenses thereto.

ii) Depreciation is provided on fixed assets, except on Technical know how, on Straight Line Method at the rates and in the manner specified under Schedule - XIV to the Companies Act, 1956. Depreciation on technical know-how is provided at 20% per annum on straight-line method.

iii) As per past practice, expenditure in respect of acquisition of Fixed Assets and other expenditure including interest on loans taken for acquisition of such fixed assets incurred in setting up new units is debited to Capital Work In Progress, pending capitalisation and commencement of commercial production of these units.

iv) Expenditure of revenue nature including interest on loans incurred during setting up of additional units are capitalised and apportioned to Fixed Assets proportionately till the date of commencement of commercial production.

03. Foreign Currency Loans:

Foreign currency Loans are converted to Rupees at the relevant rates prevailing on the date of the Balance Sheet. Difference is adjusted to Fixed Assets in case of Capital Assets and is charged off to revenue, in case of Current Assets.

04. INVESTMENTS:

Investments are stated at cost. Provision for diminution in the value of investments, if any, will be made if it is permanent in nature.

05. INVENTORIES

(As certified by the Management)

a. Finished goods are valued at cost or market value which ever is lower.

b. Work-in-progress, Raw Materials, Components, Stores, Spares etc., are valued at cost or realisable value, whichever is lower.

06. SALES:

Sales are inclusive of excise duty, and export incentives.

07. WARRANTY CLAIMS

Liability for warranty claims is charged to revenue in the year in which it is settled by the company.

08. EXPORT BENEFITS:

Export benefits are accounted on estimated amount of benefits which the company is entitled to.

09. TREATMENT OF CUSTOMS DUTY

The customs duty payable on imported material lying as at the end of the year in customs bonded warehouse is neither included in expenses nor considered in valuation of the inventories of such material/goods. The duty is accounted for on actual payment on clearance of such material/goods.

10. TREATMENT OF EXCISE DUTY

i. Excise Duty recovered is included in Sales. Excise Duty on despatches is shown as item of expense. It is included as an element of cost in the valuation of duty paid stocks.

ii. The Cenvat credit available on Raw Material, Components, Stores and Spares and Fixed Assets are correspondingly reduced from these accounts and unutilised part of credit available is reflected as Balance with Excise department under Current Assets.

 
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