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Accounting Policies of Rexnord Electronics and Controls Ltd. Company

Mar 31, 2014

A) Basis of preparation

The financial statements are prepared and presented under historical cost convention, on an accrual basis of accounting and in accordance with the provisions of the Companies Act 1956 (''the Act'') and accounting principles generally accepted in India and adjusted by revaluation of certain plants & machineries, moulds & dies, office equipments and leasehold land. Pursuant to circular 15/2013 dated 13.09.2013 read with Circular 8/2104 dated 04.04.2014, till the Standards of Accounting or any addendum thereto are prescribed by Central Government in consultation and recommendation of the National Financial Reporting Authority, the existing Accounting Standards notified under the Companies Act, 1956 shall continue to apply. Consequently, these financial statements have been prepared to comply in all materials aspects with the Accounting Standards notified under section 211 (3C) (Companies (Accounting Standards) Rules, 2006, as amended ) and other relevant provisions of the Companies Act, 1956,

All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in Revised Schedule VI to the Companies Act, 1956.

Based on the nature of products and the time between acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current/non-current classification of assets and liabilities.

B) Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires the management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities on the date of financial statements and the reported amount of revenue and expenses during the reported period. Management believes that the estimates made in the preparation of the financial statements are prudent and reasonable. Actual results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in current and future period.

C) Fixed Assets

Tangible Assets

Tangible fixed assets are stated at cost of acquisition (except in cases of revalued asset which is stated at revalued amount) less accumulated depreciation and impairment adjustment if any. The cost of acquisition includes subsequent improvement thereto inclusive of taxes, duties (net of cenvat), freight and other incidental expenses relating to acquisition, improvement and installation.

Intangible Assets

Intangible assets are stated at their cost of acquisition less accumulated amortization and impairment losses if any. An intangible asset is recognized, where it is probable that the future economic benefit attributable to the assets will flow to the Company and where its cost can be reliably measured.

Capital Work in Progress

The cost incurred for fixed assets, the construction/installation of which is not completed, are included under "capital work-in-progress" and the same are classified and added to the respective assets on the completion.

D) Depreciation and amortization

Depreciation on all the tangible assets is provided for on straight line method at the rates & manner specified in Schedule XIV of the Act.

Intangible assets (Software) are amortized over the period of three years from the month in which such assets has been put to use by the Company.

Depreciation in respect of addition to fixed assets is provided on pro-rata basis from the month in which such assets are acquired/ installed.

Depreciation on fixed assets sold, discarded or demolished during the year is provided at their respective rates up to the month in which such assets are sold, discarded or demolished.

E) Impairment

In accordance with AS 28 ''Impairment of Assets'' the carrying amounts of the Company''s assets are reviewed at each balance sheet date to determine whether there is any impairment. The recoverable amount of the assets (or where applicable, that of the cash generating unit to which the asset belongs) is estimated as the higher of its net selling price and its value in use. An impairment loss is recognized whenever the carrying amount of an asset or a cash generating unit exceeds its recoverable amount. Impairment loss is recognized in the statement profit and loss or against revaluation surplus where applicable.

F) Investments

Non-current (long term) investments are valued and stated at cost. Provision for diminution in the value of investments is made only when, in the opinion of management, there is decline, other than temporary, in the carrying value of such investments.

Current investments are valued at cost or market value whichever is lower.

G) Inventories

a) Inventories are valued at lower of cost and net realizable value.

b) Cost of inventories is assigned by using the FIFO formula.

c) Goods in transit, if any are stated at actual cost incurred upto the date of the balance sheet.

H) Revenue Recognition

Sales are inclusive of excise duty and charges received from the customers except the export sales, which is accounted without the excise duty. In conformity with the requirements of Accounting Standard 9 "Recognition of Revenue" the sales are presented in the financial statements as Sales less Excise Duty.

Dividend income is recognized when right to receive the dividend is established.

Interest income is recognized using the time proportion method, based on underlying interest rates.

I) Employee Benefits

a) Employees'' benefits under defined contribution plan such as contribution to provident fund and employees'' benefits under defined benefit plan for cost of compensated absences are charged off in the year in which the related services are provided.

b) Post employment benefits under defined benefit plan such as gratuity are charged off in the year in which the employee has rendered services at the present value of the amounts payable determined using actuarial valuation techniques. Actuarial gain and/or losses in respect of post employment benefits are charged to statement of profit and loss.

J) Foreign Currency Transactions

a) All the transactions including transactions of acquiring fixed assets, in foreign currency are recorded by applying the exchange rates at the date of the transactions.

b) Monetary items denominated in foreign currency remaining unsettled at the end of the year, are reported using the closing rates. The exchange difference arising as a result of the above is recognised in the statement profit and loss.

c) In case the monetary items are covered by the foreign exchange contracts, the difference between the year end rate and the exchange rate at the date of the inception of the forward exchange contract is recognised as exchange difference.

d) In respect of hedging transactions, the premium/discount represented by difference between the exchange rate at the date of the inception of the forward exchange contract and forward rate specified in the contract is amortised as expense or income over the life of the contract.

K) Borrowing Costs

The Company capitalises interest and other costs incurred by it in connection with funds borrowed for the acquisition of fixed assets. Where specific borrowings are identified to a fixed asset or a new unit, the Company uses the interest rates applicable to that specific borrowing as the capitalisation rate. Capitalisation of borrowing costs ceases when all the activities necessary to prepare the fixed assets for their intended use are substantially complete. Other borrowing costs are charged to statement of profit and loss.

L) Segment Reporting

Segments are identified in accordance with the Accounting Standard 17 "Segment Reporting" taking into account the organizational structure as well as differing risks and returns. The business segment is disclosed as primary segment.

M) Taxation

Income tax expense comprises Current Tax and Deferred Tax charge or credit. Provision for current tax is made on the assessable income at the rate applicable to the relevant assessment year. The deferred Tax Assets and Deferred Tax Liability are calculated by applying tax rate and tax laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred tax assets arising mainly on account of unabsorbed depreciation and deferment of allowances under tax laws, are recognized, only if there is a virtual certainty of its realization, supported by convincing evidence. Deferred Tax assets on account of other timing differences are recognized, only to the extent there is a reasonable certainty of its realization. At each balance sheet date the carrying amount of deferred tax assets are reviewed to reassure realization.

N) Leases

Lease rentals payable under operating leases are recognized in the statement of profit and loss on a straight line basis over the term of the lease.

O) Earning per share

The basic earnings per equity share are computed by dividing the net profit or loss attributable to the equity shareholders for the period by the weighted average number of equity shares outstanding during the reporting period. The number of shares used in computing diluted earnings per share comprises the weighted average number of shares considered for deriving basic earnings per share, and also the weighted average number of equity shares, which may be issued on the conversion of all dilutive potential shares, unless the results would be anti dilutive.

P) Customs & Excise Duties

The custom duty payable, on imported materials lying at the custom bonded warehouses at the end of the year and excise duty payable, in respect of goods manufactured but not cleared from the factory premises at the end of the year, are neither included in expenses nor included in the valuation of the inventories of such materials / goods. Such duties are accounted for on actual payment on clearance of such materials/goods. This practice has no impact on the profits of the Company.

Q) Cenvat Credit

Cenvat credit available on raw materials and packing materials, as per the provisions of Cenvat Credit Rules, has been accounted for by reducing the cost of respective material accounts. Cenvat credit available on capital goods, as per the provisions of Cenvat Credit Rules, has been accounted for by reducing the cost of such capital goods. Cenvat credit available on the input services as per the provisions of Cenvat Credit Rules has been accounted for by reducing the cost of such input services.

R) Export Incentive

The benefits, on account of entitlement to import duty free raw material under the Advance License Scheme in respect of goods already exported, are not valued and brought into the books in the year of export. The raw materials are recorded at cost at which they are procured in the year of import.

The benefits under FMS/FPS Scheme and Duty Drawback Scheme are recognized when the exports are made

S) Provisions and Contingencies

The Company creates a provision when there is present obligation as a result of a past event that probably requires an outflow of resources embodying economic benefits and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is so longer probable that the outflow of resources would be required to settle the obligation, the provision is reversed.

Contingent assets are not recognized in the financial statements. However, contingent assets are assessed continually and if it is virtually certain that an economic benefit will arise, the asset and related income are recognized in the period in which the change occurs.


Mar 31, 2013

A) Basis of preparation

The fnancial statements are prepared and presented under historical cost convention, on an accrual basis of accounting and in accordance with the provisions of the Companies Act 1956 (‘the Act'') and accounting principles generally accepted in India and adjusted by revaluation of certain plants & machineries, moulds & dies, offce equipments and leasehold land. The fnancial statements comply with the Accounting Standards prescribed in the Companies (Accounting Standards) Rules 2006, to the extent applicable.

All assets and liabilities have been classifed as current or non-current as per the Company''s normal operating cycle and other criteria set out in Revised Schedule VI to the Companies Act, 1956.

Based on the nature of products and the time between acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current/non-current classifcation of assets and liabilities.

B) Use of Estimates

The preparation of fnancial statements in conformity with generally accepted accounting principles requires the management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities on the date of fnancial statements and the reported amount of revenue and expenses during the reported period. Management believes that the estimates made in the preparation of the fnancial statements are prudent and reasonable. Actual results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in current and future period.

C) Fixed Assets

Tangible Assets

Tangible fxed assets are stated at cost of acquisition (except in cases of revalued asset which is stated at revalued amount) less accumulated depreciation and impairment adjustment if any. The cost of acquisition includes subsequent improvement thereto inclusive of taxes, duties (net of cenvat), freight and other incidental expenses relating to acquisition, improvement and installation.

Intangible Assets

Intangible assets are stated at their cost of acquisition less accumulated amortization and impairment losses if any. An intangible asset is recognized, where it is probable that the future economic beneft attributable to the assets will fow to the Company and where its cost can be reliably measured.

Capital Work in Progress

The cost incurred for fxed assets, the construction/installation of which is not completed, are included under "capital work-in-progress" and the same are classifed and added to the respective assets on the completion.

D) Depreciation and amortization

Depreciation on all the tangible assets is provided for on straight line method at the rates & manner specifed in Schedule XIV of the Act.

Intangible assets (Software) are amortized over the period of three years from the month in which such assets has been put to use by the Company.

Depreciation in respect of addition to fxed assets is provided on pro-rata basis from the month in which such assets are acquired/ installed.

Depreciation on fxed assets sold, discarded or demolished during the year is provided at their respective rates up to the month in which such assets are sold, discarded or demolished.

E) Impairment

In accordance with AS 28 Impairment of Assets'' the carrying amounts of the Company''s assets are reviewed at each balance sheet date to determine whether there is any impairment. The recoverable amount of the assets (or where applicable, that of the cash generating unit to which the asset belongs) is estimated as the higher of its net selling price and its value in use. An impairment loss is recognized whenever the carrying amount of an asset or a cash generating unit exceeds its recoverable amount. Impairment loss is recognized in the statement proft and loss or against revaluation surplus where applicable.

F) Investments

Non-current (long term) investments are valued and stated at cost. Provision for diminution in the value of investments is made only when, in the opinion of management, there is decline, other than temporary, in the carrying value of such investments.

Current investments are valued at cost or market value whichever is lower.

G) Inventories

a) Inventories are valued at lower of cost and net realizable value.

b) Cost of inventories is assigned by using the FIFO formula.

c) Goods in transit, if any are stated at actual cost incurred upto the date of the balance sheet.

H) Revenue Recognition

Sales are inclusive of excise duty and charges received from the customers except the export sales, which is accounted without the excise duty. In conformity with the requirements of Accounting Standard 9 "Recognition of Revenue" the sales are presented in the fnancial statements as Sales less Excise Duty.

Dividend income is recognized when right to receive the dividend is established.

Interest income is recognized using the time proportion method, based on underlying interest rates.

I) Employee Benefts

a) Employees'' benefts under defned contribution plan such as contribution to provident fund and employees'' benefts under defned beneft plan for cost of compensated absences are charged off in the year in which the related services are provided.

b) Post employment benefts under defned beneft plan such as gratuity are charged off in the year in which the employee has rendered services at the present value of the amounts payable determined using actuarial valuation techniques. Actuarial gain and/or losses in respect of post employment benefts are charged to statement of proft and loss.

J) Foreign Currency Transactions

a) All the transactions including transactions of acquiring fxed assets, in foreign currency are recorded by applying the exchange rates at the date of the transactions.

b) Monetary items denominated in foreign currency remaining unsettled at the end of the year, are reported using the closing rates. The exchange difference arising as a result of the above is recognised in the statement proft and loss.

c) In case the monetary items are covered by the foreign exchange contracts, the difference between the year end rate and the exchange rate at the date of the inception of the forward exchange contract is recognised as exchange difference.

d) In respect of hedging transactions, the premium/discount represented by difference between the exchange rate at the date of the inception of the forward exchange contract and forward rate specifed in the contract is amortised as expense or income over the life of the contract.

K) Borrowing Costs

The Company capitalises interest and other costs incurred by it in connection with funds borrowed for the acquisition of fxed assets. Where specifc borrowings are identifed to a fxed asset or a new unit, the Company uses the interest rates applicable to that specifc borrowing as the capitalisation rate. Capitalisation of borrowing costs ceases when all the activities necessary to prepare the fxed assets for their intended use are substantially complete. Other borrowing costs are charged to statement of proft and loss.

L) Segment Reporting

Segments are identifed in accordance with the Accounting Standard 17 "Segment Reporting" taking into account the organizational structure as well as differing risks and returns. The business segment is disclosed as primary segment.

M) Taxation

Income tax expense comprises Current Tax and Deferred Tax charge or credit. Provision for current tax is made on the assessable income at the rate applicable to the relevant assessment year. The deferred Tax Assets and Deferred Tax Liability are calculated by applying tax rate and tax laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred tax assets arising mainly on account of unabsorbed depreciation and deferment of allowances under tax laws, are recognized, only if there is a virtual certainty of its realization, supported by convincing evidence. Deferred tax assets on account of other timing differences are recognized, only to the extent there is a reasonable certainty of its realization. At each balance sheet date the carrying amount of deferred tax assets are reviewed to reassure realization.

N) Leases

Lease rentals payable under operating leases are recognized in the statement of proft and loss on a straight line basis over the term of the lease.

O) Earning per share

The basic earnings per equity share are computed by dividing the net proft or loss attributable to the equity shareholders for the period by the weighted average number of equity shares outstanding during the reporting period. The number of shares used in computing diluted earnings per share comprises the weighted average number of shares considered for deriving basic earnings per share, and also the weighted average number of equity shares, which may be issued on the conversion of all dilutive potential shares, unless the results would be anti dilutive.

P) Customs & Excise Duties

The custom duty payable, on imported materials lying at the custom bonded warehouses at the end of the year and excise duty payable, in respect of goods manufactured but not cleared from the factory premises at the end of the year, are neither included in expenses nor included in the valuation of the inventories of such materials / goods. Such duties are accounted for on actual payment on clearance of such materials/goods. This practice has no impact on the profts of the Company.

Q) Cenvat Credit

Cenvat credit available on raw materials and packing materials, as per the provisions of Cenvat Credit Rules, has been accounted for by reducing the cost of respective material accounts. Cenvat credit available on capital goods, as per the provisions of Cenvat Credit Rules, has been accounted for by reducing the cost of such capital goods. Cenvat credit available on the input services as per the provisions of Cenvat Credit Rules has been accounted for by reducing the cost of such input services.

R) Export Incentive

The benefts, on account of entitlement to import duty free raw material under the Advance License Scheme in respect of goods already exported, are not valued and brought into the books in the year of export. The raw materials are recorded at cost at which they are procured in the year of import.

The benefts under DEPB Scheme and Duty Drawback Scheme are recognized when the exports are made and against which the credit has been granted.

S) Provisions and Contingencies

The Company creates a provision when there is present obligation as a result of a past event that probably requires an outfow of resources embodying economic benefts and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outfow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outfow of resources is remote, no provision or disclosure is made.

Provisions are reviewed at each balance sheet date and adjusted to refect the current best estimate. If it is so longer probable that the outfow of resources would be required to settle the obligation, the provision is reversed.

Contingent assets are not recognized in the fnancial statements. However, contingent assets are assessed continually and if it is virtually certain that an economic beneft will arise, the asset and related income are recognized in the period in which the change occurs.


Mar 31, 2011

A) ACCOUNTING CONVENTION

The financial statements are prepared and presented under historical cost convention, on an accrual basis of accounting and in accordance with the provisions of the Companies Act 1956 ('the Act') and accounting principles generally accepted in India and adjusted by revaluation of certain plants & machineries, moulds & dies, office equipments and leasehold land. The financial statements comply with the Accounting Standards prescribed in the Companies (Accounting Standards) Rules 2006, to the extent applicable.

B) USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted accounting principles requires the management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities on the date of financial statements and the reported amount of revenue and expenses during the reported period. Management believes that the estimates made in the preparation of the financial statements are prudent and reasonable. Actual results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in current and future period.

C) FIXED ASSETS

TANGIBLE ASSETS

Tangible fixed assets are stated at cost of acquisition (except in cases of revalued asset which is stated at revalued amount) less accumulated depreciation and impairment adjustment if any. The cost of acquisition includes subsequent improvement thereto inclusive of taxes, duties (net of cenvat), freight and other incidental expenses relating to acquisition, improvement and installation.

INTANGIBLE ASSETS

Intangible assets are stated at their cost of acquisition less accumulated amortization and impairment losses if any. An intangible asset is recognized, where it is probable that the future economic benefit attributable to the assets will flow to the Company and where its cost can be reliably measured.

CAPITAL WORK IN PROGRESS

The cost incurred for fixed assets, the construction of which is not completed, are included under "capital work-in-progress" and the same are classified and added to the respective assets on the completion.

D) DEPRECIATION AND AMORIZATION

Depreciation on all the tangible assets is provided for an straight line method at the rates & manner specified in Schedule XIV of the Act.

Intangible assets (Software) are amortized over the period of three years from the month in which such assets has been put to use by the Company.

Individual assets costing upto Rs. 5000/- are depreciated over a period of one year from the month in which such asset is acquired.

Depreciation in respect of addition to fixed assets is provided on pro-rata basis from the month in which such assets are acquired/ installed.

Depreciation on fixed assets sold, discarded or demolished during the year is provided at their respective rates up to the month in which such assets are sold, discarded or demolished.

E) IMPAIRMENT

In accordance with AS 28 'Impairment of Assets' the carrying amounts of the Company's assets are reviewed at each balance sheet date to determine whether there is any impairment. The recoverable amount of the assets (or where applicable, that of the cash generating unit to which the asset belongs) is estimated as the higher of its net selling price and its value in use. An impairment loss is recognized whenever the carrying amount of an asset or a cash generating unit exceeds its recoverable amount. Impairment loss is recognized in the profit and loss account or against revaluation surplus where applicable.

F) INVESTMENTS

Long-term investments are valued and stated at cost. Provision for diminution in the value of investments is made only when, in the opinion of management, there is decline, other than temporary, in the carrying value of such investments.

Current investments are valued at cost or market value whichever is lower.

G) INVENTORIES

a) Inventories are valued at lower of cost and net realizable value.

b) Cost of inventories is assigned by using the FIFO formula.

c) Goods in transit, if any are stated at actual cost incurred upto the date of the balance sheet.

H) REVENUE RECOGNITION

Gross Sales are inclusive of excise duty, sales tax and charges received from the customers except the export sales, which is accounted without the excise duty. In conformity with the requirements of Accounting Standard 9 "Recognition of Revenue" the sales are presented in the financial statements as Gross Sales less Excise Duty.

Dividend income is recognized when right to receive the dividend is established.

Interest income is recognized using the time proportion method, based on underlying interest rates.

I) EMPLOYEE BENEFITS

a) Employees' benefits under defined contribution plan such as contribution to provident fund and employees' benefits under defined benefit plan for cost of compensated absences are charged off at the undiscounted amount in the year in which the related services are provided.

b) Post employment benefits under defined benefit plan such as gratuity are charged off in the year in which the employee has rendered services at the present value of the amounts payable determined using actuarial valuation techniques. Actuarial gain and/or losses in respect of post employment benefits are charged to profit and loss account.

J) FOREIGN CURRENCY TRANSACTIONS

a) All the transactions including transactions of acquiring fixed assets, in foreign currency are recorded by applying the exchange rates at the date of the transactions.

b) Monetary items denominated in foreign currency remaining unsettled at the end of the year, are reported using the closing rates. The exchange difference arising as a result of the above is recognised in the profit and loss account.

c) In case the monetary items are covered by the foreign exchange contracts, the difference between the year end rate and the exchange rate at the date of the inception of the forward exchange contract is recognised as exchange difference.

d) In respect of hedging transactions, the premium/discount represented by difference between the exchange rate at the date of the inception of the forward exchange contract and forward rate specified in the contract is amortised as expense or income over the life of the contract.

K) BORROWING COSTS

The Company capitalises interest and other costs incurred by it in connection with funds borrowed for the acquisition of fixed assets. Where specific borrowings are identified to a fixed asset or a new unit, the Company uses the interest rates applicable to that specific borrowing as the capitalisation rate. Capitalisation of borrowing costs ceases when all the activities necessary to prepare the fixed assets for their intended use are substantially complete. Other borrowing costs are charged to Profit & Loss Account.

L) SEGMENT REPORTING

Segments are identified in accordance with the Accounting Standard 17 "Segment Reporting" taking into account the organizational structure as well as differing risks and returns. The business segment is disclosed as primary segment.

M) TAXATION

Income tax expense comprises Current Tax and Deferred Tax charge or credit. Provision for current tax is made on the assessable income at the rate applicable to the relevant assessment year. The deferred Tax Assets and Deferred Tax Liability are calculated by applying tax rate and tax laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred tax assets arising mainly on account of unabsorbed depreciation and deferment of allowances under tax laws, are recognized, only if there is a virtual certainty of its realization, supported by convincing evidence. Deferred Tax assets on account of other timing differences are recognized, only to the extent there is a reasonable certainty of its realization. At each balance sheet date the carrying amount of deferred tax assets are reviewed to reassure realization.

N) LEASES

Lease rentals payable under operating leases are recognized in the profit and loss account on a straight line basis over the term of the lease.

O) EARNING PER SHARE

The basic earnings per equity share are computed by dividing the net profit or loss attributable to the equity shareholders for the period by the weighted average number of equity shares outstanding during the reporting period. The number of shares used in computing diluted earnings per share comprises the weighted average number of shares considered for deriving basic earnings per share, and also the weighted average number of equity shares, which may be issued on the conversion of all dilutive potential shares, unless the results would be anti dilutive.

P) CUSTOMS & EXCISE DUTIES

The custom duty payable, on imported materials lying at the custom bonded warehouses at the end of the year and excise duty payable, in respect of goods manufactured but not cleared from the factory premises at the end of the year, are neither included in expenses nor included in the valuation of the inventories of such materials / goods. Such duties are accounted for on actual payment on clearance of such materials / goods. This practice has no impact on the profits of the Company.

Q) CENVAT CREDIT

Cenvat credit available on raw materials and packing materials, as per the provisions of Cenvat Credit Rules, has been accounted for by reducing the cost of respective material accounts. Cenvat credit available on capital goods, as per the provisions of Cenvat Credit Rules, has been accounted for by reducing the cost of such capital goods. Cenvat credit available on the input services as per the provisions of Cenvat Credit Rules has been accounted for by reducing the cost of such input services.

R) EXPORT INCENTIVE

The benefits, on account of entitlement to import duty free raw material under the Advance License Scheme in respect of goods already exported, are not valued and brought into the books in the year of export. The raw materials are recorded at cost at which they are procured in the year of import.

The benefits under DEPB Scheme are recognized when the exports are made and against which the credit has been granted.

S) PROVISIONS AND CONTINGENCIES

The Company creates a provision when there is present obligation as a result of a past event that probably requires an outflow of resources embodying economic benefits and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is so longer probable that the outflow of resources would be required to settle the obligation, the provision is reversed.

Contingent assets are not recognized in the financial statements. However, contingent assets are assessed continually and if it is virtually certain that an economic benefit will arise, the asset and related income are recognized in the period in which the change occurs.

NOTES :

On nature of security on loans :

1. Vehicle loans are secured by hypothecation of specific vehicles acquired from the loans.

2. Working capital facilities including non funded facilities and term loan are primarily secured by hypothecation of stock and book debts of the company.

3. Working capital facilities including non funded facilities and term loan are further secured by way of Equitable Mortgage of Factory Land and Building at Plot No. 92-D Govt. Industrial Estate, Charkop, Kandivli (W), Mumbai 400067.

4. Working capital facilities including non funded facilities and term loan are further secured by the personal guarantee of two directors of the company and three relatives of chairman and managing director of the company.


Mar 31, 2010

A) ACCOUNTING CONVENTION

The accounts are prepared on historical cost basis on a going concern and adjusted by revaluation of certain plants & machineries, moulds & dies, office equipments and leasehold land. Accounting policies not referred to otherwise are consistent with generally accepted accounting principles.

B) RECOGNITION OF INCOME AND EXPENSES

All income and expenses are accounted for on accrual basis.

C) FIXED ASSETS

Fixed assets are stated at cost of acquisition and subsequent improvement thereto inclusive of taxes, duties (net of cenvat), freight and other incidental expenses relating to acquisition, improvement and installation, except in cases of revaluation of such assets where it is stated at revalued amount.

D) INTANGIBLE ASSETS:

Intangible assets are measured at cost and amortized so as to reflect the pattern in which the assets economic benefits are consumed.

E) CAPITAL WORK IN PROGRESS

The cost incurred for fixed assets, the construction of which is not completed, are included under "capital work-in progress" and the same are classified and added to the respective assets on the completion.

F) DEPRECIATION

Depreciation on all the assets is provided for on straight line method at the rates & manner specified in Schedule XTV of the Companies Act, 1956. Depreciation in respect of addition to fixed assets is provided on pro-rata basis from the month in which such assets are acquired/installed. Depreciation on fixed assets sold, discarded or demolished during the year is being provided at their respective rates up to the month in which such assets are sold, discarded or demolished.

G) INVESTMENTS

Long-term investments are accounted and valued at cost. Short-term investments are being valued at cost or market value whichever is lower.

H) INVENTORIES

a) Inventories are valued at lower of cost and net realizable value

b) Cost of inventories is assigned by using the FIFO formula.

c) Goods in transit, if any are stated at actual cost incurred upto the date of the balance sheet.

I) FOREIGN CURRENCY TRANSACTIONS

a) All the transactions including transactions of acquiring fixed assets, in foreign currency are recorded by applying the exchange rates at the date of the transactions.

b) Monetary items denominated in foreign currency remaining unsettled at the end of the year, are reported using the closing rates. The exchange difference arising as a result of the above is recognised in the profit and loss account.

c) hi case the monetary items are covered by the foreign exchange contracts, the difference between the year end rate and the exchange rate at the date of the inception of the forward exchange contract is recognised as exchange difference.

d) hi respect ofhedging transactions, the premium/discount represented by difference between the exchange rate at the date of the inception of the forward exchange contract and forward rate specified in the contract is amortised as expense or income over the life of the contract.

J) EMPLOYEE BENEFITS

a) Employees benefits under defined contribution plan such as contribution to provident fund and employees benefits under defined benefit plan for cost of compensated absences are charged of at the undiscounted amount in the year in which the related service provided.

b) Post employment benefits under defined benefit plan such as gratuity are charged off in the year in which the employee has rendered services at the present value of the amounts payable determined using actuarial valuation techniques. Actuarial gain and/or losses in respect of post employment benefits are charged to profit and loss account.

K) BORROWING COSTS

The company capitalises interest and other costs incurred by it in connection with funds borrowed for the acquisition of fixed assets. Where specific borrowings are identified to a fixed asset or a new unit, the company uses the interest rates applicable to that specific borrowing as the capitalisation rate. Capitalisation of borrowing costs ceases when all the activities necessary to prepare the fixed assets for their intended use are substantially complete. Other borrowing costs are charged to Profit & Loss Account.

L) SEGMENT REPORTING

Segments are identified in accordance with the AS 17 taking into account the organizational structure as well as differing risks and returns. The business segment is disclosed as primary segment.

M) TAXATION

Income tax expense comprises Current Tax and Deferred Tax charge or credit. Provision for current tax is made on the assessable income at the rate applicable to therelevant assessment year. The Deferred TaxAssets and Deferred Tax Liability is calculated by applying tax rate and tax laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred tax assets arising mainly on account of unabsorbed depreciation under tax laws, are recognized, only if there is a virtual certainty of its realization, supported by convincing evidence. Deferred Tax assets on account of other timing differences are recognised, only to the extent there is a reasonable certainty of its realisation. At each balance sheet date the carrying amount of deferred tax assets are reviewed to reassure realization.

N) IMPAIRMENT

In accordance with AS 28 Impairment of Assets the carrying amounts of the Companys assets are reviewed at each balance sheet date to determine whether there is any impairment. The recoverable amount of the assets (or where applicable, that of the cash generating unit to which the asset belongs) is estimated as the higher of its net selling price and its value in use. An impairment loss is recognized whenever the carrying amount of an asset or a cash generating unit exceeds its recoverable amount. Impairment loss is recognized in the profit and loss account or against revaluation surplus where applicable.

O) SALES

Sales are gross inclusive of excise duty, sales tax and charges received from the customers except the export sales, which is accounted without the excise duty. In conformity with the requirements of Accounting Standard 9-Recognition of Revenue the sales are presented in the financial statement as Gross Sales less Excise Duty. Sales are presented in the financial statement net of inter divisional transfers.

P) CUSTOMS & EXCISE DUTIES

The custom duty payable, on imported materials lying at the custom bonded warehouses at the end of the year and excise duty payable, in respect of goods manufactured but not cleared from the factory premises at the end of the year, are neither included in expenses nor included in the valuation of the inventories of such materials / goods. Such duties are accounted for on actual payment on clearance of such materials/goods. This practice has no impact on the profits of the company.

Q) CENVAT CREDIT

Cenvat credit available on raw materials and packing materials, as per the provisions of Cenvat Credit Rules, has been accounted for by reducing the Cenvat credit available on the capital goods as per the provisions of Cenvat Credit Rules, has been accounted for by reducing the cost of such input services. Cenvat credit available on the input services aspertheprovisionsofCenvat Credit Rules, has been accounted for by reducing the cost of such input services.

R) EXPORT INCENTIVE

The benefits, on account of entitlement to import duty free raw material under the Advance Licence Scheme in respect of goods already exported, are not valued and brought into the books in the year of export. The raw materials are recorded at cost at which they are procured in the year of import.

S) CONTINGENT LIABILITIES

Contingent liabilities are not provided for and are disclosed by way of notes.

 
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