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Accounting Policies of Ruttonsha International Rectifier Ltd. Company

Mar 31, 2015

(a) Basis of Preparation of Financial Statements :

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 129 and 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 1956, as applicable. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year except for change in the accounting policy for depreciation.

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 the Schedule III to the Companies Act, 2013. Based on the nature of products and the time between the acquisition of materials and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle to be less than 12 months. As a result, current assets comprise elements that are expected to be realised within 12 months after the reporting date and current liabilities comprise elements that are due for settlement within 12 months after the reporting date.

(b) Use of Estimates :

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known /materialised.

(c) Fixed Assets :

Fixed assets are stated at the cost of acquisition less accumulated depreciation and impairment loss, if any (except for Land, Building and Machinery which had been revalued on 30th May, 1986). Cost of fixed assets includes taxes (other than those subsequently recoverable from tax authorities), duties, freight and any other costs directly attributable for bringing the asset to its working condition and other indirect costs specifically attributable to the acquisition or construction of the respective assets.

Projects under which assets are not ready for their intended use are disclosed under Capital Work-in-Progress.

(d) Depreciation :

Depreciation in respect of fixed assets acquired during the year is charged on a straight line method so as to write-off the cost of the assets over the useful lives.

With respect to the existing class of assets acquired prior to 1s' April, 2014 the management has estimated useful life which differs from the useful life prescribed under the Act on the basis of internal assessment and as per chartered engineer's technical evaluation. The management believes that the useful lives provided for assets acquired prior to 01/04/2014 best represents the period over which management expects to use these assets. Hence the useful lives for these assets are different from the useful lives as prescribed under Part C of Schedule II of the Companies Act, 2013.

Depreciation method, useful life and residual value are reviewed periodically.

(e) Borrowing Costs :

Interest and other costs incurred in connection with the borrowing of funds are charged to revenue on accrual basis.

(f) Inventories :

Inventories of Raw Materials, Work in Progress and Finished Goods are stated at cost or net realizable value, whichever is lower. Cost of inventories comprises of cost of purchase, cost of conversion and other costs including overheads incurred in bringing them to their respective present location and condition. Cost of Inventory is determined on First-in-First-out basis. The excise duty in respect of closing inventory of finished goods is included as part of finished goods.

(g) Revenue Recognition :

Gross Sales are inclusive of Excise Duty, VAT, and Net of returns, Claims, and Discount etc. The Company recognizes sale of goods when all the obligations connected with the transfer of risks and rewards to the buyer have been fulfilled after the price has been determined and collection of the receivable is reasonably certain.

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

(h) Employee Benefits :

(i) Short term employee benefits are recognised as an expense at the undiscounted amount expected to be paid over the period of services rendered by the employees to the Company.

(ii) Post employment and other long term employee benefits are recognised as an expense in the statement of profit and loss for the year in which the employee has rendered services. The expense is recognised at the present value of the amounts payable, determined using actuarial valuation techniques. Actuarial gains and losses in respect of post employment and other long term benefits are charged to the statement of profit and loss.

(i) Foreign Currency Transactions :

Transactions in foreign currency are recorded at the exchange rate prevailing on the date of transaction. Exchange difference arising on foreign currency transactions settled during the year are recognised as income or expenses in the statement of profit and loss for the year.

Monetary items in the form of Current/Non Current Assets and Current/Non Current Liabilities in foreign currency, outstanding at the end of the year, are converted in Indian Currency at the appropriate rate of exchange prevailing on the date of Balance Sheet and resultant gain or loss is accounted during the year.

(j) Taxation :

Tax expense comprises of current tax and deferred tax. Current tax is measured at the amount expected to be paid to the tax authorities, using applicable tax rates. Deferred income tax reflects the current period timing differences between taxable income and accounting income for the period and reversal of timing differences of earlier years/period. Deferred tax assets are recognised only to the extent that there is a reasonable certainty that sufficient future income will be available. In case there are unabsorbed depreciation or losses, it is recognised if there is virtual certainty that sufficient future taxable income will be available to realize the same.

Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date.

(k) Provisions, Contingent Liabilities and Contingent Assets :

Provisions is recognized in the accounts when there is a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate can be made. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.

Contingent liabilities are disclosed unless the possibility of outflow of resources is remote.

Contingent assets are neither recognised nor disclosed in the financial statements.

(l) Segment Accounting :

The segment of the Company has been identified in line with the Accounting Standard 17 on "Segment Reporting" issued by the Institute of Chartered Accountants of India. However during the year under review the Company was operating in single segment of Power Electronics business, hence Segment reporting is not applicable.

(m) Impairment of Assets :

The carrying amounts of assets are reviewed periodically for any indication of impairment based on internal/external factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset's net selling price and value in use.

(n) Investments :

Non current investments are stated at cost. Provision for diminution in the value of Non Current Investments is made only if such a decline is other than temporary.


Mar 31, 2014

(a) Basis of Preparation of Financial Statements :

The Financial Statements have been prepared under the historical cost convention on accrual basis. The mandatory applicable accounting standards in India and the provisions of the Companies Act, 1956 have been followed in preparation of these financial statements.

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 Schedule VI to the Companies Act, 1956. Based on the nature of products and the time between the acquisition of materials for processing and their realization in cash and cash equivalent, the Company has ascertained its operating cycle to be less than 12 months.

(b) Fixed Assets :

Fixed assets are stated at the cost of acquisition less accumulated depreciation and impairment loss, if any (except for Land, Building and Machinery which had been revalued on 30th May, 1986). Cost of fixed assets includes taxes (other than those subsequently recoverable from tax authorities), duties, freight and any other costs directly attributable for bringing the asset to its working condition and other indirect costs specifically attributable to the acquisition or construction of the respective assets. Interest on borrowed funds directly attributable to the qualifying assets up to the period such assets are put to use, are included in the cost.

Projects under which assets are not ready for their intended use are shown as Capital Work-in-Progress.

(c) Depreciation:

Depreciation for the year is provided on written down value method, at the rates specified under Schedule XIV to the Companies Act, 1956, over their useful life, except for depreciation on the fixed assets acquired on amalgamation, which are provided on straight line method basis in accordance with section 205(2)(b) of the Companies Act, 1956.

Depreciation on revalued assets has been adjusted against Capital Reserves on Revaluation of Assets.

Individual fixed assets having cost of Rs. 5,000/- or below have been written off during the year.

(d) Borrowing Costs :

Interest and other costs incurred in connection with the borrowing of funds are charged to revenue on accrual basis.

(e) Inventories :

Inventories of Raw Materials, Work in Progress and Finished Goods are stated at cost or net realizable value, whichever is lower. Cost of inventories comprises of cost of purchase, cost of conversion and other costs including overheads incurred in bringing them to their respective present location and condition. Cost is determined on First-in-First-out basis. The excise duty in respect of closing inventory of finished goods is included as part of finished goods.

(f) Revenue Recognition

Revenue is recognized only when it can be reliably measured and it is reasonable to expect ultimate collection. Revenue from operations includes sale of goods, services, sales tax, service tax, excise duty, VAT etc. Interest income is recognized on time proportion basis taking into account the amount outstanding and rate applicable.

(g) Employee Benefits

(i) Short term employee benefits are recognised as an expense at the undiscounted amount in the statement of profit and loss for the year in which the related service is rendered.

(ii) Post employment and other long term employee benefits are recognised as an expense in the statement of profit and loss for the year in which the employee has rendered services. The expense is recognised at the present value of the amounts payable, determined using actuarial valuation techniques. Actuarial gains and losses in respect of post employment and other long term benefits are charged to the statement of profit and loss.

(h) Foreign Currency Transactions:

Transactions in foreign currency are recorded at the exchange rate prevailing on the date of transaction. Exchange difference arising on foreign currency transactions settled during the year are recognised in the statement of profit and loss for the year.

Monetary items in the form of Current/Non Current Assets and Current/Non Current Liabilities in foreign currency, outstanding at the end of the year, are converted in Indian Currency at the appropriate rate of exchange prevailing on the date of Balance Sheet and resultant gain or loss is accounted during the year.

(i) Taxation :

(1) Current Tax: Provision for current income tax is made on the taxable income using the applicable tax rates and tax laws.

(2) Deferred Tax: Deferred tax arising on account of timing differences and which are capable of reversal in one or more subsequent periods is recognised using the tax rates and tax laws that have been enacted or substantively enacted. Deferred tax assets are not recognised unless there is virtual certainty with respect to the reversal of the same in future years.

(3) Minimum Alternative Tax : Minimum Alternative Tax (MAT) credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period.

(j) Provisions, Contingent Liabilities and Contingent Assets :

Provisions are recognized when the Company has a present obligation as a result of past events; it is more likely than not, that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated. A contingent liability is disclosed where there is a possible obligation or a present obligation that may, but probably will not, require an outflow. Contingent assets are neither recognized nor disclosed in the financial statements.

(k) Segment Accounting :

The segment of the Company has been identified in line with the Accounting Standard 17 on "Segment Reporting" issued by the Institute of Chartered Accountants of India. However during the year under review the Company was operating in single segment of Power Electronics business, hence segment reporting is not applicable.

(l) Impairment of Assets :

The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal/external factors. An asset is treated as impaired when the carrying cost of the asset exceeds the recoverable amount. An impairment loss is charged to the statement of profit and loss in the year in which an asset is identified as impaired. An impairment loss recognised in prior accounting periods is reversed if there has been change in the estimate of the recoverable amount.


Mar 31, 2013

(a) Basis of Preparation of Financial Statements :

The Financial Statements have been prepared under the historical cost convention on accrual basis. The mandatory applicable accounting standards in India and the provisions of the Companies Act, 1956 have been followed in preparation of these financial statements.

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 Schedule VI to the Companies Act, 1956. Based on the nature of products and the time between the acquisition of materials for processing and their realization in cash and cash equivalent, the Company has ascertained its operating cycle to be less than 12 months.

(b) Fixed Assets :

Fixed assets are stated at the cost of acquisition less accumulated depreciation and impairment loss, if any (except for Land, Building and Machinery which had been revalued on 30th May, 1986). Cost of fixed assets includes taxes (other than those subsequently recoverable from tax authorities), duties, freight and any other costs directly attributable for bringing the asset to its working condition and other indirect costs specifically attributable to the acquisition or construction of the respective assets. Interest on borrowed funds directly attributable to the qualifying assets up to the period such assets are put to use, are included in the cost.

(c) Depreciation :

Depreciation for the year is provided on written down value method, at the rates specified under Schedule XIV to the Companies Act, 1956, over their useful life, except for depreciation on the fixed assets acquired on amalgamation, which are provided on straight line method basis in accordance with section 205(2)(b) of the Companies Act, 1956.

Depreciation on revalued assets has been adjusted against Capital Reserves on Revaluation of Assets.

Individual fixed assets having cost of f 5,000/- or below have been written off during the year.

(d) Borrowing Costs :

Interest and other costs incurred in connection with the borrowing of funds are charged to revenue on accrual basis.

(e) Inventories :

Inventories of Raw Materials, Work in Progress and Finished Goods are stated at cost or net realizable value, whichever is lower. Cost of Inventories comprises of cost of purchase, cost of conversion and other costs including overheads incurred in bringing them to their respective present location and condition. Cost is determined on First-in-First-out basis. The excise duty in respect of closing inventory of finished goods is included as part of finished goods.

(f) Revenue Recognition :

Revenue is recognized only when it can be reliably measured and it is reasonable to expect ultimate collection. Revenue from operations includes sale of goods, services, sales tax, service tax, excise duty, VAT etc. Interest income is recognized on time proportion basis taking into account the amount outstanding and rate applicable.

(g) Employee Benefits :

(i) Short-term employee benefits are recognised as an expense at the undiscounted amount in the statement of profit and loss for the year in which the related service is rendered.

(ii) Post employment and other long term employee benefits are recognised as an expense in the statement of profit and loss for the year in which the employee has rendered services. The expense is recognised at the present value of the amounts payable, determined using actuarial valuation techniques. Actuarial gains and losses in respect of post employment and other long term benefits are charged to the statement of profit and loss.

(h) Foreign Currency Transactions :

Transactions in foreign currency are recorded at the exchange rate prevailing on the date of transaction. Exchange difference arising on foreign currency transactions settled during the year are recognised in the statement of profit and loss for the year.

Monetary items in the form of Current/Non Current Assets and Current/Non Current Liabilities in foreign currency, outstanding at the end of the year, are converted in Indian Currency at the appropriate rate of exchange prevailing on the date of Balance Sheet and resultant gain or loss is accounted during the year.

(i) Taxation :

(1) Current Tax : Provision for current income tax is made on the taxable income using the applicable tax rates and tax laws.

(2) Deferred Tax : Deferred tax arising on account of timing differences and which are capable of reversal in one or more subsequent periods is recognised using the tax rates and tax laws that have been enacted or substantively enacted. Deferred tax assets are not recognised unless there is virtual certainty with respect to the reversal of the same in future years.

(3) Minimum Alternative Tax : Minimum Alternative Tax (MAT) credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period.

(j) Provisions, Contingent Liabilities and Contingent Assets :

Provisions are recognized when the Company has a present obligation as a result of past events; it is more likely than not, that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. A contingent liability is disclosed where there is a possible obligation or a present obligation that may, but probably will not, require an outflow. Contingent assets are neither recognized nor disclosed in the financial statements.

(k) Segment Accounting :

The segment of the Company has been identified in line with the Accounting Standard 17 on "Segment Reporting" issued by the Institute of Chartered Accountants of India. However during the year under review the Company was operating in single segment of Power Electronics business, hence Segment reporting is not applicable.

(I) Impairment of Assets :

The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal/external factors. An asset is treated as impaired when the carrying cost of the asset exceeds the recoverable amount. An impairment loss is charged to the statement of profit and loss in the year in which an asset is identified as impaired. An impairment loss recognised in prior accounting periods is reversed if there has been change in the estimate of the recoverable amount.


Mar 31, 2012

(a) Basis of Preparation of Financial Statements:

The Financial Statements have been prepared under the historical cost convention on accrual basis. The mandatory applicable accounting standards in India and the provisions of the Companies Act, 1956 have been followed in preparation of these financial statements.

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 Schedule VI to the Companies Act, 1956. Based on the nature of products and the time between the acquisition of materials for processing and their realization in cash and cash equivalent, the Company has ascertained its operating cycle to be less than 12 months.

(b) Fixed Assets :

Fixed assets are stated at the cost of acquisition less accumulated depreciation and impairment loss, if any (except for Land, Building and Machinery which had been revalued on 30th May, 1986). Cost of fixed assets include taxes (other than those subsequently recoverable from tax authorities), duties, freight and any other costs directly attributable for bringing the asset to its working condition and other indirect costs specifically attributable to the acquisition or construction of the respective assets. Interest on borrowed funds directly attributable to the qualifying assets up to the period such assets are put to use, are included in the cost.

(c) Depreciation:

Depreciation for the year is provided on written down value method, at the rates specified under Schedule XIV to the Companies Act, 1956, over their useful life, except for depreciation on the fixed assets acquired on amalgamation, which are provided on straight line method basis in accordance with section 205(2)(b) of the Companies Act, 1956.

Depreciation on revalued assets has been adjusted against Capital Reserves on Revaluation of Assets.

Individual fixed assets having cost of Rs. 5,000/- or below have been written off during the year.

(d) Borrowing Costs:

Interest and other costs incurred in connection with the borrowing of funds are charged to revenue on accrual basis.

(e) Inventories:

Inventories of Raw Materials, Work in Progress and Finished Goods are stated at cost or net realizable value, whichever is lower. Cost of Inventories comprises of cost of purchase, cost of conversion and other costs including overheads incurred in bringing them to their respective present location and condition. Cost is determined on First-in-First-out basis. The excise duty in respect of closing inventory of finished goods is included as part of finished goods.

(f) Revenue Recognition

Revenue is recognised only when it can be reliably measured and it is reasonable to expect ultimate collection. Revenue from operations includes sale of goods, services, sales tax, service tax, excise duty, VAT etc. Interest income is recognised on time proportion basis taking into account the amount outstanding and rate applicable.

(g) Employee Benefits

(i) Short-term employee benefits are recognised as an expense at the undiscounted amount in the statement of profit and loss for the year in which the related service is rendered.

(ii) Post employment and other long term employee benefits are recognised as an expense in the statement of profit and loss for the year in which the employee has rendered services. The expense is recognised at the present value of the amounts payable, determined using actuarial valuation techniques. Actuarial gains and losses in respect of post employment and other long term benefits are charged to the statement of profit and loss.

(h) Foreign Currency Transactions :

Transactions in foreign currency are recorded at the exchange rate prevailing on the date of transaction. Exchange difference arising on foreign currency transactions settled during the year are recognised in the statement of profit and loss for the year.

Monetary items in the form of Current/Non Current Assets and Current/Non Current Liabilities in foreign currency, outstanding at the end of the year, are converted in Indian Currency at the appropriate rate of exchange prevailing on the date of Balance Sheet and resultant gain or loss is accounted during the year.

(i) Taxation :

(1) Current Tax: Provision for current income tax is made on the taxable income using the applicable tax rates and tax laws.

(2) Deferred Tax: Deferred tax arising on account of timing differences and which are capable of reversal in one or more subsequent periods is recognised using the tax rates and tax laws that have been enacted or substantively enacted. Deferred tax assets are not recognised unless there is virtual certainty with respect to the reversal of the same in future years.

(3) Minimum Alternative Tax : Minimum Alternative Tax (MAT) credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period.

(j) Provisions, Contingent Liabilities and Contingent Assets :

Provisions are recognized when the Company has a present obligation as a result of past events; it is more likely than not, that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. A contingent liability is disclosed where there is a possible obligation or a present obligation that may, but probably will not, require an outflow. Contingent assets are neither recognized nor disclosed in the financial statements.

(k) Segment Accounting:

The segment of the Company has been identified in line with the Accounting Standard 17 on "Segment Reporting" issued by the Institute of Chartered Accountants of India. However, during the year under review the Company was operating in single segment of Power Electronics business, hence Segment reporting is not applicable.

(I) Impairment of Assets

The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal/external factors. An asset is treated as impaired when the carrying cost of the asset exceeds the recoverable amount. An impairment loss is charged to the statement of profit and loss in the year in which an asset is identified as impaired. An impairment loss recognised in prior accounting periods is reversed if there has been change in the estimate of the recoverable amount.


Mar 31, 2011

(i) Basis of Preparation of Financial Statements

a. The financial statements have been prepared and presented under the historical cost convention on accrual basis of accounting to comply with the accounting standards prescribed in the Companies (Accounting Standards) Rules, 2006 and with the relevant provisions of the Companies Act, 1956.

b. The preparation of financial statements is in conformity with Generally Accepted Accounting Principles (GAAP) in India and requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent liabilities on the date of financial statements.

(ii) Fixed Assets :

a. Fixed assets are carried at the cost of acquisition or construction, less accumulated depreciation and impairment (except for Land, Building and Machinery of erstwhile Orient Semiconductors Private Limited which have been revalued on 30th May, 1986).The cost of fixed assets includes taxes (other than those subsequently recoverable from tax authorities), duties, freight and any other costs directly attributable for bringing the asset to its working condition and other indirect costs specifically attributable to the acquisition or construction of the respective assets. Interest on borrowed funds directly attributable to the qualifying assets up to the period such assets are put to use, is included in the cost.

b. Depreciation for the year is provided on written down value method, at the rates specified under Schedule XIV to the Companies Act, 1956, as amended vide Notification No. GSR 756 (E) dt.16.12.1993 except for depreciation on the fixed assets acquired on amalgamation, which is provided on straight line method basis in accordance with section 205(2)(b) of the Companies Act, 1956.

c. Depreciation on revalued assets has been adjusted against Capital Reserves on Revaluation of Assets.

d. Individual fixed assets having cost of Rs. 5,000/- or below have been written off during the year. (iii) Borrowing Costs: Borrowing costs are charged to revenue.

(iv) Inventories:

a. Raw materials, stores and spares are valued at cost on weighted average basis. Stock in the case of work in process is determined on the basis of cost of manufacturing, which includes material, labour, and overhead cost on an average basis as certified by the management. There has been no significant variation in the method of valuation during the year.

b. Finished Goods are valued at lower of cost or net realisable value.

c. The method of valuation is in line with Accounting Standard 2 regarding Valuation of Inventory, issued by the Institute of Chartered Accountants of India.

(v) Sundry Debtors, Loans and Advances :

All sundry debtors, loans and advances are considered good and realisable at the value stated in the normal course of business, though, unconfirmed except in cases where legal proceedings for recovery have been initiated. Adequate provision is made for debts considered doubtful.

(vi) Sales and Service :

Sales are recognised when goods are supplied and are net of trade discounts, rebates, sales tax and excise duty. Sales tax liability and set off are accounted on mercantile basis.

(vii) Interest Income :

Interest income is accounted for on accrual basis. (viii) Retirement Benefits :

Defined Contribution Plans

a. Provident Fund

In accordance with law, all the eligible employees of the Company are entitled to receive benefits under the provident fund. The Company’s contribution to provident fund is charged to profit and loss account each year.

b. Leave Encashment

The Company provides for the leave encashment based on actuarial valuation at the balance sheet date, determined every year.

c. Gratuity

The Company provides for the Gratuity liability on actuarial valuation at the balance sheet date and contributes to Life Insurance Corporation (LIC) under LIC’s Group Gratuity Scheme determined every year using the projected Unit Credit Method. The Company has created a Trust administered by the trustees and managed under the Scheme of Group Gratuity with LIC.

(ix) Foreign Currency Transactions:

Transactions in foreign currency are recorded at the exchange rate prevailing on the date of transaction.

Exchange difference arising on foreign currency transactions settled during the year are recognised in the Profit and Loss account for the year.

Monetary items in the form of Current Assets and Current liabilities in foreign currency, outstanding at the end of the year, are converted in Indian Currency at the appropriate rate of exchange prevailing on the date of Balance Sheet and resultant gain or loss is accounted during the year.

(x) Taxation :

(a) Tax expense comprises of current tax (i.e. amount of tax for the period determined in accordance with applicable taxation laws), and deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the period).

(b) The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognised using the tax rates that have been enacted or substantively enacted by the Balance Sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realized in future; however, where there is unabsorbed depreciation or carry forward loss under applicable taxation laws, deferred tax assets are recognised only if there is a virtual certainty of realisation of such assets. Deferred tax assets are reviewed as at each Balance Sheet date to reassess realisation.

(xi) Provisions, Contingent Liabilities and Contingent Assets :

Provisions are recognized only when there exists a present obligation as a result of past events that probably requires an outflow of resources and a reliable estimate can be made of the amount of obligation. A disclosure for contingent liability is made when there is :

(a) Possible obligation which will be confirmed by future events not wholly within the control of the Company or

(b) Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or where a reliable estimate of the amount of the obligation cannot be made. Contingent assets are not recognized in the financial statements since this may result in the recognition of income that may never be realized.

(xii) Segment Accounting:

The segment of the Company has been identified in line with the Accounting Standard 17 on "Segment Reporting” issued by the Institute of Chartered Accountants of India. However during the year under review the company was operating in single segment of Semi-conductors manufacturing business, hence Segment reporting is not applicable.

(xiii) Impairment of Assets

The Company makes an assessment of any indicators (based on internal or external factors) that may lead to impairment of assets on an annual basis. An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value, which is higher of net selling price and value in use. Any impairment loss is charged to profit and loss account in the year in which it is identified as impaired.


Mar 31, 2010

(i) Basis of Preparation of Financial Statements

a. The financial statements have been prepared under the historical cost convention in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 1956, as adopted consistently by the Company, except for certain fixed assets, which have been revalued in the past.

b. The Company generally follows mercantile system of accounting and recognises all significant items of income and expenditure on accrual basis.

(ii) Fixed Assets :

a. Fixed assets are stated at cost except land, building and machineries at Baska, (other than Land, Bldg, Machinery, except those of erstwhile Orient Semiconductors Pvt. Ltd., ) which had been revalued on 30th May, 1986.

b. Depreciation:

Depreciation for the year is provided on written down value method, at the rates specified under Schedule XIV of the Companies Act, 1956, as amended vide Notification No. GSR 756 (E) dt. 16.12.1993 except for depreciation on the fixed assets acquired on amalgamation, which is provided on straight line method basis in accordance with section 205(2)(b) of the Companies Act, 1956.

Depreciation on revalued assets has been adjusted against Capital Reserves on Revaluation of Assets. Individual fixed assets having cost of Rs.5,000/- or below have been written off during the year.

(iii) Borrowing Costs: Borrowing costs are charged to revenue.

(iv) Inventories :

a. Raw materials, stores and spares are valued at cost on first in first out method basis. Stock in the case of work in process is determined on the basis of cost of manufacturing, which includes material, labour, and overhead cost on an average basis as certified by the management. There has been no significant variation in the method of valuation during the year.

b. Finished Goods are valued at lower of cost or net realisable value.

c. The method of valuation is in line with Accounting Standard 2 regarding Valuation of Inventory, issued by the Institute of Chartered Accountants of India.

(v) Sundry Debtors, Loans and Advances :

All sundry debtors, loans and advances are considered good and realisable at the value stated in the normal course of business though unconfirmed excepting cases where legal proceedings for recovery have been initiated.

(vi) Sales and Service :

Sales are recognised when goods are supplied and are net of trade discounts, rebates, sales tax and excise duty. Sales tax liability and set off are accounted on mercantile basis.

(vii) Interest Income :

Interest income is accounted for on accrual basis.

(viii) Retirement Benefits :

(also refer note no.2(v) below)

Defined Contribution Plans

a. Provident Fund

In accordance with law, all the eligible employees of the Company are entitled to receive benefits under the provident fund. The Companys contribution to provident fund is charged to profit and loss account each year.

b. Leave Encashment

The Company provides for the leave encashment based on actuarial valuation at the balance sheet date determined every year by Life Insurance Corporation of India (LIC).

c. Gratuity

The Company provides for the gratuity liability on actuarial valuation at the balance sheet date and contributes to Life Insurance Corporation(LIC) under LICs Group Gratuity Scheme determined every year using the projected Unit Credit Method. The Company has created a Trust administered by the trustees and managed under the Scheme of Group Gratuity with LIC.

(ix) Foreign Currency Transactions:

a. Transaction in Foreign Currencies are recognized at the original rate of exchange in force at the time of occurrence of transactions.

b. Transactions in foreign currency are accounted for at the rates prevailing on the date of transaction. Monetary items denominated in foreign currencies at the year end are translated at the relevant exchange rates prevailing at the year end and are recognized in the Profit and Loss account and reflected in the Balance Sheet.

(x) Taxation :

a. Provision for Income Tax is made on the basis of taxable income for the current accounting year in accordance with the Income Tax Act, 1961 and the Rules framed there under.

b. Deferred Tax asset/liability is recognised at the applicable rate of tax on the basis of timing differences between book profits and taxable income.

(xi) Provisions, Contingent Liabilities and Contingent Assets :

Provisions are recognized only when there is a present obligation as a result of past events and when a reliable estimate of the amount of obligation can be made. Contingent liability is disclosed for

a. possible obligation which will be confirmed by future events not wholly within the control of the Company or

b. Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or where a reliable estimate of the amount of the obligation cannot be made. Contingent assets are not recognized in the financial statements since this may result in the recognition of income that may never be realized.

(xii) Segment Accounting :

The segment of the Company has been identified in line with the Accounting Standard 17 on "Segment Reporting" issued by The Institute of Chartered Accountants of India. However, during the year under review the company was operating in single segment of manufacturing Power Semi-conductors related business, hence Segment reporting is not applicable.

(xiii) Impairment of Assets :

The carrying amounts of assets are reviewed at each Balance Sheet date to determine whether there is any indication of impairment of the carrying amounts of the Companys fixed assets. An impairment loss is recognized whenever the carrying amount of the asset exceeds the recoverable amount, if any indication of impairment exists.

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