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Accounting Policies of Salzer Electronics Ltd. Company

Mar 31, 2014

(a) Basis of preparation of financial statements

The financial statements are prepared under the historical cost conception, on accrual basis of accounting, and comply with the Accounting Standards prescribed by the Central Government, in consultation with National Advisory Committee on Accounting Standards, under the Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act, 1956, (''the Act'') to the extent applicable. The financial statements are presented in Indian rupees rounded off to the nearest rupee.

(b) Use of estimates:

The preparation of financial statements in conformity with Generally Accepted Accounting Principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent liabilities as at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Any revision of accounting estimates is recognized prospectively in current and future period.

(c) Fixed assets:

(i) Tangible:

Fixed assets are stated at historical cost less accumulated depreciation and impairment losses if any and net of Cenvat / Value Added Tax. Cost includes all attributable expenses in bringing the assets to its working condition. Net changes on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the fixed assets are capitalized.

(ii) Intangible

Software development expenditure of capital nature are shown as intangible assets. They are stated at cost of acquisition less depreciation.

(d) Impairment:

The carrying amount of asset is reviewed at each balance sheet date if there is any indication of impairment based on internal/ external factors, an impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount.

(e) Depreciation:

Depreciation on fixed assets other than Wind Mill is provided on straight-line method in accordance with Schedule XIV of the Companies Act, 1956. Depreciation on Wind Mills are provided on WDV method at the rate specified in Schedule XIV In respect of additions made during the year, depreciation is charged on pro-rata basis from the month of addition.

(f) Investments:

Long term investments are stated at cost, less provision for other than temporary diminution in value. Current investments, except for current maturities of long term investments are stated at the lower of cost and fair value.

The investments made in M/s. Salzer Global Services LLC, USA (SGS) is strategically made to keep the furtherance of market share in the international markets particularly USA and Canada, and the management feels that the company''s investments in SGS will provide returns on the long run and hence the investment has been stated at cost.

(g) Inventories:

(i) Raw materials including consumables and stores & spares are valued at cost. The cost is determined on the basis of FIFO method.

(ii) Work-in-process is valued at cost of materials and labour together with relevant factory overheads. The cost of work in progress is determined on the basis of weighted average method.

(iii) The finished goods are valued at cost inclusive of excise duty (or) net realizable value whichever is less.

(h) Research and Development:

Revenue expenditure on Research and Development is charged to the Profit and Loss Account and Capital Expenditure is added to the cost of fixed assets.

(i) Foreign Currency Transactions:

a) Transactions in foreign currency are recorded on initial recognition at the exchange rate prevailing at the time of the transaction.

b) Monetary items (i.e. receivables, payables, loans, etc.) denominated in foreign currency are reported using the closing exchange rate on each balance sheet date.

c) The exchange difference arising on the settlement of monetary items on reporting these items at rates different from rates at which these were initially recorded / reported in previous financial statements are recognized as income/expense in the period in which they arise.

(j) Taxation:

1. Current Tax:

Provision for taxation has been made on assessable profits of the Company as determined Under the Income Tax Act, 1961.

2. Deferred Tax:

In terms of AS.22, the deferred tax for timing differences between the book and tax profit arising out of capital expenditure on research and development, depreciation and provisions for the year is accounted by using the tax rates and laws that have been in force as of the Balance Sheet date.

(k) Revenue Recognition:

i. Revenue in respect of sale of products is recognized at the point of despatch to customers.

ii. Sales comprise of value of sale of goods (Net of returns) excluding Sales Tax and Excise Duty.

iii. Revenue in respect of investments is recognized as and when these incomes are ascertained and quantified.

iv. Income from Services is recognized as and when the services are rendered.

V Export benefits are recognized in the profit and loss account when the right to receive credit as per the terms of the entitlement is established in respect of exports made.

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

Vii. Lease income under operating lease is recognized in Profit and Loss Account on the basis of accrual of income as per terms of the agreement.

(l) Employees Benefits:

1. Defined contribution plans:

The Company makes contribution towards employees'' provident fund and employees'' state insurance plan scheme.

2. Defined benefit plan (gratuity):

The employees'' gratuity scheme is a defined benefit plan. The Company has taken Group Gratuity Policies with the Life Insurance Corporation of India (''LIC'') for future payment of gratuities. The present value of the obligation under such defined benefit plan is determined at each Balance Sheet date based on an actuarial valuation carried out by an independent actuary using the projected unit credit method. Actuarial gains and losses and past service costs are recognized immediately in the Profit and Loss account.

3. Pension & Leave Salaries:

Pension:

The scheme is discretionary in nature. The Company operates a funded pension defined benefit scheme for qualifying employees. The scheme is funded with LIC of India - Pension and Group scheme.

Leave Salaries:

No provision has been made for leave salaries as the Company does not have any leave encashment scheme and the same is at the discretion of management.

(m) ESOS:

In respect of Employees Stock Options, the excess of market price on the date of grant over the exercise price is recognized as deferred employees compensation cost and amortized over the vesting / exercise period.

(n) Earnings Per Share (EPS):

The basic EPS is computed by dividing the net profit attributable to the equity shareholders for the year by the weighted average number of equity shares outstanding during the year.

Diluted EPS is computed using the weighted average number of equity and dilutive equity equivalent shares outstanding during the year except where the results would be anti dilutive.

(o) Borrowing Costs:

Borrowing costs, which are directly attributable to the acquisition / constructions of fixed assets, till the time such assets are ready for intended use, are capitalized as part of the assets. Other borrowing costs are recognized as an expense in the year in which they are incurred.

(p) Leases:

Lease income is treated as operating lease in accordance with AS 19 of ICAI and the income is recognized on accrual basis as per the terms of agreement with Municipal Corporation.

Since the income has the character of fluctuations and not pre determined, straight line basis of adopting the income is not possible.

(q) Provisions, contingent liabilities and contingent assets:

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

A disclosure for a contingent liability is made when there is a possible or present obligation that may, but probably will not require an outflow of resources. When there is a possible obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

(r) Segment Reporting:

Based on the guiding principles given in Accounting Standards on "Segment Reporting (AS-17) issued by the ICAI and on the basis of Management Certification, the Company''s primary business segment is Electrical installation products. As the Company''s business activity falls within a single primary business segment, the disclosure requirements of AS-17 in this regard does not arise.

(s) Consolidation of accounts (AS23):

The company has made investments in three other bodies corporate. The management feels, as these investments are being strategic in nature and the company has no control or significant influence in the financial / operating policies and in decisions of these investee companies, the disclosure requirements of AS23 in this regard does not arise.

(t) Cash and Cash Equivalents:

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

Pursuant to the decision of the shareholders at their meeting held on 11.08.2012, the company has established "Salzer Electronics Limited Employees Stock Option Scheme 2012-13 (Salzer ES0S-2012-13) and the Scheme is being administered by the Employees Compensation Committee" of the Board of Directors. Since the vesting period runs over two financial years (2013-14 & 2014-15) and the employees have not yet exercised their right to vest on option till 31.03.2014, there is no impact on the financials of the company during the relevant financial year 2013-14 and hence the same has not been dealt with the accounts. The same will be suitably dealt with in the accounts relating to the financial year 2014-15, being the relevant financial year, wherein the vesting date falls and attains finality.


Mar 31, 2013

(a) Basis of preparation of financial statements

The financial statements are prepared under the historical cost conception, on accrual basis of accounting, and comply with the Accounting Standards prescribed by the Central Government, in consultation with National Advisory Committee on Accounting Standards, under the Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act, 1956, (''the Act'') to the extent applicable. The financial statements are presented in Indian rupees rounded off to the nearest rupee.

(b) Use of estimates:

The preparation of financial statements in conformity with Generally Accepted Accounting Principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent liabilities as at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Any revision of accounting estimates is recognized prospectively in current and future period.

(c) Fixed assets:

(i) Tangible:

Fixed assets are stated at historical cost less accumulated depreciation and impairment losses if any and net of Cenvat / Value Added Tax. Cost includes all attributable expenses in bringing the assets to its working condition. Net changes on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the fixed assets are capitalized.

(ii) Intangible

Software development expenditure of capital nature are shown as intangible assets. They are stated at cost of acquisition less depreciation.

(d) Impairment:

The carrying amount of asset is reviewed at each balance sheet date if there is any indication of impairment based on internal/ external factors, an impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount.

(e) Depreciation:

Depreciation on fixed assets other than Wind Mill is provided on straight-line method in accordance with Schedule XIV of the Companies Act, 1956. Depreciation on Wind Mills are provided on WDV method at the rate specified in Schedule XIV. In respect of additions made during the year, depreciation is charged on pro-rata basis from the month of addition.

(f) Investments:

Long term investments are stated at cost, less provision for other than temporary diminution in value. Current investments, except for current maturities of long term investments are stated at the lower of costand fairvalue.

The investments made in M/s.Salzer Global Services LLC, USA (SGS) is strategically made to keep the furtherance of market share in the international markets particularly USA and Canada, and the management feels that the company''s investments in SGS will provide returns on the long run and hence the investment has been stated at cost.

(g) Inventories:

i) Raw materials including consumables and stores & spares are valued at cost. The cost is determined on the basis of FIFO method.

ii) Work-in-process is valued at cost of materials and labour together with relevant factory overheads. The cost of work in progress is determined on the basis of weighted average method.

iii) The finished goods are valued at cost inclusive of excise duty (or) net realizable value whichever is less.

(h) Research and Development:

Revenue expenditure on Research and Development is charged to the Profit and Loss Account and Capital Expenditure is added to the cost of fixed assets.

(i) Foreign Currency Transactions:

i) Transactions in foreign currency are recorded on initial recognition at the exchange rate prevailing at the time of the transaction.

ii) Monetary items (i.e. receivables, payables, loans, etc.) denominated in foreign currency are reported using the closing exchange rate on each balance sheet date.

iii) The exchange difference arising on the settlement of monetary items on reporting these items at rates different from rates at which these were initially recorded / reported in previous financial statements are recognized as income/expense in the period in which they arise.

(j) Taxation:

1. Current Tax:

Provision for taxation has been made on assessable profits of the Company as determined Under the Income Tax Act, 1961.

2. Deferred Tax:

In terms of AS.22, the deferred tax for timing differences between the book and tax profit arising out of capital expenditure on research and development, depreciation and provisions for the year is accounted by using the tax rates and laws that have been in force as of the Balance Sheet date.

(k) Revenue Recognition:

i) Revenue in respect of sale of products is recognized at the point of despatch to customers.

ii) Sales comprise of value of sale of goods (Net of returns) excluding Sales Tax and Excise Duty.

iii) Revenue in respect of investments is recognized as and when these incomes are ascertained and quantified.

iv) Income from Services is recognized as and when the services are rendered.

v) Export benefits are recognized in the profit and loss account when the right to receive credit as perthe terms of the entitlement is established in respect of exports made.

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

vii) Lease income under operating lease is recognized in Profit and Loss Account on the basis of accrual of income as per terms of the agreement.

(I) Employees Benefits:

1. Defined contribution plans:

The Company makes contribution towards employees'' provident fund and employees'' state insurance plan scheme.

2. Defined benefit plan (gratuity):

The employees'' gratuity scheme is a defined benefit plan. The Company has taken Group Gratuity Policies with the Life Insurance Corporation of India (''LIC'') for future payment of gratuities. The present value of the obligation under such defined benefit plan is determined at each Balance Sheet date based on an actuarial valuation carried out by an independent actuary using the projected unit credit method. Actuarial gains and losses and past service costs are recognized immediately in the Profit and Loss account.

3. Pension & Leave Salaries:

Pension:

The scheme is discretionary in nature. The Company operates a funded pension defined benefit scheme for qualifying employees. The scheme is funded with LIC of India Pension and Group scheme.

Leave Salaries:

No provision has been made for leave salaries as the Company does not have any leave encashment scheme and the same is at the discretion of management.

(m) Earnings Per Share (EPS):

The basic EPS is computed by dividing the net profit attributable to the equity shareholders for the year by the weighted average number of equity shares outstanding during the year.

Diluted EPS is computed using the weighted average number of equity and dilutive equity equivalent shares outstanding during the year except where the results would be anti dilutive.

(n) Borrowing Costs

Borrowing costs, which are directly attributable to the acquisition / constructions of fixed assets, till the time such assets are ready for intended use, are capitalized as part of the assets. Other borrowing costs are recognized as an expense in the year in which they are incurred.

(o) Leases:

Lease income is treated as operating lease in accordance with AS 19 of ICAI and the income is recognized on accrual basis as per the terms of agreement with Municipal Corporation.

Since the income has the character of fluctuations and not pre determined, straight line basis of adopting the income is not possible.

(p) Provisions, contingent liabilities and contingent assets

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

A disclosure for a contingent liability is made when there is a possible or present obligation that may, but probably will not require an outflow of resources. When there is a possible obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

(q) Segment Reporting:

Based on the guiding principles given in Accounting Standards on "Segment Reporting (AS-17) issued by the ICAI and on the basis of Management Certification, the Company''s primary business segment is Electrical installation products. As the Company''s business activity falls within a single primary business segment, the disclosure requirements of AS-17 in this regard does not arise.

(r) Consolidation of accounts (AS23)

The company has made investments in three other bodies corporate. The management feels, as these investments are being strategic in nature and the company has no control or significant influence in the financial / operating policies and in decisions of these investee companies, the disclosure requirements of AS23 in this regard does not arise.

(s) Cash and Cash Equivalents:

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


Mar 31, 2012

(a) Basis of preparation of financial statements

The financial statements are prepared under the historical cost conception, on the accrual basis of accounting, and comply with the Accounting Standards prescribed by the Central Government, in consultation with National Advisory Committee on Accounting Standards, under the Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act, 1956, ('the Act') to the extent applicable. The financial statements are presented in Indian rupees rounded off to the nearest rupee.

(b)Presentation and disclosure of financial statements:

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

(c) Use of estimates

The preparation of financial statements in conformity with Generally Accepted Accounting Principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent liabilities as at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Any revision of accounting estimates is recognized prospectively in current and future period.

(d) Fixed assets

Fixed assets are stated at historical cost less accumulated depreciation and impairment losses if any and net of Cenvat / Value Added Tax. Cost includes all attributable expenses in bringing the assets to its working condition. Net changes on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the fixed assets are capitalized.

(e) Impairment

The carrying amount of asset is reviewed at each balance sheet date if there is any indication of impairment based on internal/ external factors, an impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount.

(f) Depreciation:

Depreciation on fixed assets other than Wind Mill is provided on straight-line method in accordance with Schedule XIV of the Companies Act, 1956. Depreciation on Wind Mills are provided on WDV method at the rate specified in Schedule XIV. In respect of additions made during the year, depreciation is charged on pro-rata basis from the month of addition.

(g) Investments:

Long term investments are stated at cost, less provision for other than temporary diminution in value. Current investments, except for current maturities of long term investments are stated at the lower of cost and fair value.

The investments made in M/s.Salzer Global Services LLC, USA (SGS) is strategically made to keep the furtherance of market share in the international markets particularly USA and Canada, and the management feels that the company's investments in SGS will provide returns on the long run and hence the investment has been stated at cost.

(h) Inventories:

(i) Raw materials including consumables and stores & spares are valued at cost. The cost is determined on the basis of FIFO method.

(ii) Work-in-process is valued at cost of materials and labour together with relevant factory overheads. The cost of work in progress is determined on the basis of weighted average method.

(iii) The finished goods are valued at cost inclusive of excise duty (or) net realizable value whichever is less.

(i) Research and Development

Revenue expenditure on Research and Development is charged to the Profit and Loss Account and Capital Expenditure is added to the cost of fixed assets.

(j) Foreign Currency Transactions

a) Transactions in foreign currency are recorded on initial recognition at the exchange rate prevailing at the time of the transaction.

b) Monetary items (i.e. receivables, payables, loans, etc.) denominated in foreign currency are reported using the closing exchange rate on each balance sheet date.

c) The exchange difference arising on the settlement of monetary items on reporting these items at rates different from rates at which these were initially recorded / reported in previous financial statements are recognized as income/expense in the period in which they arise.

(k) Taxation

1. Current Tax

Provision for taxation has been made on assessable profits of the Company as determined Under the Income Tax Act, 1961.

2. Deferred Tax

In terms of AS.22, the deferred tax for timing differences between the book and tax profit arising out of capital expenditure on research and development, depreciation and provisions for the year is accounted by using the tax rates and laws that have been in force as of the Balance Sheet date.

(l) Revenue Recognition

i. Revenue in respect of sale of products is recognized at the point of despatch to customers.

ii. Sales comprise of value of sale of goods (Net of returns) excluding Sales Tax and Excise Duty.

iii. Revenue in respect of investments is recognized as and when these incomes are ascertained and quantified.

iv. Income from Services is recognized as and when the services are rendered.

v. Export benefits are recognized in the profit and loss account when the right to receive credit as per the terms of the entitlement is established in respect of exports made.

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

vii. Lease income under operating lease is recognized in Profit and Loss Account on the basis of accrual of income as per terms of the agreement.

(m) Employees Benefits

1. Defined contribution plans

The Company makes contribution towards employees' provident fund and employees' state insurance plan scheme.

2. Defined benefit plan (gratuity)

The employees' gratuity scheme is a defined benefit plan. The Company has taken Group Gratuity Policies with the Life Insurance Corporation of India ('LIC') for future payment of gratuities. The present value of the obligation under such defined benefit plan is determined at each Balance Sheet date based on an actuarial valuation carried out by an independent actuary using the projected unit credit method. Actuarial gains and losses and past service costs are recognized immediately in the Profit and Loss account.

3. Pension & Leave Salaries

Pension

The scheme is discretionary in nature. The Company operates a funded pension defined benefit scheme for qualifying employees. The scheme is funded with LIC of India - Pension and Group scheme.

Leave Salaries

No provision has been made for leave salaries as the Company does not have any leave encashment scheme and the same is at the discretion of management.

(n) Earnings Per Share (EPS)

The basic EPS is computed by dividing the net profit attributable to the equity shareholders for the year by the weighted average number of equity shares outstanding during the year.

Diluted EPS is computed using the weighted average number of equity and dilutive equity equivalent shares outstanding during the year except where the results would be anti dilutive.

(o) Borrowing Costs

Borrowing costs, which are directly attributable to the acquisition / constructions of fixed assets, till the time such assets are ready for intended use, are capitalized as part of the assets. Other borrowing costs are recognized as an expense in the year in which they are incurred.

(p)Leases

Lease income is treated as operating lease in accordance with AS 19 of ICAI and the income is recognized on accrual basis as per the terms of agreement with Municipal Corporation.

Since the income has the character of fluctuations and not pre determined, straight line basis of adopting the income is not possible.

(q) Provisions, contingent liabilities and contingent assets

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

A disclosure for a contingent liability is made when there is a possible or present obligation that may, but probably will not require an outflow of resources. When there is a possible obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

( r) Segment Reporting

Based on the guiding principles given in Accounting Standards on "Segment Reporting (AS-17) issued by the ICAI and on the basis of Management Certification, the Company's primary business segment is Electrical installation products. As the Company's business activity falls within a single primary business segment, the disclosure requirements of AS-17 in this regard does not arise.

(s) Consolidation of accounts (AS23)

The company has made investments in three other bodies corporate. The management feels, as these investments are being strategic in nature and the company has no control or significant influence in the financial / operating policies and in decisions of these investee companies, the disclosure requirements of AS23 in this regard does not arise.

(t) Cash and Cash Equivalents

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


Mar 31, 2011

(a) Basis of preparation of financial statements

The financial statements are prepared under the historical cost conception, on the accrual basis of accounting, and comply with the Accounting Standards prescribed by the Central Government, in consultation with National Advisory Committee on Accounting Standards, under the Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act, 1956, (''the Act'') to the extent applicable. The financial statements are presented in Indian rupees rounded off to the nearest rupee.

(b) Use of estimates

The preparation of financial statements in conformity with Generally Accepted Accounting Principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent liabilities as at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Any revision of accounting estimates is recognized prospectively in current and future period.

(c) Fixed assets:

Fixed assets are stated at historical cost less accumulated depreciation and impairment losses if any and net of Cenvat / Value Added Tax. Cost includes all attributable expenses in bringing the assets to its working condition.

(d) Impairment

The carrying amount of asset is reviewed at each balance sheet date if there is any indication of impairment based on internal/ external factors, an impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount.

(e) Depreciation:

Depreciation on fixed assets other than Wind Mill is provided on straight-line method in accordance with Schedule XIV of the Companies Act, 1956. Depreciation on Wind Mills are provided on WDV method at the rate specified in Schedule XIV. In respect of additions made during the year, depreciation is charged on pro-rata basis from the month of addition.

(f) Investments:

Long term investments are valued at cost less diminution in value, if any. Short Term investments are valued at cost/ net realisable value whichever is less. Provisions for diminution in the value of long-term investments are made only if such a decline is other than temporary in the opinion of the management.

The investments made in M/s.Salzer Global Services LLC, USA (SGS) is strategically made to keep the furtherance of market share in the international markets particularly USA and Canada, where the company''s products have been well received and also to provide proximity of contacts at these markets. During its operations the SGS has taken all efforts to further strengthen the brand image of the company in these markets and also presently holding controllable interest in an Incorporate company viz., M/s.Global Technical Talent Inc, USA providing IT and IT enabled services in the areas of Human Resources for the IT sector in USA & Canada. The economic and financial recessionary conditions prevailing in USA for the last couple of years, resulted in IT slowdown with resultant impact on the financials of these companies. Now the economy is in the process of recovery progressively & M/s.SGS is confident that in addition to brand building of Salzer, the IT and IT enabled services will also provide good potentials in the coming years and will generate profit. Moreover, as per the international experience, such companies have a long gestation period. As such the management feels that the company''s investments in SGS will provide returns on the long run and hence the investment has been stated at cost.

(g) Inventories:

(i) Raw materials including consumables and stores & spares are valued at cost. The cost is determined on the basis of FIFO method.

(ii) Work-in-process is valued at cost of materials and labour together with relevant factory overheads. The cost of work in process is determined on the basis of weighted average method.

(iii) The finished goods are valued at cost inclusive of excise duty (or) net realizable value whichever is less.

(h) Research and Development:

Revenue expenditure on Research and Development is charged to the Profit and Loss Account and Capital Expenditure is added to the cost of fixed assets. The capital expenditure on R&D incurred during the year by the Company was Rs.225.34 lakhs and shown as additions to fixed assets of the Company.

(i) Foreign Currency Transactions:

Transactions in foreign currency are recorded on initial recognition at the exchange rate prevailing at the time of the transaction.

b. Monetary items (i.e. receivables, payables, loans, etc.) denominated in foreign currency are reported using the closing exchange rate on each balance sheet date.

c. The exchange difference arising on the settlement of monetary items on reporting these items at rates different from rates at which these were initially recorded / reported in previous financial statements are recognized as income/expense in the period in which they arise.

(j) Taxation:

1. Current Tax:

Provision for taxation has been made on assessable profits of the Company as determined Under the Income Tax Act, 1961.

2. Deferred Tax:

In terms of AS.22, the deferred tax for timing differences between the book and tax profit arising out of capital expenditure on research and development, depreciation and provisions for the year is accounted by using the tax rates and laws that have been in force as of the Balance Sheet date.

Deferred Tax liability as at 31.03.2011

Timing difference on a/c of:

Depreciation - Rs. 59.94 lakhs

Research & Development - Rs. 74.86 lakhs

Provisions - Rs. 0.84 lakhs

Deferred Tax Liability - Rs.135.64 lakhs

(k) Revenue Recognition:

(I) Revenue in respect of sale of products is recognized at the point of despatch to customers.

(ii) Sales comprise of value of sale of goods (Net of returns) excluding Sales Tax and Excise Duty.

(iii) Revenue in respect of investments is recognized as and when these incomes are ascertained and quantified.

(iv) Income from Services is recognized as and when the services are rendered.

(v) Export benefits are recognized in the profit and loss account when the right to receive credit as per the terms of the entitlement is established in respect of exports made.

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

(vii) Lease income under operating lease is recognized in Profit and Loss Account on the basis of accrual of income as per terms of the agreement.

(l) Employees Benefits:

1. Defined contribution plans:

The Company makes contribution towards employees'' provident fund and employees'' state insurance plan scheme. The Company during the year recognized Rs.32.71 lakhs (previous year Rs.26.57 lakhs) as expense towards contribution to Provident Fund and Rs.15.13 lakh (previous year Rs.10.62 lakhs) towards ESI.

2. Defined benefit plan (gratuity):

The employees'' gratuity scheme is a defined benefit plan. The Company has taken Group Gratuity Policies with the Life Insurance Corporation of India ("LIC") for future payment of gratuities. The present value of he obligation under such defined benefit plan is determined at each balance Sheet date based on an actuarial valuation carried out by an independent actuary using the projected unit credit method. Actuarial gains and losses and past service costs are recognized immediately in the Profit and Loss account.

3. Pension & Leave Salaries:

Pension:

The scheme is discretionary in nature. The Company operates a funded pension defined benefit scheme for qualifying employees. The scheme is funded with LIC of India Pension and Group scheme.

Leave Salaries:

No provision has been made for leave salaries as the Company does not have any leave encashment scheme and the same is at the discretion of management.

(m) Earnings Per Share (EPS):

The basic EPS is computed by dividing the net profit attributable to the equity shareholders for the year by the weighted average number of equity shares outstanding during the year.

Diluted EPS is computed using the weighted average number of equity and dilutive equity equivalent shares outstanding during the year except where the results would be anti dilutive.

(n) Borrowing Costs

Borrowing costs, which are directly attributable to the acquisition / constructions of fixed assets, till the time such assets are ready for intended use, are capitalized as part of the assets. Other borrowing costs are recognized as an expense in the year in which they are incurred.

(o) Leases:

Lease income is treated as operating lease in accordance with AS 19 of ICAI and the income is recognized on accrua basis as per the terms of agreement with Municipal

Corporation.

Since the income has the character of fluctuations and not pre determined, straight line basis of adopting the income is not possible.

(p) Provisions, contingent liabilities and contingent assets

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

A disclosure for a contingent liability is made when there is a possible or present obligation that may, but probably will not require an outflow of resources. When there is a possible obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

(q) Segment Reporting:

Based on the guiding principles given in Accounting Standards on "Segment Reporting (AS-17) issued by the ICAI and on the basis of Management Certification, the Company''s primary business segment is Electrical installation products. As the Company''s business activity falls within a single primary business segment, the disclosure requirements of AS-17 in this regard does not arise.

(r) Consolidation of accounts (AS23)

The company has made investments in three other bodies corporate. The management feels, as these investments are being strategic in nature and the company has no control or significant influence in the financial / operating policies and in decisions of these investee companies, these bodies corporate will not come under associate companies.

(s) Cash and Cash Equivalents:

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
















Mar 31, 2010

(A) Basis of preparation of financial statements

The financial statements are prepared under the historical cost conception, on the accrual basis of accounting, and comply with the Accounting Standards prescribed by the Central Government, in consultation with National Advisory Committee on Accounting Standards, under the Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act, 1956, (the Act) to the extent applicable. The financial statements are presented in Indian rupees rounded off to the nearest rupee.

(b) Use of estimates

The preparation of financial statements in conformity with Generally Accepted Accounting Principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent liabilities as at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Any revision of accounting estimates is recognized prospectively in current and future period.

(c) Fixed assets:

Fixed assets are stated at historical cost less accumulated depreciation and impairment losses if any and net of Cenvat / Value Added Tax. Cost includes all attributable expenses in bringing the assets to its working condition.

(d) Impairment

The carrying amount of asset is reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors, an impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount.

(e) Depreciation:

Depreciation on fixed assets other than Wind Mill is provided on straight-line method in accordance with Schedule XIV of the Companies Act, 1956. Depreciation on Wind Mills are provided on WDV method at the rate specified in Schedule XIV. In respect of additions made during the year, depreciation is charged on pro-rata basis from the month of addition.

(f) Investments:

Long term investments are valued at cost less diminution in value, if any. Short Term investments . are valued at cost/ net realisable value whichever is less. Provisions for diminution in the value of long- term investments are made only if such a decline is other than temporary in the opinion of the management.

(g) Inventories:

(i) Raw materials including consumables and stores & spares are valued at cost. The cost is determined on the basis of FIFO method.

(ii) Work-in-process is valued at cost of materials and labour together with relevant factory overheads. The cost of work in progress is determined on the basis of weighted average method.

(iii) The finished goods are valued at cost inclusive of excise duty (or) net realizable value whichever is less.

(h) Research and Development:

Revenue expenditure on Research and Development is charged to the Profit and Loss Account and Capital Expenditure is added to the cost of fixed assets. The capital expenditure on R&D incurred during the year by the Company was Rs.281.65 lakhs and shown as additions to fixed assets of the Company.

(i) Foreign Currency Transactions:

a) Transactions in foreign currency are recorded on initial recognition at the exchange rate prevailing atthe time ofthe transaction.

b) Monetary items (i.e. receivables, payables, loans, etc.) denominated in foreign currency are reported using the closing exchange rate on each balance sheet date.

c) The exchange difference arising on the settlement of monetary items on reporting these items at rates different from rates at which these were initially recorded / reported in previous financial statements are recognized as income/expense in the period in which they arise.

(j) Taxation:

1. Current Tax:

Provision for taxation has been made on assessable profits of the Company as determined Underthe IncomeTax Act, 1961.

(k) Revenue Recognition:

i. Revenue in respect of sale of products is recognized at the point of despatch to customers.

ii. Sales comprise of value of sale of goods (Net of returns) excluding Sales Tax and Excise Duty.

iii. Revenue in respect of investments is recognized as and when these incomes are ascertained and quantified.

iv. Income from Services is recognized as and when the services are rendered

v. Export benefits are recognized in the profit and loss account when the right to receive credit as per the terms of the entitlement is established in respect of exports made.

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

vii. Lease income under operating lease is recognized in Profit and Loss Account on the basis of accrual of income as per terms of the agreement.

(l) Employees Benefits:

1. Defined contribution plans:

The Company makes contribution towards employees provident fund and employees state insurance plan scheme. The Company during the year recognized Rs.55.92 lakhs (previous year Rs.52 57 lakhs) as expense towards contribution to Provident Fund and Rs.13.94 lakhs (previous year Rs.14.48 lakhs) towards ESI.

2. Defined benefit plan (gratuity):

The employees gratuity scheme is a defined benefit plan. The Company has taken Group Gratuity Policies with the Life Insurance Corporation of India (LIC) for future payment of gratuities. The present value of the obligation under such defined benefit plan is determined at each Balance Sheet date based on an actuarial valuation carried out by an independent actuary using the projected unit credit method. Actuarial gains and losses and past service costs are recognized immediately in the Profit and Loss account.

3. Pension & Leave Salaries:

Pension:

The scheme is discretionary in nature. The Company operates a funded pension defined benefit scheme for qualifying employees. The scheme is funded with LIC of India - Pension and Group scheme.

Leave Salaries:

No provision has been made for leave salaries as the Company does not have any leave encashment scheme and the same is at the discretion of management.

(m) Earnings Per Share (EPS):

The basic EPS is computed by dividing the net profit attributable to the equity shareholders for the year by the weighted average number of equity shares outstanding during the year.

Diluted EPS is computed using the weighted average number of equity and dilutive equity equivalent shares outstanding during the year except where the results would be anti dilutive.

(n) Borrowing Costs

Borrowing costs, which are directly attributable to the acquisition / constructions of fixed assets, till the time such assets are ready for intended use, are capitalized as part of the assets. Other borrowing costs are recognized as an expense in the year in which they are incurred.

(o) Leases:

Lease income is treated as operating lease in accordance with AS 19 of ICAI and the income is recognized on accrual basis as per the terms of agreement with Municipal Corporation.

Since the income has the character of fluctuations and not pre determined, straight line basis of adopting the income is not possible.

(p) Provisions, contingent liabilities and contingent assets

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

A disclosure for a contingent liability is made when there is a possible or present obligation that may, but probably will not require an outflow of resources. When there is a possible obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

(q) Segment Reporting:

Based on the guiding principles given in Accounting Standards on "Segment Reporting (AS-17) issued by the ICAI and on the basis of Management Certification, the Companys primary business segment is Electrical installation products. As the Companys business activity fails within a single primary business segment, the disclosure requirements of AS-17 in this regard does not arise.

(r) Cash and Cash Equivalents:

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


Mar 31, 2009

(a) Basis of preparation of financial statements

The financial statements are prepared under the historical cost conception, on the accrual basis of accounting, and in accordance with the provisions of the Companies Act, 1956, by applying accounting standards issued by the Institute of Chartered Accountants of India, to the extent applicable.

(b) Use of estimates

The preparation of financial statements in conformity with Generally Accepted Accounting Principles (GAAP) requires management to make estimates and assumptions that effect the reported amounts of assets and liabilities and the disclosures of contingent liabilities as at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Any revision of accounting estimates is recognized prospectively in current and future period.

(c) Fixed assets :

Fixed assets are stated at historical cost less accumulated depreciation. Costs include inward freight, duties, taxes and expenses incidental to acquisition and installation of fixed assets.

Fixed Assets are reviewed for impairment on each Balance Sheet date, in accordance with AS 28 "Impairment of Assets".

(d) Depreciation:

Depreciation on fixed assets other than Wind Mills and Energy Savers are provided on straight-line method in accordance with Schedule XIV of the Companies Act, 1956. Depreciation on Wind Mills are provided on WDV method at the rate specified in Schedule XIV. Depreciation on Energy Saver is provided on Straight line method over the period of lease. In respect of additions made during the year, depreciation is charged on pro-rata basis from the month of addition.

(e) Investments:

Long term investments are valued at cost less diminution in value, if any, short term investments are valued at cost net realisable value whichever is less. Provisions for diminution in the value of long- term investments is made only if such a decline is other than temporary in the opinion of the managements.

(f) Inventories:

(i). Raw materials including consumables and stores & spares are valued at cost including duty on purchase and other costs incurred in bringing the inventories to the present location and condition. The cost is determined on the basis of FIFO method.

(ii). Work-in-process is valued at cost of materials and labour together with relevant factory overheads. The cost of work in progress is determined on the basis of weighted average method.

(iii). The finished goods are valued at cost inclusive of excise duty attributable to the goods lying in bonded area (or) net realizable value whichever is less.

(g) Excise Duty:

Liability for Excise Duty on finished goods stored at Company premises, is accounted as and when they are cleared from the factory premises. No provision is made in the accounts for goods manufactured and lying in Bonded warehouses in the factory premises. Such non-provision on Excise duty on finished goods will have no impact on the profits of the company.

(h) Research and Development:

Revenue expenditure on Research and Development is charged to the Profit and Loss Account and Capital Expenditure is added to the cost of fixed assets. The capital expenditure on R&D incurred during the year by the company was Rs.156.78 lakhs and shown as additions to fixed assets of the Company.

(i) Foreign Currency Transactions:

a) Transactions in foreign currencies are recorded at the original rate of exchange in force at the time of occurrence of transaction.

b) Exchange difference arising on foreign exchange transactions settled during the year (except those arising on borrowings for the acquisition of fixed assets) are recognised as income or expense in the profit and loss account.

c) The amount outstanding payable and receivable in foreign currency as on 31.03.2009 is NIL and Rs.309.59 lakhs respectively.

(j) Taxation:

Provision for taxation has been made on profits in accordance with the income tax laws prevailing for the relevant assessment years. In terms of AS.22, the deferred tax for timing differences between the book and tax profit arising out of capital expenditure on research and development, depreciation and provisions for the year is accounted by using the tax rates and laws that have been in force as of the balance sheet date.

(k) Revenue Recognition:

i. Revenue in respect of sale of products is recognised at the point of despatch to customers.

ii. Sales include all duties and taxes collected and the company has been consistently following the inclusive method for all these years.

iii. Revenue in respect of investments is recognised as and when these incomes are ascertained and quantified.

iv. Lease transaction in respect of energy saver is treated as operating lease in accordance with AS 19 issued by ICAI and accounting treatment and disclosures are given / made as prescribed therein.

(l) Employees Benefits:

1. Defined contribution plans:

The company makes contribution towards employees provident fund and employees state insurance plan scheme. The company during the year recognized Rs.39.89 lakhs (previous year Rs.42.21 lakhs) as expense towards contribution to these plans.

2. Defined benefit plan (gratuity):

The scheme is non-contributing defined benefit plan for qualifying employees. The company has made provision for gratuity on actuarial value, computed by LIC of India. The scheme is funded by LIC. In accordance with the revised Accounting Standard AS-15, the company has provided for gratuity of Rs.7.63 lakhs for the year.

3. Pension & Leave Salaries:

Pension :

The scheme is discretionary in nature. The company operates a funded pension defined benefit scheme for qualifying employees. The scheme is funded with LIC of India - Pension and Group scheme.

Leave Salaries :

No provision has been made for leave salaries as the company does not have any leave encashment scheme and the same is at the discretion of management.

(m) Borrowing Costs

Borrowing costs, which are directly attributable to the acquisition / constructions of fixed assets, till the time such assets are ready for intended use, are capitalized as part of the assets. Other borrowing costs are recognized as an expense in the year in which they are incurred.

(n) Provisions, contingent liabilities and contingent assets

As per the Accounting Standard 29, Provisions, Contingent Liabilities and Contingent Assets, issued by the Institute of Chartered Accountants of India, the company recognizes provisions only when it has a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligations as and when a reliable estimate of the amount of the obligations can be made. Provisions are not discounted to its present value and are determined based on the best estimate required to settle the obligations at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current management estimates.

A disclosure for a contingent liability is made where it is more likely than not that a present obligation or possible obligation would not result in or involve an outflow of the resources. Contingent Assets are neither recognized not disclosed in the Financial Statements.

(o) Segment Reporting :

Based on the guiding principles given in Accounting Standards on "Segment Reporting (AS-17) issued by the ICAI, the companys primary business segment is switches & switchgears. As the companys business activity falls within a single primary business segment, the disclosure requirements of AS-17 in this regard does not arise.

Maximum remuneration payable is 10% of the above profit of Rs.552.46 =Rs.55.25 Lacs

(b) Joint Venture company :

Salzer Global Services LLC, a foreign company, in which the Salzer has 40% of the holding as its investment, has not declared any dividend for the year ended 31.12.2008. SGS is holding 100% control over Global Technical Talent Inc and STT had made a turnover of US$ 21.00 millions (INR 1063.41 million) with a net profit of US$0.12 million (INR 5.94 million) No adjustments are required in the accounts as per AS 27 of Institute of Chartered Accountants of India.

(c) During the year, the following Amalgamations were effected by the Group:

 
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