Home  »  Company  »  Sanghvi Forging & En  »  Quotes  »  Accounting Policy
Enter the first few characters of Company and click 'Go'

Accounting Policies of Sanghvi Forging & Engineering Ltd. Company

Mar 31, 2015

I. Basis for preparation of financial accounting

The financial statement 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 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provision of the Companies Act, 2013 ("the 2013 Act') / Companies Act, 1956 ("the 1956 Act"), as applicable.

These Financial statements are prepared under historical cost conventions on accrual.

II. Use of Estimates

The presentation of financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities on the date of financial statements and the reported amount of revenues and expenses during the year. Difference between the actual result and estimates are recognised in the period in which reason are known / materialized.

III. Fixed Assets and Depreciation /Amortization

A. Tangible Assets

Tangible Fixed Assets are stated at historical cost including borrowing costs expenditure directly attributable to the acquisition of the asset and net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the assets less accumulated depreciation there on and impairment losses if any. Leasehold land having lease of 99 years or more are treated as free hold land only and other leases are amortized over the period of lease.

Subsequent expenditure related to an item of tangible assets are added to its book value only if they increase the future benefits from the existing assets beyond its previously assessed standard of performance.

B. Intangible Assets

Intangible assets are stated at acquisition cost, net of accumulated amortization and accumulated impairment losses, if any. Intangible assets are amortised on a straight line basis over their estimated useful lives.

C. Capital Work in Progress

Cost of fixed assets not ready for use before the balance sheet date is disclosed as capital work in progress.

Depreciation:

The depreciation during the year has been provided on straight line basis as per Schedule II of the Companies act 2013 since the acquisition of respective fixed assets. In earlier years depreciation was provided as per the Schedule XIV of Companies Act 1956. The depreciation on fixed assets is provided on the straight line method considering the useful life and residual value of respective fixed asset.

1 SIGNIFICANT ACCOUNTING POLICIES TO FINANCIAL STATEMENTS

The useful life of assets as adopted by the company as per Old Schedule XIV and New Schedule II of the Companies Act is listed as under:

Perticulars Previous Useful Revised Useful Life Life Leasehold Land 20 20

Building (Factory) 30 30

Building (Residential) 20 60

Building (Fences, Wells, etc) 30 5

Road 30 5 to 10

Plant and Machinery 20 15

Plant and Machinery (Heavy 20 20 to 25* Forging Process Machinery)

Electrically Operated Vehicles 20 8

Electrical Installations 20 10

Laboratory Equipment 20 10

Windmill 20 22

Computers, Server & Networking 6 3 Device

Furniture 15 10

Office equipment 20 5

Vehicles - Four Wheeler 10 8

Vehicles - Two Wheeler 10 10

* Based on an internal technical evaluation made by the company and on past experience , estimated useful life of Plant and machinery listed above best represent the period over which the management expects to use these assets . However the useful lives for these asset is different from that prescribed in schedule II of the Act.

IV. Inventories

Cost of Inventories have been computed to include all cost of Purchases, Cost of Conversion and other costs incurred in bringing the inventories to their present location and condition.

Inventories are valued at lower of cost or net realizable value using the First in First out (FIFO) basis.

V. Revenue Recognition

Sales of products and services are recognised when risk and rewards of ownership at of the products are passed on to the customers, which is generally on dispatch of goods. Sales are inclusive of Excise Duty but excluding sales tax / Value Added Tax and export incentives. Export incentives are accounted on accrual basis. Revenue from job charges is recognised completion of job work. Interest incomes are recognised on time proportion basis.

VI. Cash flow statement

Cash flows are reported using the indirect method whereby profit before tax is adjusted for the effects of the transactions of a non cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from regular revenue generating; financing and investing activities of the company are segregated.

VII. Leases

Rentals applicable to operating leases where substantially all of the benefits and risks of ownership remain with the lessor are charged against profits on straight line basis over the lease period.

VIII. Foreign Currency Transactions, Foriegn Operations and Forward Contracts and Derivatives

(a) Transactions denominated in foreign currencies are recorded at the rate prevailing on date of transaction

(b) In respect of monetary items denominated in foreign currency at the year-end are translated at the year-end rates.

(c) Any income or expenses on account of exchange differences either on settlement or on transactions are recognised in the Profit and Loss Account.

(d) Exchange difference relating to long term foreign currency monetary item to the extent they are used for financing the acquisition of fixed assets are adjusted from the cost of such fixed assets.

(e) Financial statements of foreign operations are treated as integral operations and translated for Assets and liabilities at rates prevailing at the end of the year and Net revenues at the average rate for the year.

(f) Exchange differences arising on such translation are recognised as income or expense of the period in which they arise.

(g) Forward contracts, other than those entered into to hedge foreign currency risk on unexecuted firm commitments or highly probable forecast transactions, are treated as foreign currency transactions and accounted accordingly as per Accounting Standard (AS) 11 The Effects of Changes in Foreign Exchange Rates. Exchange differences arising on such contracts are recognised in the period in which they arise.

IX. Taxes on Income

Provision for taxation comprises of Current Tax and Deferred Tax. Current tax provision has been made after considering reliefs and deduction available under Income Tax Act, 1961. Deferred tax resulting from "timing differences" between taxable and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted as on the balance sheet date. The deferred tax assets is recognised and carried forward only to the extent the assets can be realized in future. However, where there is unabsorbed depreciation or carry forward losses under taxation laws, deferred tax assets are recognised only if there is virtual certainty of realization of such assets. Deferred tax assets are reviewed as at each Balance sheet date.

Minimum Alternate Tax (MAT) Credit: 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 year. In the year in which the Minimum Alternative tax (MAT) credit becomes eligible to be recognised as an asset in accordance with the recommendation contained in Guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the statement of profit and loss and shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income Tax during the specified period.

X. Employee Benefits

(a) The Company's contribution in respect of provident fund is charged to Profit and Loss Account each year on accrual basis.

(b) Short term compensated absences are provided based on past experience.

(c) With respect to gratuity liability, Company contributes to Life Insurance Corporation of India (LIC) under LIC's Group Gratuity policy. Gratuity liability as determined on actuarial basis by the independent valuer. Actuarial gain/ loss is charged to Profit and Loss Account.

XI. Borrowing Costs

(a) Borrowing Cost attributable to acquisition and construction of qualifying assets are capitalized as part of the cost of such assets up to the date when such assets are ready for intended use.

(b) Other borrowing cost is charged to Profit and Loss Account.

XII. Provisions, Contingent Liabilities and Contingent Assets

Provision is recognised only when there is a present obligation as a result of past events and when reliable estimates of the amount of the obligation can be made. Contingent liability is disclosed for:-

(a) Possible Obligations which will be confirmed only 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 reliable estimates of the amount of the obligation cannot be made. Contingent Assets are not recognised in the financial statements since this may result in the recognition of income that may never be realized.

XIII. Impairment of Assets

The Company assesses at each Balance Sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the Profit and Loss Account. If at the Balance Sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount.

XIV. Application of Securities Premium Account

Share issue expenses are charged first against available balance in Securities Premium Account.

XV. Earning Per Share

The Company reports basic and diluted earnings per share in accordance with the Accounting Standard - 20- 'Earning per Share' prescribed by the Companies (Accounting Standard) Rules 2006. Basic Earning per Share is computed by dividing the net profit or loss for the year by the weighted average number of Equity Share outstanding during the year. Diluted earning per share is computed by dividing the net profit or loss for the year by the weighted number of equity shares outstanding during the year as adjusted for the effects of all dilutive potential equity share.

XVI. Investments

Current Investments are carried to lower of cost and Market Value. Non Current(Long Term) 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.

(a) Right to vote , dividend and restriction attached to each class of issued capital to be disclosed.

All the Shareholders whose name is entered in the Registered of Members of the Company shall enjoy the same voting rights and be subject to the same liabilities as all other shareholder of the same class.




Mar 31, 2014

I. Basis of Accounting

These Financial statements are prepared under historical cost conventions on accrual basis in accordance with the Generally Accepted Accounting principles in India and Accounting Standard (AS) as notified under Companies (Accounting Standard) Rules, 2006 (as amended).

II. Use of Estimates

The presentation of Financial Statements in conformity with the generally accepted principles requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of financial statements and the reported amount of revenues and expenses during the year. Difference between the actual result and estimates are recognised in the period in which reason are known / materialised.

III. Fixed Assets and Depreciation / Amortisation

A. Tangible Assets

Tangible Fixed Assets are stated at historical cost including expenditure directly attributable to the acquisition of the asset. Borrowing costs directly attributable to the construction or manufacturing of qualifying assets are capitalised as part of the cost less accumulated depreciation there on and impairment losses if any. Depreciation on tangible assets is provided on Straight Line Method at the rates specified in Schedule XIV the Companies Act, 1956 except Residential building, which is depreciated at 5% of Straight Line Basis. Leasehold land

having lease of 99 years or more are treated as free hold land only and other leases are amortised over the period of lease.

B. Intangible Assets

Intangible assets are stated at the consideration paid for the acquisition less accumulated amortisation. The same are amortised at rate of 16.25% of Straight Line Basis.

C. Capital Work in Progress

Cost of fixed assets not ready for use before the balance sheet date is disclosed as capital work in progress. Advances paid towards the acquisition of fixed assets outstanding as of each balance sheet date is disclosed as capital advance.

IV. Leases

Rentals applicable to operating leases where substantially all of the benefits and risks of ownership remain with the lessor are charged against profits on straight line basis over the lease period.

V. Inventories

Cost of Inventories have been computed to include all cost of Purchases, Cost of Conversion and other costs incurred in bringing the inventories to their present location and condition.

Inventories are valued at lower of cost or net realisable value using the First in First out (FIFO) basis.

VI. Revenue Recognition

Sales of products and services are recognised when risk and rewards of ownership at of the products are passed on to the customers, which is generally on dispatch of goods. Sales are inclusive of Excise Duty but excluding sales tax / Value Added Tax and export incentives. Export incentives are accounted on accrual basis. Revenue from job charges is recognised on dispatch of material and in accordance with terms of job work. Interest incomes are recognised on time proportion basis.

VII. Foreign Currency Transactions

(a) Transactions denominated in foreign currencies are recorded at the rate prevailing on date of transaction.

(b) In respect of monetary items denominated in foreign currency at the year-end are translated at the year-end rates.

(c) Any income or expenses on account of exchange differences either on settlement or on transactions are recognised in the Profit and Loss Account.

(d) Exchange difference relating to long term foreign currency monetary item to the extent they are used for financing the acquisition of fixed assets are added to or subtracted from the cost of such fixed assets.

VIII. Taxes on Income

Provision for taxation comprises of Current Tax and Deferred Tax .Current tax has provision has been made after considering reliefs and deduction available under Income Tax Act, 1961. Deferred tax resulting from "timing differences" between taxable and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted as on the balance sheet date. The deferred tax assets is recognised and carried forward only to the extent the assets can be realised in future. However, where there is unabsorbed depreciation or carry forward losses under taxation laws, deferred tax assets are recognised only if there is virtual certainty of realisation of such assets. Deferred tax assets are reviewed as at each Balance sheet date.

Minimum Alternate Tax (MAT) Credit: 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 year. In the year in which the Minimum Alternative tax (MAT) credit becomes eligible to be recognised as an asset in accordance with the recommendation contained in Guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the statement of profit and loss and shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date

and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income Tax during the specified period.

IX. Employee Benefits

(a) The Company''s contribution in respect of provident fund is charged to Profit and Loss Account each year on accrual basis.

(b) Short term compensated absences are provided based on past experience.

(c) With respect to gratuity liability, Company contributes to Life Insurance Corporation of India (LIC) under LIC''s Group Gratuity policy. Gratuity liability as determined on actuarial basis by the independent valuer. Actuarial gain/loss is charged to Profit and Loss Account.

X. Borrowing Costs

(a) Borrowing Cost attributable to acquisition and construction of qualifying assets are capitalised as part of the cost of such assets up to the date when such assets are ready for intended use. The borrowing cost eligible for capitalisation is being netted off against any income arising on the temporary investment of those borrowings.

(b) Other borrowing cost is charged to Profit and Loss Account.

XI. Provisions, Contingent Liabilities and Contingent Assets

Provision is recognised only when there is a present obligation as a result of past events and when reliable estimates of the amount of the obligation can be made. Contingent liability is disclosed for:-

(a) Possible Obligations which will be confirmed only 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 reliable estimates of the amount of the obligation cannot be made. Contingent Assets are not recognised in

the financial statements since this may result in the recognition of income that may never be realised.

XII. Impairment of Assets

The Company assesses at each Balance Sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the Profit and Loss Account. If at the Balance Sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount.

XIII. Application of Securities Premium Account

Share issue expenses are charged first against available balance in Securities Premium Account.

XIV. Project Development Expense Pending Adjustment

Expenditure incurred during developmental and preliminary stages of the Company''s new project are charged to Capital Work in progress. Advance paid for the Project development are charged to Capital Advances.

XV. Earning Per Share

The Company reports basic and diluted earnings per share in accordance with the Accounting Standard - 20-'' Earning per Share'' prescribed by the Companies (Accounting Standard) Rules 2006.Basic Earning per Share is computed by dividing the net profit or loss for the year by the weighted average number of Equity Share outstanding during the year. Diluted earning per share is computed by dividing the net profit or loss for the year by the weighted number of equity shares outstanding during the year as adjusted for the effects of all dilutive potential equity share.

XVI. Cash flow statement

Cash flows are reported using the indirect method whereby profit before tax is adjusted for the effects of the transactions of a non cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from regular revenue generating; financing and investing activities of the company are segregated.

(a) Right to vote , dividend and restriction attached to each class of issued capital to be disclosed.

All the Shareholders whose name is entered in the Registered of Members of the Company shall enjoy the same voting rights and be subject to the same liabilities as all other shareholder of the same class.


Mar 31, 2012

I. Basis of Accounting

These Financial statements are prepared under historical cost conventions on accrual basis in accordance with the Generally Accepted Accounting principles in India and Accounting Standard (AS) as notified under Companies (Accounting Standard) Rules, 2006 (as amended), Accounting Standards issued by the Institute of Chartered Accountants of India (ICAI).

ii. Use of Estimates

The presentation of Financial Statements in conformity with the generally accepted principles requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of financial statements and the reported amount of revenues and expenses during the year. Difference between the actual result and estimates are recognised in the period in which reason are known/materialised.

iii. Fixed Assets and Depreciation/Amortisation

a. Tangible Assets

Tangible Fixed Assets are stated at historical cost including expenditure directly attributable to the acquisition of the asset. Borrowing costs directly attributable to the construction or manufacturing of qualified assets are capitalised as part of the cost less accumulated depreciation there on and impairment losses if any. Depreciation on tangible assets is provided on Straight Line Method at the rates specified in Schedule XIV the Companies Act, 1956. Except Residential building, which is depreciated at 5% of Straight line basis. Leasehold land having lease of 99 years or more are treated as free hold land only and other leases are amortised over the period of lease.

b. Intangible Assets

Intangible assets are stated at the consideration paid for the acquisition less accumulated amortisation

c. Capital Work in Progress

Cost of fixed assets not ready for use before the balance sheet date is disclosed as capital work in progress. Advances paid towards the acquisition of fixed assets outstanding as of each balance sheet date is disclosed as capital advance.

iv. Leases

Rentals applicable to operating leases where substantially all of the benefits and risks of ownership remain with the lesser are charged against profits as per the terms of the lease agreement over the lease period.

v. Inventories

Cost of Inventories have been computed to include all cost of Purchases, Cost of Conversion and other costs incurred in bringing the inventories to their present location and condition.

i. Raw materials and components, stores and spares and packing material are valued at lower of cost or Net realisable value. The costs are ascertained using the First in First out (FIFO) basis.

ii. Work-in-progress and finished goods are valued at the lower of cost or Net Realisable Value.

iii. Scrap is valued at Net Realisable Value.

vi. Revenue Recognition

Sales of products and services are recognised when risk and rewards of ownership of the products are passed on to the customers, which is generally on dispatch of goods. Sales are inclusive of Excise Duty but excluding sales tax/Value Added Tax and export incentives. Export incentives are accounted on accrual basis. Revenue from job charges is recognised on dispatch of material and in accordance with terms of job work. Interest incomes are recognised on time proportion basis.

vii. Foreign Currency Transactions

Transactions denominated in foreign currencies are recorded at the rate prevailing on date of transaction. In respect of Monetary items denominated in foreign currency at the year end are translated at the year end rates. The exchange differences arising on settlement/translation are recognised in the Profit and Loss Account.

viii. Taxes on Income

Provision for taxation comprises of Current Tax and Deferred Tax .Current tax has provision has been made the basis of reliefs and deduction available under Income Tax Act, 1961.Deferred tax resulting from "timing differences" between taxable and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted as on the balance sheet date. The deferred tax assets is recognised and carried forward only to the extent the assets can be realised in future. However, where there is unabsorbed depreciation or carry forward losses under taxation laws, deferred tax assets are recognised only if there is virtual certainty of realisation of such assets. Deferred tax assets are reviewed as at each Balance sheet date.

ix. Employee Benefits

(a) The Company's contribution in respect of provident fund is charged to Profit and Loss Account each year

(b) With respect to gratuity liability, Company contributes to Life Insurance Corporation of India (LIC) under LIC's Group Gratuity policy. Gratuity liability as determined on actuarial basis by the independent valuer is charged to Profit and Loss Account.

x. Borrowing Costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised. Other borrowing costs are recognised as an expense in the period which they are incurred.

xi. Provisions, Contingent Liabilities and Contingent Assets

Provision is recognised only when there is a present obligation as a result of past events and when reliable estimates of the amount of the obligation can be made. Contingent liability is disclosed for:-

(i) Possible Obligations which will be confirmed only by future events not wholly within the control of the Company or

(ii) Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or reliable estimates of the amount of the obligation cannot be made. Contingent Assets are not recognised in the financial statements since this may result in the recognition of income that may never be realised.

xii. Impairment of Asset

The Company assesses at each Balance Sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the Profit and Loss Account. If at the Balance Sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount.

xiii. Investments

Long Term Investments are valued at cost of acquisition. No provision for diminution in value, if any, has been made as these are long-term investments and in the opinion of the management any decline is temporary.

xiv. Government Grants/Subsidy

The Government Grants/Subsidy is recognised on accrual basis.

xv. Application of Securities Premium Account

Share issue expenses are charged first against available balance in Securities Premium Account.

xvi. Project Development Expense Pending Adjustment

Expenditure incurred during developmental and preliminary stages of the Company's new project are charged to Capital Work in progress. Advance paid for the Project development are charged to Capital Advances.

xvii. Earnings Per Share

The Company reports basic and diluted earnings per share in accordance with the Accounting Standard - 20-' Earning per Share' prescribed by the Companies (Accounting Standard) Rules 2006. Basic Earnings per Share is computed by dividing the net profit or loss for the year by the weighted average number of Equity Share outstanding during the year. Diluted earnings per share is computed by dividing the net profit or loss for the year by the weighted number of equity shares outstanding during the year as adjusted for the effects of all dilutive potential equity share.

xviii.Cash flow statement

Cash flows are reported using the indirect method whereby profit before tax is adjusted for the effects of the transactions of a non cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from regular revenue generating; financing and investing activities of the Company are segregated.

 
Subscribe now to get personal finance updates in your inbox!