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Accounting Policies of Setco Automotive Ltd. Company

Mar 31, 2015

1.1 General

The Financial Statements are prepared under historical cost convention (Except for certain fixed assets which are carried at revalued amounts) on accrual basis and they are in consonance with generally accepted accounting principles in India and applicable Accounting Standards specified under section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014.

1.2 Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period. Although these estimates are based upon management's best knowledge of current events and actions, actual results could differ from these estimates.

1.3 Fixed Assets / Intangible Assets

A. Fixed Assets

i. Fixed Assets are stated at cost of acquisition/construction except for land & Buildings which are stated at revalued amounts as at that date based on external valuers' report, less accumulated depreciation and impairment loss, if any. The cost of fixed assets includes directly attributable expenses incurred for the purpose of acquiring fixed assets, net of cenvat credit on qualifying assets. Press Tools and such type of machinery items developed in house are capitalized at direct cost plus directly attributable overheads. Capital work in progress comprises of the cost of fixed assets that are not yet ready for their intended use at the reporting date.

ii. The Company estimates the useful lives for fixed assets as follows:

Asset Classification Useful Life

Buildings (Including Temporary Shed) 3-30 years Plant & Machinery 1-15 years

Furniture & Fixtures 1-10 years

Office Equipments 2-5 years

Pollution Equipments 2-8 years

Computers 1-3 years

Electric Fiitings 10 years

Vehicles 4-8 years

The Company believes that the useful lives as given above best represent the useful lives of these assets based on tehnical advice and is different from the useful lives as prescribed under Part C of Schedule II of the Companies Act, 2013.

B. Intangible Assets

Intangible assets are stated at cost of acquisition net of cenvat credit less accumulated amortization. Expenditure, identifiable and reliably measurable, incurred on product development yielding future economic benefits is recognized as internally generated Intangible Asset as per Accounting Standard 26 on "Intangible Assets".

1.4 Depreciation / Amortisation

i. Depreciation is charged on straight-line method (SLM) and is based on useful lives of the assets as determined by external experts in accordance with requirements of Schedule II to the Companies Act, 2013. The additional charge of depreciation on account of revaluation is withdrawn from revaluation reserve and is credited to the General Reserve as per Guidance note on the provisions of Schedule II to the Companies Act, 2013 issued by The Institute of Chartered Accountants of India. Depreciation on additions during the year to fixed assets is charged on pro-rata basis.

ii. Payments for Long Term leasehold land and expenses incurred for the development of such land are amortized over a period of lease.

iii. Intangible Assets are amortized as follows : a) Product Development: over a period of ten years after commencement of commercial production of relevant item.

b) Computer Software (including License fees): over a period of three years.

1.5 Investments

Long Term Investments are stated at cost. Provision for diminution is made when such diminution is considered other than temporary in nature.

1.6 Inventories

Inventories are valued in accordance with Accounting Standard tAS)-2 "Valuation of Inventories" at lower of cost (exclusive of cenvat credits availed on inputs) and net realizable value. Raw material, Stores and Packing material are valued on weighted average cost basis. Finished Goods and Work-in-Progress are valued at aggregate cost determined, comprising material cost and manufacturing overheads. Finished Goods include Excise Duty. Scrap is valued at net realizable value.

1.7 Impairment of Assets

Impairment of Assets is recognized when there is an indication of impairment. On such indication, the recoverable amount of Asset is estimated and if such estimation is less than its book value, the book value is reduced to its recoverable amount.

1.8 Revenue Recognition

i. Sales and Services are accounted for on dispatch of products from the works and which are followed by transfer of risk and reward to the customers up to the time the financial statements of the Company are approved by the Board.

ii. Insurance Claims are accounted as and when admitted.

iii. Other income is accounted on accrual basis except when the realization of such income is uncertain. Dividend income is accounted when right to receive the same is established.

1.9 Foreign Currency Transactions

Transactions in foreign currency are recorded at monthly exchange rates as notified by the concerned authorities. Monetary assets and liabilities denominated in foreign currency are restated at year end exchange rates. Non monetary Items (Investments) denominated in foreign currency are stated using the exchange rate on the date of transaction. Exchange differences arising on settlement of transactions and on restatement of monetary items are recognized as income or expense in the year in which they arise, except in respect of the liabilities,

if any for acquisition of Fixed Assets, where such exchange difference is adjusted in the carrying cost of Fixed Assets.

1.10 Cenvat Credit

Cenvat credit available on the material inputs is adjusted against consumption. Cenvat credit available on capital goods is adjusted against cost of Fixed Assets. Cenvat credit remaining unutilized is shown as receivables in Short Term Loans and Advances.

1.11 Selling/ Marketing Expenses

i. Warranty is extended on products sold. Warranty expenses are accrued / accounted as and when claim is accepted.

ii. Commission, Discount and other expenses payable on sales are recognized on determination of amount payable in accordance with arrangements / contracts with the parties.

1.12 Employee Benefits

A. Short Term Employee Benefits

Short term employee benefits are recognized as an expense at the undiscounted amounts in the statement of profit and loss of year in which the related services are rendered.

B. Defined Contribution Plans

Provident Fund & ESIC are defined contribution schemes established under a State Plan. The contributions to the schemes are charged to the statement of profit and loss in the year of incurrence.

C. Defined Benefit Plans

The company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on post employment at 15 days salary (last drawn salary) for each completed year of services as per the rules of the company. The aforesaid liability is provided for on the basis of an actuarial valuation made using Projected Unit Credit Method at the end of the financial year. The scheme is funded with an insurance company in the form of a qualifying insurance policy. Actuarial gains/losses are recognized in statement of profit and loss in the year in which they arise.

D. Compensated Absences

Employees are entitled to accumulate leave subject to certain limits for future encashment. The liability in respect of compensated absences is provided for on the basis of actuarial valuation made at the end of the financial year using Projected Unit Credit Method. The said liability is not funded.

1.13 Research & Development Expenses

i. Revenue expenses pertaining to research activities are charged to statement of profit and loss under the respective heads of expenses.

ii. Expenditure incurred on fixed assets used for R & D is capitalized under the head "Fixed Assets'.

iii. Expenditure incurred on development activities which do not qualify as Intangible Asset is charged to statement of Profit and Loss.

1.14 Borrowing Costs

Borrowing cost that are attributable to the acquisition, construction or production of qualifying assets are capitalized as a part of cost of such assets. All other borrowing costs are recognized as expense in the period in which they are incurred.

1.15 Taxes on Income

i. Provision for current tax is made for the amount of tax payable in respect of taxable income for the year under Income Tax Act, 1961. Unutilized MAT credit is recognized.

ii. Deferred tax is recognized on timing differences; being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets are recognized only to the extent there is virtual certainty of its realization.

1.16 Provisions and Contingent Liabilities

i. Provisions in respect of present obligations arising out of past events are made in the accounts when reliable estimates can be made of the amount of the obligation.

ii. Contingent liabilities are disclosed by way of a note to the Financial Statements, after careful evaluation by the management of the facts and legal aspects of the matter involved.

1.17 Earnings per Share

The earnings considered for ascertaining the Company's Earnings Per Share (EPS) comprises the net profit after tax. The number of shares used in computing Basic EPS is the weighted average number of shares outstanding during the year. The number of shares used in computing diluted EPS comprises the weighted average shares considered for deriving basic EPS, and also the weighted average number of equity shares that would be issued on the conversion of all dilutive potential equity shares. In case of dilutive potential equity shares, the difference between the number of shares issuable and the number of shares that would have been issued at fair value are treated as diluted potential equity shares. Dilutive potential equity shares are deemed converted as of the beginning of the period, unless issued at a later date.

1.18 Employee Stock Option Scheme

Stock options granted to the employees under the stock option scheme established are evaluated as per the accounting treatment prescribed by Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. The Company follows the intrinsic value method of accounting for the options and accordingly, the excess of market value of the stock options as on date of grant over the exercise price of the options, if any, is recognized as deferred employee compensation and is charged to the statement of profit and loss on graded vesting basis over the vesting period of the options. The unamortized portion of the deferred employee compensation is netted out against "Stock options Outstanding".

1.19 Government Grants

i. Government grant is recognized when there is reasonable assurance that the grant will be received and all relevant conditions are complied with.

ii. Grant received by way of investment subsidy in relation to total investment is credited to capital reserve.


Mar 31, 2014

1.1 General

The Financial Statements are prepared under historical cost convention [Except for certain fixed assets which are revalued] on accrual basis and they are in consonance with generally accepted accounting principles in India and applicable Accounting Standards notified under the Companies Act , 1956 [which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs] & other relevant provisions of the Companies Act, 1956/2013, as applicable.

1.2 Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period. Although these estimates are based upon management''s best knowledge of current events and actions actual results could differ from these estimates.

1.3 Fixed Assets / Intangible Assets

a. Fixed Assets:

Fixed Assets are stated at cost of acquisition/construction except for land & Buildings which are stated at revalued amounts as at that date based on external valuers'' report, less accumulated depreciation and impairment loss, if any. The cost of fixed assets includes directly attributable expenses incurred for the purpose of acquiring fixed assets, net of cenvat credit on qualifying assets. Press Tools and such type of machinery items developed in house are capitalized at direct cost plus directly attributable overheads.

b. Intangible Assets:

Expenditure (including technical know-how). identifiable and reliably measurable, incurred on product development yielding future economic benefits is recognized as internally generated Intangible Asset as per Accounting Standard 96 on "Intangible Assets". Other Intangible assets are stated at cost of acquisition net of cenvat credit less accumulated amortization.

1.4 Depreciation/Amortization

i Depreciation is charged on straight-line method (SLM), at the rates and in the manner prescribed in Schedule XIV of the Companies Act, 1956 except in case of revalued assets which are depreciated over revised residual useful life of the assets as determined by the external valuers or at the rates prescribed in Schedule XIV of the Companies At, 1956, whichever is higher. The additional charge of depreciation on account of revaluation is withdrawn from revaluation reserve and is credited to the statement of profit and loss. Depreciation on additions during the year to fixed assets is charged on pro-rata basis.

ii. Payments for Long Term leasehold land and expenses incurred for the development of such land are amortised over a period of lease.

iii. Intangible Assets are amortized as follows:

at Product Development: over a period of ten years after commencement of commercial production of relevant item.

b) Computer Software (including License fees): over a period of three years.

c) Website Development: over a period of three years.

1.5 Investments

Long Term Investments are stated at cost. Provision for diminution is made when such diminution is considered other than temporary in nature.

1.6 Inventories

Inventories are valued in accordance with Accounting Standard (A8)-2 "Valuation of Inventories" at lower of cost [exclusive of cenvat credits availed an inputs] and net realizable value. Raw material, Spares and Packing material are valued an weighted average cost basis. Finished Goods and Work-in-Progress are valued at aggregate cost determined, comprising material cast and manufacturing overheads. Finished Goods include Excise Duty. Scrap is valued at realizable value.

1.7 Impairment of Assets

Impairment of assets is recognized when there is an indication of impairment. On such indication, the recoverable amount of asset is estimated and if such estimation is less than its bock value, the book value is reduced to its recoverable amount.

1.8 Revenue Recognition

a) Sales and Services are accounted for on dispatch of products from the works and which are followed by transfer of risk and reward to the customers up to the time the financial statements of the Company are approved by the Board.

b) Insurance Claims are accounted as and when admitted.

c) Other income is accounted on accrual basis except when the realization of such income is uncertain. Dividend income is accounted when right to receive is established.

1.9 Foreign Currency Transactions

Transactions in foreign currency are recorded at monthly exchange rates as notified by the concerned authorities. Monetary assets and liabilities denominated in foreign currency are restated at year end exchange rates. Mon monetary Items (Investments) denominated in foreign currency are stated using the exchange rate on the date of transaction. Exchange differences arising on settlement of transactions and on restatement of monetary items are recognized as income or expense in the year in which they arise, except in respect of the liabilities, if any for acquisition of fixed assets, where such exchange difference is adjusted in the carrying cost of fixed assets.

1.10 Cenvat Credit

Cenvat credit available on the material inputs is adjusted against consumption. Cenvat credit available on capital goods is adjusted against cost of fixed assets. Cenvat credit remaining unutilized is shown as receivables in Short Term Loans and Advances.

1.11 Miscellaneous Expenditure

i) Fees for Increese in Authorized Share Capital are charged to the statement of Profit and Loss.

1.12 Selling/ Marketing Expenses

i. Warranty is extended on products sold. Warranty expenses are accrued / accounted as and when claim is accepted.

ii. Commission, Discount and other expenses payable an sales are recognized on determination of amount payable in accordance with arrangements / contracts with the parties.

1.13 Employee Benefits

i. Short Term Employee Benefits

Short term employee benefits are recognized as an expense at the undiscounted amounts in the statement of profit and loss of year in which the related services are rendered

ii. Defined Contribution Plans

Provident Fund & ESIC are defined contribution schemes established under a State Plan. The contributions to the schemes are charged to the statement of profit and loss in the year when the contributions become due.

iii. Defined Benefit Plans

The company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on post employment at 15 days salary [last drawn salary] for each completed year of services as per the rules of the company The aforesaid liability is provided for on the basis of an actuarial valuation made using Projected Unit Credit Method at the end of the financial year The scheme is funded with an insurance company in the form of a qualifying insurance policy. Actuarial gains/losses are recognized in statement of profit and loss in the year in which they arise.

iv. Compensated Absences

Employees are entitled to accumulate leave subject to certain limits for future encashment. The liability in respect of leave encashment is provided for on the basis of actuarial valuation made at the end of the financial year using Projected Unit Credit Method. The said liability is not funded.

1.14 Research & Development Expenses

a. Revenue expenses pertaining to research activities are charged to statement of profit and loss under the respective heads of expenses.

b. Expenditure incurred on fixed assets used for R & D is capitalized under the head "Fixed Assets.

c. Expenditure incurred on development activities which da not qualify as Intangible Asset is charged to statement of Profit and Loss

1.15 Borrowing Costs

Borrowing cost that are attributable to the acquisition, construction or production of qualifying assets are capitaiized as a part of cast of such assets. All other borrowing costs are recognized as expense in the period in which they are incurred.

1.16 Taxes on Income

i. Provision for current tax is made for the amount of tax payable in respect of taxable income for the year under Income Tax Act, 1961. Unutilized MAT credit is recognized.

ii. Deferred tax is recognized on timing differences; being the difference between taxable, income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets are recognized only to the extent there is virtual certainty of its realization.

1.17 Provisions and Contingent Liabilities

i. Provisions in respect of present obligations arising out of past events are made in the accounts when reliable estimates can be made of the amount of the obligation.

ii. Contingent liabilities are disclosed by way of a note to the Financial Statements, after careful evaluation by the management of the facts end legal aspects of the matter involved

1.18 Earnings per Share

The earnings considered for ascertaining the Company''s Earnings Per Share (EPS) comprises the net profit after tax. The number of shares used in computing Basic EPS is the weighted average number of shares outstanding during the year The number of shares used in computing diluted EPS comprises the weighted average shares considered for deriving basic EPS, and also the weighted average number of equity shares that would be issued on the conversion of all dilutive potential equity shares. In case of dilutive potential equity shares, the difference between the number of shares issuable and the number of shares that would have been issued at fair value are treated as diluted potential equity shares. Dilutive potential equity shares are deemed converted as of the beginning of the period, unless issued at a later date.

1.19 Employee Stock Option Scheme

Stack options granted to the Employees under the stock option scheme established are evaluated as per the accounting treatment prescribed by Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. The Company follows the intrinsic value method of accounting for the options and accordingly, the excess of market value of the stock options as on date of grant over the exercise price of the options, if any, is recognized as deferred employee compensation and is charged to the statement of profit and loss on graded vesting basis over the vesting period of the options The unamortized portion of the deferred employee compensation is netted out against "Stock options Outstanding"

1.20 Government Grants

i. Government grant is recognized when there is reasonable assurance that the grant will be received and all relevant conditions are complied with.

ii. Grant received by way of investment subsidy in relation to total investment is credited to capital reserve.


Mar 31, 2013

1.1 General

The Financial Statements are prepared under historical cost convention (Except for certain fixed assets which are revalued) on accrual basis and they are in consonance with generally accepted accounting principles in India and applicable Accounting Standards notified u/s 211 C3C) & other relevant provisions of the Companies Act, 1956.

1.2 Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of Assets and Liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates.

1.3 Fixed Assets / Intangible Assets

i. Fixed Assets are stated at cost of acquisition/construction except for Land S. Buildings which are stated at revalued amounts as at that date based on external valuers'' report, less accumulated depreciation and impairment loss, if any. The cost of fixed assets includes direct/indirect apportioned expenses incurred for the purpose of acquiring fixed assets, net of cenvat credit on qualifying assets. Press Tools and such type of machinery items developed in house are capitalized at direct cost plus overheads and standing charges.

ii. Pre-operative expenses, comprising revenue expenses incurred up to the date of commencement of production are apportioned to fixed assets.

iii. Expenditure [including technical know-how) , identifiable and reliably measurable, incurred on product development yielding future economic benefits is recognized as internally generated Intangible Asset as per Accounting Standard 26 on "Intangible Assets". Other Intangible Assets are stated at cost of acquisition net of cenvat credit less accumulated amortization.

1.4 Depreciation/Amortization

i. Depreciation is charged on straight-line method (SLM), at the rates and in the manner prescribed in Schedule XIV of the Companies Act, 1956 except in case of revalued assets which are depreciated over revised residual useful life of the assets as determined by the external valuers. The additional charge of depreciation on account of revaluation is withdrawn from revaluation reserve and is credited to the statement of profit and loss. Depreciation on additions during the year to fixed assets is charged on pro-rata basis.

ii. Payments for Long Term leasehold land and expenses incurred for the development of such land are amortised over a period of lease.

iii. Intangible Assets are amortized as follows:

a) Product Development: over a period of ten years after commencement of commercial production of relevant item.

b) Computer Software [including License fees): over a period of three years.

c) Website Development: over a period of three years.

1.5 Investments

Long Term Investments are stated at cost. Provision for diminution is made when such diminution is considered other than temporary in nature.

1.6 Inventories

Inventories are valued in accordance with Accounting Standard CAS)-2 "Valuation of Inventories" at lower of cost (exclusive of taxes and cenvat credits availed on inputs) and net realizable value. Raw material, Spares and Packing material are valued on weighted average basis. Finished Goads and Work-in-Progress are valued at aggregate cost determined, comprising material cost and manufacturing overheads. Finished Goods include Excise Duty. Scrap is valued at realizable value.

1.7 Impairment of Assets

Impairment of assets is recognized when there is an indication of impairment. On such indication, the recoverable amount of asset is estimated and if such estimation is less than its book value, the book value is reduced to its recoverable amount.

1.8 Revenue Recognition

a) Sales and Services are accounted for on dispatch of products from the works and which are followed by transfer of risk and reward to the customers up to the time the financial statements of the Company are approved.

b) Insurance Claims are accounted as and when admitted.

c) Other income is accounted on accrual basis except when the realization of such income is uncertain. Dividend income is accounted when right to receive is established.

1.9 Foreign Currency Transactions

Transactions in foreign currency are recorded at monthly exchange rates as notified by the concerned authorities. Monetary assets and liabilities denominated in foreign currency are restated at year end exchange rates. Non monetary Items [Investments) denominated in foreign currency are stated using the exchange rate on the date of transaction. Exchange differences arising on settlement of transactions and on restatement of monetary items are recognized as income or expense in the year in which they arise, except in respect of the liabilities, if any for acquisition of fixed assets, where such exchange difference is adjusted in the carrying cost of fixed assets.

1.10 Cenvat Credit

Cenvat credit available on the material inputs is adjusted against consumption. Cenvat credit available on capital goods is adjusted against cost of fixed assets. Cenvat credit remaining unutilized is shown as receivables in Short Term Loans and Advances.

1.11 Miscellaneous Expenditure

i. Fees for Increase in Authorized Share Capital are charged to the statement of Profit and Loss .

1.12 Selling/Marketing Expenses

i. Warranty is extended on products sold. Warranty expenses are accrued / accounted as and when claim is accepted.

ii. Commission, Discount and other expenses payable on sales are recognized on determination of amount payable in accordance with arrangements / contracts with the parties.

1.13 Employee Benefits

i. Short Term Employee Benefits

Short term employee benefits are recognized as an expense at the undiscounted amounts in the statement of Profit and Loss of the year in which the related services are rendered.

ii. Defined Contribution Plans

Provident Fund & ESIC are defined contribution schemes established under a State Plan. The contributions to the schemes are charged to the statement of Profit and Loss in the year when the contributions become due.

iii. Defined Benefit Plans

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on post employment at 15 days salary (last drawn salary) for each completed year of services as per the rules of the Company. The aforesaid liability is provided for on the basis of an actuarial valuation made using Project Unit Credit Method at the end of the financial year. The scheme is funded with an insurance company in the form of a qualifying insurance policy. Actuarial gains/losses are recognized in statement of Profit and Loss in the year in which they arise.

iv. Compensated Absences

Employees are entitled to accumulate leave subject to certain limits for future encashment. The liability in respect of leave encashment is provided for on the basis of actuarial valuation made at the end of the financial year using Project Unit Credit Method. The said liability is not funded.

1.14 R&D Expenses

a. Revenue expenses pertaining to research activities are charged to statement of Profit and Loss under the respective heads of expenses.

b. Expenditure incurred on fixed assets used for R & D is capitalized under the head "Fixed Assets.

c. Expenditure incurred on development activities which do not qualify as Intangible Asset is charged to statement of Profit and Loss.

1.15 Borrowing Costs

Borrowing cost-that are attributable to the acquisition, construction or production of qualifying assets are capitalized as a part of cost of such assets. All other borrowing costs are recognized as expense in the period in which they are incurred.

1.16 Taxes on Income

i. Provision for current tax is made for the amount of tax payable in respect of taxable income for the year under Income Tax Act, 1961. Unutilized MAT credit is recognized.

ii. Deferred tax is recognized on timing differences; being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets are recognized only to the extent there is virtual certainty of its realization.

1.17 Provisions and Contingent Liabilities

i. Provisions in respect of present obligations arising out of past events are made in the accounts when reliable estimates can be made of the amount of the obligation.

ii. Contingent liabilities are disclosed by way of a note to the Financial Statements, after careful evaluation by the management of the facts and legal aspects of the matter involved.

1.18 Earnings per Share

The earnings considered for ascertaining the Company''s Earnings Per Share (EPS) comprises the net profit after tax. The number of shares used in computing Basic EPS is the weighted average number of shares outstanding during the year. The number of shares used in computing diluted EPS comprises the weighted average shares considered for deriving basic EPS, and also the weighted average number of equity shares that would be issued on the conversion of all dilutive potential equity shares. In case of dilutive potential equity shares, the difference between the number of shares issuable and the number of shares that would have been issued at fair value are treated as diluted potential equity shares. Dilutive potential equity shares are deemed converted as of the beginning of the period, unless issued at a later date.

1.19 Employee Stock Option Scheme

Stock Options granted to the employees under the stock option scheme established are evaluated as per the accounting treatment prescribed by Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. The Company follows the intrinsic value method of accounting for the options and accordingly, the excess of market value of the stock options as on date of grant over the exercise price of the options, if any, is recognized as deferred employee compensation and is charged to the statement of profit and loss on graded vesting basis over the vesting period of the options. The unamortized portion of the deferred employee compensation is netted out against "Stock Options Outstanding"

1.20 Government Grants

i. Government grant is recognized when there is reasonable assurance that the grant will be received and all relevant conditions are complied with.

ii. Grant received by way of investment subsidy in relation to total investment is credited to capital reserve.


Mar 31, 2012

1.1 General

The Financial Statements are prepared under historical cost convention on accrual basis and they are in consonance with generally accepted accounting principles in India and applicable Accounting Standards notified u/s 211 (3C) & other relevant provisions of the Companies Act, 1956.

1.2 Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period. Although these estimates are based upon management's best knowledge of current events and actions, actual results could differ from these estimates.

1.3 Fixed Assets / Intangible Assets

i. Fixed assets are stated at cost of acquisition / construction. The cost of fixed assets includes direct / indirect apportioned expenses incurred for the purpose of acquiring fixed assets, net of cenvat credit on qualifying assets. Press Tools and such type of machinery items developed in house are capitalized at direct cost plus overheads and standing charges.

ii. Pre- operative expenses, comprising revenue expenses incurred up to the date of commencement of production are apportioned to fixed assets.

iii. Expenditure (including technical know-how) incurred on product development yielding future economic benefits is recognized as internally generated Intangible Asset as per Accounting Standard 26 on "Intangible Assets".

1.4 Depreciation/Amortization

i. Depreciation is charged on straight-line method (SLM), at the rates and in the manner prescribed in Schedule XIV of the Companies Act, 1956. Depreciation on additions during the year to fixed assets is charged on pro- rata basis.

ii. Intangible Assets are amortized as follows:

a) Product Development: over a period of ten years after commencement of commercial production of relevant item.

b) Computer Software (including Licence fees): over a period of three years.

c) Website Development: over a period of three years.

1.5 Investments

Investments are stated at cost.

1.6 Inventories

Inventories are valued in accordance with Accounting Standard (AS)-2 "Valuation of Inventories" at lower of cost (exclusive of taxes and cenvat credits availed on inputs) and net realizable value. It is on weighted average basis. Finished Goods and Work-in-Progress are valued at aggregate cost determined, comprising material cost and manufacturing overheads. Finished Goods include Excise Duty. Scrap is valued at realizable value.

1.7 Impairment of Assets

Impairment of assets is recognized when there is an indication of impairment. On such indication, the recoverable amount of asset is estimated and if such estimation is less than its book value, the book value is reduced to its recoverable amount.

1.8 Revenue Recognition

a) Sales and Services are accounted for on dispatch of products from the works and which are followed by transfer of risk and reward to the customer's up to the time the financial statements of the Company are approved.

b) Insurance claims are accounted as and when admitted.

c) Other income is accounted on accrual basis except when the realization of such income is uncertain.

1.9 Foreign Currency Transactions

Transactions in foreign currency are recorded at monthly exchange rates as notified by the concerned authorities. Monetary assets and liabilities denominated in foreign currency are restated at year end exchange rates. Non monetary Items (Investments) denominated in foreign currency are stated using the exchange rate on the date of transaction. Exchange differences arising on settlement of transactions and on restatement of monetary items are recognized as income or expense in the year in which they arise, except in respect of the liabilities, if any for acquisition of fixed assets, where such exchange difference is adjusted in the carrying cost of fixed assets.

1.10 Cenvat Credit

Cenvat credit available on the material inputs is adjusted against consumption. Cenvat credit available on capital goods is adjusted against cost of fixed assets. Cenvat credit remaining unutilized is shown as receivables in Short term Loans and Advances.

1.11 Miscellaneous Expenditure

i) Share Issue Expenses are amortized over a period of -5- years.

ii) Fees for Increase in Authorized Share Capital is amortized over a period of -5- years.

1.12 Selling/ Marketing Expenses

i. Warranty is extended on products sold. Warranty expenses are accrued / accounted as and when claim is accepted.

ii. Commission, Discount and other expenses payable on sales are recognized on determination of amount payable in accordance with arrangements / contracts with the parties.

1.13 Employee Benefits

i. Short Term Employee Benefits

Short term employee benefits are recognized as an expense at the undiscounted amounts in the statement of profit and loss of year in which the related services are rendered.

ii. Defined Contribution Plans

Provident Fund & ESIC are defined contribution schemes established under a State Plan. The contributions to the schemes are charged to the statement of profit and loss in the year when the contributions become due.

iii. Defined Benefit Plans

The company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on post employment at 15 days salary (last drawn salary) for each completed year of services as per the rules of the company. The aforesaid liability is provided for on the basis of an actuarial valuation made using Project Unit Credit Method at the end of the financial year. The scheme is funded with an insurance company in the form of a qualifying insurance policy. Actuarial gains/losses are recognized in statement of profit and loss in the year in which they arise.

iv. Compensated Absences

Employees are entitled to accumulate leave subject to certain limits for future encashment. The liability in respect of leave encashment is provided for on the basis of actuarial valuation made at the end of the financial year using Project Unit Credit Method. The said liability is not funded.

1.14 R & D Expenses

Revenue expenses are charged to statement of profit and loss under the respective heads of expenses.

1.15 Borrowing Costs

Borrowing cost that are attributable to the acquisition, construction or production of qualifying assets are capitalized as a part of cost of such assets. All other borrowing costs are recognized as expense in the period in which they are incurred.

1.16 Taxes on Income

i. Provision for current tax is made for the amount of tax payable in respect of taxable income for the year under Income Tax Act, 1961. Company has started recognizing unutilized MAT credit from current financial year.

ii. Deferred tax is recognized on timing differences; being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets are recognized only to the extent there is virtual certainty of its realization.

1.17 Provisions and Contingent Liabilities

i. Provisions in respect of present obligations arising out of past events are made in the accounts when reliable estimates can be made of the amount of the obligation.

ii. Contingent liabilities are disclosed by way of a note to the Financial Statements, after careful evaluation by the management of the facts and legal aspects of the matter involved.

1.18 Earnings per Share

The earnings considered for ascertaining the Company's Earnings Per Share (EPS) comprises the net profit after tax. The number of shares used in computing Basic EPS is the weighted average number of shares outstanding during the period. The number of shares used in computing diluted EPS comprises the weighted average shares considered for deriving basic EPS, and also the weighted average number of equity shares that would be issued on the conversion of all dilutive potential equity shares. In case of dilutive options, the difference between the number of shares issuable and the number of shares that would be issued at fair value are treated as diluted potential equity shares. Dilutive potential equity shares are deemed converted as of the beginning of the period, unless issued at a later date.

1.19 Employee Stock Option Scheme

Stock options granted to the employees under the stock option scheme established are evaluated as per the accounting treatment prescribed by Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. The Company follows the intrinsic value method of accounting for the options and accordingly, the excess of market value of the stock options as on date of grant over the exercise price of the options, if any, is recognized as deferred employee compensation and is charged to the statement of profit and loss on graded vesting basis over the vesting period of the options. The unamortized portion of the deferred employee compensation is netted out against "Stock options Outstanding"

1.20 Government Grants

i. Government grant is recognized when there is reasonable assurance that the grant will be received and all relevant conditions are complied with.

ii. Grant received by way of investment subsidy in relation to total investment is credited to capital reserve.


Mar 31, 2010

1. General

The Financial Statements are prepared under historical cost convention on accrual basis and they are in consonance with generally accepted accounting principles in India and applicable Accounting Standards notified u/s 211 (3C) of the Companies Act, 1956. Effect of deviations, if any from the accounting standards vis-a-vis the treatment consistently adopted is disclosed in the accounts, wherever relevant and material.

2. Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period. Although these estimates are based upon managements best knowledge of current events and actions, actual results could differ from these estimates.

3. Fixed Assets / Intangible Assets

i) Fixed assets are stated at cost of acquisition / construction. The cost of fixed assets includes direct / indirectapportioned expenses incurred for the purpose of acquiring fixed assets, net of cenvat credit on qualifying assets.

Press Tools and such type of machinery items developed in house are capitalized at direct cost plus overheads and standing charges.

ii) Pre- operative expenses, comprising revenue expenses incurred up to the date of commencement of production are apportioned to fixed assets.

iii) Expenditure (including technical know-how) incurred on product development yielding future economic benefits is recognized as internally generated Intangible Asset as per Accounting Standard 26 on "Intangible Assets".

4. Depreciation/Amortization

i) Depreciation is charged on straight-line method (SLM), at the rates and in the manner prescribed in Schedule XIV ofthe Companies Act, 1956. Depreciation on additions during the year to fixed assets is charged on pro-rata basis.

ii) Intangible Assets are amortized as follows:

(a) Product Development: over a period of ten years after commencement of commercial production of relevant item.

(b) Computer Software: over a period of three years from the date it is operationalized.

(c) Website Development: over a period of three years.

5. Investments

Investments are stated at cost.

6. Inventories

Inventories are valued in accordance with Accounting Standard (AS)-2 at lower of cost (exclusive of taxes and cenvat credits availed on inputs) and net realizable value. It is on FIFO basis in respect of raw material stocks at Sitarganj Unit and on weighted average basis in respect of stocks at other Units. Finished goods and Work-in-Progress are valued at aggregate cost determined, comprising material cost and manufacturing overheads. Finished Goods include Excise Duty. Scrap is valued at realizable value.

7. Impairment of Assets

Impairment of assets is recognized when there is an indication of impairment. On such indication, the recoverable amount of asset is estimated and if such estimation is less than its book value, the book value is reduced to its recoverable amount.

8. Revenue Recognition

(i) Sales and services are accounted for on dispatch of products from the works and which are followed by transfer of risk and reward to the customers upto the time the financial statements of the Company are adopted. (ii) Insurance Claims are accounted as and when admitted. (iii) Other income is accounted on accrual basis except when the realization of such income is uncertain.

9. Foreign Currency Transactions

Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction. Monetary assets and liabilities denominated in foreign currency are restated at year end exchange rates. Non monetary Items (Investments) denominated in foreign currency are stated using the exchange rate on the date of transaction. Exchange differences arising on settlement of transactions and on restatement of monetary items are recognized as income or expense in the year in which they arise, except in respect of the liabilities for acquisition of fixed assets, where such exchange difference is adjusted in the carrying cost of fixed assets.

10. Cenvat Credit

Cenvat credit available on the material inputs is adjusted against consumption. Cenvat credit available on capital goods is adjusted against cost of fixed assets. Cenvat credit remaining unutilized is shown as receivables in Loans and Advances.

11 Miscellaneous Expenditure

(i) Company Formation expenses are amortized over a period of -6- years.

(ii) Share Issue Expenses are amortized over a period of -5- years.

(iii) Fees for Increase in Authorized Share Capital is amortized over a period of -5- years.

12. R&D Expenses

All expenses with respect to new designs, improvements in designs, manufacturing processes, quality assurance, product life and efficacies and associated administrative expenses of Research and Development Department, etc are grouped under the head "R & D Expenses" & charged to Profit and Loss account.

13. Selling/ Marketing expenses

(i) Warranty is extended on products sold. Warranty expenses are accrued / accounted as and when claim is accepted.

(ii) Commission, Discount and other expenses payable on sales are recognized on determination of amount payable in accordance with arrangements / contracts with the parties.

14. Employee Benefits

i) Short Term Employee Benefits

Short term employee benefits are recognized as an expense at the undiscounted amounts in the profit and loss account of year in which the related services are rendered.

ii) Defined Contribution Plans Provident Fund & ESIC are defined contribution schemes established under a State Plan. The contributions to the schemes are charged to the profit and loss account in the year when the contributions become due.

iii) Defined Benefit Plans

The company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on post employment at 15 days salary (last drawn salary) for each completed year of services as per the rules of the company. The aforesaid liability is provided for on the basis of an actuarial valuation made using Project Unit Credit Method at the end of the financial year. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

Actuarial gains/losses are recognized in profit and loss account in the year in which they arise.

iv) Compensated Absences

Employees are entitled to accumulate leave subject to certain limits for future encashment. The liability in respect of leave encashment is provided for on the basis of actuarial valuation made at the end of the financial year using Project unit credit method. The said liability is not funded.

15. Borrowing Costs

Borrowing cost that are attributable to the acquisition, construction or production of qualifying assets are capitalized as a part of cost of such assets. All other borrowing costs are recognized as expense in the period in which they are incurred.

16. Taxes on Income

Deferred tax is recognized on timing differences; beingthe difference between taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets are recognized only to the extent there is virtual certainty of its realization.

17. Provisions and Contingent liabilities

i) Provisions in respect of present obligations arising out of past events are made in the accounts when reliable estimates can be made of the amount of the obligation. ii) Contingent liabilities are disclosed by way of a note to the Financial Statements, after careful evaluation by the management of the facts and legal aspects of the matter involved.

 
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