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Accounting Policies of Shakti Pumps (India) Ltd. Company

Mar 31, 2014

A. Basis of Preparation of Financial Statements

The financial statements are prepared under the historical cost convention, on the basis of going concern assumption in accordance with the applicable accounting standards in India and the provisions of the Companies Act, 1956.

B. Use of Estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known/materialized.

C. Fixed Assets

Fixed Assets are stated at cost net of recoverable taxes including any cost attributable for bringing the assets to its working condition for its intended use less accumulated depreciation.

D. Depreciation

Depreciation has been charged on fixed assets on straight-line basis from the month of addition and to the month of sale at the rates specified in schedule XIV of the Companies Act, 1956. 100% depreciation has been charged on assets valued up to Rs. 5000/- per item.

E. Foreign Currency Transaction

(a) Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction or that approximates the actual rate at the date of transaction.

(b) Monetary items denominated in foreign currencies at the year-end are restated at the year-end rates.

(c) Non Monetary foreign currencies items are carried at cost.

(d) Any income or expense on account of exchange differences either on settlement or on translation is recognized in the profit & loss account except in case of long term liabilities, where they relate to acquisition of fixed assets, in which case they are adjusted to the carrying cost of such assets.

F. Investments

Current Investments are carried at lower of cost and fair value. Long Term Investments are stated at cost. Provision for diminution in the value of long term investments is made only if such a decline is other that temporary.

G. Inventories

Item of Inventories are measured at lower of cost and net realizable value after providing for obsolescence, if any. The cost of work in progress and finished goods is determined on absorption cost price.

H. Revenue Recognition

Revenue is recognized only when it can be reliably measured and it is reasonable to expect ultimate collection. Revenue on sale of goods is recognized on passes of title to customers, sales are excluding of VAT, Excise duty and adjustment for rate difference. Export sale are accounted for on the basis of dates of bill of lading.

I. Excise duty/CENVAT

Excise duty is accounted for on the basis of payment made in respect of goods cleared. CENVAT claim on purchase of raw material is reduced from the cost of raw material.

J. Employee Benefits

(a) Short Term Employee benefits are recognized as an expense at the undiscounted amount in profit & loss account of the year in which the related service is rendered.

(b) Defined benefit plans: The Company operates a gratuity plan covering qualifying employees. The benefit payable is the greater of the amount calculated as per the payment of Gratuity Act or the Company scheme applicable to the employee. The benefit vests upon completion of five years of continuous service and once vested it is payable to employees on retirement or on termination of employment. In case of death while in service, the gratuity is payable irrespective of vesting. The Company makes annual contribution to the group gratuity scheme administered by the Life Insurance Corporation of India through its Gratuity Trust Fund.

(c) Defined contribution plans: Company''s contribution to Provident Fund, ESIC scheme for the year is charged to Profit and Loss account. Retirement benefit, medical reimbursement and leave payments to employees are accounted for on cash basis.

K. Borrowing Costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to Profit & Loss account.

L. Provision for Current & Deferred Tax

Provision for current tax is made after taking into account benefits admissible under the provisions of the Income Tax Act, 1961. Deferred tax resulting from "Timing Difference" between taxable incomes & accounting income is accounted for using the tax rates and laws that are enacted or substantially enacted as on the balance sheet date.

M. Provisions , Contingent Liabilities & Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognized nor disclosed in the financial statements.

N. Segment Reporting

The Company is mainly engaged in the business of manufacturing various types of Pump & Motors. Considering the nature of business & financial reporting of the Company, the company has only one segment as reportable segment. The Company operates in Local & Export Segments Geographically. The sales for both are separately given, but due to the nature of business the assets/liabilities and expenses for these activities cannot be bifurcated separately.

O. Share Warrant

During the Year Company has issued Rs. 15,00,000 (Fifteen Lacs) Equity Warrants on a preferential basis to promoter and promoter group relatives with each warrant convertible into equity share of nominal value of Rs. 10/- each. The warrant shall be converted into equity shares within a period of 18 Months from the date of allotment.

The share warrant are issued at Rs. 80/- per warrant i.e. the equity share of Rs. 10/- each are being offered at a premium of Rs. 70/- per share. During the year company received 25% of total consideration and the warrant holder shall on or before the date of conversion pay the balance 75% of the consideration towards conversion of equity shares.


Mar 31, 2013

A. Basis of Preparation of Financial Statements

The financial statements are prepared under the historical cost convention, on the basis of going concern assumption in accordance with the applicable accounting standard in India and the provisions of the Companies Act, 1956.

B. Use of Estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognised in the period in which the results are known/materialised.

C. Fixed Assets

Fixed Assets are stated at cost net recoverable taxes including any cost attributable for bringing the assets to its working condition for its intended use less accumulated depreciation.

D. Depreciation

Depreciation has been charged on fixed assets on straight-line basis from the month of addition and to the month of sale at the rates specified in schedule XIV of the Companies Act, 1956. 100% depreciation has been charged on assets valued up to 5000/- per item

E. Foreign Currency Transaction

(a) Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction or that approximates the actual rate at the date of transaction.

(b) Monetary items denominated in foreign currencies at the year end are restated at the year end rates.

(c) Non Monetary foreign currencies Items are carried at cost.

(d) Any income or expense on account of exchange differences either on settlement or on translation is recognised in the profit & loss account except in case of long term liabilities, where they relate to acquisition of fixed assets, in which case they are adjusted to the carrying cost of such assets.

F. Investments

Current Investments are carried at lower of cost and fair value. Long Term Investments are stated at cost. Provision for diminution in the value of long term investments is made only if such a decline is other that temporary.

G. Inventories

Item of Inventories are measured at lower of cost and net realisable value after providing for obsolescence, if any. The cost of work in progress and finished goods is determined on absorption cost price.

H. Revenue Recognition

Revenue is recognised only when it can be reliably meas ured and it is reasonable to expect ultimate collection. Revenue on sale of goods is recognised on passes of title to customers, sales are excluding of VAT/Sales tax, Excise duty and adjustment for rate difference and discount. Export sale are accounted for on the basis of dates of bill of lading.

I. Excise duty/CENVAT

Excise duty is accounted for on the basis of payment made in respect of goods cleared. CENVAT claim on purchase of raw material is reduced from the cost of raw material.

J. Employee Benefits

(a) Short Term Employee benefits are recognised as an expense at the undiscounted amount in profit & loss account of the year in which the related service is rendered.

(b) Defined benefit plans: The Company operates a gratuity plan covering qualifying employees. The benefit payable is the greater of the amount calculated as per the payment of Gratuity Act or the Company scheme applicable to the employee. The benefit vests upon completion of five years of continuous service and once vested it is payable to employees on retirement or on termination of employment. In case of death while in service, the gratuity is payable irrespective of vesting. The Company makes annual contribution to the group gratuity scheme administered by the Life Insurance Corporation of India through its Gratuity Trust Fund.

(c) Defined contribution plans: Company''s contribution to Provident Fund, ESIC scheme for the year is charged to Profit and Loss account. Retirement benefit, medical reimbursement and leave payments to employees are accounted for on cash basis.

K. Borrowing Costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of such assets. All other borrowing costs are charged to Profit & Loss account.

L. Provision for Current & Deferred Tax

Provision for current tax is made after taking into account benefits admissible under the provisions of the Income Tax Act, 1961. Deferred tax resulting from "Timing Difference" between taxable incomes & accounting income is accounted for using the tax rates and laws that are enacted or substantially enacted as on the balance sheet date.

M. Provisions , Contingent Liabilities & Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that

there will be an outflow of resources. Contingent liabilities are not recognise but are disclosed in the notes. Contingent assets are neither recognised nor disclosed.

N. Segment Reporting

The Company is mainly engaged in the business of manufacturing of Pump & Motors. Considering the nature of business & financial reporting of the Company, the Company has only one segment as reportable segment. The Company operates in Local & Export Segments Geographically. The sales for both are separately given, but due to the nature of business the assets/liabilities and expenses for these activities cannot be bifurcated separately.

O. Optionally Convertible Debentures

During the year company has redeemed the Outstanding OCD''s.

P. Share Warrants

During the Year the Company has converted outstanding Share Warrants into 600000 Equity Shares of Face Value Rs.10/- at a premium of Rs.166/- each. And also issued 600000 Bonus Shares thereon.


Mar 31, 2012

A. Basis of Preparation of Financial Statements

The financial statements are prepared under the historical cost convention, on the basis of going concern assumption in accordance with the applicable accounting standard in India and the provisions of the Companies Act, 1956.

B. Use of Estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known/materialized.

C. Fixed Assets

Fixed Assets are stated at cost net recoverable taxes including any cost attributable for bringing the assets to its working condition for its intended use less accumulated depreciation.

D. Depreciation

Depreciation has been charged on fixed assets on straightline basis from the month of addition and to the month of sale at the rates specified in schedule XIV of the Companies Act, 1956. 100% depreciation has been charged on assets valued up to 5000/- per item

E. Foreign Currency Transaction

(a) Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction or that approximates the actual rate at the date of transaction.

(b) Monetary items denominated in foreign currencies at the yearend are restated at the yearend rates.

(c) Non Monetary foreign currencies Items are carried at cost.

(d) Any income or expense on account of exchange differences either on settlement or on translation is recognized in the profit & loss account except in case of long term liabilities, where they relate to acquisition of fixed assets, in which case they are adjusted to the carrying cost of such assets.

F. Investments

Current Investments are carried at lower of cost and fair value. Long Term Investments are stated at cost. Provision for diminution in the value of long term investments is made only if such a decline is other that temporary.

G. Inventories

Item of Inventories are measured at lower of cost and net realizable value after providing for obsolescence, if any. The cost of work in progress and finished goods is determined on absorption cost price.

H. Revenue Recognition

Revenue is recognized only when it can be reliably measured and it is reasonable to expect ultimate collection. Revenue on sale of goods is recognized on passes of title to customers, sales are excluding of VAT/ Sales tax, Excise duty and adjustment for rate difference and discount. Export sale are accounted for on the basis of dates of bill of lading.

I. Excise duty/CENVAT

Excise duty is accounted for on the basis of payment made in respect of goods cleared. CENVAT claim on purchase of raw material is reduced from the cost of raw material.

J. Employee Benefits

(a) Short Term Employee benefits are recognized as an expense at the undiscounted amount in profit & loss account of the year in which the related service is rendered.

(b) Defined benefit plans: The Company operates a gratuity plan covering qualifying employees. The benefit payable is the greater of the amount calculated as per the payment of Gratuity Act or the Company scheme applicable to the employee. The benefit vests upon completion of five years of continuous service and once vested it is payable to employees on retirement or on termination of employment. In case of death while in service, the gratuity is payable irrespective of vesting. The Company makes annual contribution to the group gratuity scheme administered by the Life Insurance Corporation of India through its Gratuity Trust Fund.

(c) Defined contribution plans: Company's contribution to Provident Fund, ESIC scheme for the year is charged to Profit and Loss account. Retirement benefit, medical reimbursement and leave payments to employees are accounted for on cash basis.

K. Borrowing Costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized at part of such assets. All other borrowing costs are charged to Profit & Loss account.

L. Provision for Current & Deferred Tax

Provision for current tax is made after taking into account benefits admissible under the provisions of the Income Tax Act, 1961. Deferred tax resulting from "Timing Difference" between taxable incomes & accounting income is accounted for using the tax rates and laws that are enacted or substantially enacted as on the balance sheet date.

M. Provisions, Contingent Liabilities & Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognize but are disclosed in the notes. Contingent assets are neither recognized nor disclosed.

N. Segment Reporting

The Company is mainly engaged in the business of manufacturing of Pump & Motors. Considering the nature of business & financial reporting of the Company, the company has only one segment as reportable segment. The Company operates in Local & Export Segments Geographically. The sales for both are separately given, but due to the nature of business the assets/ liabilities and expenses for these activities cannot be bifurcated separately.

O. Comparatives

During the Preceding Year Company had changed its Accounting Year from June to March. The Comparative Figures of Previous year belongs to nine month period ending on 31st March 2011.

P. Optionally Convertible Debentures

During the year company had issued optionally convertible debenture at the issue price of Rs.134/- per security. These OCD's are convertible into equity shares within 18 months from the date of subscription i.e. 20.04.2011.In case these OCD's doesn't get converted into equity share it will be redeemed by the company at issue price plus 20%premium compounded annually. The company has intended to redeem the OCD's by the end of July 2012. And the estimated outflow on account of redemption is calculated as follows.

(Amount in Rs.)

OCD Amount 97498400

Premium 26102860

Total 123601260


Jun 30, 2010

1. Accounting Assumptions

These accounts have been prepared under the historical cost convention on the basis of going concern, with revenue recognized and expenses accounted on their accrual, in accordance with the applicable accounting standard and relevant presentational requirements of the companies Act, 1956 unless otherwise stated.

2. Revenue Recognition:

Revenue on sale of goods is recognized on passes of title to the customers, sales are excluding of VAT/Sales Tax, Excise Duty and adjustment for rate difference.

3. Central Value Added Tax (CENVAT):

CENVAT claim on capital goods is reduced from the cost of respective cost of plant and machinery/capital work in progress.

CENVAT claimed on purchase of raw material and others is reduced from the cost of such material.

4. Employee Benefit:

Retirement benefit plans

(a) Defined benefit plans

The Company operates a gratuity plan covering qualifying employees. The benefit payable is the greater of the amount calculated as per the Payment of Gratuity Act or the Company scheme applicable to the employee. The benefit vests upon completion of five years of continuous service and once vested it is payable to employees on retirement or on termination of employment. In case of death while in service, the gratuity is payable irrespective of vesting. The Company makes annual contribution to the group gratuity scheme administered by the Life Insurance Corporation of India through its Gratuity Trust Fund.

(b) Defined contribution plans

Companys contribution to Provident Fund, ESIC scheme for the year is charged to Profit and Loss account. Retirement benefit, medical reimbursement and leave payments to employees are accounted for on cash basis.

5. Fixed Assets

Fixed Assets are stated at cost of acquisition including any cost attributable for bringing the assets to its working condition for its intended use less accumulated depreciation.

6. Depreciation

Depreciation has been charged on fixed assets on straight-line basis from the month of addition and to the month of sale at the rates specified in schedule XIV of the companies Act, 1956. 100% depreciation has been charged on assets valued up to 5000/- per item.

7. Value of Inventories

Inventories of Raw Material, Stores & Spares, Work in Process, Finished Goods are valued at net realisable value. The cost of Work in Process & Finished Goods is determined on absorption cost price, Raw Material; Stores & Spares are valued at average method.

8. Taxation

Current Income Tax provision has been determined based on relief, deduction available under the Income Tax Act. Deferred tax is recognized for all timing difference applying the tax rates that have been substantially enacted by the Balance- Sheet date.

9. Provision, Contingent liabilities & Contingent Assets:

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources.

10. Foreign Currency Transaction:

(i) Transaction denominated in foreign currencies are normally recorded at the exchange rate prevailing at the time of the transaction.

(ii) Any income or expenses on account of exchange difference either on settlement or on translation are recognized in the Profit & Loss Account, except in case where they relate to acquisition of fixed assets, in such case, they are adjusted to the cost of such assets.

11. The Company has hedged interest rate on External Commercial Borrowing (ECB).

 
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