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Accounting Policies of Shivalik Bimetal Controls Ltd. Company

Mar 31, 2014

1.1 Basis of Preparation of Financial Statements

These financial statements are prepared in accordance with Generally Accepted Accounting Principles (GAAP) under the historical cost convention on accrual basis. GAAP comprises mandatory accounting standards as prescribed by the Companies (Accounting Standards) Rules, 2006, the provisions of the Companies Act, 1956. The Financial statements are presented in Indian Rupee rounded off to the nearest Rupees in thousands.

2.2 Use of Estimates

The preparation of financial statements in conformity with Generally Accepted Accounting Principles (GAAP) requires the management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures of contingent liabilities on the date of financial statements and the reported amounts of revenues and expenses during the reporting period.

Management believes that the estimates used in the preparation of financial statements are prudent and reasonable. Accounting estimates could change from period to period.

2.3 Inventories

Inventories are valued at the lower of cost and net realizable value, after providing for obsolescence, wherever considered necessary as under:

a. Raw materials, stores and spares: At cost, on "FIFO" basis;

b. Work-in-progress /Semi-Finished: At cost plus related cost of conversion including appropriate overheads;

c. Finished goods: At cost plus related cost of conversion including appropriate overheads and excise duty paid/ payable on such goods; and

d. Saleable Scrap is valued at estimated realizable value

2.4 Cash and cash equivalents

Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

2.5 Cash Flow Statements

Cash flows are reported using the indirect method, whereby Profit before tax is adjusted for the effects of 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.

2.6 Depreciation

Depreciation on Fixed Assets is provided on Straight Line Method at the rates and in the manner specified in

Schedule-XIV of the Companies Act, 1956 except for following :

a. Dies & Tools included under the head "Plant & Machinery" after being put to use, are depreciated over its estimated life of two years.

b. Assets costing less than Rs. 5,000/- each are fully depreciated in the year of acquisition.

2.7 Research & Development Expenditure

Expenditure in the nature of revenue, incurred for Research & Development relating to business, is charged to profit & loss account.

2.8 Revenue Recognition

a. Sales are recognized, net of returns and trade discount, on transfer of significant risks and rewards of ownership to the buyer, that coincides with the reliability and reasonableness to expect ultimate collection , which is generally on dispatch of goods. Sales include excise duty but excludes sales tax and value added tax.

b. For other incomes, the Company follows the accrual basis of accounting except interest on delayed payment from customers where there is no reasonable certainty regarding the amount and / or its Collectability.

2.9 Export Benefits

a. Imports entitlements/Export obligations under Advance Licenses are accounted for at the time of purchase of Raw Materials/ Export sales.

b. Other export incentives are accounted for as and when the claims thereof have been admitted by the authorities, at a value which can be fetched in the market.

2.10 Fixed Assets, Intangible Assets and Capital Work-in-Progress

a. Tangible Assets are stated at cost (Net of CENVAT/Value added tax, wherever applicable) less accumulated depreciation/amortization. Cost comprises the purchase price, freight, foreign exchange adjustments arising from exchange rate variations, borrowing cost attributable to the Qualifying Asset and any other directly attributable cost of bringing the asset to working condition for its intended use.

Subsequent expenditures 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 are recorded at consideration paid for acquisition of such assets and are carried at cost less accumulated depreciation or amortization and impairment, if any.

c. Capital work-in-progress represents the cost of tangible assets that are not yet ready for their intended use at the reporting date.

2.11 Foreign Currency Transactions

a. Foreign currency transactions are accounted for at the exchange rate prevailing on the transaction date.

b. Foreign currency denominated monetary assets and liabilities are converted at the exchange rate prevailing on the Balance Sheet date and the resultant difference is charged/ credited to Profit & Loss account.

c. Non-monetary assets and non-monetary liabilities denominated in a foreign currency, measured at historical cost are translated at the exchange rate prevalent at the date of transaction and any translation gain or losses are adjusted to the costs of the relevant assets according to newly inserted para 46A of Accounting Standard -11 vide notification issued by the Ministry of Corporate Affairs.

2.12 Forward Contracts

a. The Company uses foreign exchange forward contracts to hedge its exposure to movements in foreign exchange rates. The use of these foreign exchange forward contracts reduces the risk or cost to the Company and the company does not use those for trading or speculation purposes.

b. In case of items which are covered by forward exchange contracts, the difference between the year end rate and rate on the date of the contract is recognised as exchange difference and the premium paid on forward contracts is recognised over the life of the contract.

c. In respect of Commodity Hedging transactions, gain/ losses on settlement are recognized in the profit & loss account.

2.13 Investments

Current investments are carried at lower of cost and fair value, computed category wise. Long -term Investments are stated at cost, unless there is a decline, other than temporary in the value of Investments.

2.14 Employees'' Benefits

a. Defined Contribution Plans:

The Company has contributed to State Governed Provident Fund scheme, Employees State Insurance scheme and Employee Pension Scheme which are defined contribution plans. Contribution paid or payable under the scheme is recognized as expense during the period in which employee renders the related service.

b. Defined Benefit Plans:

The employees'' gratuity is a defined benefit plan. The present value of the obligation under such plan is determined based on the Actuarial Valuation using the projected unit credit method which recognizes each period of service as giving rise to an additional unit of employee benefit entitlement and measures each unit separately to build up the financial obligation. The Company has an employee gratuity fund managed by Life Insurance Corporation of India (LIC). The gains or losses are charged to Profit and Loss Account.

c. Liability in respect of leave encashment is provided for based on Actuarial Valuation basis using the same projected unit credit method as above.

d. Compensation to employees, who opted for retirement under the Voluntary Retirement Scheme of the company, is charged to the statement of Profit & Loss in the year of exercise of option by the employee.

2.15 Borrowing Costs

a. Borrowing Costs that are attributable to the acquisition or construction of qualifying assets as defined in Accounting Standard-16 are capitalized as part of the cost of such asset till such time as the asset is ready for its intended use. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use. All other borrowing costs are recognized as expenses in the period in which they are incurred.

b. Borrowing costs include interest and exchange difference arising from currency borrowing to the extent they are regarded as an adjustment to the interest cost.

2.16 Inter unit Transactions

The Inter unit sale / purchase of materials/Job work transactions are accounted for at the prevailing market prices. Annual Accounts are reported excluding inter-unit transfers/transactions.

2.17 Earnings Per share

Basic Earnings per Share is computed by dividing net profit or loss for the period attributable to equity shareholders by the weighted average number of Equity Shares outstanding during the period.

2.18 Taxes on Income

Tax on income for the current period is determined on the basis of taxable income and tax credits/ benefits computed in accordance with the provisions of the Income Tax Act 1961.

Deferred tax charge/ credit is recognized on timing differences between the accounting income and the taxable income for the year, and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date.

Deferred tax assets are recognized and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

Deferred tax assets and liabilities are measured at the tax rates that has been enacted or substantively enacted at the balance sheet date.

2.19 Impairment

The Carrying amounts of assets are reviewed at each Balance Sheet date and if there is any indication to the effect that the recoverable amount of the Asset/ CGU (Cash Generating Unit) is less than its carrying amount, the difference is treated as "Impairment Loss". The recoverable amount is greater of the asset''s net selling price and value in use.

2.20 Provision, Contingent Liabilities and Contingent Assets

Provisions are recognized for liabilities that can be measured only by using substantial degree of estimation, if

a. the company has a present obligation as a result of past event,

b. a probable outflow of resources is expected to settle the obligation; and

c. the amount of the obligation can be reliably estimated.

Contingent liability is disclosed in case of

i. a present obligation arising from past events, when it is not probable that an outflow of resources will be required to settle the obligation;

ii. a present obligation arising from past events, when no reliable estimate is possible; and

iii. a possible obligation arising from past events where the probability of outflow of resources is not remote. Contingent assets are neither recognized nor disclosed.


Mar 31, 2013

1.1 Basis of Preparation of Financial Statements

These financial statements are prepared in accordance with Generally Accepted Accounting Principles (GAAP) under the historical cost convention on accrual basis. GAAP comprises mandatory accounting standards as prescribed by the Companies (Accounting Standards) Rules, 2006, the provisions of the Companies Act, 1956.

1.2 Use of Estimates

The preparation of financial statements in conformity with Generally Accepted Accounting Principles (GAAP) requires the management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures of contingent liabilities on the date of financial statements and the reported amounts of revenues and expenses during the reporting period.

Management believes that the estimates used in the preparation of financial statements are prudent and reasonable. Accounting estimates could change from period to period.

1.3 Inventories

Inventories are valued at the lower of cost and net realizable value, after providing for obsolescence, wherever considered necessary as under:

a. Raw materials, stores and spares: At cost, on "FIFO" basis;

b. Work-in-progress /Semi-Finished: At cost plus related cost of conversion including appropriate overheads;

c. Finished goods: At cost plus related cost of conversion including appropriate overheads and excise duty paid/ payable on such goods; and

d. Saleable Scrap is valued at estimated realizable value

1.4 Cash and cash equivalents

Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

1.5 Cash Flow Statements

Cash flows are reported using the indirect method, whereby Profit before tax is adjusted for the effects of 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.

1.6 Depreciation

Depreciation on Fixed Assets is provided on Straight Line Method at the rates and in the manner specified in Schedule-XIV of the Companies Act, 1956 except for following :

a. Dies & Tools included under the head "Plant & Machinery" after being put to use, are depreciated over its estimated life of two years.

b. Assets costing less than Rs. 5,000/- each are fully depreciated in the year of acquisition.

1.7 Research & Development Expenditure

Expenditure in the nature of revenue, incurred for Research & Development relating to business, is charged to profit & loss account.

1.8 Revenue Recognition

a. Sales are recognized, net of returns and trade discount, on transfer of significant risks and rewards of ownership to the buyer, that coincides with the reliability and reasonableness to expect ultimate collection, which is generally on dispatch of goods. Sales include excise duty but excludes sales tax and value added tax.

b. For other incomes, the Company follows the accrual basis of accounting except interest on delayed payment from customers where there is no reasonable certainty regarding the amount and / or its Collectability.

1.9 Export Benefits

a. Imports entitlements/Export obligations under Advance Licenses are accounted for at the time of purchase of Raw Materials/ Export sales.

b. Other export incentives are accounted for as and when the claims thereof have been admitted by the authorities.

1.10 Fixed Assets, Intangible Assets and Capital Work-in-Progress

a. Tangible Assets are stated at cost (Net of CENVAT/Value added tax, wherever applicable) less accumulated depreciation/amortization. Cost comprises the purchase price, freight, foreign exchange adjustments arising from exchange rate variations, borrowing cost attributable to the Qualifying Asset and any other directly attributable cost of bringing the asset to working condition for its intended use.

b. Intangible assets are recorded at consideration paid for acquisition of such assets and are carried at cost less accumulated depreciation or amortization and impairment, if any.

c. Capital work-in-progress represents the cost of tangible assets that are not yet ready for their intended use at the reporting date.

1.11 Foreign Currency Transactions

a. Foreign currency transactions are accounted for at the exchange rate prevailing on the transaction date.

b. Foreign currency denominated monetary assets and liabilities are converted at the exchange rate prevailing on the Balance Sheet date and the resultant difference is charged/ credited to Profit & Loss account.

c. Non-monetary assets and non-monetary liabilities denominated in a foreign currency, measured at historical cost are translated at the exchange rate prevalent at the date of transaction and any translation gain or losses are adjusted to the costs of the relevant assets according to newly inserted para 46A of Accounting Standard -11 vide notification issued by the Ministry of Corporate Affairs.

1.12 Forward Contracts

a. The Company uses foreign exchange forward contracts to hedge its exposure to movements in foreign exchange rates. The use of these foreign exchange forward contracts reduces the risk or cost to the Company and the company does not use those for trading or speculation purposes.

b. Forward contracts are fair valued at each reporting date. The resultant gain or loss from these transactions is recognized in the statement of profit and loss. The company records the gain or loss on effective hedges, if any, in the foreign currency fluctuation reserve until the transactions are completed. On completion, the gain or loss is transferred to the statement of profit and loss of that period. To designate a forward contract as an effective hedge, the Management objectively evaluates and evidences with appropriate supporting documents at the inception of each contact whether the contract is effective in achieving offsetting cash flows attributable to the hedged risk. Any profit & loss arising on the cancellation or renewal of forward contracts is recognized as income or as expense for the year.

c. The company records the gain or loss on effective hedges, if any, in Hedge Reserve until the transaction is complete. In respect of Commodity Hedging transactions, gain/ losses on settlement are recognized in the profit & loss account.

1.13 Investments

Current investments are carried at lower of cost and fair value, computed category wise. Long -term Investments are stated at cost, unless there is a decline, other than temporary in the value of Investments.

1.14 Employees'' Benefits

a. Defined Contribution Plans:

The Company has contributed to State Governed Provident Fund scheme, Employees State Insurance scheme and Employee Pension Scheme which are defined contribution plans. Contribution paid or payable under the scheme is recognized as expense during the period in which employee renders the related service.

b. Defined Benefit Plans:

The employees'' gratuity is a defined benefit plan. The present value of the obligation under such plan is determined based on the Actuarial Valuation using the projected unit credit method which recognizes each period of service as giving rise to an additional unit of employee benefit entitlement and measures each unit separately to build up the financial obligation. The Company has an employee gratuity fund managed by Life Insurance Corporation of India (LIC). The gains or losses are charged to Profit and Loss Account.

c. Liability in respect of leave encashment is provided for based on Actuarial Valuation basis using the same projected unit credit method as above.

1.15 Borrowing Costs

a. Borrowing Costs that are attributable to the acquisition or construction of qualifying assets as defined in Accounting Standard-16 are capitalized as part of the cost of such asset till such time as the asset is ready for its intended use. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use. All other borrowing costs are recognized as expenses in the period in which they are incurred.

b. Borrowing costs include interest and exchange difference arising from currency borrowing to the extent they are regarded as an adjustment to the interest cost.

1.16 Inter unit Transactions

The Inter unit sale / purchase of materials/Job work transactions are accounted for at the prevailing market prices. Annual Accounts are reported excluding inter-unit transfers/transactions.

1.17 Earnings Per share

Basic Earnings per Share is computed by dividing net profit or loss for the period attributable to equity shareholders by the weighted average number of Equity Shares outstanding during the period.

1.18 Taxes on Income

Tax on income for the current period is determined on the basis of taxable income and tax credits/ benefits computed in accordance with the provisions of the Income Tax Act 1961.

Deferred tax charge/ credit is recognized on timing differences between the accounting income and the taxable income for the year, and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date.

Deferred tax assets are recognized and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

Deferred tax assets and liabilities are measured at the tax rates that has been enacted or substantively enacted at the balance sheet date.

1.19 Impairment

The Carrying amounts of assets are reviewed at each Balance Sheet date and if there is any indication to the effect that the recoverable amount of the Asset/ CGU (Cash Generating Unit) is less than its carrying amount, the difference is treated as "Impairment Loss". The recoverable amount is greater of the asset''s net selling price and value in use.

1.20 Provision, Contingent Liabilities and Contingent Assets

Provisions are recognized for liabilities that can be measured only by using substantial degree of estimation, if

a. the company has a present obligation as a result of past event,

b. a probable outflow of resources is expected to settle the obligation; and

c. the amount of the obligation can be reliably estimated.

Contingent liability is disclosed in case of

i. a present obligation arising from past events, when it is not probable that an outflow of resources will be required to settle the obligation;

ii. a present obligation arising from past events, when no reliable estimate is possible; and

iii. a possible obligation arising from past events where the probability of outflow of resources is not remote.

Contingent assets are neither recognized nor disclosed.

Provisions, contingent liabilities and contingent assets are reviewed at each Balance Sheet date.


Mar 31, 2012

1.1 Basis of Preparation of Financial Statements

These financial statements are prepared in accordance with Generally Accepted Accounting Principles (GAAP) under the historical cost convention on accrual basis. GAAP comprises mandatory accounting standards as prescribed by the Companies (Accounting Standards) Rules, 2006, the provisions of the Companies Act, 1956 and guidelines issued by the Securities and Exchange Board of India (SEBI). Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

1.2 Use of Estimates

The preparation of financial statements in conformity with Generally Accepted Accounting Principles (GAAP) requires the management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures of contingent liabilities on the date of financial statements and the reported amounts of revenues and expenses during the reporting period.

Management believes that the estimates used in the preparation of financial statements are prudent and reasonable. Accounting estimates could change from period to period.

1.3 Inventories

Inventories are valued at the lower of cost and net realizable value, after providing for obsolescence, wherever considered necessary as under:

a. Raw materials, stores and spares: At cost, on "FIFO" basis;

b. Work-in-progress/Semi-Finished: At cost plus related cost of conversion including appropriate overheads;

c. Finished goods: At cost plus related cost of conversion including appropriate overheads and excise duty paid/payable on such goods; and

d. Saleable Scrap is valued at estimated realizable value

1.4 Cash and cash equivalents

Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

1.5 Cash Flow Statements

Cash flows are reported using the indirect method, whereby Profit before tax is adjusted for the effects of 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.

1.6 Depreciation

Depreciation on Fixed Assets is provided on Straight Line Method at the rates and in the manner specified in Schedule-XIV of the Companies Act, 1956 except for following :

a. Dies & Tools included under the head "Plant & Machinery" after being put to use, are depreciated over its estimated life of two years.

b. Assets costing less than Rs. 5,000/- each are fully depreciated in the year of acquisition.

1.7 Research & Development Expenditure

Expenditure in the nature of revenue, incurred for Research & Development relating to business, is charged to profit & loss account.

1.8 Revenue Recognition

a. Sales are recognized, net of returns and trade discount, on transfer of significant risks and rewards of ownership to the buyer, that coincides with the reliability and reasonableness to expect ultimate collection, which is generally on dispatch of goods. Sales include excise duty but excludes sales tax and value added tax.

b. For other incomes, the Company follows the accrual basis of accounting except interest on delayed payment from customers where there is no reasonable certainty regarding the amount and/or its Collectability.

1.9 Export Benefits

a. Imports entitlements/Export obligations under Advance Licenses are accounted for at the time of purchase of Raw Materials/Export sales.

b. Other export incentives are accounted for as and when the claims thereof have been admitted by the authorities.

1.10 Fixed Assets, Intangible Assets and Capital Work-in-Progress

a. Tangible Assets are stated at cost (Net of CENVAT/Value added tax, wherever applicable) less accumulated depreciation/amortization. Cost comprises the purchase price, freight, foreign exchange adjustments arising from exchange rate variations, borrowing cost attributable to the Qualifying Asset and any other directly attributable cost of bringing the asset to working condition for its intended use.

b. Intangible assets are recorded at consideration paid for acquisition of such assets and are carried at cost less accumulated depreciation or amortization and impairment, if any.

c. Capital work-in-progress represents the cost of tangible assets that are not yet ready for their intended use at the reporting date.

1.11 Capital Commitments

Estimated amount of contracts remaining to be executed exceeding Rs. 1.00 lacs in each case are disclosed in the "Notes to Accounts".

1.12 Foreign Currency Transactions

a. Foreign currency transactions are accounted for at the exchange rate prevailing on the transaction date.

b. Foreign currency denominated monetary assets and liabilities are converted at the exchange rate prevailing on the Balance Sheet date and the resultant difference is charged/credited to Profit & Loss account.

c. Non-monetary assets and non-monetary liabilities denominated in a foreign currency, measured at historical cost are translated at the exchange rate prevalent at the date of transaction and any translation gain or losses are adjusted to the costs of the relevant assets according to newly inserted para 46A of Accounting Standard -11 vide notification issued by the Ministry of Corporate Affairs.

1.13 Forward Contracts

a. The Company uses foreign exchange forward contracts to hedge its exposure to movements in foreign exchange rates. The use of these foreign exchange forward contracts reduces the risk or cost to the Company and the company does not use those for trading or speculation purposes.

b. Forward contracts are fair valued at each reporting date. The resultant gain or loss from these transactions is recognized in the statement of profit and loss. The company records the gain or loss on effective hedges, if any, in the foreign currency fluctuation reserve until the transactions are completed. On completion, the gain or loss is transferred to the statement of profit and loss of that period. To designate a forward contract as an effective hedge, the Management objectively evaluates and evidences with appropriate supporting documents at the inception of each contact whether the contract is effective in achieving offsetting cash flows attributable to the hedged risk. Any profit & loss arising on the cancellation or renewal of forward contracts is recognized as income or as expense for the year.

c. The company records the gain or loss on effective hedges, if any, in Hedge Reserve until the transaction is complete. In respect of Commodity Hedging transactions, gain/losses on settlement are recognized in the profit & loss account.

1.14 Investments

Current investments are carried at lower of cost and fair value, computed category wise. Long -term Investments are stated at cost, unless there is a decline, other than temporary in the value of Investments.

1.15 Employees' Benefits

a. Defined Contribution Plans:

The Company has contributed to State Governed Provident Fund scheme, Employees State Insurance scheme and Employee Pension Scheme which are defined contribution plans. Contribution paid or payable under the scheme is recognized as expense during the period in which employee renders the related service.

b. Defined Benefit Plans:

The employees' gratuity is a defined benefit plan. The present value of the obligation under such plan is determined based on the Actuarial Valuation using the projected unit credit method which recognizes each period of service as giving rise to an additional unit of employee benefit entitlement and measures each unit separately to build up the financial obligation. The Company has an employee gratuity fund managed by Life Insurance Corporation of India (LIC). The gains or losses are charged to Profit and Loss Account.

c. Liability in respect of leave encashment is provided for based on Actuarial Valuation basis using the same projected unit credit method as above.

1.16 Borrowing Costs

a. Borrowing Costs that are attributable to the acquisition or construction of qualifying assets as defined in Accounting Standard-16 are capitalized as part of the cost of such asset till such time as the asset is ready for its intended use. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use. All other borrowing costs are recognized as expenses in the period in which they are incurred.

b. Borrowing costs include interest and exchange difference arising from currency borrowing to the extent they are regarded as an adjustment to the interest cost.

1.17 Inter unit Transactions

The Inter unit sale/purchase of materials/Job work transactions are accounted for at the prevailing market prices. Annual Accounts are reported excluding inter-unit transfers/transactions.

1.18 Earnings Per share

Basic Earnings per Share is computed by dividing net profit or loss for the period attributable to equity shareholders by the weighted average number of Equity Shares outstanding during the period.

1.19 Taxes on Income

Tax on income for the current period is determined on the basis of taxable income and tax credits/benefits computed in accordance with the provisions of the Income Tax Act 1961.

Deferred tax charge/credit is recognized on timing differences between the accounting income and the taxable income for the year, and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date.

Deferred tax assets are recognized and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

Deferred tax assets and liabilities are measured at the tax rates that has been enacted or substantively enacted at the balance sheet date.

1.20 Impairment

The Carrying amounts of assets are reviewed at each Balance Sheet date and if there is any indication to the effect that the recoverable amount of the Asset/CGU (Cash Generating Unit) is less than its carrying amount, the difference is treated as "Impairment Loss". The recoverable amount is greater of the asset's net selling price and value in use.

1.21 Provision, Contingent Liabilities and Contingent Assets

Provisions are recognized for liabilities that can be measured only by using substantial degree of estimation, if

a. the company has a present obligation as a result of past event,

b. a probable outflow of resources is expected to settle the obligation; and

c. the amount of the obligation can be reliably estimated.

Contingent liability is disclosed in case of

i. a present obligation arising from past events, when it is not probable that an outflow of resources will be required to settle the obligation;

ii. a present obligation arising from past events, when no reliable estimate is possible; and

iii. a possible obligation arising from past events where the probability of outflow of resources is not remote.

Contingent assets are neither recognized nor disclosed.

Provisions, contingent liabilities and contingent assets are reviewed at each Balance Sheet date.


Mar 31, 2010

1. Basis of Accounting

The financial statements have been prepared and presented on accrual basis following historical cost convention in accordance with generally accepted accounting principles (GAAP), in compliance with the provisions of the Companies Act, 1956 and the Accounting Standards as specified in the Companies (Accounting Standards) Rules, 2006 as pre- scribed by the Central Government.

2. Use of Estimates

The preparation of financial statements in conformity with Generally Accepted Accounting Principles (GAAP) requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent liabilities on the date of financial statements and the reported amounts of revenues and ex- penses during the reporting period.

3. Inventories

a. Raw Materials and Stores & Spares are valued at cost on "First in First out" basis.

b. Semi-Finished/WIP are valued at cost including related overheads after providing for obsolescence, wherever consid- ered necessary.

c. Finished Goods are valued at cost or net realizable value, whichever is lower.

Cost includes cost of conversion, excise duty paid/ payable and other costs incurred in bringing the inventories to their present location and condition, as the case may be.

d. Saleable Scrap is valued at estimated realizable value.

4. Cash Flow Statements

Cash flows are reported using the indirect method, whereby Profit before tax is adjusted for the effects of 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.

5. Depreciation

a. Depreciation on Fixed Assets is provided on Straight Line Method at the rates and in the manner specified in Schedule-XlV of the Companies Act, 1956.

b. Depreciation on Fixed Assets added / disposed off during the year has been provided on pro-rata basis with reference to the month of addition / disposal.

c. Dies & Tools included under the head "Plant & Machinery" after being put to use, are depreciated over its estimated life of two years.

6. Research & Development Expenditure

Expenditure in the nature of Revenue incurred for Research & Development relating to business is charged to profit & loss account.

7. Revenue Recognition

a. Sales are recognized on dispatch of goods from the factory and are recorded net of trade discounts, rebates, sales tax and returns.

b. For other incomes, the Company follows the accrual basis of accounting except interest on delayed payment from customers where there is no reasonable certainty regarding the amount and / or its Collectability.

8. Export Benefits

Imports entitlements/Export obligations under Advance Licenses are accounted for at the time of purchase of Raw Materials/ Export sales.

9. Fixed Assets

Fixed Assets are stated at cost (Net of CENVAT/Value added tax, wherever applicable) less accumulated depreciation. Cost comprises the purchase price, freight, foreign exchange adjustments arising from exchange rate variations and any directly attributable cost of bringing the asset to working condition for its intended use.

10. Dies & Tools

Repair & maintenance of Tools & Dies are directly charged to profit & loss account

11. Capital Commitments

Estimated amount of contracts remaining to be executed exceeding Rs. 1.00 lacs in each case are disclosed in the "Notes to Accounts".

12. Foreign Currency Transactions

a. Foreign currency transactions are accounted for at the exchange rate prevailing on the transaction date.

b. Year end monetary assets and liabilities in foreign currency, other than pertaining to acquisition of fixed assets, are converted at the exchange rate prevailing on the Balance Sheet date and the resultant difference is charged/ credited to Profit & Loss account.

c. Year end conversion differences in respect of liabilities pertaining to acquisition of fixed assets are adjusted to the costs of the relevant Assets.

d. Forward contracts entered into to hedge foreign currency risks on foreign exchange liabilities are recognised in the financial statements at fair value as on balance sheet date in pursuance of the Accounting Standard (AS)-ll issued by ICAI and the premium or discount arising at the inception of forward contracts is amortized as expense or income over the life of respective contracts. Exchange differences on such contracts are recognized in Profit & Loss account in the year in which the exchange rate changes. Any profit & loss arising on the cancellation or renewal of forward contracts is recognized as income or as expense for the year.

13. Investments

Long -term Investments including interests in Incorporated Jointly Controlled Entities, are stated at cost, unless there is a permanent diminution in the value of Investments.

14. Employees Benefits

a) Defined Contribution Plans:

The Company has contributed to state Governed Provident Fund scheme, Employees State Insurance scheme and Employee Pension Scheme which are defined contribution plans. Contribution paid or payable under the scheme is recognized during the period in which employee renders the related service.

b) Defined Benefit Plans:

The employees gratuity is a defined benefit plan. The present value of the obligation under such plan is determined using the projected unit credit method which recognizes each period of service as giving rise to an additional unit of employee benefit entitlement and measures each unit separately to build up the financial obligation. The Company has an employee gratuity fund managed by Life Insurance Corporation of India (LIC). The gains or losses are charged to Profit and Loss Account.

c) Liability in respect of leave encashment is provided for based on actuarial valuation basis using the same projected unit credit method as above.

15. Borrowing Cost

Borrowing Costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such asset till such time as the asset is ready for its intended use. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use. All other borrowing costs are recognized as expenses in the period in which they are incurred.

16. Inter unit Transactions

The Inter unit sale / purchase of materials/Job work transactions are accounted for at the prevailing market prices. Annual Accounts are reported excluding inter-unit transfers/transactions.

17. Accounting for interests in joint ventures

Interests in joint ventures are in the nature of Incorporated Jointly Controlled Entities and are accounted for as:

a) Income from joint ventures is recognized when the right to receive the same is established.

b) Investment in joint ventures is carried at cost after providing for any permanent diminution in value.

18. Lease

Operating lease payments are charged to Profit and Loss account on straight- line basis over the lease term. Lease where the lessor effectively retains substantially all the risks and benefits of ownership are classified as operating lease.

19. Earnings Per share

Basic Earning per Share is computed by dividing net profit or loss for the period attributable to equity shareholders by the weighted average number of Equity Shares outstanding during the period.

20. Taxes on Income

Tax on income for the current period is determined on the basis of taxable income and tax credits computed in accor- dance with the provisions of the Income Tax Act 1961.

Deferred tax is recognized on timing differences between the accounting income and the taxable income for the year, and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date.

Deferred tax assets are recognized and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

21. Impairment

The Carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal / external factors. An impairment loss will be recognized wherever the carrying amount of an asset exceeds its estimated recoverable amount. The recoverable amount is greater of the assets net selling price and value in use.

22. Provision. Contingent Liabilities and Contingent Assets.

Provisions are recognized for liabilities that can be measured only by using substantial degree of estimation, if

i) the company has a present obligation as a result of past event,

ii) a probable outflow of resources is expected to settle the obligation; and

iii) the amount of the obligation can be reliably estimated. Contingent liability is disclosed in case of

i) a present obligation arising from past events, when it is not probable that an outflow of resources will be required to settle the obligation;

ii) a present obligation arising from past events, when no reliable estimate is possible; and

iii) a possible obligation arising from past events where the probability of outflow of resources is not remote.

Contingent assets are neither recognized nor disclosed.

Provisions, contingent liabilities and contingent assets are reviewed at each Balance Sheet date.

 
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