Accounting Policies of Shree Ganesh Forgings Ltd. Company

Mar 31, 2014

A) Accounting Convention

The financial statements are prepared under the historical cost convention, on accrual basis in accordance with the generally accepted accounting principles in India, the Accounting Standards issued by the Institute of Chartered Accountants of India and the applicable Accounting standards notified under Section 211(3c)ofthe Companies Act, 1956.

b) Fixed Asset

(i) Fixed Assets are stated at cost less accumulated depreciation. Cost includes all expenses related to acquisition and installation of the concerned asset.

(ii) Depreciation on Fixed Assets is being charged on straight-line method at the rate prescribed under schedule XIV to the Companies Act, 1956.

(iii) Leased land value is not amortised in view of the long tenure of unexpired

c) Inventories :

(i) Raw Material: At cost on FIFO

(ii) Finished Goods : Lower of estimated cost or realizable value (Estimated Cost comprises of material cost and direct overheads)

(iii) Semi Finished Goods: At estimated cost (Estimated cost comprises of: Cost and related direct overhead

(iv) Scrap : At net realizable value

(v) Sundry Materials : At cost on FIFO basis

d) Asset Impairment

The Company reviews the carrying values of tangible and intangible assets for any possible impairment at each balance sheet date. An impairment loss is recognized when the carrying amount of an asset exceeds its recoverable amount. In assessing the recoverable amount, the estimated future cash flows are discounted to their present value at appropriate discount rate.

e) Investments

Long-term investments are carried at cost. Provision for diminution, if any, in the value of each long-term investment is made to recognize a decline, other than that of a temporary nature. The fair value of a long-term investment is ascertained with reference to its market value, the investee''s assets and results and the expected cash flows from the investments. Current investments are carried at lower of cost and fair value.

f) Provisions And Contingent Liabilities

Provisions are recognized in the accounts in respect of present probable obligations, the amount of which can be reliably estimated.Contingent Liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the company.

g) Revenue Recognition

Sales are recognized when bills are raised and recorded net of discounts, sales Taxes Income from dispatch of goods is recorded net of returns after trade discounts.

Dividend income is recognized when the right to receive the same is established. Interest income is recognized on a time proportion basis.

h) Employee Benefits

Obligations pertaining to short term employee benefits are recognized as cost in the period in which the employee renders the related service.

The cost of non accumulating compensated absences is recognized in the period in which such absences occur. The cost of accumulating compensated absences is recognized in the period in which such absences occur. The cost of accumulating compensated absences is recognized in the period in which the employee renders the service that increases his entitlement to future compensated absences.

The amount of contribution payable toward define contribution plan in exchange for service rendered by an employee is recognized as a cost, in the period in which such service was rendered. However if the said contribution falls due 12 months after the period in which the employee has rendered the related service, the amount of contribution to be recognized as above is discounted at appropriate rate. In case of defined benefit plans actuarial techniques are used to make a reliable estimate of the amount of benefits that the employees has earned in return for the services in the current and past period. These estimates are based on certain actuarial assumption about demographic and financial variable, which influence the cost of benefits. The rate used to discount post employment benefit obligation are determined by reference to market yield at balance sheet date on government bond of appropriate currency and term.

i) Taxed on Income

Provision for current tax is ascertained on the basis of the taxable income for the year determined in accordance with the provision of Income Tax Act, 1961.Deferred tax is recognized on timing differences; being the difference between the taxable incomes and accounting income that originate in one period and are capable of reversal in one or more accounting periods. Deferred tax assets subject to the consideration of prudence are recognized and carried forward only to the extent that there is reasonable certainty that sufficient difference at the year end and based on the tax rate and laws enacted on substantially enacted on the balance sheet date.

j) Foreign Currency Transactions

Transactions in foreign currency are recorded at the exchange rates prevailing on the date of the transaction. Monetary Assets and Liabilities denominated in foreign currency are translated at the period end exchange rates. Exchange gain/losses are recognized in the profit and loss account except for exchange differences related to fixed assets, which are adjusted in the cost of the assets. Non Monetary foreign currency items like investments in foreign subsidiaries are carried at cost and expressed in Indian currency at the rate of exchange prevailing at the time of making the original investment.

k) Export Benefits /Incentives

Export benefits/lncentives on export are accounted on accrual basis taking into Account the present realisable value of DEPB License.

l) Turnover:

Turnover includes Sale of goods, Scrap, Service Charges, and excludes Export Incentives And Excise Duties, Sales Tax, Value Added Tax, Discounts.

m) Miscellaneous Expenditure:

Share issue expenses are amortised equally over a period of Ten years

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Mar 31, 2013

SIGNIFICANT ACCOUNTING POLICIES

a) Accounting Convention

The fnancial statements are prepared under the historical cost convention, on accrual basis in accordance with the generally accepted accounting principles in India, the Accounting Standards issued by the Institute of Chartered Accountants of India and the applicable Accounting standards notifed under Section 211(3c) of the Companies Act, 1956.

b) Fixed Asset

(i) Fixed Assets are stated at cost less accumulated depreciation. Cost includes all expenses related to acquisition and installation of the concerned asset.

(ii) Depreciation on Fixed Assets is being charged on straight-line method at the rate prescribed under schedule XIV to the Companies Act,1956.

(iii) Leased land value is not amortised in view of the long tenure of unexpired

c) Inventories :

(i) Raw Material : At cost on FIFO

(ii) Finished Goods : Lower of estimated cost or realizable value (Estimated Cost comprises of material cost and direct overheads)

(iii) Semi Finished Goods: At estimated cost (Estimated cost comprises of : Cost and related direct overhead

(iv) Scrap : At net realizable value

(v) Sundry Materials : At cost on FIFO basis

d) Asset Impairment

The Company reviews the carrying values of tangible and intangible assets for any possible impairment at each balance sheet date. An impairment loss is recognized when the carrying amount of an asset exceeds its recoverable amount. In assessing the recoverable amount, the estimated future cash fows are discounted to their present value at appropriate discount rate.

e) Investments

Long-term investments are carried at cost. Provision for diminution, if any, in the value of each long-term investment is made to recognize a decline, other than that of a temporary nature. The fair value of a long-term investment is ascertained with reference to its market value, the investee''s assets and results and the expected cash fows from the investments. Current investments are carried at lower of cost and fair value.

f) Provisions And Contingent Liabilities

Provisions are recognized in the accounts in respect of present probable obligations, the amount of which can be reliably estimated.Contingent Liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confrmed by the occurrence or non- occurrence of one or more uncertain future events not wholly within the control of the company.

g) Revenue Recognition

Sales are recognized when bills are raised and recorded net of discounts, sales Taxes Income from dispatch of goods is recorded net of returns after trade discounts.

Dividend income is recognized when the right to receive the same is established.

Interest income is recognized on a time proportion basis.

h) Employee Benefts

Obligations pertaining to short term employee benefts are recognized as cost in the period in which the employee renders the related service.

The cost of non accumulating compensated absences is recognized in the period in which such absences occur. The cost of accumulating compensated absences is recognized in the period in which such absences occur. The cost of accumulating compensated absences is recognized in the period in which the employee renders the service that increases his entitlement to future compensated absences.

The amount of contribution payable toward defne contribution plan in exchange for service rendered by an employee is recognized as a cost, in the period in which such service was rendered. However if the said contribution falls due 12 months after the period in which the employee has rendered the related service, the amount of contribution to be recognized as above is discounted at appropriate rate. In case of defned beneft plans actuarial techniques are used to make a reliable estimate of the amount of benefts that the employees has earned in return for the services in the current and past period. These estimates are based on certain actuarial assumption about demographic and fnancial variable, which infuence the cost of benefts. The rate used to discount post employment beneft obligation are determined by reference to market yield at balance sheet date on government bond of appropriate currency and term.

i) Taxed on Income

Provision for current tax is ascertained on the basis of the taxable income for the year determined in accordance with the provision of Income Tax Act, 1961.Deferred tax is recognized on timing differences; being the difference between the taxable incomes and accounting income that originate in one period and are capable of reversal in one or more accounting periods. Deferred tax assets subject to the consideration of prudence are recognized and carried forward only to the extent that there is reasonable certainty that suffcient difference at the year end and based on the tax rate and laws enacted on substantially enacted on the balance sheet date.

j) Foreign Currency Transactions

Transactions in foreign currency are recorded at the exchange rates prevailing on the date of the transaction. Monetary Assets and Liabilities denominated in foreign currency are translated at the period end exchange rates. Exchange gain/losses are recognized in the proft and loss account except for exchange differences related to fxed assets, which are adjusted in the cost of the assets. Non Monetary foreign currency items like investments in foreign subsidiaries are carried at cost and expressed in Indian currency at the rate of exchange prevailing at the time of making the original investment.

k) Export Benefts /Incentives

Export benefts/Incentives on export are accounted on accrual basis taking into Account the present realisable value of DEPB License.

1) Turnover:

Turnover includes Sale of goods, Scrap, Service Charges, and excludes Export Incentives And Excise Duties, Sales Tax, Value Added Tax, Discounts.

j) Miscellaneous Expenditure:

Share issue expenses are amortised equally over a period of Ten years

2) Secured Loans:

During the period under review, interest accrued on secured loans has not been Accounted in the books since interest by the lender banks has not been charged in the Account consequent to the amount being declared as non-performing assets.

The company is presently under negotiation with the consortium for settling the outstanding dues.

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Mar 31, 2010

I) Basis Of Accounting :

The fi nancial statements are prepared under the historical cost convention, in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 1956 as adopted consistently by the company.

ii) Fixed Assets :

a) The fi xed assets are stated at cost less depreciation. The Company capitalizes all direct cost relating to the acquisition and installation of fi xed assets. Interest on borrowed funds if any used to fi nance the acquisition of Fixed Assets, are capitalized up to the date the assets are ready for commercial use.

b) Depreciation on fi xed assets is being charged on straight-line method at the rate prescribed under schedule XIV to the Companies Act, 1956.

c) Depreciation on revalued assets is transferred from revaluation reserve to the Profi t & Loss Account.

d) Leased land value is not amortized in view of the long tenure of unexpired lease period.

iii) Inventories :

The inventories are valued:-

a) Raw Material : At cost on FIFO

b) Finished Goods : Lower of estimated cost or realizable value

(Estimated cost comprises of material cost

and direct overheads)

c) Semi Finished Goods : At estimated cost (Estimated cost comprises of material cost and

Related direct overheads)

d) Scrap : At net realizable value

e) Sundry Materials : At cost on FIFO Basis



iv) Contingent Liabilities :

Contingent liabilities are generally not provided for in the accounts and are shown as notes to the accounts.

v) Foreign Currency Transaction :

Transactions in foreign currencies are recognized at the prevailing exchange rates on the transaction dates. Realised gains and losses on settlement of foreign currency transactions are recognized in the Profi t and Loss Account.

vi) Revenue Recognition :

Sales are recognized upon delivery of goods and are recorded net of trade discounts, rebates, sales tax/ value added tax but are inclusive of excise duty.

vii) Export Benefi ts/ Incentives :

Export Benefi ts/ Incentives on export are accounted on accrual basis taking into account the present realizable value of DEPB License.

viii) Taxation :

Current tax is determined as the amount of tax payable in respect of taxable income for the year. Deferred tax for timing differences between the income as per fi nancial statement and income as per the Income Tax Act,1961 is accounted for using the tax rates and laws that have been enacted or substantially enacted as of the Balance Sheet date. Deferred tax assets arising from the timing differences are recognized to the extent there is virtual certainty that suffi cient future taxable income will be available against such deferred tax assets can be realized.

ix) Retirement Benefi ts :

Liabilities in respect of retirement benefi ts to employees are provided in books of account on accrual basis.

x) Investments :

Long-term investments are valued at cost. Current investments are valued at lower of cost or fair value as on the date of the Balance Sheet. However, as per management, diminutions which are temporary in nature are not provided for.

xi) Turnover :

Turnover includes Sale of Goods, Scrap, Service Charges, and excludes Export Incentives and Excise Duties, Sales tax, Value Added Tax, Discounts .

xii) Miscellaneous expenditures :

Share issue expenses are amortized equally over a period of ten years.

a) The consortium bankers have fi rst pari passu charge over the entire fi xed assets and second charge over the current assets of the company with respect to the Term loan facility and fi rst pari passu charge on the current assets and the second charge over the fi xed assets of the company in respect of the working capital facilities.

b) Personal Guarantees of Mr. Deepak Sekhri & Mrs. Anita Sekhri have been provided in favor of the consortium Bankers, under the CDR package

ii) Provision For Current And Deferred Tax

Provision for current tax is made after taking into consideration benefi ts admissible under the provisions of the Income-tax Act, 1961.

Deferred tax resulting from “timing difference” between book and taxable profi t is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. The deferred tax asset is recognized and carried forward only to the extent that there is a virtual certainty that the assets will be realized in future.