Accounting Policies of Sportking India Ltd. Company

Mar 31, 2018

NOTE 1. A. SIGNIFICANT ACCOUNTING POLICIES:

(a) Basis of preparation of financial statements

The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 and relevant amendment rules issued thereafter, relevant provisions of the Companies Act 2013 and guidelines issued by the Securities and Exchange Board of India (SEBI).

For all periods up to and including the year ended 31stMarch, 2017, the Company prepared its financial statements in accordance with accounting standards notified under Companies (Accounting Standard) Rule, 2006 (previous GAAP). These financial statements for the year ended 31 March 2018 are the first financial statements of the Company prepared in accordance with Ind AS as the company is required to comply with the Indian Accounting Standards (Ind AS) for the accounting periods beginning on or after 1st April, 2017, (with the comparatives for the periods ended on 31stMarch, 2017).Detail explanation on how the transition from previous GAAP to Ind AS has affected the Company''s financial position, financial performance and cash flow is explained in Note No.31).

The financial statements have been prepared on historical cost convention on accrual basis, except for certain financial instruments which have been measured at fair value.

The 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.

The books of accounts and the financial statements for year ended and as at 31st March, 2017 were audited by previous auditors M/s Rawla & Co.

(b) Use of Estimates and Judgements

The preparation of the financial statements in conformity with Ind AS requires management to make estimates, judgments and assumptions. These estimates, judgments and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period. Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made. Differences between actual results and estimates are recognised in the period in which the results are known materialised.

(c) Revenue Recognition

Revenue is recognised at the fair value of the consideration received or receivable. Revenue is reduced for sales return, trade discount and other similar allowances. The company recognizes revenue when the amount of revenue can be measured reliably and it is probable that the economic benefits associated with the transaction will flow to the entity.

(i) Sales of goods

Revenue from sale of goods is recognised when the following conditions are satisfied:

a) The Company has transferred all significant risk and rewards of ownership to the buyer;

b) The company does not retain effective control on the goods usually associated with ownership;

c) The cost incurred in respect of the transaction can be measured reliably;

d) It is probable that economic benefits will flow to the company; and

e) The amount of revenue can be measured reliably.

In accordance with Ind AS 18 on "Revenue" and Schedule III to the Companies Act, 2013, Sales for the previous year ended 31st March 2017 and for the period 1st April to 30 June 2017 are reported gross of Excise Duty and net of VAT/CST. Further, Excise Duty is reported as a separate expense line item. Consequent to the introduction of Goods and Services Tax (GST) with effect from 1st July 2017, VAT/ CST, Excise Duty etc. have been subsumed into GST and accordingly the same is not recognised as part of sales.

(ii) Export Incentives

Revenue in respect of the export incentives is recognized on post export basis.

(iii) Interest

Income from interest is recognized using the effective interest rate (EIR).

(iv) Dividend

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

(v) Insurance and Other Claims

Insurance and other claims are recognized when no significant uncertainty exists with regard to the amount to be realized and the ultimate collection thereof.

(d) Employee Benefits

(A) Short term Employee Benefits :

Employee benefits payable wholly within twelve months of receiving employee services are classified as short-term employee benefits. The amount of short term employee benefits are recognized as an expense on an undiscounted basis in the statement of profit and loss of the year in which the related service is rendered.

(B) Defined Contribution :

Provident fund is a defined contribution scheme. The Company has no obligation, other than the contribution payable to the provident fund. The Company recognizes contribution payable to the provident fund scheme as an expense, when an employee renders the related service

(C) Defined Benefit Plan :

The Company provides for gratuity, a defined benefit retirement plan (''the Gratuity Plan'') covering eligible employees of the Company. The Gratuity Plan provides a lump-sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee''s salary and the tenure of employment with the Company.

Liabilities with regard to the Gratuity Plan are determined by actuarial valuation, performed by an independent actuary, at each balance sheet date using the projected unit credit method. The company fully contributes all ascertained liabilities to the Sportking India Limited Employee Group Gratuity Trust managed by the trustees. The trustees administrate contributions made to the Trust and contributions are invested in the schemes as permitted by the laws of India.

The Company recognizes the net obligation of a defined benefit plan in its balance sheet as an asset or liability. Re-measurements comprising of actuarial gains and losses, the effect of the asset ceiling (excluding amounts included in net interest on the net defined benefit liability) and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability) are recognised in Other Comprehensive Income which are not reclassified to profit or loss in subsequent periods. All other expenses related to defined benefit plans are recognised in employee benefits expense in the Statement of profit and loss

(D) Compensated absences:

The Company has a policy on compensated absences which are both accumulating and non-accumulating in nature. The expected additional cost of accumulating compensated absences is determined by actuarial valuation performed by an independent actuary at each balance sheet date using projected unit credit method. Expense on non-accumulating compensated absences is recognized in the period in which the absences occur.

(e) Property, Plant and Equipment :

The Company has applied for the one time transition exemption of considering the carrying cost on the transition date i.e. April 1, 2016 as the deemed cost under Ind AS 101 and hence regarded thereafter as historical cost.

Freehold land is carried at cost. All other items of Property, plant and equipment are stated at cost, less accumulated depreciation and impairment loss, if any. The cost directly attributable to acquisition are capitalised until the property plant and equipment are ready for use as intended by the management. The cost comprises of:

(a) Purchase price including import duties and non-refundable purchase taxes after deducting trade discounts and rebates.

(b) any expenditure directly attributable for bringing an asset to the location and the working condition for its intended use and

(c) the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located, the obligation for which an entity incurs either when the item is acquired or as a consequence of having used the item during a particular period for purposes other than to produce inventories during that period.

Depreciation is provided on Straight Line Method on the basis of useful lives of such assets specified in Schedule II to the Companies Act, 2013.

Depreciation method, useful lives and residual values are reviewed periodically, including at each financial year end.

Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is classified as capital advances under other non-current assets and the cost of assets not put to use before such date are disclosed under ''Capital work-in-progress''.

Subsequent expenditures relating to property, plant and equipment is capitalized only when it is probable that future economic benefits associated with these will flow to the Company and the cost of the item can be measured reliably. Repairs and maintenance costs are recognized in net profit in the statement of profit and loss when incurred. The cost and related accumulated depreciation are eliminated from the financial statements upon sale or retirement of the asset and the resultant gains or losses are recognized in the statement of profit and loss.

(f) Intangible Assets

Intangible assets are stated at cost less accumulated amount of amortization and impairment, if any. Intangible assets are amortized over their respective individual estimated useful lives on a straight-line basis, from the date that they are available for use. The estimated useful life of an identifiable intangible asset is based on a number of factors including the effects of obsolescence, etc. Amortisation method and useful life are reviewed periodically, including at each financial year end.

(g) Inventories

Inventories are valued at cost or net realizable value, whichever is lower. The cost in respect of the various items of inventory is computed as under:

- In case of raw materials at first-in, first-out (FIFO) basis. The cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition.

- In case of stores and spares at weighted average cost plus direct expenses. The cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition.

- In case of work in progress at raw material cost plus conversion costs depending upon the stage of completion.

- In case of finished goods at raw material cost plus conversion costs, packing cost and other overheads incurred to bring the goods to their present location and condition.

(h) Borrowing Costs

Borrowing costs that are directly attributable to the acquisition or construction of a qualifying asset are capitalized as part of the cost of the asset. Other borrowing costs are recognized in the statement of Profit and Loss in the period in which they are incurred. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.

(i) Earnings per Share

Basic earnings per share is computed by dividing the net profit for the period attributable to the equity share holders of the company by the weighted average number of equity shares outstanding during the period. For the purpose of calculating diluted earnings per share, the weighted average numbers of shares outstanding during the period are adjusted for the effects of all diluted potential equity shares if any.

(j) Income Taxes

Income tax expense comprises current tax and deferred tax.

Income tax expense is recognized on net profit in the statement of profit and loss except to the extent that it relates to items recognized directly in equity or other comprehensive income, in which case it is recognized in equity or other comprehensive income respectively.

Current income tax for current and prior periods is recognized at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.

Deferred income tax assets and liabilities are recognized for all temporary differences arising between the tax base of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

Deferred income tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date and are expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of changes in tax rates on deferred income tax assets and liabilities is recognized as income or expense in the period that includes the enactment or the substantive enactment date. A deferred income tax asset is recognized to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences and tax losses can be utilized. The Company offsets current tax assets and current tax liabilities, where it has a legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.

Minimum Alternate Tax credit is recognised when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. Such asset is reviewed at each Balance Sheet date and the carrying amount of the MAT credit asset is written down to the extent there is no longer a convincing evidence to the effect that the Company will pay normal income tax during the specified period. The same is grouped under the head as ''Deferred Tax Asset''.

(k) Government Grants

The government grants are recognized only when there is reasonable assurance that the conditions attached to them shall be complied with, and the grants will be received.

Government grants related to assets are treated as deferred revenue and are recognized in the statement of profit and loss on a systematic and rational basis over the useful life of the related asset.

Government grants related to revenue are recognized on a systematic basis in the statement of profit and loss over the periods necessary to match them with the related costs which they are intended to compensate.

(l) Foreign Currency Transactions

Transactions in foreign currency are initially recorded in the functional currency i.e. Indian Rupees using the exchange rate at the date of transaction.

Monetary items (i.e. receivables, payables, loans etc.) denominated in foreign currency are reported using the closing exchange rate as on each balance sheet date.

The exchange difference arising on the settlement or reporting of monetary items at rates different from rates at which these were initially recorded / reported in previous financial statements, are recognised in the statement of profit and loss in the period in which they arise.

(m) Dividends

Final dividends on shares are recorded as a liability on the date of approval by the shareholders and interim dividends are recorded as a liability on the date of declaration by the company''s Board of Directors.

(n) Leases

Payments under operating leases are recognized as an expense in the statement of profit and loss on a straight line basis over the term of lease.

(o) Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

(i) Initial Recognition and measurement

The company recognises the financial assets and financial liabilities when it becomes party to the contractual provision of the instruments. All financial assets and liabilities are recognised at fair value on initial recognition except for trade receivables which are initially measured at transaction price. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities that are not at fair value through profit or loss are added/ reduced to the fair value on initial recognition. Transaction cost directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit and loss are recognised immediately in the statement of profit and loss.

(ii) Subsequent measurement

a. Non-derivative financial instruments

(i) Financial assets carried at amortised cost

A financial asset is subsequently measured at amortised cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

(ii) Financial assets at fair value through other comprehensive income

A financial asset is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

(iii) Financial assets at fair value through profit or loss

A financial asset is measured at fair value through profit and loss unless it is measured at amortized cost or at fair value through other comprehensive income.

(iv) Financial liabilities

The financial liabilities are subsequently carried at amortized cost using the effective interest method. For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.

b. Derivative financial instruments

The Company holds derivative financial instruments such as foreign exchange forward control to mitigate the risk of changes in exchange rates on foreign currency exposures. The counterparty for these co tracts is generally a bank.

Although the Company believes that these derivatives constitute hedges from an economic perspective, they may not qualify for hedge accounting under Ind AS 109, Financial Instruments. Any derivative that is either not designated a hedge, or is so designated but is ineffective as per Ind AS 109, is categorized as a financial asset or financial liability, at fair value through profit or loss.

Derivatives not designated as hedges are recognized initially at fair value and attributable transaction costs are recognized in net profit in the statement of profit and loss when incurred. Subsequent to initial recognition, these derivatives are measured at fair value through profit or loss and the resulting exchange gains or losses are charged to Statement of Profit and Loss. Assets/ liabilities in this category are pre sented as current assets/current liabilities if they are either held for trading or are expected to be realized within 12 months after the balance sheet date.

c. Equity Share

Equity shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares and share options are recognized as a deduction from equity, net of any tax effects.

d. Compound financial instruments

The non-convertible non-cumulative preference shares issued by the company that provides for mandatory redemption by the company for a fixed or determinable amount at a fixed or determinable future date has been treated as a compound financial instruments as per criteria mentioned in Ind AS 32.

On issuance of the convertible preference shares, the fair value of the liability component is determined using a market rate for an equivalent non-convertible instrument. This amount is classified as a financial liability measured at amortised cost (net of transaction costs).The remainder of the proceeds is recognised and included in other equity.

(iii) De-recognition of financial instruments

A financial asset is derecognized when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for de-recognition under Ind AS 109. A financial liability (or a part of financial liability) is derecognized when the obligation specified in the contract is discharged or cancelled or expires.

(iv) Fair value measurement of financial instruments

The Company measures certain financial instruments at the fair value at each balance sheet date.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

(i) In the principal market for the asset or liability, or

(ii) In the absence of a principal market, in the most advantageous market for the assets or liability.

The fair value of financial instruments is determined using the valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimising the use of unobservable inputs.

Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

-Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities

-Level 2: inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly (i.e. as prices) or (unadjusted) in active markets for identical assets or liabilities

-Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs)

Based on the three level fair value hierarchy, the methods used to determine the fair value of financial assets and liabilities include quoted market price, discounted cash flow analysis and valuation certified by the external valuer.

In case of financial instruments where the carrying amount approximates fair value due to the short maturity of those instruments, carrying amount is considered as fair value.

(p) Impairment of assets

a. Financial assets

The company recognizes loss allowances using the expected credit loss (ECL) model for the financial assets which are not fair valued through profit or loss.

Loss allowance for trade receivables with no significant financing component is measured at an amount equal to lifetime ECL. For all other financial assets, expected credit losses are measured at an amount equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL. The amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognised is recognized as an impairment gain or loss in statement of profit or loss.

b. Non-financial assets

Intangible assets and property, plant and equipment

Intangible assets and property, plant and equipment are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the CGU to which the asset belongs.

If such assets are considered to be impaired, the impairment to be recognized in the statement of profit and loss is measured by the amount by which the carrying value of the assets exceeds the estimated recoverable amount of the asset. An impairment loss is reversed in the statement of profit and loss if there has been a change in the estimates used to determine the recoverable amount. The carrying amount of the asset is increased to its revised recoverable amount, provided that this amount does not exceed thecarrying amount that would have been determined (net of any accumulated amortization or depreciation) had no impairment loss been recognized for the asset in prior years.

(q) Cash and cash equivalents

The Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with a maturity period of three months or less from the balance sheet date, which are subject to an insignificant risk of changes in value.

(r) Cash flow statement

The cash flow statement is prepared in accordance with the Indian Accounting Standard (Ind AS) - 7 "Statement of Cash flows" using the indirect method for operating activities. The cash flows from operating, investing and financing activities of the Company are segregated

(s) Provisions

(i) A provision shall be recognised when:

(a) an entity has a present obligation as a result of a past event;

(b) it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and

(c)a reliable estimate can be made of the amount of the obligation.

(ii) A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not require an outflow of resources. When there is a possible obligation or a present obligation in respect of which likelihood of outflow of resources is remote, no provision or disclosure is made.

(iii) Contingent assets are not recognised in the financial statements since this may result in the recognition of income that may never be accrued/ realised. A disclosure for contingent assets is made when an inflow of economic benefit is probable.

B. CRITICAL ACCOUNTING ESTIMATES

i. Useful lives of property, plant and equipment

The estimated useful lives of property, plant and equipment are based on a number of factors including the effects of obsolescence, internal assessment of user experience and other economic factors (such as the stability of the industry, and known technological advances) and the level of maintenance expenditure required to obtain the expected future cash flows from the asset.

The Company reviews the useful life of property, plant and equipment periodically and at the end of each reporting date.

ii. Recoverable amount of property, plant and equipment

The recoverable amount of property plant and equipment is based on estimates and assumptions regarding the expected market outlook and expected future cash flows. Any changes in these assumptions may have a material impact on the measurement of the recoverable amount and could result in impairment.

iii. Post-retirement benefit plans

Employee benefit obligations are measured on the basis of actuarial assumption including any changes in these assumptions that may have a material impact on the resulting calculations.

iv. Recognition of deferred tax assets

Recognition of deferred tax assets depends upon the availability of future profits against which tax losses carried forward can be used.

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Mar 31, 2014

A) Accounting Convention :

The financial statements are prepared under historical cost convention using the accrual system of accounting in accordance with the accounting principles generally accepted in India and the requirements of the Companies Act, 1956, including the mandatory Accounting Standards as prescribed by the Companies (Accounting Standards) Rules, 2006. Value Added Tax (VAT), Income Tax, Wealth Tax, and Service Tax, Cess, Insurance Claims, etc. which are accounted for as and when final demand/refund/claim is determined on final assessment.

b) Use of Estimates :

The preparation of financial statements requires the management of the company to make estimates and assumption that effect the reported balances of assets/liabilities and disclosure relating to the contingent liabilities and provisions as at the date of the financial statements and reported amounts of income and expenses during the year. The difference between the actuals and estimates are recognized in the year such amounts are known/materialised.

c) Provisions, Contingent Liabilities and Contingents Assets :

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

d) Fixed Assets :

i) Fixed Assets are stated at cost of acquisition, net of modvat /cenvat credit /terminal excise duty, additional custom duty including net effect on foreign exchange fluctutation/contracts, financial cost and other incidental expenses till the commencement of commercial production attributable to acquisition or construction/installation of fixed assets less depreciation and impairment loss.

ii) Capital works in progress are carried at cost, comprising direct cost, finance cost, net effect on foreign fluctuation/contracts and related incidental expenses.

iii) Intangible assets are stated at cost of acquisition less accumulated amortisation.

e) Depreciation / Amortisation :

i) The company has provided depreciation on Straight Line Method in accordance with the rates as prescribed in Schedule XIV under the provisions of The Companies Act, 1956 on the fixed assets when it is put to use on monthly basis.

ii) Renovation to premises taken on lease by the company have been amortised over the period of lease and in case of premature termination would be written off fully.

iii) Electricity Line Expenses / Service connection charges and Computer Software being intangible are amortised over a period of 5 years.

f) Impairment of Assets :

At each balance sheet date the carrying amounts of fixed assets are reviewed by the management to determine whether there is any indication that these assets had suffered an impairment loss. If any such indication exists recoverable amount of the asset is estimated in order to determine the extent of impairment loss. Recoverable amount is the higher of an asset's net selling price and value in use. In assessing, value in use, the estimated future cash flows expected from the continuing use of the assets and from its disposal are discounted to their present value using a pre tax discount rate that reflects the current market assessments of time value of money and risks specific to the asset. Reversal of impairment loss is recognized immediately as income in the profit and loss account.

g) Inventories :

These are valued as under:

i) Raw Material, Work-in-Process At cost or net realisable value and useable whichever is lower.

ii) Stores & Spares At cost less provision for obsolescence or net realisable value whichever is lower.

iii) Finished Goods At cost plus excise duty payable on sale or net realisable value whichever is lower.

iv) Unusable waste At net realisable value

v) The raw material, stores & spares and raw-material contents of work-in-process are valued by using the first-in-first out (FIFO) method while the finished goods are valued by using weighted average cost method. Cost relating to finished goods/work-in-process means direct raw material cost and allocable manufacturing expenses.

vi)The company makes provision for the value of goods in transit at the year end for imported/indigenous raw material and imported spare parts only.

vii) The policy of valuation of inventories is in accordance with Accounting Standard-2 (Revised) 'Valuation of Inventories' issued by the Institute of Chartered Accountants of India.

h) Sales/Revenue Recognition :

i) Domestic sales are accounted, net of returns & trade discounts, on dispatch of products to customers from the works/warehouses and export sales on shipment of goods. Sales within India comprising of sale of goods and services are inclusive of excise duty, if any. The sale value of goods on which value added tax has already been charged, are exclusive of such tax.

ii) The revenue in respect of export benefit is recognized on post exports basis, at the rate at which the entitlement accrues, to the extent the company is reasonably certain of the realisable value.

i) Excise Duty :

The excise duty liability has been accounted for in respect of the finished goods/ useable waste cleared/ lying in the factory/bonded premises which are liable to excise duty provided the cenvat of excise duty/ additional custom duty of the inputs have been availed.

j) Employee Benefits :

i) Short-term employee benefits are recognized as an expense at the undiscounted amount in the profit and loss account of the year in which the related service is rendered.

ii) Long term employee benefits are recognized as an expense in the profit and loss account for the year in which the employee has rendered services. The expense is recognized at the present value of the amount payable determined using actuarial valuation techniques. Actuarial gains / losses in respect of long term benefits are adjusted to the profit and loss account.

k) Modvat (Cenvat) :

Modvat (cenvat) credit/Terminal Excise Duty paid on inputs and capital assets is accounted for by reducing the purchase cost of related inputs or the capital assets.

l) Subsidy :

Government's Capital Investment Subsidy in the nature of promoters' contribution represents Capital Reserve.

m) Direct Taxes :

i) Current Tax

Provision for Income Tax, if any, is based on the assessable profits, computed in accordance with the provisions of Income Tax Act, 1961.

ii) Defered Tax

Deferred Income tax expense or benefit 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 period. Deferred tax assets or liabilities are measured using the tax rates and tax laws that have been enacted or substantially enacted by the balance sheet date.

Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recognized only to the extent that there is virtual certainty that sufficient taxable income will be available to realize these assets. All other deferred tax assets are recognized only to the extent there is reasonable certainty that sufficient future taxable income will be available to realize these assets.

iii) Wealth Tax

Wealth tax is ascertained in accordance with the provisions of the Wealth Tax Act 1957

n) Foreign Currency Transactions :

i) Foreign currency transactions are accounted for at equivalent rupee value converted at the exchange rates prevailing at the time of such transaction

ii) Monetary Assets & Liabilities in foreign currency are translated at the year-end rate through exchange fluctuation account to the respective accounts as per the guidance issued by The Institute of Chartered Accountants of India

iii) Any income or expense on account of exchange differences either on settlement or translation is recognized in the revenue account except in cases where they relate to acquisition of fixed assets and before put to use in which case they are adjusted to the carrying cost of such assets.

iv) Financial derivatives and hedging contracts are accounted on the date of settlement. The accrued/ realised gain/loss in respect of the settled contracts/ renewed/ cancelled is only recognized in the books of accounts.

o) Prior Period Items :

Income and expenditure which relate to significant items of prior accounting period other than those occasioned during the close of accounting year to which it is relatable, is considered in current year.

p) Borrowing Costs :

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of the asset till the asset is ready for use. Other borrowing costs are recognised as an expense in the year in which they are incurred.

q) Lease :

Leases of assets under which the lessor effectively retains all the risks and benefits of ownership are classified as operating lease. Payments made under operating lease are charged to profit and loss account over the period of lease.

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Mar 31, 2013

A| Accounting Convention :

The financial statements are prepared under historical cost convention using (he accrual system of accounting ir accordance with the accounting principles generally accepted in India and the requirements ot the companies Act 1956. including the mandatory Accounting Standards as prescribed by the Companies (Accounting Standards) Rules, 2006. valueAdded Tax (VAT), income rax, Wealth Tax, and Service Tax. Cess, Insurance Claims etc which are accounted for as and when final demand/refund/claim is determined on final assessment,

b) Use of Estimates :

The preparation of financial statement requires the management of the company 10 make estimates gnd assumption (hal effect the reported balances of assetsfhatulilias and disclosure relating to the cent ngent uL hi us and provisions as at the date of the financial statements and reported amounts of income and expenses during the year The difference between the actuals and estimates are recognized in the year such amounts are known materilised.

c} Provisions, Contingent Liabilities and Contingents Assets :

Provisions involving substantial degree of estimation in nneasui ament are recognized where there is a presanl obligation as a result of pest events and it is probable that there will be an c jUIqw of resources. Contigent Liabilities are not recognized but are disclosed In the notes. Cent gam assets ere neither recognized 'lor disclosed in the financial statEmantsfnptes

d) Fixed Assets:

j) Fixed Assefa are slated at cost of acquisition, net of modvat feenvat credit /terminal excise duty additional custom duty >ncludng net effect on foreign exchange fluctufationfcontracts. (inane at cost and other incidental expenses till the commencement of commercial production attributable to acquisition or construction''natal lahon of fixed, assets less degree ahon ann impairment loss, ii) Capital works in progress are earned al cost, comprising direct cost, finance cost, net effect on foreign fluctuation contracts and related incidental expenses iii) Intangible assets are stated at cost of acquisition less accumulated amortisation

e) Depreciation / Amortisation :

i) The company has provided depreciation on Straight Line Method in accordance with the rates as presenbed in Schedule XIV under (he provisions of The Companies Act, 1956 on the fixed assete when it is put to use on monthly basis.

ii] Renovation to premises taken on lease by the company have been amortised aver the pentad of lease and In case of premature tm mi nation would be written off fully iii) Electricity Line Expenses i Service connection changes and Computer Software being mtengihte ere amortised over a period of 5 years.

f) Impairment of Assets :

At each balance sheet date the carrying amounts of fixed assets are reviewed by the management to determine wnether there is any indication thal these assets had suffered an impairment loss If any such indication exisls recoverable emounl of the asset is estimated in order to determine the extent o! impairment loss Recoverable amount is the higher of an asset's net selling pace and value in use. In assessing, value in use. the estimaled tulure cash flows expected from the continuing use of the assets and from its disposal are discounted to their present value using a pre tax discount rate mat reflects the cunenl market assessments of time value of money and nsks specific to ttie asset. Reversal of mpaimmenl loss is recognizer! immediately as income in the profit and loss account

g) Inventories :

These are valued as under

1) Raw Material Work-in-Process and useable At cost or net realisable value whichever is lower

ii) Stores & Spares At cost less provision for obsolescence or net realisable value whichever lower

iii) Finished Goods At cosl plus excise duty payable on salecr net realisable value whichever is lower

iv) Unusable waste At net realisable value

v) The raw malenal. stores 4 Spares and raw-materiel contenls of work -in -process are valued by using me first-in-firsi out (FIFO) method while the finished goods are valued by using weighted average cost method Co3t relating to finished goodsfwork-in -process means direct raw material cost and allocable manufacluring expenses

vi) The company makes provision for the value of goods in transit ait me year end for imported/indigenous raw maierial and imported spare parts only

vii) The policy ol valuation of inventories is in accordance with Accounting Stendard-2 (Revised) h/alualion of inventories' issued by ihe tnslilute of Chartered Accountants of India

h) Sale/Revenue Recognition :

1) Domestic sales are accounted, net of returns trade discounts, on dispatch of products to customers from the works anehouses and export sales on shipment of goods Sales within India comprising of sale of goods and services are inclusive of excise duty, if arty. The sale value of goods on which value added tax has already been charged, are exclusive of such tax. ii) The revenue m respect of export benefit is recognised on post exports basis, at 1he rate at which the enlivement accrues, to the extenlthe company Is reasonably certain of the realisable value

i) Excise Duty:

T no excise duty liability has been accounted for ir respect of the finished goodsV useable waste cleared,1f lying in (he factoryfbgnded premises which are liable to exc se duly provided the cenvat of excise dutyf additional cl atom duty of the inputs have been availed

j) Employes Benefits:

1) Shod-term employee benefits ere recognized as an expense at (he undiscounted amount in ihe profit and loss acoourf gl the year in which the related service is rendered. n> Long term employee benefits are recognized as an expense in the profil and loss account (or 1he year m which (he employee has rendered services The expense is recognized at ihe present value of the amount payable determined using actuarial va.ualkm techniques. Actuarial ga ns / lasses in respect of long term benefits are adjusted to Ihe profit and loss account

k| Nodvat fCenval):

Modval fcenval} ciBuit/TerrninalExCise Duly paid on nocls anc capital assets if; accounted "or hy reducing lUe purchase cos?f related inputs or the capita!assets

l) Subsidy ;

Governments Capital Investment Subsidy in the nature ofpnomoters1 contribution represents Copcai Peseme

m) Direct Taxes:

Provision (or Income Tax, it any, is based on the assessable profits, computed m accordance with th e provisions of I ncome Tax Act, 1961

ii) Detered Tax

Deferred Income tax expense or benetil is recognized an timing differences being the d fferenoe between taxable income and accounting income that originate in one period and ate capable at reverse m cme or more Subsequent pB'itid Deferred tax assets or liabilities are measured using the tax rates and lax laws teat have been enacted or substantially enacted by me balance sheet date. Deterred tax assets in resped &f unabsnrued depreciation and carry forward of losses are recognized only to the extent mat mere is virtual certainty thal sufficient taxable income will be available to rea ize these assels All other deferred tax assets are recognized only to the extent there is reasonable certainty thal sufficient future taxable moome will be available to realize these assets,

ii) Wealth Tax

Wealth tax is ascertained m accordance with the provisions of the Weann Tax Ad 1967

n) Foreign Currency Transactions :

ij Foreign currency transactions are accounted ford equivalent rupee value converted al ihe Exchange rates prevailing at the time of such transaction

ii] Monetary Assets £ Liabilities, in foreign currency are translated al Ihe year-end rate Ihrough exchange fluctuation account to the respective accounts as per Ihe guidance issued by The Institute of Chartered Accountants of India

iii) Any income or expense on account of exohange differences eilher on settlement or translation is recognized in the revenue account except in cases where (hey relate to acquisition of fixed assets and before put to use in which case they are adjusted 1o 1he carrying cost of such assets.

iy) Financial derivatives and hedging conhaclsare accounted on Lhe date of settlement. The accrued/ realised gain/loss in respect of the settled contracts/ renewed^ cancelled is only recognized rn the books of accounts,

o) Prior Period Items :

Income and expenditure which relate to significant items of prior accounting period ether then those occasioned during the dose of accounting year to which it is relalable, is considered in current year,

p) Borrowing Costs:

Borrowing costs thal are direotly attributable to fhe acquisition construction or production of sq'.n ifying asset are capitalised as part of lhe owl of the asset till Lite asset is ready for use. Other borrowing costs are recognised as an expense in the year in whicil ihey are incurred

q) LeasE :

Leases of assets under which the lessor effectively relates all the risks and benefits of ownership are classified as operating tease. Payments made under operating lease are charged to profiL and loss account over me penod of lease.

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Mar 31, 2012

A) Accounting Convention:

The financial statements are prepared under historical cost convention using the accrual system of accounting in accordance with the accounting principles generally accepted in India and the requirements of the Companies Act, 1956, including the mandatory Accounting Standards as prescribed by the Companies (Accounting Standards) Rules, 2006

b) Use of Estimates:

The preparation of financial statements requires the management of the company to make estimates and assumption that effect the reported balances of assets/liabilities and disclosure relating to the contingent liabilities and provisions as at the date of the financial statements and reported amounts of income and expenses during the year. The difference between the actuals and estimates are recognized in the year such amounts are known/materialised.

c) Provisions, Contingent Liabilities and Contingents Assets :

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

d) Fixed Assets:

i) Fixed Assets are stated at cost of acquisition, net of modvat/cenvat credit/terminal excise duty, additional custom duty, or of construction, including pre-operative, financial and other incidental expenses attributable to acquisition or construction of fixed assets less depreciation.

ii) Capital works in progress are carried at cost, comprising direct costs, related incidental expenses & attributable interest.

iii) Intangible assets are stated at cost of acquisition less accumulated amortisation.

e) Depreciation / Amortisation:

i) The company has provided depreciation on Straight Line Method in accordance with the rates as prescribed in Schedule XIV under the provisions of The Companies Act, 1956 on the fixed assets when it is put to use.

ii) Renovation to premises taken on lease by the company have been amortised over the period of lease and in case of premature termination would be written off fully.

iii) Electricity Line Expenses / Service connection charges and Computer Software being intangible are amortised over a period of 5 years.

f) Impairment of Assets:

At each balance sheet date the carrying amounts of fixed assets are reviewed by the management to determine whether there is any indication that these assets had suffered an impairment loss. If any such indication exists recoverable amount of the asset is estimated in order to determine the extent of impairment loss. Recoverable amount is the higher of an asset's net selling price and value in use. In assessing, value in use, the estimated future cash flows expected from the continuing use of the assets and from its disposal are discounted to their present value using a pre tax discount rate that reflects the current market assessments of time value of money and risks specific to the asset. Reversal of impairment loss is recognized immediately as income in the profit and loss account.

g) Inventories:

These are valued as under:

i) Raw Material, Work-in-Process and useable

At cost or estimated realisable value whichever is lower.

ii) Stores & Spares

At cost less provision for obsolescence or estimated realisable value whichever is lower.

iii) Finished Goods

At cost plus excise duty payable on sale or estimated realisable value whichever is lower.

iv) Unusable waste

At net realisable value

v) The raw material, stores & spares and raw-material contents of work-in-process are valued by using the first-in-first out (FIFO) method while the finished goods are valued by using weighted average cost method. Cost relating to finished goods/work-in-process means direct raw material cost and allocable manufacturing expenses.

vi) The company makes provision for the value of goods in transit at the year end for imported/indigenous raw material and imported spare parts only and does not make any provision in respect of other materials.

vii) The policy of valuation of inventories is in accordance with Accounting Standard-2 (Revised) 'Valuation of Inventories' issued by the Institute of Chartered Accountants of India.

h) Sales/Revenue Recognition:

i) Domestic sales are accounted, net of returns & trade discounts, on dispatch of products to customers from the works/warehouses and export sales on shipment of goods. Sales within India comprising of sale of goods and services are inclusive of excise duty cleared in the domestic market. The sale value of goods oh which value added tax has been charged, are exclusive of value added tax.

ii) The revenue in respect of export benefit is recognized on post exports basis, at the rate at which the entitlement accrued, to the extent the company is reasonably certain of the realisable value.

i) Excise Duty:

The excise duty liability has been accounted for in respect of the finished goods/ useable waste cleared/ lying in the factory/bonded premises which are liable to excise duty provided the cenvat of excise duty/ additional custom duty of the inputs have been availed.

j) Employee Benefits:

i) Short-term employee benefits are recognized as an expense at the undiscounted amount in the profit and loss account of the year in which the related service is rendered.

ii) Long term employee benefits are recognized as an expense in the profit and loss account for the year in which the employee has rendered services. The expense is recognized at the present value of the amount payable determined using actuarial valuation techniques. Actuarial gains / losses in respect of long term benefits are adjusted to the profit and loss account.

k) Modvat (Cenvat):

Modvat (cenvat) credit/Terminal Excise Duty paid on inputs and capital assets is accounted for by reducing the purchase cost of related inputs or the capital assets.

l) Subsidy:

Government Capital Investment Subsidy in the nature of promoters' contribution represents Capital Reserve.

m) Direct Taxes:

i) Current Tax

Provision for Income Tax, if any, is based on the assessable profits, computed in accordance with the provisions of Income Tax Act, 1961

ii) Defferred Tax

Deferred Income tax expense or benefit 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 period. Deferred tax assets or liabilities are measured using the tax rates and tax laws that have been enacted or substantially enacted by the balance sheet date.

Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recognized only to the extent that there is virtual certainty that sufficient taxable income will be available to realize these assets. All other deferred tax assets are recognized only to the extent there is reasonable certainty that sufficient future taxable income will be available to realize these assets.

iii) Wealth Tax

Wealth tax is ascertained in accordance with the provisions of the Wealth Tax Act 1957

n) Foreign Currency Transactions:

i) Foreign currency transactions are accounted for at equivalent rupee value converted at the exchange rates prevailing at the time of such transaction

ii) Monetary Assets & Liabilities in foreign currency are translated at the year-end rate through exchange fluctuation account to the respective accounts as per the guidance issued by The Institute of Chartered Accountants of India

iii) Any income or expense on account of exchange differences either on settlement or translation is recognized in the revenue account except in cases where they relate to acquisition of fixed assets and before put to use in which case they are adjusted to the carrying cost of such assets.

iv) Financial derivatives and hedging contracts are accounted on the date of settlement. The accrued/ realised gain/loss in respect of the settled contracts/ renewed/ cancelled is only recognized in the books accounts.

o) Prior Period Items:

Income and expenditure which relate to significant items of prior accounting period other than those occasioned during the close of accounting year to which it is relatable, is considered in current year.

p) Borrowing Costs:

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of the asset till the asset is ready for use. Other borrowing costs are recognised as an expense in the year in which they are incurred.

q) Lease:

Leases of assets under which the lessor effectively retains all the risks and benefits of ownership are classified as operating lease. Payments made under operating lease are charged to profit and loss account over the period of lease.