Mar 31, 2018
Significant Accounting Policies for the period ended 31st March,2018
1) CORPORATE INFORMATION
Steel Strips Wheels Limited (the Company) is a public limited Company registered in India under the Companies Act 2013 (Erstwhile Companies Act 1956). Its Shares are listed on both BSE Limited (Formerly Bombay Stock Exchange Limited) and National Stock Exchange of India Ltd. (NSE). The Company is a leading manufacturer of Automotive Wheel rims.
2) SIGNIFICANT ACCOUNTING POLICIES
1) BASIS OF PREPARATION
The financial statements have been prepared in accordance with Indian Accounting Standards (''Ind AS'') notified under section 133 of the Companies Act 2013, read together with the Companies (Indian Accounting Standards) Rules, 2015.
For all the periods up to and including the year ended 31March, 2017, the Company prepared its financial statements in accordance with accounting standards notified under the section 133 of the Companies Act 2013, read together with Rule 7 of the Companies (Accounts) Rules, 2014 (''Previous GAAP''). These are the Company first Ind AS financial statements and the date of transition to Ind AS is 01 April, 2016. Detailed explanation of how the transition from previous GAAP to Ind AS has affected the Company Balance Sheet, financial performance and cash fows is given under Note 3.22.
The Standalone financial statements have been prepared under the historical convention, on the accrual basis of accounting except for certain financial assets and financials liabilities that are measured at fair value at the end of the each reporting period, as stated in the accounting policies below. The accounting policies have been applied consistently over all the periods presented in the Standalone financial statements.
The accounting policies have been consistently applied by the Company and except for the changes in accounting policy discussed more fully below, are consistent with those used in the previous year.
2) REVENUE RECOGNITION
Revenue is recognized to the extent that it is probable that economic benefits will fow to the Company and the revenue can be reliably measured.
A. SALE OF GOODS
Revenue from sale of goods is recognized when the significant risks and rewards of ownership in the goods are transferred to the buyer of goods as per the terms of contracts, the Company retains no effective control of the goods transferred to a degree usually associated with the ownership and no significant uncertainty exists regarding the amount of the consideration that will be derived from the sale of goods. The Company collects CST/VAT/GST on the behalf of the Government and therefore these are not economic benefits flowing to the company. Hence they are excluded from Revenue.
However, the revenue up to Q1 of the F.Y. 2017-18 includes the excise duty amounts that have been collected from customers, which is shown separately in the expenditure head of the statement of profit & loss as per the disclosure requirements.
Thereafter, with the introduction of Goods & Service Tax as on 01 June 2017, the tax amounts are excluded from the revenue for the period from Q2 to Q4 of F.Y. 2017-18.
B. INTEREST INCOME
Interest income from a financial asset is recognized when it is probable that the economic benefits will fow to the company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset''s net carrying amount on initial recognition.
C. OTHER INCOME
(i) Dividend Income is accounted in the period in which the right to receive the same is established, which is generally when shareholders approve the dividend.
(ii) Revenue in respect of claims is recognized when no significant uncertainty exists with regard to the amount to be realized and the ultimate collection thereof.
D. DUTY DRAWBACK AND EXPORT INCENTIVES
Income from duty drawback and export incentives is recognized on an accrual basis.
3) Leasing As a Lessee
Leases of property, plant and equipment where the Company, as lessee, has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease''s inception at the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in borrowings or other Financial liabilities, as appropriate. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases is depreciated over the asset''s useful life or over the shorter of the asset''s useful life and the lease term if there is no reasonable certainty that the Company will obtain ownership at the end of the lease term. Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease unless the payments are structured to increase in line with expected general inflation to compensate for the lessor''s expected inflationary cost increases.
As a Lessor
Lease income from operating leases where the Company is a lessor is recognized in income on a straight-line basis over the lease term unless the receipts are structured to increase in line with expected general inflation to compensate the lessor for the expected inflationary cost increases. The respective leased assets are included in the balance sheet based on their nature.
4) ACCOUNTING FOR TAXES ON INCOME
Tax expense comprises current and deferred tax. Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India and tax laws prevailing in the respective tax jurisdictions where the company operates. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Deferred income taxes refect the impact of timing differences between taxable income and accounting income originating during the current year and reversal of timing differences for the earlier years. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted at the reporting date.
Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized for deductible timing differences only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In situations where the company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.
At each reporting date, the Company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax asset to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each reporting date. The Company writes-down the carrying amount of deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set-off current tax assets against current tax liabilities and the deferred tax assets and deferred taxes relate to the same taxable entity and the same taxation authority.
MAT credit is recognized as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during the specified period. In the year in which the Minimum Alternative tax (MAT) credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the profit and loss account and shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income Tax during the specified period.
5) IMPAIRMENT OF NON FINANCIAL ASSETS
A. At each Balance Sheet date, the carrying amount of assets is tested based on internal/external factors, for impairment so as to determine:
(i) The provision for impairment loss, if any; and
(ii) The reversal of impairment loss recognized in previous periods, if any,
B. Impairment loss is recognized when the carrying amount of an asset exceeds its recoverable amount. Recoverable amount is determined:
(i) In the case of an individual asset, higher of the net selling price and the value in use.
(ii) In the case of a cash generating unit (a group of assets that generates identified, independent cash fows), at the higher of the cash generating unit''s net selling price and the value in use.
(Value in use is determined as the present value of estimated future cash fows discounted to their present value at the weighted average cost of Capital, from the continuing use of an asset and from its disposal at the end of its useful life).
Post impairment, depreciation is provided on the revised carrying value of the asset over its remaining useful life.
6) CASH AND CASH EQUIVALENTS
Cash and cash equivalents balances include cash in hand, fixed deposits, margin money deposits, earmarked balances with banks, other bank balances such as dividend accounts, which have restrictions on repatriation, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value.
7) 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:
a) In case of raw materials 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.
b) 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.
c) In case of work in progress at raw material cost plus conversion costs depending upon the stage of completion.
d) In case of finished goods at raw material cost plus conversion costs, packing cost, excise duty (if applicable) and other overheads incurred to bring the goods to their present location and condition.
8) FINANCIAL INSTRUMENT
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.
Initial recognition and measurement
On initial recognition, all the financial assets and liabilities are recognized at its fair value plus or minus, in the case of a financial asset or financial liability not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability except trade receivables which are recognized at transaction price.
Subsequent measurement 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 fows and the contractual terms of the financial asset give rise on specified dates to cash fows 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 fows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash fows 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 which is not classified in any of the above categories is subsequently measured at fair value through profit or loss.
(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.
Derivative financial instruments
The Company holds derivative financial instruments such as foreign exchange forward and option contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The counter party for these contracts 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 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 included in statement of profit and loss. Assets/ liabilities in this category are presented 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.
Equity Share Capital
(i) Equity shares
Equity shares issued by the Company are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares are recognized as a deduction from equity, net of any tax effects.
De-recognition of financial instruments
A financial asset is derecognized when the contractual rights to the cash fows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition under Ind-AS 109. A financial liability is derecognized when the obligation specified in the contract is discharged or cancelled or expired.
Fair value measurement of financial instruments
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, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
Based on the three level fair value hierarchies, the methods used to determine the fair value of financial assets and liabilities include quoted market price, discounted cash fow 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.
9) PROPERTY, PLANT AND EQUIPMENT(PPE)
Fixed assets are stated at original cost net of tax/duty credit availed, if any, less accumulated depreciation and cumulative impairment and those which have been revaluated are stated at the values determined by the valuers less accumulated depreciation and cumulative impairment. Cost of acquisition is inclusive of freight and other incidental expenses and interest on loan taken for the acquisition of qualifying assets up to the date of commissioning of assets.
Subsequent expenditure related to PPE is capitalized only when it is probable that future economic benefits associated with these will fow to the company and cost of the item can be measured reliably. All other expenses on existing fixed assets, including day to day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.
Gain or losses arising from de-recognition of fixed assets are measured as the difference between the net disposable proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.
The exchange differences arising on reporting of long term foreign currency monetary items at rates different from those at which they were initially recorded during the period, or reported in previous financial statements, in so far as they relate to the acquisition of a depreciable capital asset, have been added to or deducted from the cost of the asset and shall be depreciated over the balance useful life of the asset.
Significant Accounting Policies for the period ended 31st March,2018
Die Tooling, developed in-house, includes cost of material and other direct/ incidental expense on in-house development.
Tangible Assets not ready for the intended use on the date of the balance Sheet are disclosed as "capital work in progress". (Also refer to policy on leases, borrowing costs, impairment of assets and foreign currency transactions infra.)
Transition to Ind AS
For transition to Ind AS, The Company has elected to continue with the carrying value of all of its PPE recognised as of 01 April, 2016 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
10) DEPRECIATION / AMORTIZATION ON TANGIBLE FIXED ASSETS
Depreciation is the systematic allocation of the depreciable amount of an asset over useful life. The depreciable amount of an asset is the cost of an asset or other amount substituted for cost, less its residual value.
A. OWNED ASSETS
(i) Pursuant to applicability of Schedule II, of Companies Act 2013, with effect from 1st April 2014, Management has reassessed the useful life of tangible assets based on the internal and external technical evaluation. The Depreciation on fixed assets is provided on straight line method in accordance with applicable Schedule of the Companies Act, 2013.
(ii) Depreciation for addition to/deductions from, owned assets is calculated on pro-rata basis from the date of such addition or, as the case may be, up to the date on which such asset has been sold, discarded, demolished or destroyed.
(iii) Residual values of assets have been considered at 5% of the original cost of the assets.
(iv) Difference of Exchange Rate fluctuation on imported plant and machineries procured out of long term foreign currency loans is amortized over the residual life of relevant plant and machineries.
(v) Depreciation on assets carried at carrying amount as on 01.04.2014 and is depreciated as per Straight line method over the remaining useful life of the assets. Further the assets whose remaining useful life are nil, has been recognized in the opening balance of retained earnings. Refer the same as transitional provision
(vi) The depreciation calculation is based on the balance useful lives of assets and shift working. Depreciation on assets used on double shift basis have been increase by 50% for that period and Depreciation on assets used in triple shift basis have be calculated on the basis of 100% for that period, Except for assets in respect of which no extra shift depreciation is permitted (indicated by NESD in Part C of the schedule).
(vii) Management has reassessed the useful life of plant and machineries based on the internal and external technical evaluation which is higher than useful life prescribed under the act. The reassessed useful life is tabulated as:
B. LEASED ASSETS
Land acquired under long term lease is classified under "Tangible Assets" and is amortized over the period of lease.
Mar 31, 2017
1) USE OF ESTIMATES
The preparation of financial statements in conformity with Indian GAAP requires the management to make estimates and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities and disclosure of contingent liabilities, as at the date of the financial statements. Although these estimates are based upon managementâs best knowledge of current events and actions, actual results could differ from those estimates. Uncertainties about these estimates and assumptions could result in the outcomes requiring a material adjustment to the carrying amount of assets or liabilities in the future periods.
2) PRESENTATION OF FINANCIAL STATEMENTS
The Balance Sheet and Statement of Profit and Loss are prepared and presented in the format prescribed in the schedule III of the Companies Act, 2013(âthe Actâ). The disclosure requirements are presented as per the Companies (Accounting Standards) rules 2006, read with the General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of section 133 of Companies Act, 2013.
3) REVENUE RECOGNITION
Revenue is recognized to the extent that it is probable that economic benefits will flow to the Company and the revenue can be reliably measured.
A. SALE OF GOODS
Revenue from sale of goods is recognized when the significant risks and rewards of ownership in the goods are transferred to the buyer of goods as per the terms of contracts, the Company retains no effective control of the goods transferred to a degree usually associated with the ownership and no significant uncertainty exists regarding the amount of the consideration that will be derived from the sale of goods. The Company collects Central Sales tax and value added taxes(VAT) on the behalf of the Government and therefore these are not economic flowing to the Company. Hence they are excluded from Revenue. Excise duty deducted from revenue (Gross) is the amount that is included in the revenue(Gross) and not the entire amount of liability arising during the year.
B. INTEREST INCOME
Interest from bank is recognized on time proportion basis taking into account the amount outstanding and applicable interest rate. Interest income is included under the head âother incomeâ in the statement of profit and loss account.
C. OTHER INCOME
(i) Dividend Income is accounted in the period in which the right to receive the same is established.
(ii) Insurance claim is recognized on acceptance of claim by Insurance Company.
(iii) Vat Subsidy (granted in the state of Jharkhand) has been accounted on the basis of 50%of the Net VAT paid per annum up to a maximum of 75% of the total fixed capital investment for different duration. The subsidy is as per Mega Incentive Policy of Jharkhand Government. As per policy, industry with investment above Rs.50 crore are eligible for following incentives:
* 75%/50% of the VAT/CST paid up to maximum of 75% of cost of project (Net of land/building) within 7 years whichever is earlier.
4) RECOGNITION OF EXPENSES
All Expenses are recognized on accrual basis.
A. COST OF MATERIAL CONSUMED AND CHANGE IN INVENTORIES
Cost of material consumed is primarily comprised of landed cost of direct materials and supplies consumed in the manufacture of product including the effect of changes in the finished goods, Work in progress and Scrap material.
B. EMPLOYEE BENEFIT EXPENSES
Employee benefit expenses comprises of Salaries, wages, bonus and incentives, employee welfare expenses, share options and statutory contributions such as Provident funds, ESI, gratuity etc.
C. OTHEREXPENSES
Other Expenses comprises of Manufacturing expenses, Administrative Expenses, Selling and distribution expenses and Research and development expense.
(i) Manufacturing Expenses includes expenses such as consumption of stores and spares, power consumed, repairs to plant and machinery and other direct expenses related to production of goods etc.
(ii) Administrative Expenses includes expenses like Rent (including lease rent), Insurance charges, Rates fees and taxes, auditorâs remunerations, advertisements expenses, other repairs, travelling expenses of staff, Managerial commissions, telephone and telex etc.
(iii) Selling and Distribution Expenses include business promotion, Freight charges on dispatches to customers, rebate and discounts, royalties on sales etc.
(iv) Research and Development Expenses
a) Revenue Expenses
A research and development expense comprises revenue expenses on research are expensed under the respective head of accounts in the period in which it is occurred.
b) Development Expenses
Development expenditure on new products is capitalized as intangible assets so that it will amortized over the useful life of the assets. If all of the following can be demonstrated:
. The technical feasibility of completing the intangible asset so that it will be available for use or sale.
- The Company has intention to complete the intangible asset and use or sell it.
. The Company has ability to use or sell the intangible asset.
- The manner in which the probable future economic benefits will be generated including the existence of a market for output of the intangible asset or intangible asset itself or if it is to be used internally, the usefulness of intangible assets.
- The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset.
The Company has ability to measure the expenditure attributable to the intangible asset during its development reliably.
Other development costs that do not meet above criteria are expensed in the period in which they are incurred.
5) EXTRAORDINARY AND EXCEPTIONAL ITEMS
Income or expenses that arise from events or transactions that clearly differs from the ordinary activities of the Company are classified as extraordinary items. Specific disclosure of such events/transactions is made in the financial statements. Similarly, any external events beyond the control of the Company, significantly impacting income or expense, is also treated as extraordinary item and are disclosed as such.
Item of income or expense pertaining to ordinary activities of Company that demands separate disclosure considering the size, type or incidence, to improve understanding of the performance of the Company are classified as an exceptional item and accordingly disclosed in the notes to accounts.
6) INVENTORIES
A. Raw materials lying at Factory and job workers have been valued lower of weighted average cost or net realizable value. However these items are considered to be realizable at cost if the finished products in which they will be used are expected to be sold at or above cost.
B. Stocks in process have been valued at lower of cost or net realizable value. Cost includes raw material cost plus proportionate of conversion cost (based on normal capacity of production) comprising of direct materials; direct labour, power consumed, and other overheads directly associated with production process.
C. Finished goods lying at factory have been valued at lower of weighted average cost or net realizable value. Cost includes related overheads and excise duty paid/payable on such goods.
D. Scrap has been valued at net realizable value.
E. Stores and Spares have been valued at weight average cost.
(Net realizable value is the estimated selling price in the ordinary course of business less estimated costs of completion and estimated cost necessary to make the sale)
7) TANGIBLE FIXED ASSETS
Fixed assets are stated at original cost net of tax/duty credit availed, if any, less accumulated depreciation and cumulative impairment and those which have been revaluated are stated at the values determined by the valuers less accumulated depreciation and cumulative impairment. Cost of acquisition is inclusive of freight and other incidental expenses and interest on loan taken for the acquisition of qualifying assets up to the date of commissioning of assets.
Subsequent expenditure related to item of fixed asset is added to its book value only if it increases the future benefits from the existing assets beyond its previously assessed standard of performance. All other expenses on existing fixed assets, including day to day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.
Gain or losses arising from de-recognition of fixed assets are measured as the difference between the net disposable proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.
The exchange differences arising on reporting of long term foreign currency monetary items at rates different from those at which they were initially recorded during the period, or reported in previous financial statements, in so far as they relate to the acquisition of a depreciable capital asset, have been added to or deducted from the cost of the asset and shall be depreciated over the balance useful life of the asset.
Die Tooling, developed in-house, includes cost of material and other direct/ incidental expense on in-house development.
Tangible Assets not ready for the intended use on the date of the balance Sheet are disclosed as âcapital work in progressâ. (Also refer to policy on leases, borrowing costs, impairment of assets and foreign currency transactions infra.)
8) DEPRECIATION / AMORTIZATION ON TANGIBLE FIXED ASSETS
Depreciation is the systematic allocation of the depreciable amount of an asset over useful life. The depreciable amount of an asset is the cost of an asset or other amount substituted for cost, less its residual value.
A. OWNED ASSETS
(i) Pursuant to applicability of Schedule II, of Companies Act 2013,with effect from 1st April 2014, Management has reassessed the useful life of tangible assets based on the internal and external technical evaluation. The Depreciation on fixed assets is provided on straight line method in accordance with applicable Schedule of the Companies Act, 2013.
(ii) Depreciation for addition to/deductions from, owned assets is calculated on pro-rata basis from the date of such addition or, as the case may be, up to the date on which such asset has been sold, discarded, demolished or destroyed.
(iii) Residual values of assets have been considered at 5% of the original cost of the assets.
(iv) Difference of Exchange Rate fluctuation on imported plant and machineries procured out of long term foreign currency loans is amortized over the residual life of relevant plant and machineries.
(v) Depreciation on assets carried at carrying amount as on 01.04.2014 and is depreciated as per Straight line method over the remaining useful life of the assets. Further the assets whose remaining useful life are nil, has been recognized in the opening balance of retained earnings. Refer the same as transitional provision
(vi) The depreciation calculation is based on the balance useful lives of assets and shift working. Depreciation on assets used on double shift basis have been increase by 50% for that period and Depreciation on assets used in triple shift basis have been calculated on the basis of 100% for that period, Except for assets in respect of which no extra shift depreciation is permitted (indicated by NESD in Part C of the schedule).
(vii) Management has reassessed the useful life of plant and machineries based on the internal and external technical evaluation which is different from useful life prescribed under the act. The reassessed useful life is tabulated as:
B. LEASED ASSETS
Land acquired under long term lease is classified under âTangible Assetsâ and is amortized over the period of lease.
9) INTANGIBLE ASSETS AND AMORTIZATION
Intangible assets are stated at original cost net of tax/duty credit availed, if any, less accumulated amortization and cumulative impairment. Intangible assets are recognized when it is probable that the future economic benefits are attributable to the asset will flow to the enterprise and the cost of asset can be measured reliably. Intangible assets are amortized over their useful life.
Intangible Assets not ready for the intended use on the date of balance sheet are disclosed as âintangible assets under developmentâ
10) IMPAIRMENT OF ASSETS
A. At each Balance Sheet date, the carrying amount of assets is tested based on internal/external factors, for impairment so as to determine:
(i) The provision for impairment loss, if any; and
(ii) The reversal of impairment loss recognized in previous periods, if any,
B. Impairment loss is recognized when the carrying amount of an asset exceeds its recoverable amount. Recoverable amount is determined:
(i) In the case of an individual asset, higher of the net selling price and the value in use.
(ii) In the case of a cash generating unit (a group of assets that generates identified, independent cash flows), at the higher of the cash generating unitâs net selling price and the value in use.
(Value in use is determined as the present value of estimated future cash flows discounted to their present value at the weighted average cost of Capital, from the continuing use of an asset and from its disposal at the end of its useful life).
Post impairment, depreciation is provided on the revised carrying value of the asset over its remaining useful life.
11) TRANSACTIONS IN FOREIGN CURRENCY
A. INITIAL RECOGNITION
Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the applicable exchange rate on date of the transaction.
B. CONVERSION
Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction; and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.
C. EXCHANGE DIFFERENCES
Exchange differences arising on the settlement of monetary items or on reporting companyâs monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or as expenses in the year in which they arise.
Exchange differences relating to acquisition of imported fixed assets are adjusted in the carrying cost of the respective Fixed Assets.
D. FORWARD EXCHANGE CONTRACTS NOT INTENDED FOR TRADING OR SPECULATION PURPOSES
The premium or discount arising at the inception of forward exchange contracts is amortized as expense or income over the life of the contract. Exchange differences on such contracts are recognized in the statement of profit and loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognized as income or as expense for the year.
Gain or loss on contracts relating to acquisition of imported Fixed Assets is adjusted to the carrying cost of Fixed Assets.
12) BORROWING COST
Borrowing costs that are attributable to acquisition or construction of a qualifying asset are capitalized/inventories as part of cost of such assets till such time the asset is ready for its intended use/or sale. Qualifying asset is one that necessarily takes 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.
13) EMPLOYEE BENEFITS
A. SHORT TERM EMPLOYEE BENEFITS
All employee benefits falling due wholly within twelve months of rendering the services are classified as short term employee benefits. The benefit likes salaries, wages, short term compensated absence etc. and the expected cost of bonus, and ex-gratia is recognized in the period in which the employee renders the related services.
B. POST EMPLOYMENT BENEFITS
(i) DEFINED CONTRIBUTION PLANS
(Provident fund, family pension fund and employee state insurance scheme)
As per the employee Provident funds and misc provisions Act 1952, all employee of the Company are entitled to receive benefits under the provident fund and family pension fund which is defined contribution plan. These contributions are made to the funds administrated and managed by Government of India. In addition some employee of the Company are covered under employee state insurance scheme Act 1948 which is also defined contribution schemes recognized and administered by Government of India.
The Companyâs contributions to these schemes are recognized as expense in profit and loss account during the period in which the employee renders the related service
(ii) DEFINED BENEFIT PLANS
a) GRATUITY
The company provides for gratuity obligations through a defined benefits retirement plan (âThe Gratuity Planâ) covering all employees. The present value of the obligation under such Defined benefits plan is determined based on actuarial valuation using the Project Unit Credit method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measure each unit separately to build up final obligation. The obligation is measured at the present value of the estimated cash flows. The discount rate used for determining the present value of the defined obligation under defined benefit plan, is based on the market yields on Government securities as at the balance sheet date. Actuarial gains and losses are recognized in profit and loss account as and when determined.
The company makes annual contribution to LIC for the gratuity plan in respect of all the employeesâ liability on the basis of actuarial valuation done by the LIC. The company also provides for additional liability, in case of excess contribution, determined by the independent actuary based on actuarial valuation using the Project Unit Credit method as compared to actuarial valuation determined by LIC and vice versa
b) LEAVE LIABILITY
The Company provides for the liability at the year end on account of unavailed earned leave as per the actuarial valuation.
The leave encashment liability is covered through a policy taken from Life Insurance Corporation of India. The contribution towards premium of the policy is charged to revenue every year.
Actuarial gain or losses are recognized immediately in the statement of profit and loss.
The interest element in the actuarial valuation of defined benefits plans, which comprises the implicit interest cost and the impact of the changes in discount rate, is classified under finance costs. The balance charge is recognized as employee benefit expenses in the statement of profit and loss account
C. LONG TERM EMPLOYEE BENEFITS
The obligation for long term employee benefits such as long term compensated absences, long service award etc are recognized in the similar manner as in the case of defined benefit plans as mention in (ii).
D. EMPLOYEE TERMINATION BENEFITS
Termination benefits such as compensation under voluntary retirement cum pension scheme are recognized as expense in the period in which they are incurred.
14) INVESTMENTS
A. CURRENT INVESTMENTS
Investments, which are readily realizable and are intended to be held for not more than one year from the date of acquisition, are classified as current investments. All other investments are classified as long term investments.
B. LONG TERM INVESTMENTS
Long-term investments including unquoted shares are carried at cost after providing diminution in value, if such diminution is other than temporary in nature. However mutual funds investments are valued at its net realizable value.
Purchase and sale of investments are recognized based on the trade date accounting.
15) LEASES
A. FINANCE LEASE
Assets acquired under leases where the Company has substantially all the risks and rewards of ownership are classified as finance leases. Such assets are capitalized at the inception of the lease at the lower of the fair value or the present value of minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost, so as to obtain a constant periodic rate of interest on the outstanding liability for each period.
B. OPERATING LEASE
Assets acquired on leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Lease rentals are charged to the Statement of Profit and Loss on accrual basis.
16) SEGMENT REPORTING
A. IDENTIFICATION OF SEGMENTS
The Companyâs operating businesses are organized and managed separately according to the nature of products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets. The analysis of geographical segments is based on the areas in which major operating divisions of the Company operate.
B. SEGMENT ACCOUNTING POLICIES
The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.
17) ACCOUNTING FOR TAXES ON INCOME
Tax expense comprises current and deferred tax. Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India and tax laws prevailing in the respective tax jurisdictions where the company operates. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.
Deferred income taxes reflect the impact of timing differences between taxable income and accounting income originating during the current year and reversal of timing differences for the earlier years. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted at the reporting date.
Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized for deductible timing differences only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In situations where the company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.
At each reporting date, the Company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax asset to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each reporting date. The Company writes-down the carrying amount of deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set-off current tax assets against current tax liabilities and the deferred tax assets and deferred taxes relate to the same taxable entity and the same taxation authority.
MAT credit is recognized as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during the specified period. In the year in which the Minimum Alternative tax (MAT) credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the profit and loss account and shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income Tax during the specified period.
18) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Provisions for expenses are recognized for liabilities that can be measured only by using a substantial degree of estimation, if
(i) The Company has a present obligation as a result of a 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.
(iii) A possible obligation arising from past events where the probability of outflow of resources is not remote.
However contingent assets are neither recognized, nor disclosed.
Provisions, contingent liabilities and contingent assets are reviewed at each Balance Sheet date and adjusted to reflect the correct management estimates.
19) EARNING PER SHARE
Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting attributable taxes and dividend on cumulative preference shares for the year) by the weighted average number of equity shares outstanding during the year. Partly paid equity shares are treated as a fraction of an equity share to the extent that they were entitled to participate in dividends relative to a fully paid equity share during the reporting period. The weighted average number of equity shares outstanding during the period is adjusted for event of bonus issue/right issue etc; bonus element in a rights issue to existing shareholders; share split; and reverse share split (consolidation of shares).
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
20) CASH AND CASH EQUIVALENTS
Cash and cash equivalents balances include cash in hand, fixed deposits, margin money deposits, earmarked balances with banks and other bank balances such as dividend accounts, which have restrictions on repatriation.
21) EMPLOYEE STOCK OPTION SCHEME.
Stock Options granted to employee under the Stock option scheme are accounted at intrinsic value as per the accounting treatment prescribed by the Securities and Exchange Board of India (Employee stock Option scheme and Employee Stock purchase Scheme) Guidelines 1999 and Guidance Note on Accounting for Employee Share-based Payments, issued by the Institute of Chartered Accountants of India. Accordingly the excess of market price, determined as per the guidelines and guidance note, of underlying equity shares (market value), over the exercise price of the options is recognized as deferred stock compensation expenses as is charged to the statement of profit and loss account on straight line basis over the vesting period of the options. The amortized portion of the cost is shown under share holder funds.
Mar 31, 2015
1) CORPORATE INFORMATION
Steel Strips Wheels Limited (the Company) is a public limited Company
registered in India under the Companies Act 1956. Its Shares are listed
on both Bombay stock Exchange and National Stock Exchange. The Company
is a leading manufacturer of Automotive Wheel rims.
2) BASIS OF PREPARATION
The financial statements have been prepared in accordance with
generally accepted accounting principles in India(Indian GAAP) and to
comply in all material respects with the mandatory Accounting Standards
notified by Companies (Accounting Standards) rules 2006, read with the
General Circular 15/2013 dated 13th September 2013 of the Ministry of
Corporate Affairs in respect of Section 133 of Companies Act, 2013 and
relevant provisions of the Companies Act, 1956 (as amended) read with
General Circular 1/19/2013 dated 4th April 2014 of Ministry of
Corporate Affairs in respect of the relevant provisions/schedules/rules
of Companies Act 2013. Further, the guidance notes/announcements issued
by the institute of Chartered Accounts of India (ICAI) are also
considered, wherever applicable except to the extent where compliance
with other statutory promulgations overrides the same requiring a
different treatment. The financial statements have been prepared under
the historical cost convention on accrual basis.
The accounting policies have been consistently applied by the Company
and except for the changes in accounting policy discussed more fully
below, are consistent with those used in the previous year.
1) USE OF ESTIMATES
The preparation of financial statements in conformity with Indian GAAP
requires the management to make estimates and assumptions that affect
the reported amounts of revenue, expenses, assets and liabilities and
disclosure of contingent liabilities, as at the date of the financial
statements. Although these estimates are based upon management's best
knowledge of current events and actions, actual results could differ
from those estimates. Uncertainties about these estimates and
assumptions could result in the outcomes requiring a material
adjustment to the carrying amount of assets or liabilities in the
future periods.
2) PRESENTATION OFF INANCIAL STATEMENTS
The Balance-sheet and statement of profit and loss are prepared and
presented in the format prescribed in the schedule III of the Companies
Act, 2013 ("the Act"). The disclosure requirements are presented as per
the Companies (Accounting Standards) rules 2006, read with the General
Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate
Affairs in respect of section 133 of Companies Act, 2013.
3) REVENUE RECOGNITION
Revenue is recognized to the extent that it improbable That economic
benefits will flow to the Company and the revenue can be reliably
measured.
A. SALE OF GOODS
Revenue from sale of goods is recognized when the significant risks and
rewards of ownership in the goods are transferred to the buyer of goods
as per the terms of contracts, the Company retains no effective control
of the goods transferred to a degree usually associated with the
ownership and no significant uncertainty exists regarding the amount of
the consideration that will be derived from the sale of goods. The
Company collects Central Sales tax and value added taxes (VAT) on the
behalf of the Government and therefore these are not economic flowing
to the company. Hence they are excluded from Revenue. Excise duty
deducted from revenue (Gross)is the amount that in included in the
revenue (Gross)and not the entire amount of liability arising during
the year.
B. INTEREST INCOME
Interest from bank is recognized on time proportion basis taking into
account the amount outstanding and applicable interest rate. Interest
income is included under the head "other income" in the statement of
profit and loss account.
C. OTHER INCOME
(i) Dividend Income is accounted in the period in which the right to
receive the same is established.
(ii) Insurance claim is recognized on acceptance of claim by Insurance
Company.
(iii) Vat Subsidy(granted in the state of Jharkh and) has been
accounted on the basisof75%of the Net VAT paid per annum up to a
maximum of 75%of the total fixed capital investment for different
duration. The subsidy is as per Mega Incentive Policy of Jharkhand
Government. As per policy, industry with investment above Rs 50 crore
are eligible for following incentives:
75% of the VAT paid up to maximum of 75% of cost of project (Net of
land/building) within 7yearswhichever is earlier.
4) RECOGNITION OF EXPENSES
All Expenses are recognized on accrual basis.
A. COST OF MATERIAL CONSUMED AND CHANGE IN INVENTORIES
Cost of material consumed is primarily comprised of landed cost Of
direct materials and supplies consumed in the manufacture of product
including the effect of changes in the finished goods, Work-in progress
and Scrap material.
B. EMPLOYEE BENEFIT EXPENSES
Employee benefit expenses comprises of Salaries, wages, bonus and
incentives, employee welfare expenses, share options and statutory
contributions such as Provident funds, ESI, gratuity etc.
C. OTHER EXPENSES
Other Expenses comprises of Manufacturing expenses, Administrative
Expenses, Selling and distribution expenses and Research and
development expense.
(i) Manufacturing Expenses includes expenses such as consumption of
stores and spares, power consumed, repairs to plant and machinery and
other direct expenses related to production of goods etc.
(ii) Administrative Expenses includes expenses like Rent (including
lease rent), Insurance charges, Rates fees and taxes, auditor's
remunerations, advertisements expenses, other repairs, travelling
expenses of staff, Managerial commissions, telephone and telex etc.
(iii) Selling and Distribution Expenses include business promotion,
Freight charges on dispatches to customers, rebate and discounts,
Royalties on sales etc.
(iv) Research and Development Expenses
a) Revenue Expenses
Research and development expense comprises revenue expenses on research
are expensed under the respective head of accounts in the period in
which it is occurred.
b) Development Expenses
Development expenditure on new products is capitalized as intangible
assets so that it will amortized over the useful life of the assets. If
all of the following can be demonstrated:
- The technical feasibility of completing the intangible asset so that
it Will be available for use or sale.
- The Company has intention to complete the intangible asset and use
corselet.
- The Company has ability to use or sell the intangible asset.
- The manner in which the probable future economic benefits will be
generated including the existence of a market for output of the
intangible asset or intangible asset itself or if it is to bused
internally, the use fullness of intangible assets.
- The availability of adequate technical, financial and other resources
to complete the development and to use or sell the intangible asset.
- The Company has ability to measure the expenditure attributable to
the intangible asset during its development reliably. Other
development costs that do not meet above criteria are expensed in the
period in which they are incurred.
5) EXTRA ORDINARY AND EXCEPTIONAL ITEMS
Income or expenses that arise from events or transactions that are
clearly differs from the ordinary activities of the Company are
classified as extraordinary items. Specific disclosure of such
events/transactions is made in the financial statements. Similarly, any
external events beyond the control of the Company, significantly
impacting income or expense, is also treated as extra ordinary item and
disclosed as such.
Item of income or expense pertaining to ordinary activities of Company
that demands separate disclosure considering the size, type or
incidence, to improve understanding of the performance of the Company
are classified as an exceptional item and accordingly disclosed in the
notes to accounts.
6) INVENTORIES
A. Raw materials lying at Factory and job workers have been valued
lower of weighted average cost or net realizable value. However these
items are considered to be realizable at cost if the finished products
in which they will be used are expected to be spoliator above cost.
B. Stocks in process have been valued at lower of cost or net
realizable value. Cost includes raw material cost plus proportionate of
conversion cost (based on normal capacity of production) comprising of
direct materials; direct lab our, power consumed, and other overheads
directly associated with production process.
C. Finished goods lying at factory have been valued at lower of
weighted average cost or net realizable value. Cost includes related
overheads and excise duty paid/payable on such goods.
D. Scrap has-been valued at net realizable value.
E. Store and Spares have been valued at weighted average cost.
(Net realizable value is the estimated selling price in the ordinary
course of business less estimated costs of completion and estimated
cost necessary to make the sale)
7) TANGIBLE FIXED ASSETS
Fixed assets are stated at original cost net of tax/duty credit
availed, if any, less accumulated depreciation and cumulative
impairment and those which have been revaluated are stated at the
values determined by the values less accumulated depreciation and
cumulative impairment. Cost of acquisition is inclusive of freight and
other incidental expenses and interest on loan taken for the
acquisition of qualifying assets up to the date of commissioning of
assets. Subsequent expenditure related to item of fixed asset is added
to its book value only if it increases the future benefits from the
existing assets beyond its previously assessed standard of performance.
All other expenses on existing fixed assets, including day to day
repair and maintenance expenditure and cost of replacing parts, are
charged to the statement of profit and loss for the period during which
such expenses are incurred.
Gain or losses arising from de-recognition of fixed assets are measured
as the difference between the net disposable proceeds and the carrying
amount of the asset and are recognized in the statement of profit and
loss when the asset is derecognized.
The exchange differences arising on reporting of long term foreign
currency monetary items at rates different from those at which they
were initially recorded during the period, or reported in previous
financial statements, insofar as they relate to the acquisition of a
depreciable capital asset, have been added to or deducted from the cost
of the asset and shall be depreciated over the balance useful life of
the asset.
Die Tooling, developed in-house, includes cost of material and other
direct/ incidental expense on in-house development.
Tangible Assets not ready for the intended use on the date of the
balance Sheet are disclosed as "capital work in progress". (Also refer
to policy on leases, borrowing costs, impairment of assets and foreign
currency transactions infra.)
8) DEPRECIATION/ AMORTIZATION ON TANGIBLE FIXED ASSETS
Depreciation is the systematic allocation of the depreciable amount of
an asset over useful life. The depreciable amount of an asset is the
cost of an asset or other amount substituted for cost, less its
residual value.
A. OWNED ASSETS
(i) Pursuant to applicability of Schedule II, of Companies Act 2013,
with effect from 1st April 2014, Management has reassessed the useful
life of tangible assets based on the internal and external technical
evaluation. The Depreciation on fixed assets is provided on straight
line method in accordance with applicable Schedule of the Companies
Act, 2013.
(ii) Depreciation for addition to/deductions from, owned assets is
Calculated on pro-rata basis from the date of such addition or, as the
case may be, up to the date on which such asset has been sold,
discarded, demolished or destroyed.
(iii) Residual values of assets
have been consideredat5% of the original cost of the assets.
(iv) Difference of Exchange Rate fluctuation on imported plant and
machineries procured out of long term foreign currency loans is
amortized over the residual life of relevant plant and machineries.
(v) Depreciation on assets carried at carrying amount as on 01.04.2014
and is depreciated as per Straight line method over the remaining
useful life of the assets. Further the assets whose remaining useful
life are nil, has been recognized in the opening balance of retained
earnings. Refer the same as transition a provision of the Companies
Act.
(vi) The depreciation calculation is based on the balance useful lives
of assets and shift working. Depreciation on assets used on double
shift basis have been increase by 50% for that period and Depreciation
on assets used in triple shift basis have be calculated on the basis
of100% for that period, Except for assets in respect of which no extra
shift depreciation is permitted(indicated by NESD in Part C of the
schedule).
(vii) Management has reassessed the useful life of plant and
machineries based on the internal and external technical evaluation
which is different from useful life prescribed under the act. The
reassessed useful life is tabulated as:
B. LEASED ASSETS
Land acquired under long term lease is classified under "Tangible
Assets" and Is amortized over the period of lease.
9) IN TANGIBLE ASSETS AND AMORTIZATION
Intangible assets are stated at original cost net of tax/duty credit
availed, if any, less accumulated amortization and cumulative
impairment. Intangible assets are recognized when it is probable that
the future economic benefits are attributable to the asset will flow to
the enterprise and the cost of asset can be measured reliably.
Intangible assets are amortized over their useful life. Intangible
Assets not ready for the intended use notched ate of balance sheet are
disclosed as" intangible assets under development"
10) IMPAIRMENT OF ASSETS
A. At each Balance Sheet date, the carrying amount of assets is tested
Based on internal/ external factors, for impairment so as to determine:
(i) The provision for impairment loss, if any; and
(ii) The reversal of impairment loss recognized in previous periods, if
any,
B. Impairment loss is recognized when the carrying amount of an asset
exceeds its recoverable amount. Recoverable amount is determined: (i)
In the case of an individual asset ,higher of the net selling price and
the value in use.
(ii) In the case of a cash generating unit (a group of assets that
generates identified, independent cash flows), at the higher of the
cash generating unit's net selling price and the value in use. (Value
in use is determined as the present value of estimated future cash
flows discounted to their present value at the weighted average cost of
Capital, from the continuing use of an asset and from its disposal at
the End of its useful life). Post impairment, depreciation is provided
on the revised carrying value of the asset over its remaining useful
life.
11) TRANSACTIONS IN FOREIGN CURRENCY
A. INITIAL RECOGNITION
Foreign currency transactions are recorded in the reporting currency,
By applying to the foreign currency amount the applicable exchange rate
on date of the transaction.
B. CONVERSION
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction; and non-monetary items which are
carried at fair value or other similar valuation denominated in a
foreign currency are reported using the exchange rates that existed
when the values were determined.
C. EXCHANGE DIFFERENCES
Exchange differences arising on the settlement of monetary items or on
reporting company's monetary items at rates different from those at
which they were initially recorded during the year, or reported in
previous financial statements, are recognized as income or as expenses
in the year in which they arise. Exchange differences relating to
acquisition of imported fixed assets Are adjusted in the carrying cost
of the respective Fixed Assets.
D. FOR WARD EXCHANGEC ON TRACTSNOT INTENDED FOR TRADING OR SPECULATION
PURPOSES
The premium or discount arising at the inception of forward exchange
contracts is amortized as expense or income over the life of the
contract. Exchanged inferences on such contracts are recognized in the
statement of profit and loss in the year in which the exchange rates
change. Any profit or loss arising on cancellation or renewal of
forward exchange contract is recognized as income or as expense for the
year. Gain or loss on contracts relating to acquisition of imported
Fixed Assets is adjusted to the carrying cost of Fixed Assets.
12) BORROWING COST
Borrowing costs that are attributable to acquisition or construction of
a qualifying asset are capitalized/inventories as part of cost of such
assets till a such a time the asset is ready for its intended use/or
sale. Qualifying asset is one that necessarily takes 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.
13) EMPLOYEE BENEFITS
A. SHORT TERM EMPLOYEE BENEFITS
All employee benefits falling due wholly with in twelve months of
rendering the services are classified as short term employee benefits.
The benefit likes salaries, wages, short term compensated absence etc.
and the Expected cost of bonus, and ex-gratia is recognized in the
period in which the employee renders the related services.
B. POST EMPLOYMENT BENEFITS
(i) DEFINED CONTRIBUTION PLANS
Provident fund, family pension fund and employee state in assurance
scheme
As per the employee Provident funds and misc provisions Act 1952, all
employee of the Company are entitled to receive benefits under the
provident fund and family pension fund which is defined contribution
plan. These contributions are made to the funds administrated and
managed by Government of India. In addition some employee of the
Company are covered under employee state insurance scheme Act 1948
which is also defined contribution schemes recognized and administered
by Government of India.
The Company's contributions to these schemes are recognized as expense
in profit and loss account during the period in which the employee
renders the related service
(ii) DEFINED BENEFIT PLANS
a) GRATUITY
The company provides for gratuity obligations through a defined
benefits retirement plan ('The Gratuity Plan') covering all employees.
The present value of the obligation under such Defined benefits plan is
determined based on actuarial valuation using the Project Unit Credit
method, which recognizes each period of service as giving rise to
additional unit of employee benefit entitlement and measure each unit
separately to buildup final obligation .The obligation is measured at
the present value of the estimated cash flows. The discount rate used
for determining the present value of the defined obligation under
defined benefit plan, is based on the market yields on Government
securities as at the balance sheet date. Actuarial gains and losses are
recognized in profit and loss account sand when determined. The
company makes annual contribution to LIC for the gratuity plan in
respect of all the employees' liability on the basis of actuarial
valuation done by the LIC. The company also provides for additional
liability, in case of excess contribution, determined by the
independent actuary based on actuarial valuation using the Project Unit
Credit method as compared to actuarial valuation Determined by LIC and
vice versa
b) LEAVE LIABILITY
The Company provides forth liability at the year end on account of
unveiled Earned leave as per the actuarial valuation.
The leave encashment liability is covered through ha policy taken from
Life Insurance Corporation of India. The contribution towards premium
of the policy is charged to revenue every year. Actuarial gain or
losses are recognized immediately in the statement Of profit and loss.
The interest element in the actuarial valuation of defined benefits
plans, which comprises the implicit interest cost and the impact of the
changes in discount rate, is classified under finance costs. The
balance charge is recognized as employee benefit expenses in the
statement of profit and loss account
C. LONG TERM EMPLOYEE BENEFITS
The obligation for long term employee benefits such as long term
compensated absences, long service award etc are recognized in the
similar manner as in the case of defined benefit plans as mention
in(ii).
D. EMPLOYEE TERMINATION BENEFITS
Termination benefits such as compensation under voluntary retirement
cum pension scheme are recognized as expense in the period in which
they are incurred.
14) INVESTMENTS
A. CURRENT INVESTMENTS
Investments, which are readily realizable and are intended to be held
for not more than one year from the date of acquisition, are classified
as current investments. All other investments are classified as long
term investments.
B. LONGTERM INVESTMENTS
Long-term investments including unquoted shares are carried at cost
after providing diminution in value, if such diminution is other than
temporary in nature. However mutual funds investments are valued at its
net realizable value. Purchase and sale of investments are recognized
based on the trade date accounting.
15) LEASES
A. FINANCE LEASE
Assets acquired under leases where the Company has substantially all
the risks and rewards of ownership are classified as finance leases.
Such assets are capitalized at the inception of the lease at the lower
of the air value or the present value of minimum lease payments and a
liability is created for an equivalent amount. Each lease rental paid
is allocated between the liability and the interest cost, so as to
obtain a constant periodic rate of interest on the outstanding
liability for each period.
B. OPERATING LEASE
Assets acquired on leases where a significant portion of the risks and
rewards of ownership are retained by the lesson are classified as
operating leases. Lease rentals are charged to the Statement of Profit
and Loss on accrual basis.
16) SEGMENT REPORTING
A. IDENTIFICATION OF SEGMENTS
The Company's operating businesses are organized and managed Separately
according to the nature of products and services provided, with each
segment representing strategic business unit that offers different
products and serves different markets. The analysis of geographical
segments is based on the areas in which major operating divisions of
the Company operate.
B. SEGMENT ACCOUNTING POLICIES
The Company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the Company as a whole.
17) ACCOUNTING FOR TAXES ON INCOME
Tax expense comprises current and deferred tax. Current income-tax is
measured at the amount expected to be paid to the tax authorities in
accordance with the Income-Tax Act,1961 enacted in India and tax laws
prevailing in there sportive tax jurisdictions where the company
operates. The tax rates and tax laws used to compute the amount are
those that are enacted or substantively enacted, at their porting date.
Deferred income taxes reflect the impact of timing differences between
taxable income and accounting income originating during the current
year and reversal of timing differences for the earlier years. Deferred
taxis measured using theta rates and the tax laws enacted or
substantively enacted at the reporting date.
Deferred tax liabilities are recognized for all taxable timing
differences. Deferred tax assets are recognized for deductible timing
differences only to the extent that there is reasonable certainty that
sufficient future taxable income will be available against which such
deferred tax assets can be realized. In situations where the company
has unabsorbed depreciation or carry forward tax losses, all deferred
tax assets are recognized only if there is virtual certainty supported
by convincing evidence that they can be realized against future taxable
profits.
At each reporting date, the Company re-assesses unrecognized deferred
tax assets. It recognizes unrecognized deferred tax asset to the extent
that it has become reasonably certain or virtually certain, as the case
may be, that sufficient future taxable income will be available against
which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are review detach reporting
date. The Company writes-down the carrying amount of deferred tax asset
to the extent that it is no longer reasonably certain or virtually
certain, as the case may be, that sufficient future taxable income will
be available against which deferred tax asset can be realized. Any such
write-down is reversed to the extent that it becomes reasonably certain
or virtually certain, as the case may be, that sufficient future
taxable income will be available.
Deferred tax assets and deferred tax liabilities are offset, if a Legal
yen force able right exists to set-off current tax assets against
Current tax liabilities and the deferred tax assets and deferred taxes
Relate to the same tax able entity and the same taxation authority.
MAT credit is recognized as an asset only when and to the extent there
is convincing evidence that the company will pay normal income tax
during the specified period. In the year in which the Minimum
Alternative tax (MAT) credit becomes eligible to be recognized as an
asset in accordance with the recommendations contained in guidance Note
issued by the Institute of Chartered Accountants of India, the said
asset is created by way of accredit to the profit and loss account and
shown as MAT Credit Entitlement. The Company reviews the same at each
balance sheet date and writes down the carrying amount of MAT Credit
Entitlement to the extent there is no longer convincing evidence to the
effect that Company will pay normal Income Tax during the specified
period.
18) PROVISIONS,CONTINGENT LIABILITIESANDCONTINGENT ASSETS
Provisions for expenses are recognized for liabilities that can be
measured Only by using a substantial degree of estimation, if (i) The
Company Has a present obligation as a result of past event (ii) A
probable out flow 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.
(iii) A possible obligation arising from past events where the
Probability of out flow of resources is not remote.
However contingent assets are neither recognized, nor disclosed.
Provisions, contingent liabilities and contingent assets are reviewed
at each Balance Sheet date and adjusted to reflect the correct
management estimates.
19) EARNING PER SHARE
Basic earnings per share are calculated by dividing the net profit or
loss for the year attributable to equity shareholders (after deducting
attributable taxes and dividend noncumulative preference shares for the
year)by the weighted average number of equity shares outstanding during
the year. Partly paid equity shares are treated as a fraction of an
equity share to the extent that they were entitled to participate in
dividends related to a fully paid equity share during the reporting
period. The weighted average number of equity shares outstanding during
the period is adjusted for event of bonus issue/rightissueetc; bonus
Elementinarights issue to existing shareholders; share split; and
reverse share split (consolidation of shares). For the purpose of
calculating diluted earnings per share, the net profit or loss for the
period attributable to equity shareholders and the weighted average
number of shares outstanding during the period are adjusted for the
effects of all dilutive potential equity shares.
20) CASHAND CASH EQUIVALENTS
Cash and cash equivalents balances include cash in hand, fixed
deposits, margin money deposits, earmarked balances with banks and
other bank balances such as dividend accounts, which have restrictions
on repatriation.
21) EMPLOYEE STOCK OPTIONSCHEME.
Stock Options granted to employee under the Stock option scheme are
accounted at intrinsic value as per the accounting treatment prescribed
by the Securities and Exchange Board of India (Employee stock Option
scheme and Employee Stock purchase Scheme) Guidelines 1999 and
Securities Exchange Board of India (Share Based Employee Benefits)
Regulations, 2014 and Guidance Note on Accounting for Employee
Share-based Payments, issued by the Institute of Chartered Accountants
of India. Accordingly the excess of market price, determined as per the
guidelines and guidance note, of underlying equity shares (market
value), over the exercise price of the options is recognized as
deferred stock compensation expenses as is charged to the statement of
profit and loss account on straight line basis over the vesting period
of the options. The amortized portion of the cost is shown under share
holder funds.
Mar 31, 2013
I) Accounting Convention
The financial statements are prepared under the historical cost
convention in accordance with the Accounting Standards referred to in
sub-section (3C) of Section 211 of the Companies Act 1956 and relevant
presentational requirements of the Companies Act, 1956.
ii) Fixed Assets
Fixed assets are stated at cost (net of CENVAT) less accumulated
depreciation. Cost of acquisition is inclusive of freight, duties,
taxes and other incidental expenses and interest on loan taken for the
acquisition of qualifying assets up to the date of commissioning of
assets.
The exchange differences arising on reporting of long term foreign
currency monetary items at rates different from those at which they
were initially recorded during the period, or reported in previous
financial statements, in so far as they relate to the acquisition of a
depreciable capital asset, have been added to or deducted from the cost
of the asset and shall be depreciated over the balance useful life of the
asset.
Die Tooling, developed in-house, includes cost of material, taxes and
duties and other direct/ incidental expense on in-house development.
(iii) Depreciation/ amortization
a. Depreciation on fixed assets (other than those referred to in b and
c below) is provided on straight line method in accordance with
Schedule XIV to the Companies Act, 1956.
b. Depreciation on assets costing Rs. 5,000 or less is provided 100%
on prorata basis for days put in use.
c. The leasehold land is amortized over the period of lease.
d. Difference of Exchange Rate fluctuation on imported plant and
machineries procured out of long term foreign currency loans is
amortized over the residual life of relevant plant and machineries.
iv) Inventories
a. Raw materials lying at Factory and job workers have been valued at
cost.
b. Stocks in process have been valued at Raw material cost plus
proportionate of conversion cost.
c. Finished goods lying at factory have been valued at Raw material
cost plus conversion cost including excise duty payable.
d. Scrap has been valued at net realizable value.
e. Stores and Spares have been valued at cost.
v) Investments
Long-term investments are carried at cost less provision, if any, for
diminution in value which is other than temporary. Current investments
are carried at lower of cost and fair value.
vi) Transactions in Foreign Currency
i) Foreign currency transactions are recorded at the exchange rate
prevailing as at the date of transactions except export sales which are
recorded at a rate notified by the customs for invoice purposes. Such
rate is notified in the last week of the month and is adopted for
recording export sales of the next month. The exchange fluctuation
arising as a result of negotiation of export bill is accounted for as
difference in exchange rates.
ii) Monetary items denominated in a foreign currency are reported at
the closing rate as at the date of balance sheet. The reinstatement
difference is charged to profit and loss account.
Hi) Non-monetary items (fixed assets and loans) denominated in a
foreign currency are reinstated as at the date of balance sheet. The
difference on re-instatement is carried to relevant non-monetary items.
vii) Employee Benefits
The Company has various schemes of retirement benefits such as
provident fund, gratuity and leave encashment, which is dealt with as
under:
i) Contributions to provident fund are made in accordance with the
provisions of Employees'' Provident Fund and Miscellaneous Provisions
Act, 1952 and are charged to revenue every year.
ii) Provision for Gratuity is made based on actuarial valuation. The
gratuity liability in respect of employees of the Company is covered
through a policy taken by a trust from Life Insurance Corporation of
India. The contribution towards premium of the policy to the trust is
charged to revenue every year.
Hi) Provision for leave encashment is made based on actuarial
valuation. The leave encashment liability is covered through a policy
taken from Life Insurance Corporation of India. The contribution
towards premium of the policy is charged to revenue every year.
viii) Borrowing costs
Borrowing costs that are attributable to acquisition or construction of
a qualifying asset are capitalized as part of cost of such assets.
Qualifying asset is one that necessarily takes 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.
ix) Cenvat
The balance in the Service Tax and Modvat account is shown as current
asset.
x) Revenue Recognition
Sales revenue is recognized as and when goods are handed overtop
carrier.
- Insurance claim is recognized on actual receipt basis.
- Interest from bank is recognized on accrual basis.
xi) Recognition of expenses
Expenses are recognized on accrual basis except Technical know-how fees
and Royalty on sales which is recognized on cash basis.
xii) Impairment of Assets
At each balance sheet date an assessment is made whether any indication
exists that an asset has been impaired. If any such indication exists,
an impairment loss, i.e., the amount by which the carrying amount of
asset exceeds its recoverable amount is provided in the books
of account.
xiii) Accounting for taxes on income
Provision for taxation for the year is ascertained on the basis of
assessable profits computed in accordance with the provisions of the
Income-tax Act, 1961.
Deferred tax is recognized, subject to the consideration of prudence,
on timing differences, being the difference between taxable income and
accounting income that originates in one period and are capable of
reversal in one or more subsequent periods. In respect of carry forward
of losses and unabsorbed depreciation, deferred tax assets are
recognized based on virtual certainty that sufficient future taxable
income will be available against which such deferred tax asset can be
realized.
MAT credit entitlement is recognized as an asset and carried under
Loans and advances.
xiv) Leases
Leases where lessor effectively retains substantially all the risk and
benefits of ownership of the leased items are classified as operating
leases. Operating lease payments are recognised as expenses in the
profit and loss account on straight line bases over the lease term.
xv) Provision involving substantial degree of estimate in measurement
are recognized when there is present obligation as result of past
events and it is probable that there will be an outflow of resources,
contingent liabilities are not recognized but are disclosed in the
notes. Contingent assets are neither recognized nor disclosed in the
financial statements.
Mar 31, 2012
I) Accounting Convention
The financial statements are prepared under the historical cost
convention in accordance with the Accounting Standards referred to in
sub-section (3C) of Section 211 of the Companies Act 1956 and relevant
presentational requirements of the Companies Act, 1956.
ii) Fixed Assets
Fixed assets are stated at cost (net of CENVAT) less accumulated
depreciation. Cost of acquisition is inclusive of freight, duties,
taxes and other incidental expenses and interest on loan taken for the
acquisition of qualifying assets up to the date of commissioning of
assets.
The exchange differences arising on reporting of long term foreign
currency monetary items at rates different from those at which they
were initially recorded during the period, or reported in previous
financial statements, in so far as they relate to the acquisition of a
depreciable capital asset, have been added to or deducted from the cost
of the asset and shall be depreciated overthe balance useful life of
the asset.
Die Tooling, developed in-house, includes cost of material, taxes and
duties and other direct/ incidental expense on in- house development.
iii) Depreciation/ amortization
a. Depreciation on fixed assets (other than those referred to in b and
c below) is provided on straight line method in accordance with
Schedule XIV to the Companies Act, 1956.
b. Depreciation on assets costing Rs. 5,000 or less is provided 100%
on prorata basis for days put in use.
c. The leasehold land is amortized overthe period of lease.
d. Difference of Exchange Rate fluctuation on imported plant and
machineries procured out of long term foreign currency loans is
amortized overthe residual life of relevant plantand machineries.
iv) Inventories
a. Raw materials lying at Factory and job workers have been valued at
cost.
b. Stocks in process have been valued at Raw material cost plus
proportionate of conversion cost.
c. Finished goods lying at factory have been valued at Raw material
cost plus conversion cost including excise duty payable.
d. Scrap has been valued at net realizable value.
e. Stores and Spares have been valued at cost.
v) Investments
Long-term investments are carried at cost less provision, if any, for
diminution in value which is other than temporary. Current investments
are carried at lowerofcost and fair value.
vi) Transactions in Foreign Currency
i) Foreign currency transactions are recorded at the exchange rate
prevailing as at the date of transactions except export sales which are
recorded at a rate notified by the customs for invoice purposes. Such
rate is notified in the last week of the month and is adopted for
recording export sales of the next month. The exchange fluctuation
arising as a result of negotiation of export bill is accounted foras
difference in exchange rates.
ii) Monetary items denominated in a foreign currency are reported at
the closing rate as at the date of balance sheet. The reinstatement
difference is charged to profit and loss account.
iii) Non-monetary items (fixed assets and loans) denominated in a
foreign currency are reinstated as at the date of balance sheet. The
difference on re-instatement is carried to relevant non-monetary items.
vii) Employee Benefits
The Company has various schemes of retirement benefits such as
provident fund, gratuity and leave encashment, which is dealt with as
under
i) Contributions to provident fund are made in accordance with the
provisions of Employees' Provident Fund and Miscellaneous Provisions
Act, 1952 and are charged to revenue every year.
ii) Provision for Gratuity is made based on actuarial valuation. The
gratuity liability in respect of employees of the Company is covered
through a policy taken by a trust from Life Insurance Corporation of
India. The contribution towards premium of the policy to the trust is
charged to revenue every year.
iii) Provision for leave encashment is made based on actuarial
valuation. The leave encashment liability is covered through a policy
taken from Life Insurance Corporation of India. The contribution
towards premium of the policy is charged to revenue every year.
viii) Borrowing costs
Borrowing costs that are attributable to acquisition or construction of
a qualifying asset are capitalized as part of cost of such assets.
Qualifying asset is one that necessarily takes 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.
ix) Cenvat
The balance in the Service Tax and Modvat account is shown as current
asset.
x) Revenue Recognition
Sales revenue is recognized as and when goods are handed over to
carrier.
Insurance claim is recognized on actual receipt basis.
Interestfrom bank is recognized on accrual basis.
xi) Recognition of expenses
Expenses are recognized on accrual basis except Technical know-how fees
and Royalty on sales which is recognized on cash basis.
xii) Impairment of Assets
At each balance sheet date an assessment is made whether any indication
exists that an asset has been impaired. If any such indication exists,
an impairment loss, i.e., the amount by which the carrying amount of
asset exceeds its recoverable amount is provided in the books of
account.
xiii) Accounting for taxes on income
Provision for taxation for the year is ascertained on the basis of
assessable profits computed in accordance with the provisions of the
Income-tax Act, 1961.
Deferred tax is recognized, subject to the consideration of prudence,
on timing differences, being the difference between taxable income and
accounting income that originates in one period and are capable of
reversal in one or more subsequent periods. In respect of carry forward
of losses and unabsorbed depreciation, deferred tax assets are
recognized based on virtual certainty that sufficient future taxable
income will be available against which such deferred tax asset can be
realized.
MAT credit entitlement is recognized as an asset and carried under
Loans and advances.
xiv) Provision involving substantial degree of estimate in measurement
are recognised when there is present obligation as result of past
events and it is probable that there will be an outflow of resources,
contigent liabilities are not recognised but are disclosed in the
notes. Contingent assets are neither recognised nordisclosed in the
financial statements.
Mar 31, 2011
I) Accounting Convention
The financial statements are prepared under the historical cost
convention in accordance with the Accounting Standards referred to in
sub-section (3C) of Section 211 of the Companies Act 1956 and relevant
presentational requirements of the Companies Act, 1956.
ii) Fixed Assets
Fixed assets are stated at cost (net of CENVAT) less accumulated
depreciation. Cost of acquisition is inclusive of freight, duties,
taxes and other incidental expenses and interest on loan taken for the
acquisition of qualifying assets up to the date of commissioning of
assets. The exchange differences arising on reporting of long term
foreign currency monetary items at rates different from those at which
they were initially recorded during the period, or reported in previous
financial statements, in so far as they relate to the acquisition of a
depreciable capital asset, have been added to or deducted from the cost
of the asset and shall be depreciated over the balance useful life of
the asset.
Die Tooling, developed in-house, includes cost of material, taxes and
duties and other direct/ incidental expense on in-house development.
iii) Depreciation/ amortization
a. Depreciation on fixed assets (other than those referred to in b and
c below) is provided on straight line method in accordance with
Schedule XIVtotheCompaniesAct,1956.
b. Depreciation on assets costing Rs. 5,000 or less is provided 100%
on prorata basis for days put in use.
c. The leasehold land is amortized over the period of lease.
d. Difference of Exchange Rate fluctuation on imported plant and
machineries procured out of long term foreign currency loans is
amortized over the residual life of relevant plant and machineries.
iv) Inventories
a. Raw materials lying at Factory and job workers have been valued at
cost.
b. Stocks in process have been valued at Raw material cost plus
proportionate of conversion cost.
c. Finished goods lying at factory have been valued at Raw material
cost plus conversion cost including excise duty payable.
d. Scrap has been valued at net realizable value.
e. Stores and Spares have been valued at cost.
v) Investments
Long-term investments are carried at cost less provision, if any, for
diminution in value which is other than temporary. Current investments
are carried at lower of cost and fairvalue.
vi) Transactions in Foreign Currency
i) Foreign currency transactions are recorded at the exchange rate
prevailing as at the date of transactions except export sales which are
recorded at a rate notified by the customs for invoice purposes. Such
rate is notified in the last week of the month and is adopted for
recording export sales of the next month. The exchange fluctuation
arising as a result of negotiation of export bill is accounted for as
difference in exchange rates.
ii) Monetary items denominated in a foreign currency are reported at
the closing rate as at the date of balance sheet. The reinstatement
difference is charged to profit and loss account.
ill) Non-monetary items (fixed assets and loans) denominated in a
foreign currency are reinstated as at the date of balance sheet. The
difference on re-instatement is carried to relevant non-monetary items.
vii) Employee Benefits
The Company has various schemes of retirement benefits such as
provident fund, gratuity and leave encashment, which is dealt with as
under
i) Contributions to provident fund are made in accordance with the
provisions of Employees' Provident Fund and Miscellaneous Provisions
Act, 1952 and are charged to revenue every year.
ii) Provision for Gratuity is made based on actuarial valuation. The
gratuity liability in respect of employees of the Company is covered
through a policy taken by a trust from Life Insurance Corporation of
India. The contribution towards premium of the policy to the trust is
charged to revenue every year.
ill) Provision for leave encashment is made based on actuarial
valuation. The leave encashment liability is covered through a policy
taken from Life Insurance Corporation of India The contribution towards
premium of the policy is charged to revenue every year.
viii) Borrowing costs
Borrowing costs that are attributable to acquisition or construction of
a qualifying asset are capitalized as part of cost of such assets.
Qualifying asset is one that necessarily takes 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.
ix) Cenvat
The balance in the Service Tax and Modvat account is shown as current
asset.
x) Revenue Recognition
Sales revenue is recognized as and when goods are handed overto
carrier.
- Insurance claim is recognized on actual receipt basis.
- Interest from bank is recognized on accrual basis.
xi) Recognition of expenses
Expenses are recognized on accrual basis except Technical know-how fees
and Royalty on sales which is recognized on cash basis.
xii) Impairment of Assets
At each balance sheet date an assessment is made whether any indication
exists that an asset has been impaired. If any such indication exists,
an impairment loss, i.e., the amount by which the carrying amount of
asset exceeds its recoverable amount is provided in the books of
account.
xiii) Accounting for taxes on income
Provision for taxation for the year is ascertained on the basis of
assessable profits computed in accordance with the provisions
ofthelncome-taxAct,1961.
Deferred tax is recognized, subject to the consideration of prudence,
on timing differences, being the difference between taxable income and
accounting income that originates in one period and are capable of
reversal in one or more subsequent periods. In respect of carry forward
of losses and unabsorbed depreciation, deferred tax assets are
recognized based on virtual certainty that sufficient future taxable
income will be available against which such deferred tax asset can be
realized.
MAT credit entitlement is recognized as an asset and carried Under
Loans and advances.
Mar 31, 2010
I) Accounting Convention
The financial statements are prepared under the historical cost
convention in accordance with the Accounting Standards referred to in
sub-section (3C) of Section 211 of the Companies Act 1956 and relevant
presentational requirements of the Companies Act, 1956.
ii) Fixed Assets
Fixed assets are stated at cost (net of CENVAT) less accumulated
depreciation. Cost of acquisition is inclusive of freight, duties,
taxes and other incidental expenses and interest on loan taken for the
acquisition of qualifying assets up to the date of commissioning of
assets. The exchange differences arising on reporting of long term
foreign currency monetary items at rates different from those at which
they were initially recorded during the period, or reported in previous
financial statements, in so far as they relate to the acquisition of a
depreciable capital asset, have been added to or deducted from the cost
of the asset and shall be depreciated over the balance useful life of
the asset.
Die Tooling, developed in-house, includes cost of material, taxes and
duties and other direct/ incidental expense on in-house development.
iii) Depreciation / Amortization
a. Depreciation on fixed assets (other than those referred to in b and
c below) is provided on straight line method in accordance with
Schedule XIV to the Companies Act, 1956.
b. Depreciation on assets costing Rs. 5,000 or less is provided 100%
on prorata basis for days put in use.
c. The leasehold land is amortized over the period of lease.
d. Difference of Exchange Rate fluctuation on imported plant and
machineries procured out of long term foreign currency loans is
amortized over the residual life of relevant plant and machineries.
iv) Inventories
a. Raw materials lying at Factory and job workers have been valued at
cost.
b. Stocks in process have been valued at Raw material cost plus
proportionate of conversion cost.
c. Finished goods lying at factory have been valued at Raw material
cost plus conversion cost including excise duty payable.
d. Scrap has been valued at net realizable value.
e. Stores and Spares have been valued at cost.
v) Investments
Long-term investments are carried at cost less provision, if any, for
diminution in value which is other than temporary. Current investments
are carried at lower of cost and fair value.
vi) Transactions in Foreign Currency
i) Foreign currency transactions are recorded at the exchange rate
prevailing as at the date of transactions except export sales which are
recorded at a rate notified by the customs for invoice purposes. Such
rate is notified in the last week of the month and is adopted for
recording export sales of the next month. The exchange fluctuation
arising as a result of negotiation of export bill is accounted for as
difference in exchange rates.
ii) Monetary items denominated in a foreign currency are reported at
the closing rate as at the date of balance sheet. The reinstatement
difference is charged to profit and loss account.
iii) Non-monetary items (fixed assets and loans) denominated in a
foreign currency are reinstated as at the date of balance sheet. The
difference on re- instatement is carried to relevant non-monetary
items.
vii) Employee Benefits
The Company has various schemes of retirement benefits such as
provident fund, gratuity and leave encashment, which is dealt with as
under
i) Contributions to provident fund are made in accordance with the
provisions of Employees Provident Fund and Miscellaneous Provisions
Act, 1952 and are charged to revenue every year.
ii) The gratuity liability in respect of employees of the Company is
covered through a policy taken by a trust from Life Insurance
Corporation of India. The contribution towards premium of the policy to
the trust is charged to revenue every year.
iii) Provision for leave encashment is made based on actuarial
valuation. The leave encashment liability is covered through a policy
taken from Life Insurance Corporation of India. The contribution
towards premium of the policy is charged to revenue every year.
viii) Borrowing costs
Borrowing costs that are attributable to acquisition or construction of
a qualifying asset are capitalized as part of cost of such assets.
Qualifying asset is one that necessarily takes 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.
ix) Cenvat
The balance in the Service Tax and Modvat account is shown as current
asset.
x) Revenue Recognition
- Sales revenue is recognized as and when goods are handed over to
carrier.
- Insurance claim is recognized on actual receipt basis.
- Interest from bank is recognized on accrual basis.
xi) Recognition of expenses
Expenses are recognized on accrual basis except Technical know-how fees
which is recognized on cash basis.
xii) Impairment of Assets
At each balance sheet date an assessment is made whether any indication
exists that an asset has been impaired. If any such indication exists,
an impairment loss, i.e., the amount by which the carrying amount of
asset exceeds its recoverable amount is provided in the books of
account.
xiii) Accounting for taxes on income
Provision for taxation for the year is ascertained on the basis of
assessable profits computed in accordance with the provisions of the
Income-tax Act, 1961.
Deferred tax is recognized, subject to the consideration of prudence,
on timing differences, being the difference between taxable income and
accounting income that originates in one period and are capable of
reversal in one or more subsequent periods. In respect of carry forward
of losses and unabsorbed depreciation, deferred tax assets are
recognized based on virtual certainty that sufficient future taxable
income will be available against which such deferred tax asset can be
realized