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Accounting Policies of Super Spinning Mills Ltd. Company

Mar 31, 2015

1.1 Accounting Convention

The financial statements are prepared under the historical cost convention in accordance with generally accepted accounting principles in India and the provisions of the Companies Act 2013.

2.2 Fixed Assets

a. Fixed assets are stated at historical cost of acquisition (Net of Cenvat credits) less accumulated depreciation / amortisation and cumulative impairment, if any. Cost of acquisition includes freight, duties, taxes, installation, direct attributable costs, finance cost and commissioning.

b. Capital Work in Progress, projects under commissioning are carried forward at cost. Incidental expenditure in relation to projects under commissioning is carried forward till completion of project and comprises of direct cost, related incidental expenditure and attributable interest.

2.3 Depreciation

a. Depreciation on Fixed assets other than those referred to in (b) is provided based on the useful life of the assets in the manner prescribed in Schedule II of the Companies Act 2013.

b. The company considering useful life of the following assets different from Schedule II of the Companies Act 2013, with supporting of Technical opinion:

i. Plant & Machinery Single Shift - 20 Years

ii. Plant & Machinery Triple Shift - 10 Years

iii. Roads, Fences, Walls - 15 Years

c. ERP software & other software is amortised over a period of five years, being the estimated useful life of the asset.

2.4 Investments

Long-term investments are stated at cost less provision, if any, for diminution in value, which is other than temporary. Current investments are stated at lower of cost and fair value.

2.5 Valuation of Inventories

Inventories of Raw Materials, Work-in Process, Finished goods, Stores and Spares are stated at lower of cost or net realisable value. Cost comprises all cost of purchase, cost of conversion and any other costs incurred in bringing the inventories to their present location and condition. Cost formula used is weighted average. Due allowance is estimated and made for defective and obsolete items whether necessary, based on the past experience of the company.

2.6 Provisions, Contingent Liabilities and Contingent Assets

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

2.7 Recognition of Income and Expenditure

a. The company follows the mercantile system of accounting and recognised income and expenditure on accrual basis except those with significant uncertainties.

b. Sales is accounted when the risk and reward of ownership are passed on to the customers.

c. Domestic sales as reported in the statement of profit and loss are inclusive of excise duty, wherever applicable and exclusive of other taxes, if any, and trade discounts. Income from export entitlements is accounted as and when the certainty of entitlement is determined.

d. Revenue from services rendered is recognised as the service is performed based on agreements/ arrangements with the concerned parties.

e. Interest is recognised using the time- proportion method, based on rates implicit in the transaction.

f. Dividend income is recognised when the Company's right to receive dividend is established.

2.8 Employee benefits / Retirement benefits of employees

a. Gratuity benefits are administered by Trust formed for this purpose through the Group Scheme of Life Insurance Corporation of India. The provision of gratuity liability is actuarially determined at the year-end and the liability arising on such valuation is charged to the Statement of Profit and Loss.

b. Provident fund contribution is as per the rates prescribed by the Employees' Provident Funds Act, 1952 and the same is charged to revenue.

c. Superannuation fund contribution is paid according to company rules to the Life Insurance Corporation of India and charged to revenue.

d. Voluntary Retirement Compensation is expended in the year of payment as per the Revised Accounting Standard AS 15.

2.9 Government Grants

a. Government Grants are recognized when there is a reasonable assurance that the company would comply with the conditions attached for such grant and further the grant would be received

b. Revenue grants are recognized in the Statement of Profit and Loss.

c. Interest reimbursement under Technology Up gradation Fund Scheme (TUFS) is directly credited to respective term loan interest accounts, being reimbursement of expenditure incurred.

2.10 Borrowing Costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. All other borrowing costs are charged to revenue.

2.11 Exchange Fluctuation

a. All loans and deferred credits repayable in Foreign Currency and outstanding at the close of the year are expressed in Indian currency at the appropriate rates of exchange prevailing on the date of the Balance Sheet. In respect of revenue transactions covered by forward exchange contracts, the difference between the forward rate and exchange rate at the inception of the contract is recognised as income or expense over the life of the contract.

b. Balances in the form of current assets and current liabilities in foreign exchange outstanding at the close of the year are converted in Indian currency at the appropriate rates of exchange prevailing on the date of the Balance Sheet. Resultant gain or loss is charged to the Statement of Profit and Loss.

c. All other income or expenditure in foreign currency is recorded at the rates of exchange prevailing on the dates when the relevant transactions took place.

2.12 Operating Lease

Assets taken on lease, under which, all the risk and rewards of ownership are effectively retained by the lessor are classified as operating lease. Lease payments under operating leases are recognised as expenses on accrual basis in accordance with the respective lease agreements.

2.13 Taxes on Income

Tax expense comprises of current and deferred tax. Current tax and deferred tax are accounted for in accordance with Accounting Standards (AS 22) on "Accounting for Taxes on Income", issued by The Institute of CharteredAccountants of India. Current tax is measured at the amount expected to be paid to the tax authority using the applicable tax rates. Deferred tax assets and liabilities are recognised for future tax consequence attributable to timing difference between taxable income and accounting income that are capable of reversing in one or more subsequent periods and are measured at relevant enacted / substantially enacted rates. At each Balance Sheet date, the company reassesses unrealised deferred tax assets to the extent they become reasonably certain or virtually certain of realisation as the case may be.

2.14 Impairment of Assets

The carrying amount of assets are reviewed at each Balance Sheet date, if there is any indication of impairment based on internal / external factors. An asset is impaired when the carrying amount of the asset exceeds the recoverable amount. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. An impairment loss recognised in prior accounting period is reversed in current accounting periods if there has been a change in the estimate of the recoverable amount.

2.15 Earnings Per Share

Basic and Diluted earnings per share is calculated by dividing the net profit attributable to the equity shareholders by the weighted average number of equity shares outstanding during the year.

3.1 Shares held by holding / ultimate holding company / or their subsidiaries / associates

3.2 The company has only one class of issued shares referred to as equity shares having a par value of Rs.1/- each.

Each holder of equity shares is entitled to one vote per share held.

The Company declares and pays dividends in indian rupees. However during the year the company has not declared any dividend. The dividend (except in case of interim dividend) proposed by the Board of Directors, if any, is subject to the approval of shareholders in the Annual General Meeting. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of all preferential amounts. However, no such preferential amount exists currently. The distribution will be in proportion to the number of equity shares held by the shareholders.

3.3 Details of security for Long-term Borrowings The Tuf loan from SBI bank is secured by:

a. First charge on fixed asset financed by SBI , and Second charge on entire current asset and other fixed assets of the company on paripassu basis"

b. Personal Guarantee from promoter

The term loan from SBI bank is secured by:

a. First Pari-passu charge on entire fixed asset of the company, and First charge on entire current asset of the company

b. Personal Guarantee from promoter

The term loans from Andhra Bank is secured by:

a. First Pari-passu charge on entire fixed asset of the company

b. Second charge on current assets of the Company.

8.1 Working Capital loans from banks are secured by:

For SBI:

a. First charge on entire current assets of the company

b. Second paripassu charge on entire fixed assets of the company For ICICI:

a. First pari passu charge by way of Hypothecation on entire current assets of the company.

b. Second paripassu charge and mortcage on specific Moveable and Immoveable properties of the Company.

For Other Banks:

a. First pari passu charge on entire current assets of the company

b. Second paripassu charge on entire fixed assets of the company

"Working Capital loans are payable on demand and carries interest rate for Cash Credit -- [14.22% to 15%] "& for Packing Credit [ 10.45% to 11.25%]"

9 Trade Payables

Based on the information and evidence available with the company, there are no dues to Micro, Small and Medium Enterprises, outstanding as on 31.03.2015.

4.1.1 Trade receivables due from certain customers are under litigation at various forums. However, management i s confident of recovering these dues and hence no provision for doubtful debts is required to be provided

4.1.2 Item shown in Non current assets in current year were grouped under Current Assets in the previous year.


Mar 31, 2014

1.1 Accounting Convention

The financial statements have been prepared under the historical cost convention in accordance with generally accepted accounting principles in India, the applicable Accounting Standards referred to in sub- section (3C) of Section 211 of the Companies Act, 1956.

2.2 Fixed Assets

a. Fixed assets are stated at historical cost of acquisition (Net of Cenvat credits) less accumulated depreciation / amortisation and cumulative impairment, if any. Cost of acquisition includes freight, duties, taxes, installation, direct attributable costs, interest and commissioning.

b. Capital Work in Progress, projects under commissioning are carried forward at cost. Incidental expenditure in relation to projects under commissioning is carried forward till completion of project and comprises of direct cost, related incidental expenditure and attributable interest.

2.3 Depreciation

a. Depreciation on Fixed assets other than those referred to in (c) and (d) below) is charged on straight line method at the rates prescribed under Schedule XIV of the Companies Act, 1956, on a pro- rata basis corresponding to the date of installation / commissioning.

b. Fixed assets, other than intangible assets are depreciated to the extent of 95% of its gross value over the useful life of the asset.

c. Assets costing Rs.5000 or less are fully depreciated in the year of purchase.

d. ERP software is amortised over a period of five years, being the estimated useful life of the asset.

2.4 Investments

Long-term investments are stated at cost less provision, if any, for diminution in value, which is other

than temporary. Current investments are stated at lower of cost and fair value.

2.5 Valuation of Inventories

Inventories of Raw Materials, Work-in Process, Finished goods, Stores and Spares are stated at lower of cost and net realisable value. Cost comprises all cost of purchase, cost of conversion and any other costs incurred in bringing the inventories to their present location and condition. Cost formula used is weighted average. Due allowance is estimated and made for defective and obsolete items whether necessary, based on the past experience of the company.

2.6 Provisions, Contingent Liabilities and Contingent Assets

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

2.7 Recognition of Income and Expenditure

a. The company follows the mercantile system of accounting and recognised income and expenditure on accrual basis except those with significant uncertainties.

b. Sales is accounted when the risk and reward of ownership are passed on to the customers

c. Domestic sales as reported in the statement of profit and loss are inclusive of excise duty, wherever applicable and exclusive of other taxes, if any, and trade discounts. Income from export entitlements is accounted as and when the certainty of entitlement is determined.

d. Revenue from services rendered is recognised as the service is performed based on agreements/ arrangements with the concerned parties.

e. Interest is recognised using the time-proportion method, based on rates implicit in the transaction.

f. Dividend income is recognised when the Company''s right to receive dividend is established.

2.8 Employee benefits / Retirement benefits of employees

a. Gratuity benefits are administered by Trust formed for this purpose through the Group Scheme of Life

Insurance Corporation of India. The provision of gratuity liability is actuarially determined at the year- end and the liability arising on such valuation is charged to the Statement of Profit and Loss.

b. Provident fund contribution is as per the rates prescribed by the Employees'' Provident Funds Act, 1952 and the same is charged to revenue.

c. Superannuation fund contribution is paid according to company rules to the Life Insurance Corporation of India and charged to revenue.

d. Voluntary Retirement Compensation is expended in the year of payment as per the Revised Accounting Standard AS 15.

2.9 Borrowing Costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are charged to revenue.

2.10 Exchange Fluctuation

a) All loans and deferred credits repayable in Foreign Currency and outstanding at the close of the year are expressed in Indian currency at the appropriate rates of exchange prevailing on the date of the Balance Sheet. In respect of revenue transactions covered by forward exchange contracts, the difference between the forward rate and exchange rate at the inception of the contract is recognised as income or expense over the life of the contract.

b) Balances in the form of current assets and current liabilities in foreign exchange outstanding at the close of the year are converted in Indian currency at the appropriate rates of exchange prevailing on the date of the Balance Sheet. Resultant gain or loss is charged to the Statement of Profit and Loss.

c) All other income or expenditure in foreign currency is recorded at the rates of exchange prevailing on the dates when the relevant transactions took place.

2.11 Operating Lease

Assets taken on lease, under which, all the risk and rewards of ownership are effectively retained by the lessor are classified as operating lease. Lease payments under operating leases are recognised as expenses on accrual basis in accordance with the respective lease agreements.

2.12 Taxes on Income

Tax expense comprises of current and deferred tax. Current tax and deferred tax are accounted for in accordance with Accounting Standards (AS 22) on "Accounting for Taxes on Income", issued by The Institute of Chartered Accountants of India. Current tax is measured at the amount expected to be paid to the tax authority using the applicable tax rates. Deferred tax assets and liabilities are recognised for future tax consequence attributable to timing difference between taxable income and accounting income that are capable of reversing in one or more subsequent periods and are measured at relevant enacted / substantially enacted rates. At each Balance Sheet date, the company reassesses unrealised deferred tax assets to the extent they become reasonably certain or virtually certain of realisation as the case may be.

2.13 Impairment of Assets

The carrying amount of assets are reviewed at each Balance Sheet date, if there is any indication of impairment based on internal / external factors. An asset is impaired when the carrying amount of the asset exceeds the recoverable amount. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. An impairment loss recognised in prior accounting period is reversed in current accounting periods if there has been a change in the estimate of the recoverable amount.

2.14 Earnings Per Share

Basic and Diluted earnings per share is calculated by dividing the net profit attributable to the equity shareholders by the weighted average number of equity shares outstanding during the year.

3.3 The company has only one class of issued shares referred to as equity shares having a par value of Re.1/- each.

Each holder of equity shares is entitled to one vote per share held.

The Company declares and pays dividends in indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of all preferential amounts. However, no such preferential amount exists currently. The distribution will be in proportion to the number of equity shares held by the shareholders.

5.2 Details of security for Long-term Borrowings

The term loan from SBI bank is secured by:

a. First Pari-passu charge on entire fixed asset of the company, and First charge on entire current asset of the company.

The term loans from other banks and financial institutions are secured by:

b. First Pari-passu charge on entire fixed asset of the company

c. Second charge on current assets of the Company.

8.1 Working Capital loans from banks are secured by:

a. First pari passu charge by way of Hypothecation of Inventories, Book Debts and other current assets of the Company.

b. Second charge on specific Moveable and Immoveable properties of the Company.

9 Trade Payables

Based on the information and evidence available with the company, there are no dues to Micro, Small and Medium Enterprises, outstanding as on 31.03.2014.


Mar 31, 2013

1.1 Accounting Convention

The financial statements have been prepared under the historical cost convention in accordance with generally accepted accounting principles in India, the applicable Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.

1.2 Fixed Assets

a. Fixed assets are stated at historical cost of acquisition(Net of Cenvat credits) less accumulated depreciation / amortizarion and cumulative impairment, if any. Cost of acquisition includes freight, duties, taxes, installation, direct attributable costs, interest and commissioning.

b. Capital Work in Progress, projects under commissioning are carried forward at cost. Incidental expenditure in relation to projects under commissioning is carried forward till completion of project and comprises of direct cost, related incidental expenditure and attributable interest.

1.3 Depreciation

a. Depreciation on Fixed assets (other than those referred to in (c) and (d) below) is charged on straight line method at the rates prescribed under Schedule XIV of the Companies Act, 1956, on a pro-rata basis corresponding to the date of installation / commissioning.

b. Fixed assets, other than intangible assets are depreciated to the extent of 95% of its gross value over the useful life of the asset.

c. Assets costing Rs. 5000 or less are fully depreciated in the year of purchase.

d. ERP software is amortised over a period of five years, being the estimated useful life of the asset.

1.4 Investments

Long-term investments are stated at cost less provision, if any, for dimunition in value, which is other than temporary. Current investments are stated at lower of cost and fair value.

1.5 Valuation of Inventories

Inventories of Raw Materials, Work-in Process, Finished goods, Stores and Spares are stated at lower of cost and net realisable value. Cost comprises all cost of purchase, cost of conversion and any other costs incurred in bringing the inventories to their present location and condition. Cost formula used is weighted average. Due allowance is estimated and made for defective and obsolete items, whether necessary based on the past experience of the company.

1.6 Provisions, Contingent Liabilities and Contingent Assets

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

1.7 Recognition of Income and Expenditure

a. The company follows the mercantile system of accounting and recognised income and expenditure on accrual basis except those with significant uncertainties.

b. Sales is accounted when the risk and reward of ownership are passed on to the customers.

c. Domestic sales as reported in the statement of profit and loss are inclusive of excise duty, wherever applicable and exclusive of other taxes, if any, and trade discounts. Income from export entitlements is accounted as and when the certainty of entitlement is determined.

d. Revenue from services rendered is recognised as the service is performed based on agreements /arrangements with the concerned parties.

e. Interest is recognised using the time-proportion method, based on rates implicit in the transaction.

f. Dividend income is recognised when the Company''s right to receive dividend is established.

1.8 Employee benefits / Retirement benefits of employees

a. Gratuity benefits are administered by Trust formed for this purpose through the Group Scheme of Life Insurance Corporation of India.

The provision of gratuity liability is actuarially determined at the year-end and the liability arising on such valuation is charged to the Statement of Profit and Loss.

b. Provident fund contribution is as per the rates prescribed by the Employees'' Provident Funds Act, 1952 and the same is charged to revenue.

c. Superannuation fund contribution is paid according to company rules to the Life Insurance Corporation of India and charged to revenue.

d. Voluntary Retirement Compensation is expended in the year of payment as per the Revised Accounting Standard AS 15.

1.9 Borrowing Costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are charged to revenue.

1.10 Exchange Fluctuation

a. All loans and deferred credits repayable in Foreign Currency and outstanding at the close of the year are expressed in indian currency at the appropriate rates of exchange prevailing on the date of the Balance Sheet. In respect of revenue transactions covered by forward exchange contracts, the difference between the forward rate and exchange rate at the inception of the contract is recognised as income or expense over the life of the contract.

b. Balances in the form of current assets and current liabilities in foreign exchange outstanding at the close of the year, are converted in indian currency at the appropriate rates of exchange prevailing on the date of the Balance Sheet. Resultant gain or loss is charged to the Statement of Profit and Loss.

c. All other income or expenditure in foreign currency is recorded at the rates of exchange prevailing on the dates when the relevant transactions took place.

1.11 Operating Lease

Assets taken on lease, under which, all the risk and rewards of ownership are effectively retained by the lessor are classified as operating lease. Lease payments under operating leases are recognised as expenses on accrual basis in accordance with the respective lease agreements.

1.12 Taxes on Income

Tax expense comprises of current and deferred tax. Current tax and Deferred tax are accounted for in accordance with Accounting Standards (AS 22) on "Accounting for Taxes on Income", issued by The Institute of Chartered Accountants of India. Current tax is measured at the amount expected to be paid to the tax authority using the applicable tax rates. Deferred tax assets and liabilities are recognised for future tax consequence attributable to timing difference between taxable income and accounting income that are capable of reversing in one or more subsequent periods and are measured at relevant enacted / substantially enacted tax rates. At each Balance Sheet date, the company reassesses unrealised deferred tax assets to the extent they become reasonably certain or virtually certain of realisation as the case may be.

1.13 Impairment of Assets

The carrying amount of assets are reviewed at each Balance Sheet date, if there is any indication of impairment based on internal / external factors. An asset is impaired when the carrying amount of the asset exceeds the recoverable amount. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. An impairment loss recognised in prior accounting period is reversed in current accounting periods if there has been a change in the estimate of the recoverable amount.

1.14 Earnings Per Share

Basic and Diluted earning per share is calculated by dividing the net profit attributable to the equity shareholders by the number of equity shares outstanding during the year.


Mar 31, 2012

1.1 Accounting Convention

The financial statements have been prepared under the historical cost convention in accordance with generally accepted accounting principles in India, the applicable Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.

1.2 Fixed Assets

a. Fixed assets are stated at historical cost of acquisition (Net of Cenvat credits) less accumulated depreciation / amortizarion and cumulative impairment, if any. Cost of acquisition includes freight, duties, taxes, installation, direct attributable costs, interest and commissioning.

b. Capital Work in Progress projects under commissioning are carried forward at cost. Incidental expenditure in relation to projects under commissioning is carried forward till completion of project and comprises of direct cost, related incidental expenditdure and attributable interest.

1.3 Depreciation

a. Depreciation on Fixed assets (other than those referred to in ( c ) and ( d ) below) is charged on straight line method at the rates prescribed under Schedule XIV of the Companies Act, 1956, on a pro-rata basis corresponding to the date of installation / commissioning.

b. Fixed assets, other than intangible assets are depreciated to the extent of 95% of its gross value over the useful life of the asset.

c. Assets costing Rs.5000 or less are fully depreciated in the year of purchase.

d. ERP software is amortised over a period of five years, being the estimated useful life of the asset.

1.4 Investments

Long-term investments are stated at cost less provision, if any, for dimunition in value which is other than temporary. Current investments are stated at lower of cost and fair value.

1.5 Valuation of Inventories

Inventories of Raw Materials, Work-in Process, Finished goods, Stores and Spares are stated at lower of cost and net realisable value. Cost comprises all cost of purchase, cost of conversion and any other costs incurred in bringing the inventories to their present location and condition. Cost formula used is weighted average. Due allowance is estimated and made for defective and obsolete items, whether necessary based on the past experience of the company.

1.6 Provisions, Contingent Liabilities and Contingent Assets

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

1.7 Recognition of Income and Expenditure

a. The company follows the mercantile system of accounting and recognises income and expenditure on accrual basis except those with significant uncertainties.

b. Sales is accounted when the risk and reward of ownership are passed on to the customers.

c. Domestic sales as reported in the statement of profit and loss are inclusive of excise duty, wherever applicable and exclusive of other taxes, if any, and trade discounts. Income from export entitlements is accounted as and when the certainty of entitlement is determined.

d. Revenue from services rendered is recognised as the service is performed based on agreements /arrangements with the concerned parties.

1.8 Employee benefits / Retirement benefits of employees

a. Gratuity benefits are administered by Trust formed for this purpose through the group scheme of Life Insurance Corporation of India. The provision of gratuity liability is actuarially determined at the year-end and the liability arising on such valuation is charged to the statement of profit and loss accordingly.

b. Provident fund contribution is as per the rates prescribed by the Employees' Provident Funds Act, 1952 and the same is charged to revenue.

c. Superannuation fund contribution is paid according to company rules to the Life Insurance Corporation of India and charged to revenue.

d. Voluntary Retirement Compensation is expended in the year of payment as per the Revised Accounting Standard AS 15.

1.9 Borrowing Costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are charged to revenue.

1.10 Exchange Fluctuation

a. All loans and deferred credits repayable in Foreign Currency and outstanding at the close of the year are expressed in indian currency at the appropriate rates of exchange prevailing on the date of the Balance Sheet. Any increase or reduction in these liabilities, to the extent they relate to borrowings for financing imported capital assets have been capitalised as per Company Accounting Standards Amendment Rules, 2009 on AS 11 (G.S.R.225(E) dated 31.03.2009) issued by the Ministry of Company Affairs. In respect of revenue transactions covered by forward exchange contracts, the difference between the forward rate and exchange rate at the inception of the contract is recognised as income or expense over the life of the contract.

b. Balances in the form of current assets and current liabilities in foreign exchange outstanding at the close of the year, are converted in indian currency at the appropriate rates of exchange prevailing on the date of the Balance Sheet. Resultant gain or loss is charged to the statement of profit and loss.

c. All other income or expenditure in foreign currency is recorded at the rates of exchange prevailing on the dates when the relevant transactions took place.

1.11 Operating Lease

Assets taken on lease, under which, all the risk and rewards of ownership are effectively retained by the lessor are classified as operating lease.

Lease payments under operating leases are recognised as expenses on accrual basis in accordance with the respective lease agreements.

1.12 Taxes on Income

Tax expense comprises of current tax and deferred tax. Current tax and Deferred tax are accounted for in accordance with Accounting Standards (AS 22) on "Accounting for Taxes on Income", issued by The Institute of Chartered Accountants of India. Current tax is measured at the amount expected to be paid to the tax authority using the applicable tax rates. Deferred tax assets and liabilities are recognised for future tax consequence attributable to timing difference between taxable income and accounting income that are capable of reversing in one or more subsequent periods and are measured at relevant enacted / substantially enacted tax rates. At each Balance Sheet date, the company reassesses unrealised deferred tax assets to the extent they become reasonably certain or virtually certain of realisation as the case may be.

1.13 Impairment of Assets

The carrying amount of assets are reviewed at each Balance Sheet date, if there is any indication of impairment based on internal / external factors. An asset is impaired when the carrying amount of the asset exceeds the recoverable amount. An impairment loss is charged to the statement of profit and loss in the year in which an asset is identified as impaired. An impairment loss recognised in prior accounting periods is reversed in current accounting period if there has been a change in the estimate of the recoverable amount.

1.14 Earnings Per Share

Basic and Diluted earning per share is calculated by dividing the net profit attributable to the equity shareholders by the number of equity shares outstanding during the year.


Mar 31, 2011

1. Accounting Convention:

The Financial Statements have been prepared under the historical cost convention in accordance with generally accepted accounting principles in India, the applicable Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.

2. Fixed Assets:

a. Fixed Assets are stated at historical cost of acquisition (Net of CENVAT Credits) less accumulated depreciation / amortization and cumulative impairment, if any. Cost of Acquisition includes freight, duties, taxes, installation, direct attributable costs, interest and commissioning.

b. Capital Work in Progress projects under commissioning are carried forward at cost. Incidental expenditure in relation to projects under commissioning is carried forward till completion of project and comprises of direct cost, related incidental expenditure and attributable interest.

3. Depreciation:

a. Depreciation on Fixed Assets (Other than those referred to in (c) and (d) below) is charged on Straight Line Method at the rates prescribed under Schedule XIV of the Companies Act, 1956, on a pro-rata basis corresponding to the date of installation / commissioning.

b. Fixed Assets, other than Intangible assets are depreciated to the extent of 95% of its Gross Value.

c. Assets costing Rs 5.000 or less are fully depreciated in the year of purchase.

d. ERP Software is amortised over a period of Five years, being the estimated useful life of the asset.

4. Investments:

Long-term investments are stated at cost less provision, if any, for dimunition in value which is other than temporary. Current investments are stated at lower of cost and fair value.

5. Valuation of Inventories:

Inventories of Raw Materials, Work in Process, Finished Goods, Stores and Spares are stated at lower of cost and net realisable value. Cost comprises all cost of purchase, cost of conversion and any other costs incurred in bringing the inventories to their present location and condition. Cost formula used is weighted average. Due allowance is estimated and made tor defective and obsolete items, wherever necessary based on the past experience of the Company.

6. Provisions, Contingent Liabilities and Contingent Assets:

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources embodying economic benefits. Contingent Liabilities are not recognised but are disclosed in the Notes. Contingent Assets are neither recognised nor disclosed in the Financial Statements.

7. Recognition of Income and Expenditure:

a) The Company follows the mercantile system of accounting and recognises income and expenditure on accrual basis except those with significant uncertainties.

b) Sale of Goods is accounted when the risk and reward of ownership are passed on to the Customers.

c) Domestic Sales as reported in the Profit and loss account are inclusive of excise duty, wherever applicable and exclusive of other taxes, if any, and trade discounts. Income from Export entitlements is accounted as and when the certainty of entitlement is determined.

d) Revenue from Services rendered is recognised as the service is performed based on agreements / arrangements with the concerned parties.

8. Employee Benefits / Retirement Benefits of Employees:

a) Gratuity benefits are administered by Trust formed for this purpose through the group scheme of Life Insurance Corporation of India. The provision for gratuity liability is actuarially determined at the year-end and the liability arising on such valuation is charged to the Profit and Loss Account accordingly.

b) Provident Fund Contribution is as per the rates prescribed by the Employees' Provident Funds Act, 1952 and the same is charged to revenue.

c) Super Annuation Fund Contribution is paid according to Company rules to the Life Insurance Corporation of India and charged to revenue.

d) Voluntary Retirement Compensation is expended in the year of payment as per the Revised Accounting Standard AS 15.

9. Borrowing Costs:

Borrowing Costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are charged to revenue.

10. Exchange Fluctuation:

a. All Loans and Deferred Credits repayable in Foreign Currency and outstanding at the close of the year are expressed in Indian Currency at the appropriate rates of Exchange prevailing on the date of the Balance Sheet. Any increase or reduction in these liabilities, to the extent they relate to borrowings for financing imported capital assets have been capitalized as per Company Accounting Standards Amendment Rules, 2009 on AS 11 (G.S.R. 225(E) dated 31.03.09) issued by the Ministry of Corporate Affairs. In respect of revenue transactions covered by Forward Exchange Contracts, the difference between the Forward Rate and Exchange Rate at the inception of the Contract is recognized as Income or Expense over the life of the Contract.

b. Balances in the form of Current Assets and Current Liabilities in Foreign Exchange outstanding at the close of the year, are converted in Indian Currency at the appropriate rates of exchange prevailing on the date of the Balance Sheet. Resultant gain or loss is charged to the Profit and loss account.

c. All other Income or Expenditure in Foreign Currency is recorded at the rates of exchange prevailing on the dates when the relevant transactions took place.

11. Operating Lease:

Assets taken on Lease under which, all the risk and rewards of ownership are effectively retained by the lessor are classified as Operating Lease. Lease payments under Operating Leases are recognised as expenses on accrual basis in accordance with the respective Lease Agreements.

12. Taxes on Income:

Tax expense comprises of Current Tax and Deferred tax. Current Tax and Deferred Tax are accounted for in accordance with Accounting Standard (AS 22) on "Accounting for Taxes on Income", issued by The Institute of Chartered Accountants of India (ICAI).

Current Tax is measured at the amount expected to be paid to the Tax authority used in the applicable tax rates.

Deferred Tax assets and liabilities are recognised for future tax consequence attributable to timing difference between Taxable Income and Accounting Income that are capable of reversing in one or more subsequent periods and are measured at relevant enacted / substantively enacted Tax rates At each Balance Sheet date the Company reassesses unrealised deferred tax assets to the extent they become reasonably certain or virtually certain of realisation as the case may be.

13. Impairment of Assets:

The carrying amount of assets are reviewed at each Balance Sheet date, if there is any indication of impairment based on internal / external factors. An asset is impaired when the carrying amount of the asset exceeds the recoverable amount. An impairment loss is charged to the Profit & Loss Account in the year in which an asset is identified as impaired. An impairment loss recognised in prior accounting periods is reversed in current accounting period if there has been a change in the estimate of the recoverable amount.

14. Earnings Per Share:

Basic and Diluted Earnings per Share is calculated by dividing the Net profit attributable to the Equity Shareholders by the weighted average number of Equity Shares outstanding during the year.

 
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