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Accounting Policies of Techno Forge Ltd. Company

Mar 31, 2013

A. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

i) The financial statements are prepared in accordance with the accounting principles generally accepted in India.

ii) The concern generally follows the mercantile system of accounting and recognizes income & expenditure on an accrual basis except those with significant uncertainties.

B. USE OF ESTIMATES

The presentation of financial statements requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Differences between the actual result and estimates are recognized in the period in which the results are known/ materialized. The material assumptions are as under:

i) Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. AD other investments are classified as long-term investments. Long-term investments are carried at cost.

ii) A provision is recognized when an enterprise has a present obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation. In respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

C. FIXED ASSETS

Fixed Assets are stated at cost of acquisition net of recoverable taxes and includes amount added on revaluation, less accumulated depreciation and

impairment loss, if any. All costs, including financing cost till commencement of commercial''production, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the fixed assets are capitalized.

Gross Block includes Rs. 18.43 lacs added on revaluation of Employees Quarter as at 30.03.2009 based on report issued by the valuers.

D. EXPENDITURE DURING CONSTRUCTION PERIOD

Expenditure related to and incurred during implementation of new/expansion- cum-modernization projects is included under capital work-in-progress and the same is allocated to the respective Fixed Assets on completion of its construction/erection. Interest on borrowing costs related to a qualifying asset is worked out on the basis of actual utilization of funds out of project specific loans and/or other borrowings to the extent identifiable with the qualifying asset and is capitalized with the cost of the qualifying asset.

E. DEPRECIATION AND AMORTIZATION

Depreciation on fixed assets (other than land) is provided to the extent of depreciable amount on Straight Line method (SLM) at the rates and in the manner prescribed hi schedule XIV to the Companies Act, 1956 over its useful life.

Depreciation on additions to Fixed Assets or on sale/ discardment of assets is calculated pro rata from the month of such addition or up to the month of such sale/ discardment, as the case may be.

Depreciation charged on Revalued Assets has been adjusted against the revaluation reserve. The Gross Block of Fixed Assets includes Rs.18.43 lacs (Previous Year Rs.18.43 lacs) on account of revaluation of Employees Quarter carried out in March 2009. Consequent to the said revaluation there is an additional charge of depreciation of Rs,0.31 lacs (Previous Year Rs.0.29 lacs) and an equivalent amount has been withdrawn from Revaluation Reserve and credited to the Profit and Loss Account. This has no impact on profit for the year.

F. FOREIGN CURRENCY TRANSACTIONS

Transactions denominated in foreign currency are recorded at the prevalent rates of Exchange in force at the time the transactions are effected and exchange rate difference is accounted on the date of realization of foreign exchange.

Monetary foreign currency assets and liabilities in foreign currency, 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 losses are recognized in the Profit and Loss account for the year.

G. VALUATION OF INVENTORIES

Items of Inventories "are measured at lower of cost and net realizable value after providing for obsolescence, if any.

(i) Cost of inventories comprises of cost of purchase, cost of conversion and other cost including manufacturing overheads incurred in bringing them to their respective present location & condition. Cost of Raw Materials, Stores & spares are determined at cost.

(ii) Work- in- Progress are valued at cost of purchase, cost of conversion and other cost including manufacturing overheads incurred in bringing them to their respective present location and conditions.

H. REVENUE RECOGNITION

Revenue is recognized only when it can be reliably measured and it is reasonable to expect ultimate collection. Turnover includes sale of goods and Job Charges adjusted for returns, discounts, Value Added Tax (VAT), excise duty, and Sales Tax. Materials returned/rejected are accounted for in the year of return/rejection.

Export sales are accounted for on the basis of the date of bill of lading/ airways bill.

Income from job charges accounted for at the time of billing.

Revenue in respect of insurance /other claims, interest and commission etc. is recognized only when it is reasonably certain that the ultimate realization will be effected. I. EXCISE DUTY AND CUSTOMS DUTY

Excise Duty liability on finished goods manufactured and lying in the factory is accounted for and the corresponding amount are considered for valuation thereof. Customs duty in respect of materials lying in bonded premises and in transit is accounted for as and when the property in the goods passes to the Company.

J. EXPORT BENEFITS

Export benefits available under the Export Import policy of the Government of India are accounted for in the year of export, to the extent measurable.

K. CENVAT

CENVAT is accounted as per exclusive method of accounting. L. TAXES ON INCOME

Tax expenses comprises of current & deferred tax. Current income tax is measured at the amount expected to be paid to the tax authority in accordance with the Indian Income Tax.

In accordance with Accounting Standard (AS-22) "Accounting for Taxes on Income'''' issued by the Institute of Chartered Accountants of India, deferred tax resulting from "timing difference" between taxable and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted as on the balance sheet date. Deferred .Tax asset is recognized and carried forward only to the extent that there is a virtual certainty that the asset will be realized in future.

M. EMPLOYEE BENEFITS

Expenses & liabilities in respect of employee benefits are recorded in accordance with the Revised Accounting Standard (AS)-15 -Employee Benefits (revised 2005) issued by ICAI.

a). Provident Fund

The Company makes contribution to statutory provident fund in accordance with the Employees Provident Fund & Miscellaneous Provisions Act 1952 which is a defined contribution plan and contribution paid or payable is recognized as an expense in the period in which services are rendered by the employee.

b). Post Employee Benefits / Gratuity

[Post Employee Benefit and other long term Employee Benefits a''e recognized as an expense in the Profit and Loss account for the year in which the employee has rendered services. Provision has been made for liability in respect of gratuity to employees as per the actuarial valuation

c). Leave Encashment / Salary

The company has not provided any leave encashment / salary to the employees as the employees fully utilizes their leaves during the year. N. BORROWING COST

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use.

All other borrowing costs are charged to Profit and Loss account.

O. COMPARATIVES

Comparative financial information is presented in accordance with the "Corresponding Figure" financial reporting framework set out in "Standard- of Auditing 710" on Comparatives. Accordingly, amounts and other disclosures for the preceding year are included as an Integral part of the current year financial statements, and are to be read in relation to the amounts and other disclosures - relating to the current year.

P. SEGMENT INFORMATION FOR PRIMARY SEGMENT REPORTING (BY BUSINESS SEGMENTS)

Based on guiding principles given in the Accounting standard on ''Segment Reporting'' (AS-17), the primary segment of the Company is business segment, which is involved In business of manufacturing Ingots, Flanges, Forging, etc. As the company operates in a single primary business segment, no segment information thereof is given.

Q. PROVISIONS AND CONTINGENT LIABILITIES

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a 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.

Contingent Liabilities for the year end are as-

Particulars Amount in Rs. As on 31/0312013

Contingent Liabilities for Letter of Credit issued by bank and outstanding 65,00,000/-

Contingent Liabilities for Letter of Guarantee 61,70,910/-

Total 1,26,70,910/-


Mar 31, 2012

1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

i) The financial statements are prepared in accordance with the accounting principles generally accepted in India.

ii) The concern generally follows the mercantile system of accounting and recognizes income & expenditure on an accrual basis except those with significant uncertainties. .

2. USE OF ESTIMATES:-

The presentation of financial statements requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Differences between the actual result and estimates are recognized in the period in which the results are known/ materialized. The material assumptions are as under:

i) Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments Long-term investments are carried at cost.

ii) A provision is recognized when an enterprise has a present obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

3. Fixed Assets

Fixed Assets are stated at cost of acquisition net of recoverable taxes and includes amount added on revaluation, less accumulated depreciation and impairment loss, if any. All costs, including financing cost till commencement of commercial production, net charges on foreign exchange Contracts and adjustments arising from exchange rate variations attributable to the fixed assets are capitalized.

4. Expenditure during construction period

Expenditure related to and incurred during implementation of new/expansion- cum-modernization projects is included under capital work-in-progress and the same is allocated to the respective Fixed Assets on completion of its construction/ erection. Interest on borrowing costs related to a qualifying asset is worked out on the basis of actual utilization of funds out of project specific loans and/or other borrowings to the extent identifiable with the qualifying asset and is capitalized with the cost of the qualifying asset.

5. Depreciation and Amortization

Depreciation on fixed assets (other than land) is provided to the extent of depreciable amount on Straight Line method (SLM) at the rates and in the manner prescribed in schedule XIV to the Companies Act, 1956 over its useful life.

Depreciation on additions to Fixed Assets or on sale/ discernment of assets is calculated pro rata from the month of such addition or up to the month of such sale/ discernment, as the case may be.

Depreciation charged on Revalued Assets has been adjusted against the

revaluation reserve.

Miscellaneous expenditure is written off over a period of five years.

6. FOREIGN CURRENCY TRANSACTIONS

Transactions denominated in foreign currency are recorded at the prevalent rates of Exchange in force at the time the transactions are effected and exchange rate difference is accounted on the date of realization of foreign exchange.

Monetary foreign currency assets and liabilities in foreign currency, 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 losses are recognized in the PS L A/c for the year.

7. VALUATION OF INVENTORIES

Items of inventories are measured at lower of cost and net realizable value after providing for obsolescence, if any.

i) cost of Inventories comprises of cost of purchase, cost of conversion and other cost including manufacturing overheads incurred in bringing them to their respective present location & condition. Cost of Raw Materials, Stores & spares are determined at cost.

iii) Work- in- Progress are valued at cost of purchase, cost of conversion and other cost including manufacturing overheads incurred in bringing them to their respective present location and conditions.

8. REVENUE RECOGNITION:-

Revenue is recognized only when it can be reliably measured and it is reasonable to expect ultimate collection. Turnover includes sale of goods and Job Charges adjusted for returns, discounts, Value Added Tax (VAT), excise duty, and Sales Tax. Material returned/rejected are accounted for in the year of return/rejection

Export sales are accounted for on the basis of the date of bill of lading/ airways

bill.

Income from job charges accounted for at the time of billing.

Revenue in respect of insurance / other claims, interest and commission etc. is recognized only when ;t is reasonably certain that the ultimate realization will be effected.

9. Excise Duty and Customs Duty

Excise Duty liability on finished goods manufactured and lying in the factory is accounted for and the corresponding amount are considered for valuation thereof. Customs duty in respect of materials lying in bonded premises and in transit is accounted for as and when the property in the goods passes to the Company.

10. Export benefits

Export benefits available under the Export Import policy of the Government of India are accounted for in the year of export, to the extent measurable.

11. CENVAT:-

Cenvat is accounted as per exclusive method of accounting.

12. TAXES ON INCOME:-

Tax expenses comprises of current & deferred tax. Current income tax is measured at the amount expected to be paid to the tax authority in accordance with the Indian Income Tax. -

In accordance with Accounting Standard (AS-22) "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India, deferred tax resulting from "timing difference" between taxable and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted as on the balance sheet date. Deferred Tax asset is recognized and carried forward only to the extent that there is a virtual certainty that the asset will be realized in future.

13. Employee Benefits

Expenses S liabilities in respect of employee benefits are recorded in accordance with the Revised Accounting Standard (AS)^15 -Employee Benefits (revised 2005) issued by ICAI.

a). Provident Fund

The Company makes contribution to statutory provident fund in accordance with the Employees Provident Fund & Miscellaneous Provisions Act, 1952 which is a defined contribution plan and contribution paid or payable is recognized as an expense in the period in which services are rendered by the employee.

b). Post Employee Benefits I Gratuity

Post Employment Benefit and other long term Employee Benefits are recognized as an expense in the Profit & Loss account for the year in which the employee has rendered Service. Provision has been made for liability in respect of gratuity to employees on estimated basis & not as per the actuarial Valuation.

c). Leave Encashment I Salary

The company has not provided any leave encashment / salary to the employees as the employees fully utilizes their leaves during the year.

14. BORROWING COST:-

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as a part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use.

All other borrowing costs are charged to Profit and Loss Account.

15. COMPARATIVES:-

Comparative financial information is presented in accordance with the "Corresponding Figure" financial reporting framework set out in "Standard of Auditing 710z` on Comparatives. Accordingly, amounts and other disclosures for the preceding year are included as an integral part of the current year financial statements, and are to be read in relation to the amounts and other disclosures relating to the current year.

16. SEGMENT INFORMATION FOR PRIMARY SEGMENT REPORTING (BY BUSINESS SEGMENTS):-

Based on guiding principles given in the Accounting standard on 'segment Reporting' (As-17), the primary segment of the Company is business segment, which involved in business of manufacturing Ingots, Flanges, Forging etc. As the company operates in a single primary business segment, no segment information thereof is given.

17. Provisions and contingent liabilities

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a 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, 2010

A. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

i) The accounts are prepared in accordance with the accounting principles generally accepted in India, :

ii) The concern generally follows the mercantile system of accounting and recognises income & expenditure en an accrual basis except these with significant uncertainties,

b. USE OF ESTIMATES;-

The presentation ef financial statements requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Differences between the actual result and estimates are recognized in the period in which the results are known/ materialized. The material assumptions are as under,

i) Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments. Long-term investments are carried at cost.

ii) A provision is recognized when an enterprise has a present obligation as a result of past event; it is probable that an outflow of. resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

c. BORROWING COST:-

Financing costs relating to deferred credits or to borrowed funds attributable to construction or acquisition of qualifying assets are capitalized up to the commencement of commercial production and are included in the cost of the assets to which they relate

A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use.

All other borrowing costs are charged to Profit and Loss Account

d. Fixed Assets

Fixed Assets are stated at cost of acquisition inclusive of incidental expenses related thereto and are net of CENVATA/AT credit.

e. Expenditure during construction period

Expenditure related to and incurred during implementation of new/expansion-cum- modernization projects is included under capital work-in-progress and the same is allocated to the respective Fixed Assets on completion of its construction/erection. Interest on borrowing costs related to a qualifying asset is worked out on the basis of actual utilization of funds out of project specific loans and/or other borrowings to the extent identifiable with the qualifying asset and is capitalized with the cost of the qualifying asset.

f. REVALUATION OF FIXED ASSETS:-

The company has not made any revaluation of Fixed Assets during the current financial year.

The company has revalued its Fixed Assets in last financial years & provided depreciation on the revalued amount. The depreciation on revalued assets is transfer in Revaluation Reserve to the extent of revaluation amount.

g. Depreciation and Amortization

Depreciation on fixed assets (other than Land) is provided on straight-line method (SLM) at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956.

Miscellaneous expenditure is written off over a period of five years.

h. VALUATION OF INVENTORIES :-

i) Raw Materials are valued at cost.

ii) Work- in- Progress are valued at cost of Raw Materials plus proportionate overheads and manufacturing costs.

iii) Stores & Spares are valued at cost.

t, SALES OF OTHER RECEIPTS

Sales include Sale of Products and Job Charges Less Discount Claims, Rate Differenee & Sales returns,

j, REVENUE RECOGNITION:-

Sales and Operational Income is exclusive of excise duty and sales tax but net of returns, rebates and sates tax, Materials returned/rejected are accounted for in the year of return/rejection.

Export isles are accounted for on the basis of the date of bill of lading/ always bill,

Income from job charges ls accounted for at the time of billing.

Revenue in respect of Insurance / other claims, interest and commission etc. is recognized only when it is reasonably certain that the ultimate realization will be effected.

k. Export benefits

Export benefits available under the Export Import policy of the Government of India are accounted for in the year of export, to the extent measurable.

I. CENVAT:-

Cenvat is accounted as per exclusive method of accounting.

m. TRANSLATION OF FOREIGN CURRENCY TRANSACTIONS :-

Transactions in foreign currency are recorded at the prevalent rates of Exchange in force at the time the transactions are effected and exchange rate

difference is accounted on the date of realization of foreign exchange,

Monetary foreign currency assets and liabilities a
n. TAXES ON INCOME:-

Tax expenses comprises of current & deferred tax. Current income tax is measured at the amount expected to be paid to the tax authority in accordance with the Indian Income Tax.

In accordance with Accounting Standard (AS-22) "Accounting for Taxes on Income issued by the Institute of Chartered Accountants of India, deferred taxes resulting from timing differences between book and tax profits are accounted for at the tax rate substantively enacted by the Balance Sheet date to the extent the timing differences are expected to be crystallized. Deferred tax assets are recognized to the extent there is reasonable/virtual certainty of realising such assets against future taxable income.

o. COMPARATIVES:-

Comparative financial information is presented in accordance with the Corresponding Figure financial reporting framework set out in Auditing and Assurance standard 25 on Comparatives. Accordingly, amounts and other disclosures for the preceding year are included as an integral part of the current year financial statements, and are to be read in relation to the amounts and other disclosures relating to the current year.

p. Excise Duty and Customs Duty

Excise Duty liability on finished goods manufactured and lying in the factory is accounted for and the corresponding amount are considered for valuation thereof. Customs duty in respect of materials lying in bonded premises and in transit is accounted for as and when the property in the goods passes to the Company.

q. SEGMENT INFORMATION FOR PRIMARY SEGMENT REPORTING (BY BUSINESS SEGMENTS):-

Based on guiding principles given in the Accounting standard on segment Reporting (As-17), the primary segment of the Company is business segment, "which involved in business of manufacturing Ingots, Flanges, Forging etc. As the company operates in a single primary business segment no segment information thereof is given.

r. Retirement Benefits

Expenses & liabilities in respect of employee benefits are recorded in accordance with the Revised Accounting Standard (AS)-15 -Employee Benefits (revised 2005) / issued by ICAI.

a). Provident Fund

The Company makes contribution to statutory provident fund in accordance with the Employees Provident Fund & Miscellaneous Provisions Act, 1952 whteftis a defined contribution plan and contribution paid or payable is recognized as an expense in the period in which services are rendered by the employee.

b). Gratuity

Gratuity is a post employment benefit and is in the nature of a defined benefit plan. The liability recognized in the Balance Sheet in respect of gratuity accordance to Payment of Gratuity Act, 1972 on estimated basis as calculated by the management of the company.

c). Leave Encashment / Salary

The company has not provided any leave encashment / salary to the employees as

the employees fully utilizes there leaves during the year.

s. Provisions and contingent liabilities

Provisions are recognized for present obligations of uncertain timing or amount arising as a result of a past event where a reliable estimate can be made and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation. Where it is not probable that an outflow of resources embodying economic benefits will be required or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of resources embodying economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more uncertain events, are also disclosed as contingent liabilities unless the probability of outflow of resources embodying economic benefit is remote.

 
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