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Accounting Policies of TRF Ltd. Company

Mar 31, 2016

. General corporate information

TRF Limited, ("the Company") incorporated in 1962 has its Registered Office at 11 Station Road, Burma Mines, Jamshedpur 831007. The Company is listed on the National Stock Exchange of India Limited, BSE Limited and The Calcutta Stock Exchange Limited. The Company undertakes turnkey projects of material handling for the infrastructure sector such as power and ports and industrial sector such as steel plants, cement, fertilizers and mining. The Company is also engaged in production of such material handling equipments at its manufacturing plant at Jamshedpur.

2. Summary of significant accounting policies

2.01 Basis of accounting

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013 and the relevant provisions of the Companies Act 2013 ("the 2013 Act"). The financial statements are prepared under the historical cost convention on going concern and on accrual basis. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.

2.02 Use of estimates

The presentation of financial Statements in accordance with Generally Accepted Accounting Principles in India requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent liabilities as at the date of the financial statements and the reported amounts of revenue and expenses during the year. Examples of such estimates include estimated cost of contracts, useful life of fixed assets, provision for doubtful debts, employee benefits, provision for taxes. Actual results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in the current and future periods.

2.03 Cash flow statement

Cash flows are reported using the indirect method, whereby profit/(loss) before extraordinary items and taxes is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

2.04 Fixed assets

i) Tangible assets

Tangible assets are stated at cost less accumulated depreciation and impairment losses (if any) The cost of an asset includes the purchase cost of materials, including import duties and non-refundable taxes, and any directly attributable costs of bringing an asset to the location and condition of its intended use. Interest on borrowings used to finance the construction of qualifying assets are capitalized as part of the cost of the asset until such time that the asset is ready for its intended use. Subsequent expenditure relating to tangible assets are capitalized only if such expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance. The Company has adopted the provisions of para 46 /46A of Accounting Standard (AS) 11 - The Effects of Changes in Foreign Exchange Rates, accordingly, exchange differences arising on restatement/settlement of long-term foreign currency monetary items relating to acquisition of depreciable fixed assets are adjusted to the cost of the respective assets and depreciated over the remaining useful life of such assets.

Depreciation on all tangible fixed assets are provided on a straight line basis using the useful lives prescribed in Schedule II to the Companies Act, 2013.

ii) Intangible assets

Intangible assets are stated at acquisition cost, less accumulated amortization and accumulated impairment (if any) The cost of an intangible asset includes purchase cost (net of rebates and discounts), including any import duties and non-refundable taxes, and any directly attributable costs on making the asset ready for its intended use. Subsequent expenditure on an intangible asset after its purchase/completion is recognized as an expense when incurred unless it is probable that such expenditure will enable the asset to generate future economic benefits in excess of its originally assessed standards of performance and such expenditure can be measured and attributed to the asset reliably, in which case such expenditure is added to the cost of the asset.

The Cost of Intangible assets are amortized on a straight line basis over their estimated useful life. The cost incurred to acquire any technical knowhow is amortized over its estimated useful life not exceeding six years from the date of transfer of technical know how and cost incurred to acquire software is amortized on a straight line basis over an estimated useful life of five years.

iii) Capital work-in-Progress

Expenditure incurred on construction of assets which are not ready for their intended use are carried at cost less impairment (if any), under Capital work-in-progress. The cost includes the purchase cost of materials, including import duties and non-refundable taxes, any directly attributable costs and Interest on borrowings used to finance the construction of the asset.

2.05 Impairment of assets

The carrying values of assets/cash generating units at each balance sheet date are reviewed for impairment. If any indication of impairment exists, the recoverable amount of such assets is estimated and impairment is recognized, if the carrying amount of these assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor. When there is indication that an impairment loss recognized for an asset in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognized in the Statement of Profit and Loss, except in case of revalued assets.

2.06 Investments

Long term investments are carried at cost less provision for diminution other than temporary (if any) in value of such investments. Current investments are carried at lower of cost and fair value.

2.07 Lease

Assets leased by the Company in its capacity as a lessee, where substantially all the risks and rewards of ownership vest in the Company are classified as finance leases. Such leases are capitalized at the inception of the lease at the lower of the fair value and the present value of the 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 year.

Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are recognized as operating leases. The Company''s significant operating leasing arrangements are for premises (Office, Residence etc.,) The leasing arrangements which normally have a tenure of eleven months to six years are cancellable with a reasonable notice, and are renewable by mutual consent at agreed terms. The aggregate lease rent payable is charged as rent in the statement of profit and loss.

2.08 Inventories and Contract in Progress

Raw materials, work-in-progress and finished products are valued at lower of cost and net realizable value after providing for obsolescence and other losses, where considered necessary. Cost includes purchase price, non refundable taxes and duties and other directly attributable costs incurred in bringing the goods to the point of sale. Work-in-progress and finished goods include appropriate proportion of overheads and, where applicable, excise duty.

Stores and spares are valued at cost comprising of purchase price, non refundable taxes and duties and other directly attributable costs after providing for obsolescence and other losses, where considered necessary. Value of inventories are generally ascertained on the "weighted average" basis.

2.09 Cash and cash equivalents

Cash and cash equivalents comprises of cash and cheques on hand, remittances in transit, balances in current accounts and deposit accounts with banks having original maturity of three months or less from the date of deposit.

2.10 Revenue recognition

i) Sale of products

Revenue from the sale of products is recognized in the statement of profit and loss when the significant risks and rewards of ownership have been transferred to the buyer, which generally coincides with the delivery of goods to customers. Revenue includes consideration received or receivable, excise duty but net of discounts and other sales related taxes.

ii) Revenue from contracts

Revenue from contracts are recognized on percentage completion method specified under Accounting Standard (AS) 7-Construction Contracts. The stage of completion is determined as a proportion that contract costs incurred for work performed up to the closing date bear to the estimated total costs of respective project. Profit (contract revenue less contract cost) is recognized when the outcome of the contract can be estimated reliably and for contracts valued up to Rs. 100crore, profit is recognized when stage of completion is 40% or more, and for contracts valued more than Rs. 100 crore, profit is recognized either at 25% stage of completion or an expenditure of Rs. 40 crore whichever is higher. When it is probable that the total cost will exceed the total revenue from the contract, the expected loss is recognized immediately. For this purpose total contract costs are ascertained on the basis of contract costs incurred and cost to completion of contracts which is arrived at by the management based on current technical data, forecast and estimate of net expenditure to be incurred in future including for contingencies etc. For determining the expected cost to completion of the contracts, cost of steel, cement and other related items are considered at current market price based on fixed cost purchase orders placed or firm commitments received from suppliers / contractors as these purchase orders and future firm commitments are enforceable over the period of the contracts. Cost incurred in excess of that considered for revenue recognition, if any, in respect of a contract is carried forward in the Balance Sheet as contracts in progress.

iii) Dividend and Interest income

Dividend income is recognized when the company''s right to receive dividend is established. Interest income is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

2.11 Employee benefits

i) Short term benefits

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

ii) Defined contribution plans

Defined contribution plans are those plans where the Company pays fixed contributions to funds/schemes managed by independent trusts or authority. Contributions are paid in return for services rendered by the employees during the year. The Company has no legal or constructive obligation to pay further contributions if the fund/scheme does not hold sufficient assets to pay/extend employee benefits. The Company provides Provident Fund facility to all employees, Superannuation benefits to selected employees. The contributions are expensed as they are incurred inline with the treatment of wages and salaries. The Company''s Provident Fund is exempted under section 17 of Employees'' Provident Fund and Miscellaneous Provision Act, 1952. Conditions for exemption stipulate that the Company shall make good deficiency, if any, in the interest rate declared by the trust vis-s-vis interest rate declared by the Employees'' Provident Fund Organization. The liability as on the balance sheet is ascertained by an independent actuarial valuation.

iii) Defined benefit plans

The Company provides gratuity, compensated absence to its employees and pension to retired whole-time directors. Gratuity liabilities are funded and managed through separate trust (except in case of Port and Yard Equipment Division in which the funds are managed by Life Insurance Corporation of India) The liabilities towards leave encashment and pension to retired whole-time directors are not funded. The present value of these defined benefit obligations are ascertained by an independent actuarial valuation as per the requirements of Accounting Standards (AS) 15 - Employee Benefits. The liability recognized in the balance sheet is the present value of the defined benefit obligations on the balance sheet date less the fair value of the plan assets (for funded plans), together with adjustments for unrecognized past service costs. Past service cost is recognized immediately to the extent that the benefits are already vested and otherwise is amortized on a straight-line basis over the average period until the benefits become vested. All actuarial gains and losses are recognized in the statement of profit and loss in full in the year in which they occur.

2.12 Borrowing costs

Borrowing costs include interest, amortization of ancillary costs incurred. Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalized as part of the cost of such assets till such time the asset is ready for its intended use. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use. All other borrowing costs are recognized as an expense in the statement of profit and loss in the period in which they are incurred.

2.13 Earnings Per Share

The basic earnings per share is computed by dividing the net profit attributable to the equity shareholders for the year by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the net profit attributable to the equity shareholders for the year by the weighted average number of equity shares together with any dilutive equity equivalent shares outstanding during the year, except where the results would be anti-dilutive.

2.14 Foreign currency transactions

i) Foreign currency transactions are recorded on initial recognition in the reporting currency i.e. Indian rupees, using the exchange rates prevailing on the date of the transaction. Monetary assets and liabilities in currencies other than the reporting currency (other than derivative contracts and net investment in non-integral foreign operations) and foreign exchange contracts remaining unsettled are re measured at the rates of exchange prevailing at the balance sheet date. Exchange difference arising on the settlement of monetary items, and on the re measurement of monetary items, other than long-term foreign currency monetary items are included in the statement of profit and loss.

ii) Net investment in non-integral foreign operations is accounted at the exchange rates prevailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction. Foreign currency monetary items (other than derivative contracts) of the Company''s net investment in non-integral foreign operations outstanding at the balance sheet date are restated at the year-end rates. The exchange differences on restatement of long-term receivables from non-integral foreign operations that are considered as net investment in such operations are accounted as per policy for long-term foreign currency monetary items stated in para (iv) below until disposal of such net investment, in which case the accumulated balance in "Foreign exchange fluctuation reserve" is recognized as income/expense in the same period in which the gain or loss on disposal is recognized.

iii) Foreign Currency forward contracts, other than those entered into to hedge foreign currency risk on unexecuted firm commitments or highly probable forecast transactions are treated as foreign currency transactions and accounted accordingly as per Accounting Standard (AS) 11 - Effects of changes in foreign exchange rates. The difference between the contract rate and spot rate on the date of transaction is recognized as premium/discount and recognized over the life of the contract. Exchange differences arising on account of re measurement and gains and losses arising on account of roll over/cancellation of foreign currency forward contracts are recognized in the statement of profit and loss.

iv) The Company has opted for accounting the exchange difference arising on reporting of long-term foreign currency monetary items in line with the paragraph 46A of Accounting Standard (AS) 11 - Effects of changes in foreign exchange rates. Accordingly exchange difference arising on the settlement and re measurement of long-term foreign currency monetary items relating to the acquisition of depreciable capital asset are accounted by addition or deduction to the cost of the depreciable assets and depreciated over the remaining useful life of such assets. Exchange differences arising on settlement and re measurement of other long-term foreign currency monetary items are accumulated in "Foreign Currency Monetary Item Translation Difference Account" and amortized over the maturity period/up to the date of settlement of such monetary items, whichever is earlier, and charged to the Statement of Profit and Loss except in case of exchange differences arising on net investment in non-integral foreign operations, where such amortization is taken to "Foreign exchange fluctuation reserve" until disposal of the net investment.

2.15 Segment reporting

The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organization and management structure. The operating segments are the segments for which separate financial information are available and for which operating results are evaluated regularly by the executive management in assessing performance and to take decision on allocation of resources. The accounting policies adopted for the segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of the their relationship to the operating activities of the segment. Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on reasonable basis have been included under "unallocable revenue/expenses/asset/liabilities".

2.16 Taxes on Income

i) Current tax

Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the provisions of the Income-tax Act, 1961.

ii) Deferred tax

Deferred tax is recognized on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets against unabsorbed depreciation and carried forward loss under tax laws, are recognized only to the extent that there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realized. Deferred tax assets on other timing differences are recognized only to the extent that there is a virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

iii) Minimum alternate tax

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is recognized as an asset in the balance sheet when there is convincing evidence that the Company will pay normal income tax during the specified period and it is probable that future economic benefit associated with it will flow to the Company.

iv) Current and Deferred taxis measured based on the provisions of tax laws and tax rates enacted or substantively enacted as at the Balance Sheet date.

2.17 Provisions, Contingent liabilities and Contingent assets

i) Provision

A provision is recognized when the Company has a present obligation as a result of past events and it is probable that an out flow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the 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.

ii) Provision for warranty

The estimated liability for product warranties is recorded when products are sold. These estimates are established using historical information on the nature, frequency and average cost of warranty claims and management estimates regarding possible future incidence based on corrective actions on product failures.

iii) Contingent liabilities and assets

Contingent liability is a possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company, or is a present obligation that arises from past events but is not recognized because either it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation, or a reliable estimate of the amount of the obligation cannot be made. Contingent liabilities are disclosed and not recognized. Contingent assets are neither recognized nor disclosed.

2.18 Research and development expenses

Research and development costs (other than cost of fixed assets acquired) are charged to the statement of profit and loss in the year in which they are incurred. Fixed assets utilized for research and development are capitalized and depreciated in accordance with the policies stated for fixed assets.

2.19 Derivative contracts

The Company enters into derivative contracts in the nature of foreign currency and interest rate swaps, option contracts to hedge its existing assets and liabilities and foreign currency forward contracts to hedge firm commitments and highly probable transactions. Derivative contracts which are closely linked to the existing assets and liabilities are accounted as per the policy stated for Foreign Currency Transactions and Translations. All other derivative contracts are marked-to-market and losses are recognized in the statement of profit and loss. Gains arising on the same are not recognized, until realized, on grounds of prudence.

Rights, preferences and restrictions attached to shares

i) Equity Shares

The company has one class of equity shares having a par value of Rs.10 per share. Each shareholder is entitled for one vote per share held. The dividend proposed by the board of directors is subject to the approval of the shareholders in the ensuing annual general meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are entitled to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to the number of equity shares held by the shareholders.


Mar 31, 2014

1. General corporate information

TRF Limited, ("the Company") incorporated in 1962 has its Registered Office at 11 Station Road, Burma Mines, Jamshedpur 831007. The Company is listed on the National Stock Exchange of India Limited, BSE Limited and The Calcutta Stock Exchange Limited. The Company undertakes turnkey projects of material handling for the infrastructure sector such as power, ports and industrial sector such as steel plants, cement, fertilisers and mining. The Company is also engaged in production of such material handling equipments at its manufacturing plant at Jamshedpur.

2. Summary of significant accounting policies

2.01 Basis of accounting

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under Section 211(3C) of the Companies Act, 1956 ("the 1956 Act") (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 ("the 2013 Act") in terms of General Circular 15/2013 dated 13 September, 2013 of the Ministry of Corporate Affairs, Government of India) and the relevant provisions of the 1956 Act/ 2013 Act, as applicable. The financial statements are prepared under the historical cost convention on going concern and on accrual basis. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.

2.02 Use of estimates

The presentation of financial statements in accordance with Generally Accepted Accounting Principles in India requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent liabilities as at the date of the financial statements and the reported amounts of revenue and expenses during the year. Examples of such estimates include estimated cost of contracts, useful life of fixed assets, provision for doubtful debts, employee benefits, provision for taxes. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in the current and future periods.

2.03 Cash flow statement

Cash flows are reported using the indirect method, whereby profit/(loss) before extraordinary items and taxes is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

2.04 Fixed assets

i) Tangible assets

Tangible assets are stated at cost less accumulated depreciation and impairment losses (if any). The cost of an asset includes the purchase cost of materials, including import duties and non-refundable taxes, and any directly attributable costs of bringing an asset to the location and condition of its intended use. Interest on borrowings used to finance the construction of qualifying assets are capitalised as part of the cost of the asset until such time that the asset is ready for its intended use. Subsequent expenditure relating to tangible assets are capitalised only if such expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance. The Company has adopted the provisions of para 46 / 46A of AS 11 The Effects of Changes in Foreign Exchange Rates, accordingly, exchange differences arising on restatement / settlement of long-term foreign currency monetary items relating to acquisition of depreciable fixed assets are adjusted to the cost of the respective assets and depreciated over the remaining useful life of such assets.

Depreciation on all tangible fixed assets are provided on a straight line basis applying the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956.

2.04 Fixed assets

ii) Intangible assets

Intangible assets are stated at acquisition cost, less accumulated amortisation and accumulated impairment (if any). The cost of an intangible asset includes purchase cost (net of rebates and discounts), including any import duties and non-refundable taxes, and any directly attributable costs on making the asset ready for its intended use. Subsequent expenditure on an intangible asset after its purchase / completion is recognised as an expense when incurred unless it is probable that such expenditure will enable the asset to generate future economic benefits in excess of its originally assessed standards of performance and such expenditure can be measured and attributed to the asset reliably, in which case such expenditure is added to the cost of the asset.

The Cost of Intangible assets are amortised on a straight line basis over their estimated useful life. The cost incurred to acquire any technical know-how is amortised over its estimated useful life not exceeding six years from the date of transfer of technical know how and cost incurred to acquire software is amortised on a straight line basis over an estimated useful life of five years.

iii) Capital work-in-Progress

Expenditure incurred on construction of assets which are not ready for their intended use are carried at cost less impairment (if any), under Capital work-in-progress. The cost includes the purchase cost of materials, including import duties and non-refundable taxes, any directly attributable costs and Interest on borrowings used to finance the construction of the asset.

2.05 Impairment of assets

The carrying values of assets/cash generating units at each balance sheet date are reviewed for impairment. If any indication of impairment exists, the recoverable amount of such assets is estimated and impairment is recognised, if the carrying amount of these assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor. When there is indication that an impairment loss recognised for an asset in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognised in the Statement of Profit and Loss, except in case of revalued assets.

2.06 Investments

Long term investments are carried at cost less provision for diminution other than temporary ( if any) in value of such investments. Current investments are carried at lower of cost and fair value.

2.07 Lease

Assets leased by the Company in its capacity as a lessee, where substantially all the risks and rewards of ownership vest in the Company are classified as finance leases. Such leases are capitalised at the inception of the lease at the lower of the fair value and the present value of the 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 year.

Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are recognised as operating leases. The Company''s significant operating leasing arrangements are for premises (Office, Residence etc.,). The leasing arrangements which normally have a tenure of eleven months to six years are cancellable with a reasonable notice, and are renewable by mutual consent at agreed terms. The aggregate lease rent payable is charged as rent in the statement of profit and loss.

2.08 Inventories

Raw materials, work-in-progress and finished products are valued at lower of cost and net realisable value after providing for obsolescence and other losses, where considered necessary. Cost includes purchase price, non refundable taxes and duties and other directly attributable costs incurred in bringing the goods to the point of sale. Work-in-progress and finished goods include appropriate proportion of overheads and, where applicable, excise duty.

Stores and spares are valued at cost comprising of purchase price, non refundable taxes and duties and other directly attributable costs after providing for obsolescence and other losses, where considered necessary.

Value of inventories are generally ascertained on the "weighted average" basis.

2.09 Cash and cash equivalents

Cash and cash equivalents comprises of cash and cheques on hand, remittances in transit, balances in current accounts and deposit accounts with banks having original maturity of three months or less from the date of deposit.

2.10 Revenue recognition

i) Sale of products

Revenue from the sale of products is recognised in the statement of profit and loss when the significant risks and rewards of ownership have been transferred to the buyer, which generally coincides with the delivery of goods to customers. Revenue includes consideration received or receivable, excise duty but net of discounts and other sales related taxes.

ii) Revenue from contracts

Revenue from contracts are recognised on percentage completion method specified under Accounting Standard (AS) 7 - Construction Contracts. The stage of completion is determined as a proportion that contract costs incurred for work performed up to the closing date bear to the estimated total costs of respective project. Profit (contract revenue less contract cost) is recognised when the outcome of the contract can be estimated reliably and for contracts valued up to Rs. 100 crores, profit is recognised when stage of completion is 40% or more, and for contracts valued more than Rs. 100 crores, profit is recognised either at 25% stage of completion or an expenditure of Rs. 40 crores whichever is higher. When it is probable that the total cost will exceed the total revenue from the contract, the expected loss is recognised immediately. For this purpose total contract costs are ascertained on the basis of contract costs incurred and cost to completion of contracts which is arrived at by the management based on current technical data, forecast and estimate of net expenditure to be incurred in future including for contingencies etc.

iii) Dividend and Interest income

Dividend income is recognised when the company''s right to receive dividend is established. Interest income is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

iv) Government grants

Incentives of revenue in nature from the government are recognised in the statement of profit and loss on accrual basis.

2.11 Employee benefits

i) Short term benefits

Short term employee benefits are recognised as an expense at the undiscounted amount in the statement of profit and loss of the year in which the related service is rendered.

ii) Defined contribution plans

Defined contribution plans are those plans where the Company pays fixed contributions to funds/schemes managed by independent trusts or authority. Contributions are paid in return for services rendered by the employees during the year. The company has no legal or constructive obligation to pay further contributions if the fund/scheme does not hold sufficient assets to pay/extend employee benefits. The Company provides Provident Fund facility to all employees, Superannuation benefits to selected employees. The contributions are expensed as they are incurred in line with the treatment of wages and salaries.

iii) Defined benefit plans

The Company provides gratuity, compensated absence to its employees and pension to retired whole-time directors. Gratuity liabilities are funded and managed through separate trust (except in case of Port and Yard Equipment Division in which the funds are managed Life Insurance Corporation of India). The liabilities towards leave encashment and pension to retired whole-time directors are not funded. The present value of these defined benefit obligations are ascertained by an independent actuarial valuation as per the requirements of Accounting Standards (AS) 15 - Employee Benefits. The liability recognised in the balance sheet is the present value of the defined benefit obligations on the balance sheet date less the fair value of the plan assets (for funded plans), together with adjustments for unrecognised past service costs. Past service cost is recognised immediately to the extent that the benefits are already vested and otherwise is amortised on a straight-line basis over the average period until the benefits become vested. All actuarial gains and losses are recognised in the statement of profit and loss in full in the year in which they occur.

2.12 Borrowing costs

Borrowing costs include interest, amortisation of ancillary costs incurred. Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalised as part of the cost of such assets till such time the asset is ready for its intended use. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use. All other borrowing costs are recognised as an expense in the statement of profit and loss in the period in which they are incurred.

2.13 Earnings Per Share

The basic earnings per share is computed by dividing the net profit attributable to the equity shareholders for the year by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the net profit attributable to the equity shareholders for the year by the weighted average number of equity shares together with any dilutive equity equivalent shares outstanding during the year, except where the results would be anti-dilutive.

2.14 Foreign currency transactions

i) Foreign currency transactions are recorded on initial recognition in the reporting currency i.e. Indian rupees, using the exchange rates prevailing on the date of the transaction. Monetary assets and liabilities in currencies other than the reporting currency (other than derivative contracts and net investment in non-integral foreign operations) and foreign exchange contracts remaining unsettled are remeasured at the rates of exchange prevailing at the balance sheet date. Exchange difference arising on the settlement of monetary items, and on the remeasurement of monetary items, other than long-term foreign currency monetary items are included in the statement of profit and loss.

ii) Net investment in non-integral foreign operations is accounted at the exchange rates prevailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction. Foreign currency monetary items (other than derivative contracts) of the Company''s net investment in non-integral foreign operations outstanding at the balance sheet date are restated at the year-end rates. The exchange differences on restatement of long-term receivables from non-integral foreign operations that are considered as net investment in such operations are accounted as per policy for long-term foreign currency monetary items stated in para (iv) below until disposal of such net investment, in which case the accumulated balance in "Foreign Exchange Fluctuation Reserve" is recognised as income / expense in the same period in which the gain or loss on disposal is recognised

iii) Foreign Currency forward contracts, other than those entered into to hedge foreign currency risk on unexecuted firm commitments or highly probable forecast transactions are treated as foreign currency transactions and accounted accordingly as per Accounting Standard (AS) 11 - Effects of changes in foreign exchange rates. The difference between the contract rate and spot rate on the date of transaction is recognised as premium/discount and recognised over the life of the contract. Exchange differences arising on account of remeasurement and gains and losses arising on account of roll over/cancellation of foreign currency forward contracts are recognised in the statement of profit and loss.

iv) The Company has opted for accounting the exchange difference arising on reporting of long-term foreign currency monetary items in line with the paragraph 46A of Accounting Standards (AS) 11 - Effects of changes in foreign exchange rates. Accordingly exchange difference arising on the settlement and remeasurement of long-term foreign currency monetary items relating to the acquisition of depreciable capital asset are accounted by addition or deduction to the cost of the depreciable assets and depreciated over the remaining useful life of such assets. Exchange differences arising on settlement and remeasurement of other long-term foreign currency monetary items are accumulated in "Foreign Currency Monetary Item Translation Difference Account" and amortised over the maturity period/upto the date of settlement of such monetary items, whichever is earlier, and charged to the Statement of Profit and Loss except in case of exchange differences arising on net investment in non-integral foreign operations, where such amortisation is taken to "Foreign Exchange Fluctuation Reserve" until disposal of the net investment.

2.15Segment reporting

The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organisation and management structure. The operating segments are the segments for which separate financial information are available and for which operating results are evaluated regularly by the executive management in assessing performance and to take decision on allocation of resources. The accounting policies adopted for the segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment. Revenue, expenses assets and liabilities which relate to the Company as a whole and are not allocable to segments on reasonable basis have been included under "unallocable revenue/expenses/asset/liabilities".

2.16 Taxes on Income

i) Current tax

Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the provisions of the Income-tax Act, 1961.

ii) Deferred tax

Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets against unabsorbed depreciation and carried forward loss under tax laws, are recognised only to the extent that there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realised. Deferred tax assets on other timing differences

are recognised only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

iii) Minimum alternate tax

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is recognised as an asset in the Balance Sheet when there is convincing evidence that the Company will pay normal income tax during the specified period and it is probable that future economic benefit associated with it will flow to the Company.

iv) Current and Deferred tax is measured based on the provisions of tax laws and tax rates enacted or substantively enacted as at the Balance Sheet date.

2.17 Provisions, Contingent liabilities and Contingent assets

i) Provision

A provision is recognised when the Company has a present obligation as a result of past events and 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 (excluding retirement benefits) are not discounted to their present value and are determined based on the 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.

ii) Provision for warranty

The estimated liability for product warranties is recorded when products are sold. These estimates are established using historical information on the nature, frequency and average cost of warranty claims and management estimates regarding possible future incidence based on corrective actions on product failures.

iii) Contingent liabilities and assets

Contingent liability is a possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company, or is a present obligation that arises from past events but is not recognised because either it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation, or a reliable estimate of the amount of the obligation cannot be made. Contingent liabilities are disclosed and not recognised. Contingent Assets are neither recognised not disclosed.

2.18Research and development expenses

Research and development costs (other than cost of fixed assets acquired) are charged to the Statement of Profit and Loss in the year in which they are incurred. Fixed assets utilised for research and development are capitalised and depreciated in accordance with the policies stated for fixed assets.

2.19 Derivative contracts

The Company enters into derivative contracts in the nature of foreign currency and interest rate swaps, option contracts to hedge its existing assets and liabilities and foreign currency forward contracts to hedge firm commitments and highly probable transactions. Derivative contracts which are closely linked to the existing assets and liabilities are accounted as per the policy stated for Foreign Currency Transactions and Translations. All other derivative contracts are marked-to- market and losses are recognised in the Statement of Profit and Loss. Gains arising on the same are not recognised, until realised, on grounds of prudence.


Mar 31, 2013

(a) Basis of accounting and preparation of financial statements

The financial statements are prepared as a going concern under historical cost convention on an accrual basis and comply on all material respects with the Generally Accepted Accounting Principles in India and the relevant provisions of the Companies Act, 1956. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.

(b) Use ofestimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Examples of such estimates include provisions for doubtful debts, employee benefits, assessment of income taxes, estimated cost of contracts and useful lives of fixed assets. The estimates and underlying assumptions are reviewed on an ongoing basis. Difference between actual results and estimates are recognized in the periods in which the results are known/materialised.

(c) Inventories

Raw materials, work-in- progress and finished goods are valued at lower of cost and net realizable value on weighted average basis. Stores and spare parts and loose tools are valued at lower of cost and net realizable value.

Cost of work- in- progress and finished goods is determined on full absorption cost basis.

(d) Cash flow statement

Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

(e) Fixed assets Tangible fixed assets

Tangible fixed assets are stated at original cost net of tax/duty credits availed, if any, less accumulated depreciation and impairement losses, if any. Cost comprises of the purchase price and any attributable cost of bringing the assets to its working condition for its intended use. Interest on borrowings during the period of construction is added to the cost of fixed assets. Subsequent expenditure relating to fixed assets is capitalised only if such expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance.

Intangible assets

Intangible assets are carried at cost less accumulated amortisation and impairment losses, if any. The cost of an intangible asset comprises its purchase price, including any import duties and other taxes (other than those subsequently recoverable from the taxing authorities), and any directly attributable expenditure on making the asset ready for its intended use net of any trade discounts and rebates. Subsequent expenditure on an intangible asset after its purchase / completion is recognised as an expense when incurred unless it is probable that such expenditure will enable the asset to generate future economic benefits in excess of its originally assessed standards of performance and such expenditure can be measured and attributed to the asset reliably, in which case such expenditure is added to the cost of the asset.

Capital work-in-progress:

Projects under which assets are not ready for their intended use and other capital work-in-progress are carried at cost, comprising direct cost, related incidental expenses and attributable interest.

(f) Depreciation and amortisation

Depreciation on all tangible fixed assets is provided on straight line basis at the rates and in the manner specified in Schedule XIV to the Companies Act,1956.

Technical knowhow is amortized over the estimated period of benefit, not exceeding six years commencing from the date of purchase of the technology.

Software expenditure is amortised over five years commencing from the date when the expenditure is incurred.

(g) Impairment of assets

The carrying value of assets are reviewed at each Balance Sheet date for impairment. If any indication of impairment exists, the recoverable amount of such assets is estimated and impairment is recognised, if the carrying amount of these assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor. When there is indication that an impairment loss recognised for an asset in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognised in the Statement of Profit and Loss, except in case of revalued assets.

(h) Revenue recognition (other than contracts)

Revenue from sale of goods / rendering of services is recognized on transfer of significant risks and rewards of ownership to the buyer. Sales excludes sales tax collected from customers.

(i) Other income

Interest income is accounted on accrual basis. Dividend income is accounted for when the right to receive it is established.

(j) Accounting of contracts

Contract Revenue is recognised on percentage completion method as required under Accounting Standard 7 - Construction Contracts. The stage of completion is determined as a proportion that contract costs incurred for work performed up to the closing date bear to the estimated total costs. Profit (contract revenue less contract cost) is recognised when the outcome of the contract can be estimated reliably and for contracts valued up to Rs.100 crores, profit is recognised when stage of completion is 40% or more, and for contracts valued more than Rs. 100 crores, profit is recognised either at 25% stage of completion or an expenditure of Rs.40 crores whichever is higher. When it is probable that the total cost will exceed the total contract revenue, the expected loss is recognised immediately. For this purpose total contract costs are ascertained on the basis of contract costs incurred and cost to completion of contracts which is arrived at by the management based on current technical data, forecast and estimate of net expenditure to be incurred in future including for contingencies etc.

(k) Foreign exchange transactions

(i) Initial recognition

Transactions in foreign currencies entered into by the Company and its integral foreign operations are accounted at the exchange rates prevailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction.

(ii) Measurement of foreign currency monetary items at the Balance Sheet date

Foreign currency monetary items (other than derivative contracts) of the Company and its net investment in non- integral foreign operations outstanding at the Balance Sheet date are restated at the year-end rates.

(iii) Treatment of exchange differences

Exchange differences arising on settlement / restatement of short-term foreign currency monetary assets and liabilities of the Company are recognised as income or expense in the Statement of Profit and Loss. The exchange differences on restatement / settlement of loans to non-integral foreign operations that are considered as net investment in such operations are accumulated in a "Foreign currency translation reserve" until disposal / recovery of the net investment.

The exchange differences arising on restatement / settlement of long-term foreign currency monetary items are capitalised as part of the depreciable fixed assets to which the monetary item relates and depreciated over the remaining useful life of such assets or amortised on settlement / over the maturity period of such items if such items do not relate to acquisition of depreciable fixed assets. The unamortised balance is carried in the Balance Sheet as "Foreign currency monetary item translation difference" .

During the previous year, in line with the Notification dated 29th December,2011 issued by the Ministry of Corporate Affairs, the Company had opted for the option given in Paragraph 46A of the Accounting Standard-11 "The Effects of Changes in Foreign Exchange Rates". Accordingly, the Company has, with effect from April 1, 2011, amortized the foreign exchange loss/(gain) incurred on foreign currency monetary items over the balance period of such long term foreign currency monetary items . The amortized portion of foreign exchange loss (net) incurred on long term foreign currency monetary items for the year ended March 31, 2013 is Rs. 526.61 lakhs (previous year Rs. 313.61 lakhs). The unamortized portion carried forward as on 31st March, 2013 is Rs. 284.75 lakhs (previous year Rs. 226.94 lakhs).

(l) Accounting of forward contracts

Premium / discount on forward exchange contracts, which are not intended for trading or speculation purposes, are amortised over the period of the contracts if such contracts relate to monetary items as at the Balance Sheet date.

(m) Investments

Long term investments are carried at cost and provisions are recorded to recognize any decline, other than temporary, in the carrying value of each investment. Current investments are carried at lower of cost and fair value.

(n) Employee Benefits

Employee benefits include provident fund, superannuation fund, gratuity fund and compensated absences.

Defined contribution plans

The Company''s contribution to provident fund and superannuation fund are considered as defined contribution plans and are charged as an expense as they fall due based on the amount of contribution required to be made.

Defined benefit plans

For defined benefit plans in the form of gratuity fund the cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each Balance Sheet date. Actuarial gains and losses are recognised in the Statement of Profit and Loss in the period in which they occur. Past service cost is recognised immediately to the extent that the benefits are already vested and otherwise is amortised on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognised in the Balance Sheet represents the present value of the defined benefit obligation as adjusted for unrecognised past service cost, as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the present value of available refunds and reductions in future contributions to the schemes.Long Service Awards are recognised as a liability at the present value of the defined benefit obligation as at the Balance Sheet date.

Short-term employee benefits

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised during the year when the employees render the service. These benefits include performance incentive and compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service.

Long-term employee benefits

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognised as a liability at the present value of the defined benefit obligation as at the Balance Sheet date less the fair value of the plan assets out of which the obligations are expected to be settled.

(o) Borrowing costs

Borrowing costs include interest, amortisation of ancillary costs incurred and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Costs in connection with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are charged to the Statement of Profit and Loss over the tenure of the loan. Borrowing costs, allocated to and utilised for qualifying assets, pertaining to the period from commencement of activities relating to construction / development of the qualifying asset upto the date of capitalisation of such asset is added to the cost of the assets.

(p) Segment reporting

The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organisation and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit/loss amounts are evaluated regularly by the executive Management in deciding how to allocate resources and in assessing performance.

The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment.

Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on reasonable basis have been included under''''Unallocated revenue/expenes/assets/liabilities".

(q) Taxes on income

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961.

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company.

Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantially enacted as at the reporting date. Deferred tax liabilities are recognised for all timing differences. Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recognised only if there is virtual certainty that there will be sufficient future taxable income available to realise such assets. Deferred tax assets are recognised for timing differences of other items only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realised. Deferred tax assets are reviewed at each Balance Sheet date for their realisability.

(r) Research and development

Research and development costs (other than cost of fixed assets acquired) are charged as an expense in the year in which they are incurred. Fixed assets utilised for research and development are capitalised and depreciated in accordance with the policies stated for Fixed Assets.

(s) Provisions, contingent liabilities and contingent assets

A provision is recognized when the Company has a present obligation as a result of past event and it is probable that an outflow of resources embodying economic benefit will be required to settle the obligation and in respect of which a reliable estimate can be made. Provisions are determined based on best estimates of the expenditure required to settle the present obligation. Contingent Liabilities are not recognised but disclosed in the notes. A disclosure for a contingent liability is made, unless the possibility of an outflow of resources is remote.

Provision for anticipated warranty costs is made on the basis of technical and available cost estimates.

Contingent Assets are neither recognised nor disclosed in the Financials Statements.

(t) Derivative

The Company enters into derivative contracts in the nature of foreign currency swaps, forward contracts with an intention to hedge its existing assets and liabilities, firm commitments and highly probable transactions. Derivative contracts which are closely linked to the existing assets and liabilities are accounted as per the policy stated for Foreign Currency Transactions and Translations.

All other derivative contracts are marked-to-market and losses are recognised in the Statement of Profit and Loss. Gains arising on the same are not recognised, until realised, on grounds of prudence.


Mar 31, 2012

(a) Basis of accounting and preparation of financial statements.

The financial statements are prepared as a going concern under historical cost convention on an accrual basis and comply on all material respects with the Generally Accepted Accounting Principles in India and the relevant provisions of the Companies Act, 1956. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year except for change in the accounting policy for 'Foreign exchange transactions' as more fully described in Note 1. (k). (iii).

(b) Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Examples of such estimates include provisions for doubtful debts, employee benefits, assessment of income taxes, estimated cost of contracts and useful lives of fixed assets. The estimates and underlying assumptions are reviewed on an ongoing basis. Difference between actual results and estimates are recognized in the periods in which the results are known/materialized.

(c) Inventories

Raw materials, work-in- progress and finished goods are valued at lower of cost and net realizable value on weighted average basis. Stores and spare parts and loose tools are valued at lower of cost and net realizable value.

Cost of work- in- progress and finished goods is determined on full absorption cost basis.

(d) Cash flow statement

Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

(e) Fixed assets Tangible fixed assets

Tangible fixed assets are stated at original cost net of tax/duty credits availed, if any, less accumulated/ depreciation. Cost comprises of the purchase price and any attributable cost of bringing the assets to its working condition for its intended use. Interest on borrowings during the period of construction is added to the cost of fixed assets. Subsequent expenditure relating to fixed assets is capitalized only if such expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance.

Intangible assets

Intangible assets are carried at cost less accumulated amortization and impairment losses, if any. The cost of an intangible asset comprises its purchase price, including any import duties and other taxes (other than those subsequently recoverable from the taxing authorities), and any directly attributable expenditure on making the asset ready for its intended use and net of any trade discounts and rebates. Subsequent expenditure on an intangible asset after its purchase / completion is recognized as an expense when incurred unless it is probable that such expenditure will enable the asset to generate future economic benefits in excess of its originally assessed standards of performance and such expenditure can be measured and attributed to the asset reliably, in which case such expenditure is added to the cost of the asset.

Capital work-in-progress

Projects under which assets are not ready for their intended use and other capital work-in-progress are carried at cost, comprising direct cost, related incidental expenses and attributable interest.

(f) Depreciation and amortization

Depreciation on all tangible fixed assets is provided on straight line basis at the rates and in the manner specified in Schedule XIV to the Companies Act,1956.

Technical know-how is amortized over the estimated period of benefit, not exceeding six years commencing from the date of purchase of the technology.

Software expenditure is a mortised over five years commencing from the date when the expenditure is incurred.

(g) Impairment of assets

The carrying values of assets are reviewed at each Balance Sheet date for impairment. If any indication of impairment exists, the recoverable amount of such assets is estimated and impairment is recognized, if the carrying amount of these assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor. When there is indication that an impairment loss recognized for an asset in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognized in the Statement of Profit and Loss, except in case of revalued assets.

(h) Revenue recognition (other than contracts)

Revenue from sale of goods / rendering of services is recognized on transfer of significant risks and rewards of ownership to the buyer. Sales excludes sales tax collected from customers.

(i) Other income

Interest income is accounted on accrual basis. Dividend income is accounted for when the right to receive it is established.

(j) Accounting of contracts

Revenue from long-term contracts, where the outcome can be estimated reliably is recognized on percentage completion method by reference to the stage of completion of the contract activity as required under Accounting Standard 7 - Construction Contracts. The stage of completion is determined as a proportion that contract costs incurred for work performed up to the closing date bear to the estimated total costs of the contract. Profit (contract revenue less contract cost) is recognized when the outcome of the contract can be estimated reliably and for contracts valued up to Rs.100 crores, profit is recognized when stage of completion is 40% or more, and for contracts valued more than Rs. 100 crores, profit is recognized either at 25% stage of completion or an expenditure of Rs. 40 crores is incurred whichever is higher. When it is probable that the total cost will exceed the total contract revenue, the expected loss is recognized immediately, irrespective of the work done. For this purpose total contract costs are ascertained on the basis of contract costs incurred and cost to completion of contracts which is estimated based on current technical data and estimate of costs to be incurred in future. Contract Revenue earned in excess of billing has been reflected under 'Other Current Assets' and billing in excess of contract revenue is reflected under 'Other Current Liabilities' in the Balance Sheet.

(k) Foreign exchange transactions

(i) Initial recognition

Transactions in foreign currencies entered into by the Company and its integral foreign operations are accounted at the exchange rates prevailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction.

(ii) Measurement of foreign currency monetary items at the Balance Sheet date

Foreign currency monetary items (other than derivative contracts) of the Company and its net investment in non- integral foreign operations outstanding at the Balance Sheet date are restated at the year-end rates.

(iii) Treatment of exchange differences

Exchange differences arising on settlement / restatement of short-term foreign currency monetary assets and liabilities of the Company are recognized as income or expense in the Statement of Profit and Loss. The exchange differences on restatement / settlement of loans to non-integral foreign operations that are considered as net investment in such operations are accumulated in a "Foreign currency translation reserve" until disposal / recovery of the net investment.

The exchange differences arising on restatement / settlement of long-term foreign currency monetary items are capitalized as part of the depreciable fixed assets to which the monetary item relates and depreciated over the remaining useful life of such assets or amortized on settlement / over the maturity period of such items if such items do not relate to acquisition of depreciable fixed assets. The unamortized balance is carried in the Balance Sheet as" Foreign currency monetary item translation difference".

During the year, in line with the Notification dated 29th December,2011 issued by the Ministry of Corporate Affairs, the Company has opted for the option given in Paragraph 46A of the Accounting Standard-11" The Effects of Changes in Foreign Exchange Rates". Accordingly, the Company has, with effect from April 1, 2011, amortized the foreign exchange loss/(gain) incurred on foreign currency monetary items over the balance period of such long term foreign currency monetary items . The amortized portion of foreign exchange loss (net) incurred on long term foreign currency monetary items for the year ended 31st March, 2012 is Rs. 313.61 lakhs. The unamortized portion carried forward as on 31st March, 2012 is Rs. 226.93 lakhs. Had the Company, followed the earlier policy of charging the entire amount to Statement of Profit and Loss, the profit before tax for the year would have been lower by Rs. 226.93 lakhs.

(l) Accounting of forward contracts

Premium / discount on forward exchange contracts, which are not intended for trading or speculation purposes, are amortized over the period of the contracts if such contracts relate to monetary items as at the Balance Sheet date.

(m) Investments

Long term investments are carried at cost and provisions are recorded to recognize any decline, other than temporary, in the carrying value of each investment. Current investments are carried at lower of cost and fair value.

(n) Employee Benefits

Employee benefits include provident fund, superannuation fund, gratuity fund and compensated absences.

Defined contribution plans

The Company's contribution to provident fund and superannuation fund are considered as defined contribution plans and are charged as an expense as they fall due based on the amount of contribution required to be made.

Defined benefit plans

For defined benefit plans in the form of gratuity fund the cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each Balance Sheet date. Actuarial gains and losses are recognized in the Statement of Profit and Loss in the period in which they occur. Past service cost is recognized immediately to the extent that the benefits are already vested and otherwise is a mortised on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognized in the Balance Sheet represents the present value of the defined benefit obligation as adjusted for un recognized past service cost, as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the present value of available refunds and reductions in future contributions to the schemes. Long Service Awards are recognized as a liability at the present value of the defined benefit obligation as at the Balance Sheet date.

Short-term employee benefits

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognized during the year when the employees render the service. These benefits include performance incentive and compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service.

Long-term employee benefits

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognized as a liability at the present value of the defined benefit obligation as at the Balance Sheet date less the fair value of the plan assets out of which the obligations are expected to be settled.

(o) Borrowing costs

Borrowing costs include interest, amortization of ancillary costs incurred and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Costs in connection with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are charged to the Statement of Profit and Loss over the tenure of the loan. Borrowing costs, allocated to and utilized for qualifying assets, pertaining to the period from commencement of activities relating to construction / development of the qualifying asset up to the date of capitalisation of such asset is added to the cost of the assets.

(p) Segment reporting

The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organization and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit/loss amounts are evaluated regularly by the Executive Management in deciding how to allocate resources and in assessing performance.

The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment.

Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on reasonable basis have been included under "Unallocated revenue/expenses/assets/liabilities"

(q) Taxes on income

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961.

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognized as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company.

Deferred tax is recognized on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantially enacted as at the reporting date. Deferred tax liabilities are recognized for all timing differences. Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recognized only if there is virtual certainty that there will be sufficient future taxable income available to realize such assets. Deferred tax assets are recognized for timing differences of other items only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realized. Deferred tax assets are reviewed at each Balance Sheet date for their reliability.

(r) Research and development

Research and development costs (other than cost of fixed assets acquired) are charged as an expense in the year in which they are incurred. Fixed assets utilized for research and development are capitalized and depreciated in accordance with the policies stated for Fixed Assets.

(s) Provisions, contingent liabilities and contingent assets

A provision is recognized when the Company has a present obligation as a result of past event and it is probable that an outflow of resources embodying economic benefit will be required to settle the obligation and in respect of which a reliable estimate can be made. Provisions are determined based on best estimates of the expenditure required to settle the present obligation. Contingent Liabilities are not recognized but disclosed in the notes. A disclosure for a contingent liability is made, unless the possibility of an outflow of resources is remote.

Provision for anticipated warranty costs is made on the basis of technical and available cost estimates.

Contingent Assets are neither recognized nor disclosed in the Financial Statements.

(t) Derivative

The Company enters into derivative contracts in the nature of foreign currency swaps, forward contracts with an intention to hedge its existing assets and liabilities, firm commitments and highly probable transactions. Derivative contracts which are closely linked to the existing assets and liabilities are accounted as per the policy stated for Foreign Currency Transactions and Translations.

(ii) Terms/Rights attached to Equity Shares

The company has only one class of equity shares having a par value of Rs 10 per share. Each equity shareholder is entitled to one vote per share. The company declares and pays dividend in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval by the shareholders in the ensuing Annual General Meeting.

During the year ended 31st March 2012, the amount of per share dividend recognized as distribution to equity shareholders was Rs 4 per share (Previous year: Rs 2 per share).

In the event of the liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after the distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

Notes :

(i) Long term loan from DBS Bank aggregating Rs. 5,746.91 lakhs (previous year Rs. 6,090.53 lakhs) is secured by pari passu first charge on the fixed assets of the Company.

(ii) Long term loan from Dena Bank aggregating Rs. 3,000 lakhs (previous year Rs 3,000 lakhs) is secured by pari passu first charge on the fixed assets and second charge on the current assets of the Company.

(iii) Long term loan from Axis Bank aggregating Rs. 4,267.17 lakhs (previous year Rs. nil) is secured by first pari passu first charge on the fixed assets of the company, present and future except asset charged exclusively to Small Industries Development Bank of India (SIDBI), and second charge on the current assets of the Company.

Note : Details of the security for the short-term borrowings

Buyers' line of credit, cash credit and short term loans from banks are secured by hypothecation, ranking pari passu, of all tangible movable assets including in particular stocks of raw materials other than those purchased under Bill discounting (components) scheme of Small Industries Development Bank of India (SIDBI), finished goods, work-in-progress, consumables, spares and other movable assets and book debts, out standings and all other receivables. Facilities from Canara Bank and Central Bank of India aggregating Rs. 3,780.88 lakhs (previous year Rs. 26.64 lakhs) and Rs. 4,490.55 lakhs (previous year Rs. 4,458.92 lakhs) respectively, are also secured, by hypothecation ranking pari passu, of fixed assets, present and future, except on an asset hypothecated to SIDBI as first charge.


Mar 31, 2011

(a) BASIS OF PREPARATION OF ACCOUNTS

The financial statements have been prepared on accrual basis following the historical cost convention in accordance with generally accepted accounting principles in India and the Accounting Standards notified by the Companies (Accounting Standards) Rules, 2006 and the relevant presentation requirements of the Companies Act, 1956

(b) Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Examples of such estimates include provisions for doubtful debts, employee benefits, assessment of income taxes, estimated cost of contract and useful lives of fixed assets. Actual results could differ from those estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

(c) FIXED ASSETS

Tangible Fixed Assets

Tangible fixed assets are stated at original cost net of tax/duty credits availed, if any, less accumulated/ depreciation. Cost comprises of the purchase price and any attributable cost of bringing the assets to its working condition for its intended use. Interest on borrowings during the period of construction is added to the cost of fixed assets.

Intangible Assets

Intangible assets are initially measured at cost and amortised so as to reflect the pattern in which the assets economic benefits are consumed.

(d) DEPRECIATION AND AMORTISATION

Tangible Assets

Depreciation on all tangible fixed assets is provided on straight line basis at the rates and in the manner specified in Schedule XIV to the Companies Act,1956.

Intangible Assets

(a) Technical Knowhow

The expenditure is amortised over the estimated period of benefit, not exceeding six years commencing with the date of purchase of the technology.

(b) Software Expenditure

The expenditure incurred is amortised over five years commencing from the date when the expenditure is incurred.

(e) IMPAIRMENT OF ASSETS

The carrying amount of fixed assets are reviewed at each Balance Sheet date to assess if there is any indication of impairment based on internal/external factors. An impairment loss will be recognised wherever the carrying amount of an asset exceeds its recoverable amount which is higher of net realisable value and value in use.

(f) INVESTMENTS

Long term investments are carried at cost and provisions are recorded to recognise any decline, other than temporary, in the carrying value of each investment. Current investments are carried at lower of cost and fair value.

(g) INVENTORIES

Raw materials, work-in-progress and finished goods are valued at lower of cost and net realisable value. Stores and spare parts and loose tools are carried at cost less obsolescence.

Cost of inventories is ascertained on the weighted average basis. Cost of work-in-progress and finished goods is determined on full absorption cost basis.

(h) REVENUE RECOGNITION (OTHER THAN CONTRACTS)

Revenue is recognised on completion of sale of goods / rendering of services. Sales excludes sales tax collected from customers.

(i) ACCOUNTING OF CONTRACTS

Contract Revenue is recognised on percentage completion method as required under Accounting Standard 7 - Construction Contracts. The stage of completion is determined as a proportion that contract costs incurred for work performed up to the closing date bear to the estimated total costs. Profit (contract revenue less contract cost) is recognised when the outcome of the contract can be

20. NOTES TO THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2011 (Contd.)

estimated reliably and for contracts valued up to Rs.100 crores, profit is recognised when stage of completion is 40% or more, and for contracts valued more than Rs. 100 crores, profit is recognised either at 25% stage of completion or an expenditure of Rs.40 crores whichever is higher. When it is probable that the total cost will exceed the total contract revenue, the expected loss is recognised immediately. For this purpose total contract costs are ascertained on the basis of contract costs incurred and cost to completion of contracts which is arrived at by the management based on current technical data, forecast and estimate of net expenditure to be incurred in future including for contingencies etc.

(j) FOREIGN EXCHANGE TRANSACTIONS

i) Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction. Monetary assets and liabilities relating to foreign currency transactions are translated at year end exchange rates. The difference in translation and realised gains/losses are recognised in the Profit and Loss Account. ii) In respect of items covered by forward exchange contracts, the premium or discount arising at the inception of such a forward exchange contract is amortised as expense or income over the life of the contract. Any Profit or Loss arising on cancellation or renewal of such a forward exchange contract is recognised in the Profit and Loss Account.

(k) EMPLOYEE BENEFITS

i) All employee benefits falling due wholly within twelve months of rendering the service are classified as short term employee benefits. Short -term Employee Benefits are recognised as an expense in the profit and loss account of the year in which the related service is rendered.

ii) Companys contributions towards Provident Fund and Superannuation Fund paid /payable during the year are charged to the Profit and Loss Account of the year in which the employee renders the related service.

iii) Companys liability towards gratuity, long term compensated absences and pension to whole time directors are determined by independent actuaries, using the projected unit credit method. Past services are recognised on a straight line basis over the average period until the benefit become vested. Actuarial gains or losses are recognised immediately in the statement of profit & loss account as income or expense. Obligation is measured at present value of estimated future cash flows using a discounted rate that is determined by reference to the market yields at the balance sheet date on Government Bonds where the currency and terms of the Government Bonds are consistent with the currency and estimated terms of the defined benefit obligation.

iv) Companys liabilities towards post -retirement medical benefits for separated employees, farewell gifts, long service awards and Early Separation Compensation (ESS) are measured at the present value of estimated future cash flows as per the requirements of Accounting Standard-15 on "Employee Benefits".

v) Actuarial gains and losses in respect of post employment and other long term benefits are charged to the profit and loss account.

(l) SEGMENT REPORTING

Segment accounting policies are in line with policies of the company. In addition, the following policies have been followed for segment reporting:

i) Segment revenues include sale and other income directly attributable with/allocable to the segment including inter segment revenue. ii) Expenses that are directly identifiable with/ allocable to segments are considered for determining the segment result. Expenses which relate to the company as a whole and not allocable to Segments are included under " unallocable corporate expenditure". iii) Incomes which relate to the company as a whole and not allocable to segments are included under "unallocable corporate income". iv) Segment assets and liabilities include those which are directly identifiable with the respective segments. Unallocable corporate assets and liabilities are those which relate to the company as a whole and are not allocable to any segment.

(m) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

A provision is recognised when the Company has a present obligation as a result of past event and it is probable that an outflow of resources embodying economic benefit will be required to settle the obligation and in respect of which a reliable estimate can be made. Provisions are determined based on best estimate of the expenditure required to settle the present obligation. The company does not recognise contingent liability. A disclosure for a contingent liability is made, unless the possibility of an outflow of resources is remote. Provision for anticipated warranty costs is made on the basis of technical and available cost estimates.

(n) TAXES ON INCOME

Tax on income for the current period is determined on the basis of taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961.

Deferred tax is recognised, subject to the consideration of prudence in respect of Deferred tax assets, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

Deferred Tax Assets in respect of unabsorbed depreciation and carry forward of losses are recognised if there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax can be realised.

(o) BORROWING COST

Borrowing costs that are attributable to the manufacturing, acquisition or construction of qualifying assets are included as part of the cost of such assets.

A qualifying asset is one that necessarily takes more than twelve months to get ready for intended use or sale.

Other borrowing costs are recognised as expense in the period in which they are incurred.


Mar 31, 2010

(a) BASIS OF PREPARATION OF ACCOUNTS

The financial statements have been prepared in compliance with the generally accepted accounting principles in India and the Accounting Standards notified by the Companies (Accounting Standards) Rules, 2006 and the relevant presentation requirements of the Companies Act, 1956

(b) FIXED ASSETS

All fixed assets are stated at original cost net of tax/duty credits availed, if any less amortisation/ depreciation. Cost comprises of the purchase price and any attributable cost of bringing the assets to its working condition for its intended use. Interest on borrowings during the period of construction is added to the cost of fixed assets.

(c) DEPRECIATION AND AMORTISATION

Tangible Assets

Depreciation on all tangible fixed assets is provided on straight line basis at the rates and in the manner specified in Schedule XIV to the Companies Act,1956.

Intangible Assets

Technical know-how fees are amortised over a period of six years. Computer software is amortised over a period of five years.

(d) IMPAIRMENT OF ASSETS

The carrying amount of fixed assets are reviewed at each Balance Sheet date to assess if there is any indication of impairment based on internal/external factors. An impairment loss will be recognised wherever the carrying amount of an asset exceeds its recoverable amount which is higher of net realisable value and value in use.

(e) INVESTMENTS

Long term investments are carried at cost and provisions are recorded to recognise any decline, other than temporary, in the carrying value of each investment. Current investments are carried at lower of cost and fair value.

(f) INVENTORIES

Raw materials, work-in- progress and finished goods are valued at lower of cost and net realisable value. Stores and spare parts and loose tools are carried at cost less obsolescence.

Cost of inventories is ascertained on the ‘weighted average ‘ basis. Cost of work- in- progress and finished goods is determined on full absorption cost basis.

(g) REVENUE RECOGNITION (OTHER THAN CONTRACTS)

Revenue is recognised on completion of sale of goods / rendering of services. Sales excludes sales tax collected from customers.

(h) ACCOUNTING OF CONTRACTS

Contract Revenue is recognised on percentage completion method as required under revised Accounting Standard 7 - Construction Contracts. The stage of completion is determined as a proportion that contract costs incurred for work performed up to the closing date bear to the estimated total costs. Profit (contract revenue less contract cost) is recognised when the outcome of the contract can be estimated reliably and for contracts valued up to Rs.100 crores, profit is recognised when stage of completion is 40% or more, and for contracts valued more than Rs. 100 crores, profit is recognised either at 25% stage of completion or an expenditure of Rs.40 crores whichever is higher. When it is probable that the total cost will exceed the total contract revenue, the expected loss is recognised immediately. For this purpose total contract costs are ascertained on the basis of contract costs incurred and cost to completion of contracts which is arrived at by the management based on current technical data, forecast and estimate of net expenditure to be incurred in future including for contingencies etc.

(i) FOREIGN EXCHANGE TRANSACTIONS

1. Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction. Monetary assets and liabilities relating to foreign currency transactions are translated at year end exchange rates. The difference in translation and realised gains/losses are recognised in the Profit and Loss Account.

2. In respect of items covered by forward exchange contracts, the premium or discount arising at the inception of such a forward exchange contract is amortised as expense or income over the life of the contract. Any Profit or Loss arising on cancellation or renewal of such a forward exchange contract is recognised in the Profit and Loss Account.

(j) EMPLOYEE BENEFITS

1. All employee benefits falling due wholly within twelve months of rendering the service are classified as short term employee benefits. Short -term Employee Benefits are recognised as an expense in the profit and loss account of the year in which the related service is rendered

2. Companys contributions towards Provident Fund and Superannuation Fund paid /payable during the year are charged to the Profit and Loss Account of the year in which the employee renders the related service

3. Companys liabilities towards Gratuity [other than Port & Yard Equipment (P&YE Division)] and pension for whole- time directors are ascertained by an independent actuarial valuation as per the requirements of Accounting Standard- 15 (revised 2005) on “Employee Benefits”.The gratuity liability in respect of P & YE division is determined based on premiums paid to the Life Insurance Corporation of India (LIC) under the group gratuity scheme. Provision for leave salaries is made on the basis of an independent actuarial valuation.

4. Companys liabilities towards post -retirement medical benefits for separated employees, farewell gifts, long service awards and Early Separation Compensation (ESS) are measured at the present value of estimated future cash flows as per the requirements of Accounting Standard-15 (revised 2005) on “Employee Benefits”.

5. Actuarial gains and losses in respect of post employment and other long term benefits are charged to the profit and loss account

(k) SEGMENT REPORTING

Segments are identified based on the dominant source and nature of risks and return and the internal organisation and management structure.

Revenue and expenses has been identified to segments on the basis of their relationship to the operating activities of the segment.

(l) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

A provision is recognised when the Company has a present obligation as a result of past event and it is probable that an outflow of resources embodying economic benefit will be required to settle the obligation and in respect of which a reliable estimate can be made. Provisions are determined based on best estimate of the expenditure required to settle the present obligation. Reimbursement against a provision is recognised as a separate asset based on virtual certainty. Provision for anticipated warranty costs is made on the basis of technical and available cost estimates.

(m) TAXES ON INCOME

Tax on income for the current period is determined on the basis of taxable income and tax credits computed in accordance with the provisions of the Income Tax Act,1961.

Deferred tax is recognised, subject to the consideration of prudence in respect of Deferred tax assets, on timing differences, being the difference between taxable Income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

Deferred Tax Assets in respect of unabsorbed depreciation and carry forward of losses are recognised if there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax can be realised.

(n) MISCELLANEOUS EXPENDITURE

Compensation to employees who have opted for retirement under Early Separation / Voluntary Retirement offered under various schemes of the Company is amortised over two to ten years depending upon the maximum balance period of service of the employees under the relevant schemes so as to amortise it entirely upto March 31, 2010. Accordingly the balance as on March 31, 2010 is Nil.