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Accounting Policies of Universal Autofoundry Ltd. Company

Mar 31, 2016

A CORPORATEINFORMATION_

Universal Autofoundary Limited (Formarly Known as Universal Autofoundary Private Limited) was a private limited company incorporated under Companied Act, 1956. Now The company has been converted into Public Limited company. The company is carrying out Manufacturing of C.I. Castings.

B Basis of accounting and preparation of financial statements

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, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013 (“the 2013 Act”) / Companies Act, 1956 (“the 1956 Act”), as applicable. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.

C Use of Estimates

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognized in the periods in which the results are known / materialize.

D Inventories (AS-2)

Raw Material, Consumables, Packing Material & Repair & Maintenance Parts are valued at Cost. WIP has been valued at Sale Price less estimated margin and cost to be incurred for the completion. Cost of inventories comprises all costs of purchases, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Valuation of the inventories has been certified by the management.

E Cash Flow Statement (AS-3)

Cash flows are reported using the indirect method, whereby profit before 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. Cash comprises cash in hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

F Fixed Assets (Tangible & Intangible) (AS-10)

Fixed assets are carried on Cost less accumulated depreciation. The cost of fixed assets includes purchase price, non refundable taxes, duties, freight and other incidental expenses related to the acquisition or installation of respective assets. Borrowing costs directly attributable to acquisition or construction of those fixed assets which necessarily take a substantial period of time to get ready for their intended use are capitalized. All other expenses on existing fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts, are charged to the Statement of Profit and Loss for the period during which such expenses are incurred. Gains or Losses arising from de recognition of fixed assets are measured as the difference between net disposal proceeds and the carrying amount of the asset and are recognized in the Statement of Profit and Loss when the asset is derecognized.

Capital Work in Progress

Project under which assets are not ready for their intendment use and other capital work in progress are carried at cost, comprising direct cost and related incidental expenses.

G Depreciation and amortization (AS-6)

The Depreciation on fixed assets is provided using Written Down Value Method over the useful life of the assets as prescribed in Schedule II to the Companies Act, 2013.

The premiliminary expenses have been fully written off during the year against security premium reserve according to section 52 of the companies act, 2013.

H Revenue Recognition (AS-9)

Sale and operating income includes Sale of products, income from job work services, export incentives and other income etc.

Sale of goods are recognized, net of returns and trade discounts, on transfer of significant risks and rewards of ownership to the buyer. Excise Duty deducted from turnover (gross) are the amount that is included in the amount of turnover (gross) and not the entire amount of liability accruing during the year. The Company collects Sales Tax and VAT on behalf of Government and therefore, these are not economic benefits flowing to the Company. Hence, these are excluded from the revenue.

Revenue from job work services is recognized based on the services rendered in accordance with the terms of contracts. export benefits are accounted for in the year of exports based on eligibility and when there is no uncertainty in receiving the same.

Export sale of Rs. 28,05,152/- to a foreign customer on FOB basis, this goods was at port as on 31.03.2016. This sale has been taken as good at port under sale head of Note No. 19. Value of the goods has been taken as per sale invoice.

There is no any Import Entitlement License in hand at the end of the year.

I Foreigh Currency Transactions (AS-11)

Initial Recognition

Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction or that the actual rate at the date of the transaction.

Translations:

Monetary items denominated in foreign currencies at the year end are restated at year end rates. The exchange rate used for conversion of above items is RBI reference rate.

Exchange Rate Difference

Any income or expense on account of exchange difference either on settlement or on restatement is recognized in the Profit and Loss Statement as income or expense in the Statement of Profit and Loss.

Outstanding Foreign Currency Term Loan at the end of the year taken for Plant & Machinery has been restated at closing exchange rate.

As per section 43A of the Income Tax Act 1961 any gain/loss on repayment of Term Loan for Imported Plant & Machinery has been add/less with Cost of Plant & Machinery for calculation of depreciation as per Income Tax Act, 1961.

J Investments (AS-13)

There is no any Investment at the end of the year.

K Employee Benefits (AS-15)

Employee benefits include Provident Fund, Employee State Insurance Scheme and compensated absences.

Defined Contribution Plans

The Company''s contribution to provident Fund and Employee State Insurance Scheme are considered as defined contribution plans and are charged as an expense based on the amount of contribution required to be made and when services are rendered by the employees.

Defined Benefit Plans

For defined benefit plans in the form of Gratuity Fund, the cost of providing benefits is determined with actuarial valuations carry out at Balance Sheet date. The post employment benefit obligation recognized in the Balance Sheet represents the present value of the defined benefit obligation.

Short-Term Employee Benefits

Short Term benefits to employees have been charged as expense in the profit and loss account of the year in which respective services are rendered by the employee Bonus has been calculated as per Payment of Bonus Act 1965.

L Borrowing Cost (AS-16)

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to the Profit and Loss Statement in the period in which they are incurred.

M Development Expenses

Revenue expenditure pertaining to research is charged to the Profit and Loss Statement. Development costs of products are charged to the Profit and Loss Statement unless a product''s technological feasibility has been established, in which case such expenditure is capitalized.

N Earnings per share (AS-20)

Basic / Diluted earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year. Last year earning per share has been restated due to bonus issue of equity share.

O Provisions & Contingencies

A provision is recognized 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. Contingent liabilities are disclosed in the Notes. Contingent assets are not recognized in the financial statements.

P Taxes on income

Current tax is the provision made for income tax liability on the profits for the year in accordance with the applicable tax laws.

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 substantively enacted as at the reporting date. Deferred tax liabilities are recognized for all timing differences. Deferred tax assets are recognized for timing differences of items other than unabsorbed depreciation and carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realized. However, if there are unabsorbed depreciation and carry forward of losses, deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that there will be sufficient future taxable income available to realize the assets. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each balance sheet date for their reliability.

Deferred tax liability (Assets)is measured using the tax rates and the tax laws that have been enacted or substantially enacted at the balance sheet date.

Q Pending Litigations

Sun Wizard Brass Ind. had filled a case against the company in 2001 for claim of Rs. 2,01,551/- which is continue & decision of court is pending. Board of Directors state that, it is not possible to certain the liability in given case.

R Pending Case in Income Tax

There is a scrutiny case in Income Tax Department for the A.Y. 2014-15, which is pending.

S Other Disclosures

All other expenditures are accounted for on accrual basis.

Figures of the Previous Year have been rearranged where necessary and have been rounded of to the nearest rupee.

In the opinion of the Board of Directors of the Company the current assets and loans & advances have a value on realization in the ordinary course of the business approximately the amount at which they are stated.

Balances of Sundry Creditors & sundry Debtors are subject to confirmation as management of the company has sent account statement to parties, but confirmation is pending till audit date.

The deposits and advances are subject to confirmations from respective parties.

T Bonus Issue & Public Issue

Company has issued 42,50,000 Equity Bonus Shares of Rs. 10 face value each during the year at a ratio of 5:2 (i.e. 5 equity share for every two equity share held) by capitalization of surplus.

The company has got itself listed with BSE Limited (SME Exchange). In terms of Chapter XB of the SEBI (ICDR) Regulations, 2009, as amended.

The company has made an initial public issue of 21,60,000 Equity Shares of face value of Rs. 10 each during the year at a price of Rs. 15 per equity shares (including a share premium of Rs. 5 per equity shares).

As per object state in prospectus, fund raised from IPO of Rs. 324 lacs to be utilized for plant & machinery cost and share issue expenses. Company has used Rs. 288.67 lacs as per object clause of prospectus. Balance amount of Rs. 35.33 lacs in bank balance & FDR.


Mar 31, 2013

A CORPORATE INFORMATION

Universal Autofoundary Private Limited is a private limited company incorporated under Companied Act, 1956. The company is carrying out Manufacturing of C.l. Castings.

B Basis of accounting and preparation of financial statements

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 the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous

C Use of Estimates

The preparation of financial statements are in conformity with Indian GAAP requires management to make estimates and assumptions that effect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements and reported amounts of revenues and expenses for the year.

D Inventories

Raw Material, Consumables & Packing Material are valued at Cost and WIP are valued at Estimated at the stage of completion. Cost of inventories comprises all costs of purchases, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Valuation of the inventories has been certified by the management.

E Fixed Assets

Fixed assets are carried on Cost less accumulated depreciation. The cost of fixed assets includes purchase price, non refundable taxes, duties, freight and other incidental expenses related to the acquisition or installation of respective assets. Borrowing costs directly attributable to acquisition or construction of those fixed assets which necessarily take a substantial period of time to get ready for their intended use are capitalized. All other expenses on existing fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts, are charged to the Statement of Profit and Loss for the period during which such expenses are incurred. Gains or Losses arising from de- recognition of fixed assets are measured as the difference between net disposal proceeds and the carrying amount of the asset and are recognized in the Statement of Profit and Loss when the asset is derecognized.

F Depreciation and amortization

The Depreciation on fixed assets is provided using Written Down Value Method over the useful lives envisaged by the management, which are equivalent to the rates prescribed in the Schedule XIV of The Companies Act, 1956.

The premiliminary expenses have been written off over a period of 5 years as per section 35D of The Income Tax Act, 1961.

G Revenue Recognition

Sales and operating income includes sale of products, services, income from Job work services and export incentives etc. Sales are recognized, net of returns and trade discounts, on transfer of significant risks and rewards of ownership to the buyer. Excise Duty deducted from turnover (gross) are the amount that is included in the amount of turnover (gross) and not the entire amount of liability accruing during the year. The Company collects Sales Tax and VAT on behalf of Government and therefore, these are not economic benefits flowing to the Company. Hence, these are excluded from the revenue.

H Employee Benefits

Short Term benefits to employees have been charged as expense in the profit and loss account of the year in which respective services are rendered by the employee Provident fund contribution and ESI contribution by the employer and deduction made from the employees are remitted to respective departments of which funds are managed by Central Government. Employer's contribution is charged to the Profit and Loss account of the respective year.

I Earnings per share

Basic / Diluted earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) and after reducing the dividend obligation (including Dividend Distribution Tax) on Preference Shares by the weighted average number of equity shares outstanding during the year.

j Taxes on income

The tax expense is the aggregate of current year tax and deferred tax charged or credited to the Profit & Loss Statement for the year.

Current tax is the provision made for income tax liability on the profits for the year in accordance with the applicable tax laws.

Deferred tax is recognized on timing differences, being the differences resulting from the recognition of items in the financial statements.and in estimating its current income tax provisions.

Deferred tax liability is measured using the tax rates and the tax Saws that have been enacted or substantially enacted at the balance sheet date.

K Other Disclosures

All cither expenditures are accounted for on accrual basis.

Figures of the Previous Year have been rearranged where necessary and have been rounded of to the nearest rupee.

in the opinion of the Board of Directors of the Company the current assets and ioans & advances have a value on realization in the ordinary course of the business approximately the amount at which they are stated.

The balances of banks, sundry debtors, sundry creditors, deposits and advances and secured and unsecured loans are subject to confirmations/reconciliation from respective parties.

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