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Accounting Policies of Windsor Machines Ltd. Company

Mar 31, 2016

Note 1 Nature of Business:

Windsor Machines Limited (‘the company’) is in business of manufacturing of plastic processing machinery, which includes pipe extrusion, blown film extrusion and injection molding machines. The company was incorporated on May 4, 1963. The company is listed with Bombay Stock Exchange and National Stock Exchange. The registered office of the company is located at Thane (Mumbai).

Note 2 Significant Accounting Policies: a. Basis of preparation of Financial Statements:

The Financial statements are prepared under historical cost convention on accrual basis of accounting and in accordance with the Generally Accepted Accounting Principles in India, Accounting Standards notified by the Companies (Accounting Standards) Rules 2006 which continues to be applicable in respect of Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules 2014 and relevant provisions of the Companies Act, 2013.

b. Use of Estimates:

The preparation of financial statement requires management to make judgments, estimates and assumptions, that affect the application of accounting policies and the reported amounts of assets and liabilities and disclosures of contingent liabilities at the date of these financial statements and the reported amount of revenue and expenses for the year presented. Actual results may differ from these estimates. Underlying assumptions are reviewed on a regular basis. Revision to accounting estimates are recorded in the period in which the estimate is revised.

c. Fixed assets:

All Tangible assets are stated at cost of acquisition, less accumulated depreciation and includes adjustment arising from exchange rate variations attributable to fixed assets. In the case of fixed assets acquired for new projects / expansion, interest cost on borrowings, and other related expenses incurred up to the date of completion of project are capitalized. The cost of fixed assets comprises purchase price and any other incidental cost of bringing the asset to its working condition for its intended use.

Intangible assets like know-how are stated at their cost of acquisition, less accumulated amortization and impairment losses. An intangible asset is recognized, where it is probable that the future economic benefit attributable to the asset will flow to the enterprise and where its cost can be reliably measured.

Intangible Assets are reported at acquisition value with deductions for accumulated amortization and impairment losses, if any. Carrying value of intangible assets is tested for impairment as at the reporting date.

d. Depreciation:

i. Depreciation on leasehold land has been provided at equal annual installments so as to write off the cost thereof completely two years before the termination date of the lease.

ii. Fixed Assets are stated at cost less accumulated depreciation thereon. The Company provides pro-rata depreciation from the date on which asset is acquired / ready for intended use. Depreciation has been provided as per Schedule II of the Companies Act, 2013 considering useful life of the asset. The tangible fixed assets for which useful life is different than the one prescribed in the Schedule II are (1) Testing and Inspection Equipment < Rs. 5000, there Useful Life are estimated as 1 Year & (2) Testing and Inspection Equipment > Rs. 5000, there Useful Life are estimated as 3 Years, which are based on technical advice.

iii. Profit or loss on disposal of a fixed asset is the difference between the net sales proceeds and the carrying amount of the relevant asset, and is recognized in the Statement of Profit & Loss.

iv. In case of intangible assets life of (i) Software is amortized over 3 Years. (ii) Technical Know How wherein there is agreement the value of the assets is amortized over the period of the agreement, other than that it is amortized over the period of 5 Years.

e. Investments:

Long term investments are stated at cost. Provision for diminution in the value of long term investments is made only if, such a decline is other than temporary in the opinion of the Management. Current investment is stated at lower of cost and fair market value.

f. Foreign currency transactions:

I. In respect of the transactions in foreign currency, those are recorded in rupees by applying to the foreign currency amount, the exchange rate prevailing at the time of the transaction. Amount short or excess realized/incurred is transferred to exchange variation account.

ii. Assets and liabilities related to foreign currency transactions other than for fixed assets remaining unsettled at the end of the year are translated at contract rate when covered by forward exchange contracts and at the rate at the end of the year in other cases. The gains and losses arising in foreign exchange other than those relating to fixed assets are recognized in the statement of profit and loss.

g. Inventories:

Inventories are valued at lower of cost or net realizable value, cost of raw materials and components is arrived on a First-in-First-out’ (FIFO) basis. Valuation of work-in-progress (including made in components) and finished goods is arrived at by using the FIFO rates of raw materials and components and includes appropriate allocation of direct labor and works overheads.

h. Research and development:

Capital expenditure on Research and development is treated in the same manner as expenditure on fixed assets. The revenue expenditure on Research and development is written off in the year in which it is incurred.

i. Retirement benefits:

i. The Company has various schemes of retirement benefits, viz. Superannuation, Gratuity and Leave Encashment. Such liabilities of Vatva & Chhatral Works are administered by separate trusts formed for this purpose through the Group schemes of Life Insurance Corporation of India and accounted on the basis of projected unit credit method.

ii. The company’s contributions to provident fund are charged to the statement of profit and loss in the year of contribution.

j. Excise duty:

Excise duty payable in respect of finished goods is provided for in the books of Account.

k. Revenue recognition:

i. The Company recognizes revenue on the sale of products, net of discounts and sales tax, when risks and rewards of the ownership is transferred to the customer.

ii. Service income is recognized on completion of services.

iii. Dividend is recognized in the statement of profit and loss when the right to receive the same is established.

iv. Interest income is recognised on time proportion basis, taking into account the amount outstanding and the rate applicable.

l. Segment Reporting policies:

The accounting policies adopted for segment reporting are in line with the accounting policies of the company. Segments are identified having regard to the dominant source and nature of risks and returns and internal organization and management structure. Each segment represent strategic business unit. Revenues and expenses have been identified to the segments based on their relationship to the business activity of the segment. Income/ Expenses relating to the enterprise as a whole and not allocable on a reasonable basis to business segments are reflected as unallocated corporate income/expenses. Inter-segment transfers are at prices which are generally market led.

m. Impairment of Assets :

At each Balance Sheet date, the management makes an assessment of any indicator that may lead to impairment of assets. An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value, which is higher of net selling price and value in use. Any impairment loss is charged to statement of profit and loss in the year in which it is identified.

After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life. An impairment loss recognized on asset is reversed when the conditions warranting impairment provision no longer exists.

n. Operating Lease:

-Rentals applicable to operating lease, where substantially all benefit and risk of ownership remains with less or, are charged through the statement of profit & loss as per the term of lease agreement over a period of lease.

o. Taxation:

Income Tax comprises of Current Tax and changes in Deferred Tax Assets or Liability during the year. Current Tax is determined as the amount of tax payable in respect of taxable income for the year as per the enacted Tax Regulations.

Deferred Tax Assets and Liabilities are recognized for the future tax consequences of timing differences between the book profit and tax profit. Deferred Tax Assets other than on carry forward losses and unabsorbed depreciation under tax laws are recognized when it is reasonably certain that there will be future taxable income. Deferred Tax Asset on carry forward losses and unabsorbed depreciation, if any, are recognized when it is virtually certain that there will be future taxable profit. Deferred Tax Assets and liabilities are measured using substantively enacted tax rates. The effect on Deferred Tax Assets and Liabilities for change in tax rates is recognized in the Statement of Profit & Loss in the period of substantive enactment of the change.

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives rise to future economic benefits in the form of adjustment of future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal tax in the future period.

Deferred tax asset/ deferred tax liability are offset if a legally enforceable right exists to set off current tax assets against current tax liability and deferred taxes relate to the same taxable entity & the same jurisdiction.

p. Provisions, Contingent Liabilities and Contingent Assets:

Provisions:

Provision is recognized when

a) The Company has a present obligation as a result of past event;

b) It is probable that an outflow of resources embodying economic benefit is expected to settle the obligation,

c) A reliable estimate can be made for the amount of obligation.

d) Provision for warranty related costs are recognized when product is sold. Provision is estimated based on historical experience and the estimates are reviewed annually for any material changes in assumptions.

Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the Balance Sheet date.

Contingent liability:

Contingent Liability is disclosed in case of

a) A present obligation arising from a past event, when it is not probable that an outflow of resources will be required to settle the obligation.

b) A possible obligation unless the probability of outflow of resources is remote.

Contingent assets:

Contingent assets are neither recognised nor disclosed.

Provisions, Contingent Liabilities are reviewed at each Balance Sheet date and adjusted to reflect the current best estimate.

q. Cash Flow Statement:

Cash flows are reported using the indirect method, whereby profit/ (loss) 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 on 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.

r. Earnings per Share:

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

Diluted earnings per share is calculated by dividing the net profit after tax for the year attributable to the equity shareholders of the Company by weighted average number of equity shares determined by assuming conversion on exercise of conversion rights for all potential dilutive securities.


Mar 31, 2014

A. System of accounting :

The financial statements are prepared under historical cost convention and on the accounting principle of going concern basis. The income and expenditure are generally accounted on accrual basis.

b. Use of Estimates:

The preparation of financial statement requires management to make judgements, estimates and assumptions, that affect the application of accounting policies and the reported amounts of assets and liabilities and disclosures of contingent liabilities at the date of these financial statements and the reported amount of revenue and expenses forthe year presented. Actual results may differ from these estimates. Underlying assumptions are reviewed on a regularly basis. Revision to accounting estimates are recorded in the period in which the estimate is revised and future periods affected.

c. Fixed assets :

All fixed assets are stated at cost of acquisition, less accumulated depreciation and includes adjustment arising from exchange rate variations attributable to fixed assets. In the case of fixed assets acquired for new projects / expansion, interest cost on borrowings, and other related expenses incurred upto the date of completion of project are capitalised. Intangible assets like Know-how are stated at their cost of acquisition, less accumulated amortisation and impairment losses. An intangible assets is recognised, where it is probable that the future economic benefit attributable to the asset will fow to the enterprise and where its cost can be reliably measured.

d. Depreciation :

i. Depreciation on leasehold land has been provided at equal annual installments so as to write off the cost thereof completely two years before the termination date of the lease.

ii. Depreciation on buildings and roads on leasehold land has been provided on straight line method at the rate of 4%.

iii. Depreciation on office premises has been provided on straight line method at the rate of 4%.

iv On the other assets acquired up to March 31, 1994, depreciation has been provided on written down value method in the manner and at the rates specified in Schedule XIV to the Companies Act, 1956. However, in respect of fixed assets acquired up to March 31, 1993, where the original cost of asset did not exceed ^5,000/- each, depreciation had not been provided at the rate of 100% but at the rate applicable to similar assets of a cost exceeding Rs. 5,000/-. On assets acquired on or after April 1,1994, depreciation has been provided on straight line method in the manner and at the rates specified in Schedule XIV to the Companies Act, 1956, except for technical know how which is depreciated over the period of the Technical know how agreement.

e. Investments :

Long term investments are stated at cost. Provision for diminution in the value of long term investments is made only if, such a decline is other than temporary in the opinion of the Management. Short term investment are stated at lower of cost and fair market value.

f. Foreign currency transactions:

i. In respect of exports and imports of goods, the transactions in foreign currency are recorded in rupees by applying to the foreign currency amount, the exchange rate prevailing at the time of the transaction. Amount short or excess realised/incurred is transferred to exchange variation account.

ii. Assets and liabilities related to foreign currency transactions otherthan for fixed assets remaining unsettled at the end of the year are translated at contract rate when covered by forward exchange contracts and at the rate at the end oftheyearin other cases. The gains and losses arising in foreign exchange otherthan those relating to fixed assets are recognised in the statement of profit and loss account.

g. Inventories:

Inventories are valued at lower of cost or net realisable value, cost of raw materials and components is arrived on a ''First-in-First-out'' (FIFO) basis. Valuation of work-in-progress (including made in components) and fnished goods is arrived at by using the FIFO rates of raw materials and components and includes appropriate allocation of direct labour and works overheads.

h. Research and development:

Capital expenditure on Research and development is treated in the same manner as expenditure on fixed assets. The revenue expenditure on Research and development is written off in the year in which it is incurred.

i. Retirement benefits:

i. The Company has various schemes of retirement benefits, viz. Superannuation, Gratuity and Leave Encashment. Such liabilities of Vatva & Chhatral Works are administered by separate trusts formed for this purpose through the Group schemes of Life Insurance Corporation of India.

ii. The company''s contributions to provident fund are charged to the statement of profit and loss account in the year of contribution.

j. Excise duty:

Excise duty payable in respect of fnished goods is provided for in the books of Account.

k. Revenue recognition:

i. The Company recognies revenue on the sale of products, net of discounts and sales tax, when risks and rewards of the ownership is transfer to the customer. ii. Service income is recognised on completion of services. iii. Dividend is recognised in the statement of profit and loss account when the right to receive the same is established. iv Interest income is recognised on accured bases.

l. Segment Reporting policies:

The accounting policies adopted for segment reporting are in line with the accounting policies of the company. Segments are identified having regard to the dominant source and nature of risks and returns and internal organisation and management structure. Revenues and expenses have been identified to the segments based on their relationship to the business activity of the segment. Income/Expenses relating to the enterprise as a whole and not allocable on a reasonable basis to business segments are refected as unallocated corporate income/expenses. Inter-segment transfers are at prices which are generally market led.

m. Impairment of Assets

At each Balance Sheet date, the management makes an assessment of any indicator that may lead to impairment of assets. An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value, which is higher of net selling price and value in use. Any impairment loss is charged to statement of profit and loss in the year in which it is identified as impaired.

n. Operating Lease

Rentals applicable to operating lease, where substantially all benefit and risk of ownership remains with lessor, are charged against profit as per the term of lease agreement over a period of lease.


Mar 31, 2013

A. System of accounting :

The financial statements are prepared under historical cost convention and on the accounting principle of going concern basis. The income and expenditure are generally accounted on accrual basis.

b. Use of Estimates:

The preparation of financial statement requires management to make judgements, estimates and assumptions, that affect the application of accounting policies and the reported amounts of assets and liabilities and disclosures of contingent liabilities at the date of these financial statements and the reported amount of revenue and expenses for the year presented. Actual results may differ from these estimates. Underlying assumptions are reviewed on a regularly basis. Revision to accounting estimates are recorded in the period in which the estimate is revised and future periods affected.

c. Fixed assets :

Fixed assets are stated at cost of acquisition inclusive of freight, duties, taxes and incidental expenses or at revalued amount, wherever revalued.

d. Depreciation :

i. Depreciation on leasehold land has been provided at equal annual installments so as to write off the cost thereof completely two years before the termination date of the lease.

ii. Depreciation on buildings and roads on leasehold land has been provided on straight line method at the rate of 4%.

iii. Depreciation on office premises has been provided on straight line method at the rate of 4%.

iv. On the other assets acquired up to March 31, 1994, depreciation has been provided on written down value method in the manner and at the rates specified in Schedule XIV to the Companies Act, 1956. However, in respect of fixed assets acquired up to March 31, 1993, where the original cost of asset did not exceed Rs. 5,000/- each, depreciation had not been provided at the rate of 100% but at the rate applicable to similar assets of a cost exceeding Rs. 5,000/-. On assets acquired on or after April 1,1994, depreciation has been provided on straight line method in the manner and at the rates specified in Schedule XIV to the Companies Act, 1956, except for technical know how which is depreciated over the period of the Technical know how agreement.

e. Investments :

Long term investments are stated at cost. Provision for diminution in the value of long term investments is made only if, such a decline is other than temporary in the opinion of the Management. Short term investment are stated at lower of cost and fair market value.

f. Foreign currency transactions:

i. In respect of exports and imports of goods, the transactions in foreign currency are recorded in rupees by applying to the foreign currency amount, the exchange rate prevailing at the time of the transaction. Amount short or excess realised/incurred is transferred to exchange variation account.

ii. Assets and liabilities related to foreign currency transactions other than for fixed assets remaining unsettled at the end of the year are translated at contract rate when covered by forward exchange contracts and at the rate at the end of the year in other cases. The gains and losses arising in foreign exchange other than those relating to fixed assets are recognised in the statement of profit and loss account.

g. Inventories:

Inventories are valued at lower of cost or net realisable value, cost of raw materials and components is arrived on a ''First-in-First-out'' (FIFO) basis. V aluation of work-in-progress (including made in components) and finished goods is arrived at by using the FIFO rates of raw materials and components and includes appropriate allocation of direct labour and works overheads.

h. Research and development:

Capital expenditure on Research and development is treated in the same manner as expenditure on fixed assets. The revenue expenditure on Research and development is written off in the year in which it is incurred.

i. Retirement benefits:

i. The Company has various schemes of retirement benefits, viz. Superannuation, Gratuity and Leave Encashment. Such liabilities of Vatva & Chhatral Works are administered by separate trusts formed for this purpose through the Group schemes of Life Insurance Corporation of India.

ii. The company''s contributions to provident fund are charged to the statement of profit and loss account in the year of contribution.

j. Excise duty:

Excise duty payable in respect of finished goods and manufactured components is provided for in the books of Account.

k. Capital subsidy:

Amount received as capital subsidy from the Government for setting up an industrial undertaking in a backward area is credited to the capital reserve.

l. Revenue recognition:

i. The Company recognies revenue on the sale of products, net of discounts and sales tax, when risks and rewards of the ownership is transfer to the customer.

ii. Service income is recognised on completion of services.

iii. Dividend is recognised in the statement of profit and loss account when the right to receive the same is established.

m. Segment Reporting policies:

The accounting policies adopted for segment reporting are in line with the accounting policies of the company. Segments are identified having regard to the dominant source and nature of risks and returns and internal organisation and management structure. Revenues and expenses have been identified to the segments based on their relationship to the business activity of the segment. Income/Expenses relating to the enterprise as a whole and not allocable on a reasonable basis to business segments are reflected as unallocated corporate income/expenses. Inter-segment transfers are at prices which are generally market led.

n. Impairment of Assets

At each Balance Sheet date, the management makes an assessment of any indicator that may lead to impairment of assets. An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value, which is higher of net selling price and value in use. Any impairment loss is charged to statement of profit and loss in the year in which it is identified as impaired.

o. Operating Lease

Rentals applicable to operating lease, where substantially all benefit and risk of ownership remains with lessor, are charged against profit as per the term of lease agreement over a period of lease.


Mar 31, 2012

A. System of accounting :

The financial statements are prepared under historical cost convention and on the accounting principle of going concern basis. The income and expenditure are generally accounted on accrual basis.

b. Fixed assets :

Fixed assets are stated at cost of acquisition inclusive of freight, duties, taxes and incidental expenses or at revalued amount, wherever revalued.

c. Depreciation :

i. Depreciation on leasehold land has been provided at equal annual installments so as to write off the cost thereof completely two years before the termination date of the lease.

ii. Depreciation on buildings and roads on leasehold land has been provided on straight line method at the rate of 4%.

iii. Depreciation on office premises has been provided on straight line method at the rate of 4%.

iv. On the other assets acquired up to March 31, 1994, depreciation has been provided on written down value method in the manner and at the rates specified in Schedule XIV to the Companies Act, 1956. However, in respect of fixed assets acquired up to March 31, 1993, where the original cost of asset did not exceed Rs. 5,000/- each, depreciation had not been provided at the rate of 100% but at the rate applicable to similar assets of a cost exceeding Rs. 5,000/-. On assets acquired on or after April 1,1994, depreciation has been provided on straight line method in the manner and at the rates specified in Schedule XIV to the Companies Act, 1956, except for technical know how which is depreciated over the period of the Technical know how agreement.

d. Investments :

Long term investments are stated at cost. Provision for diminution in the value of long term investments is made only if, such a decline is other than temporary in the opinion of the Management.

e. Foreign currency transactions:

i. In respect of exports and imports of goods, the transactions in foreign currency are recorded in rupees by applying to the foreign currency amount, the exchange rate prevailing at the time of the transaction. Amount short or excess realised/incurred is transferred to exchange variation account.

ii. Assets and liabilities related to foreign currency transactions other than for fixed assets remaining unsettled at the end of the year are translated at contract rate when covered by forward exchange contracts and at the rate at the end of the year in other cases. The gains and losses arising in foreign exchange other than those relating to fixed assets are recognised in the profit and loss account.

f. Inventories:

Inventories are valued at lower of cost or net realisable value, Cost of raw materials and components is arrived on a 'First-in-First-out' (FIFO) basis. Valuation of work-in-progress (including made in components) and finished goods is arrived at by using the FIFO rates of raw materials and components and includes appropriate allocation of direct labour and works overheads.

g. Research and development:

Capital expenditure on Research and development is treated in the same manner as expenditure on fixed assets. The revenue expenditure on Research and development is written off in the year in which it is incurred.

h. Retirement benefits:

i. The Company has various schemes of retirement benefits, viz. Superannuation, Gratuity and Leave Encashment. Such liabilities of Vatva & Chhatral Works are administered by separate trusts formed for this purpose through the Group schemes of Life Insurance Corporation of India. In respect of other Works, such liabilities are provided for as per actuarial valuation.

ii. The company's contributions to provident fund are charged to the profit and loss account in the year of contribution.

i. Excise duty:

Excise duty payable in respect of finished goods and manufactured components is provided for in the books of Account.

j. Capital subsidy:

Amount received as capital subsidy from the Government for setting up an industrial undertaking in a backward area is credited to the capital reserve.

k. Revenue recognition:

i. The Company recognies revenue on the sale of products, net of discounts and sales tax, when risks and rewards of the ownership is transfer to the customer.

ii. Service income is recognised on completion of services.

iii. Dividend is recognised in the profit and loss account when the right to receive the same is established.

l. Segment reporting policies:

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

i) Segment revenue includes sales and other income directly identifiable 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) Income which relates to the Company as a whole and not allocable to segments is included in "unallocable corporate income".

iv) Segment assets and liabilities include those directly identifiable with the respective segments. Unallocable corporate assets and liabilities represent the assets and liabilities that relate to the Company as a whole and not allocable to any segment.


Mar 31, 2010

A. System of accounting :

The financial statements are prepared under historical cost convention and on the accounting principle of going concern basis. The income and expenditure are generally accounted on accrual basis.

b. Fixed assets :

Fixed assets are stated at cost of acquisition inclusive of freight, duties, taxes and incidental expenses or at revalued amount wherever revalued.

c. Depreciation :

i. Depreciation on leasehold land has been provided at equal annual installments so as to write off the cost thereof completely two years before the termination date of the lease.

ii. Depreciation on buildings and roads on leasehold land has been provided on straight line method at the rate of 4%.

iii. Depreciation on office premises has been provided on straight line method at the rate of 4%.

iv. Depreciation on leased assets have been provided so as to match the WDV of these assets on the expiry of lease period with the security deposit (residual value) received from the lessees.

v. On the other assets acquired up to 31.03.1994, depreciation has been provided on written down value method in the manner and at the rates specified in Schedule XIV to the Companies Act, 1956. However, in respect of fixed assets acquired up to 31.03.1993, where the original cost of asset did not exceed Rs. 5,000/- each, depreciation had not been provided at the rate of 100% but at the rate applicable to similar assets of a cost exceeding Rs. 5,000/-. On assets acquired on or after 01.04.1994, depreciation has been provided on straight line method in the manner and at the rates specified in Schedule XIV to the Companies Act, 1956, except for technical know how which is depreciated over the period of the Technical know how agreement.

d. Investments :

Long term investments are stated at cost. Provision for diminution in the value of long term investments is made only if, such a decline is other than temporary in the opinion of the Management.

e. Foreign currency transactions:

i. In respect of exports and imports of goods, the transactions in foreign currency are recorded in rupees by applying to the foreign currency amount, the exchange rate prevailing at the time of the transaction. Amount short or excess realised/incurred is transferred to exchange variation account.

ii. Assets and liabilities related to foreign currency transactions other than for fixed assets remaining unsettled at the end of the year are translated at contract rate when covered by forward exchange contracts and at year-end rate in other cases. The gains and losses arising in foreign exchange other than those relating to fixed assets are recognised in the profit and loss account.

f. Inventories:

Inventories are valued at lower of cost or net realisable value, Cost of raw materials and components is arrived on a First-in-First-out (FIFO) basis. Valuation of work-in- progress (including made in components) and finished goods is arrived at by using the weighted average of the FIFO rates of raw materials and components and includes appropriate allocation of direct labour and works overheads.

g. Research and development:

Capital expenditure on Research and development is treated in the same manner as expenditure on fixed assets. The revenue expenditure on Research and development is written off in the year in which it is incurred.

h. Retirement benefits:

i. The Company has various schemes of retirement benefits, viz. Superannuation, Gratuity and Leave Encashment. Such liabilities of Vatva & Chhatral Works are administered by separate trusts formed for this purpose through the Group schemes of Life Insurance Corporation of India. In respect of other Works, such liabilities are provided for as per actuarial valuation or actual calculation on accrual basis.

ii. The companys contributions to provident fund are charged to the profit and loss account in the year of contribution.

i. Excise duty:

Excise duty payable in respect of finished goods and manufactured components is provided for in the books of Account.

j. Capital subsidy:

Amount received as capital subsidy from the Government for setting up an industrial undertaking in a backward area is credited to the capital reserve.

k. Revenue recognition:

i. Dividend is recognised in the profit and loss account when the right to receive the same is established.

ii. Service income is recognised on completion of services.