Mar 31, 2018
REVENUE RECOGNITION
Revenue from sale of goods is recognised on transfer of all significant risks and rewards of ownership to the buyer. The amounts recognised as sale is exclusive of goods and services tax. Income from conversion job is recognised on its completion and on its acceptance by the customers.
OTHER INCOME
Interest income for all debt instruments, is recognised using the effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of a financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all contractual terms of the financial instrument (for example, prepayment, extension, call and similar options), but does not consider the expected credit losses.
Dividends are recognised in profit or loss only when the right to receive payment is established and it is probable that the economic benefits associated with the dividend will flow to the Company and the amount of the dividend can be measured reliably. Management and marketing fees are recognised as and when the services are rendered.
POST-SALE-CLIENT SUPPORT AND WARRANTIES
The Company provides its clients with a fixed-period-warranty for corrections of errors and support on its fixed-price, fixed-time frame contracts, particularly to support equipment and job works related transactions.
Costs associated with such support services are accrued at the time when related revenues are recorded and included in the Statement of Profit and Loss.
PROPERTY PLANT AND EQUIPMENT (INCLUDING CAPITAL WORK-IN-PROGRESS)
Freehold land is carried at historical cost. All other items of property, plant and equipment are stated at historical cost less depreciation. Historical cost are stated at cost of acquisition inclusive of all attributable cost of bringing the assets to their working condition, accumulated depreciation and accumulated impairment losses, if any.
Subsequent expenditure related to an item of tangible asset are added to its book value only if they increase the future benefits from the existing asset beyond its previously assessed standard of performance.
Items of property, plant and equipment that have been retired from active use and are held for disposal are stated at the lower of their net book value & net realisable value and are shown separately in the financial statements. Any expected loss is recognised immediately in the Statement of Profit and Loss. Losses arising from the retirement of and gains or losses arising from disposal of tangible assets which are carried at cost are recognised in the Statement of Profit and Loss.
Schedule II to the Companies Act, 2013 prescribes useful lives for property, plant and equipment and allows Companies to use higher/lower useful lives and residual values, if such useful lives and residual values can be technically supported and justification for difference is disclosed in the financial statements. Considering the applicability of Schedule II, the Management has re-estimated useful life and residual values of all its fixed assets. The Management believes that the depreciation rates currently used fairly reflect its estimate of the useful lives and residual values of property, plant and equipment.
The Company provides depreciation on all assets (except leasehold land) on written down basis and the leasehold land is being amortised on straight line basis over the period of lease.
Assets not yet ready for use are recognised as capital work-in-progress.
On transition to Ind-AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognised as at April 1, 2016 and measured as per the previous GAAP as the deemed cost of property, plant and equipment.
INTANGIBLE ASSETS (INCLUDING UNDER DEVELOPMENT)
Intangible assets relating to product development are recorded at actual cost incurred on the development of products and are capitalised once the products receive approval from relevant authorities and the same are carried at cost less accumulated amortisation.
Intangible assets are amortised on a straight line basis over their estimated useful life of approximately four years, so as to effectively depreciate the assets over the specified useful life. Intangible assets are derecognised on disposal or when no future economic benefits are expected from its use or disposal.
Gains or losses arising from the retirement or disposal of an intangible asset are determined as the difference between the net disposal proceeds and carrying amount of the asset and recognised as income or expense in the Statement of Profit and Loss.
On transition to Ind-AS, the Company has elected to derecognise the carrying value of all of its existing intangible assets as at April 1, 2017 measured as per the previous GAAP.
IMPAIRMENT OF NON-FINANCIAL ASSETS
The carrying amount of non-financial assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal/external factors. An impairment loss, if any, is recognised in the statement of profit and loss, whenever the carrying amount of an asset or a cash generating unit exceeds its recoverable amount.
The recoverable amount of the assets (or where applicable, that of the cash generating unit to which the asset belongs) is estimated as the higher of its net selling price and its value in use.
After impairment, depreciation/amortisation is provided on the revised carrying amount of the asset over its remaining useful life.
A previously recognised impairment loss, if any, is increased or reversed depending on changes in circumstances. However, the carrying value after reversal, if any, is not increased beyond the carrying value that would have prevailed by charging usual depreciation/amortisation, if there were no impairment.
FINANCIAL INSTRUMENTS
A financial instrument is a contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
INVESTMENTS AND FINANCIAL ASSETS
Classification
The company classifies its financial assets in the following measurement categories:
- Those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and
- Those measured at amortised cost.
The classification depends on the entityâs business model for managing financial assets and contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For investments in debt instruments, this will depend on the business model in which the investment is held. For investments in equity instruments, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for equity investment at fair value through other comprehensive income.
The Company reclassifies debt investments when and only when its business model for managing those assets changes.
Derecognition of financial assets
A financial asset is derecognised only when:
- The Company has transferred the rights to receive cash flows from the financial asset or
- Retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.
Impairment of financial assets
The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost and FVOCI debt instruments. The impairment methodology applied depends on whether there has been a significant increase in the credit risk.
For trade receivables only, the Company applies the simplified approach permitted by Ind-AS-109-Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables.
INVESTMENT IN SUBSIDIARIES AND JOINT VENTURES
Subsidiaries are entities that are controlled by the Company. The Company controls an entity when the Company is exposed or has rights to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the investee. Investments in subsidiaries are accounted at cost less impairment, if any.
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Investments in joint ventures are accounted at cost less impairment, if any.
Investments in subsidiary and joint venture are accounted at cost less impairment, if any, in accordance with Ind AS 27 -Separate financial statements.
BORROWINGS AND OTHER FINANCIAL LIABILITIES
Borrowings and other financial liabilities, if any, are initially recognised at fair value (net of transaction costs incurred). Difference between fair value and transaction proceeds on initial stage, if any, is recognised as an asset/ liability based on the underlying reason for the difference.
All financial liabilities, if any, are measured at amortised cost using the effective interest rate method.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents in the Balance Sheet comprise cash at bank and on hand besides term deposits, which are subject to an insignificant risk of changes in value.
INVENTORIES
- Traded goods, raw materials and packing materials:
At cost or net realisable value, whichever is lower.
- Process stock: At cost or estimated realisable value, whichever is lower.
- Finished goods: At cost or net realisable value, whichever is lower. Note: Cost is determined on a weighted average basis.
TAXATION
Current tax
The income tax expense or credit for the period is the tax payable on the current periodâs taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period.
Deferred tax
Deferred income tax is provided in full, using the Balance Sheet approach, on temporary differences arising between the tax bases of assets & liabilities and their carrying amounts in the financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction, other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit (tax loss). Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply, when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised for all deductible temporary differences and unused tax losses, only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets & liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise asset and settle liability, simultaneously.
Current and deferred tax are recognised in the profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In which case, tax is also recognised in other comprehensive income or directly in equity, respectively.
RETIREMENT AND OTHER EMPLOYEE BENEFITS
Short-term employee benefits
Employee benefits payable wholly within twelve months of receiving employee services are classified as short-term employee benefits. These benefits include salaries and wages, bonus, performance incentives and compensated absences which are expected to occur in the next twelve months. The undiscounted amount of short-term employee benefits to be paid in exchange for employee services are recognised as an expense as the related service is rendered by employees.
Post-employment benefits
Post-employment benefits are employee benefits (other than termination benefits and short term employee benefits) that are payable after the completion of employment. There are two types:
- Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entity pays specified contribution to a separate entity and has no obligation to pay any further amounts.
- Defined benefit plans
The entityâs obligation is to provide the agreed benefits to current and former employees.
The Companyâs defined contribution plans include:
(i) Provident fund
Both the eligible employee and the Company make monthly contributions to the provident fund plan equal to a specified percentage of the employee''s salary. Employerâs contribution to provident fund is charged to the Statement of Profit and Loss.
(ii) Gratuity
Provides a lump sum payment to employees who have completed five years or more of service at retirement, disability or termination of employment, being an amount based on the respective employeeâs last drawn salary and the number of years of employment with the Company. Presently the Companyâs gratuity plan is funded and managed through a trust, specially created and being managed for this purpose.
The liability or asset recognised in the Balance Sheet in respect of gratuity plan is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets, if any. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method.
Re-measurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income and are never reclassified to profit or loss. Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in the statement of profit and loss as past service cost.
(iii) Superannuation
Employees in the managerial cadre are covered under Superannuation fund. It is a fund in which only the Company makes contribution to employees and managed through a specially created trust fund.
The Companyâs defined benefit plan comprise:
Compensated absences
Compensated absences accruing to employees and which can be carried to future periods, but where there are restrictions on availment or encashment or where the availment or encashment is not expected to occur wholly in the next twelve months, the liability on account of the benefit is determined actuarially using the projected unit credit method. The Company undertakes actuarial valuation and provides for the liability in its books of accounts. Presently the scheme is unfunded but going forward, the Company is contemplating to manage it through the aegis of the Life Insurance Corporation of India and defray the contribution in tranches over a period of time.
For the purpose of presentation, the allocation between short term and the long term provisions has been made as determined by the Actuarial valuation.
PROVISIONS AND CONTINGENT LIABILITIES
Provisions are recognised when the Company has
- a present legal or constructive obligation as a result of past events
- it is probable that an outflow of resources will be required to settle the obligation and
- the amount can be reliably estimated. Provisions are not recognised for future operating losses.
Provisions are measured at the present value of the Managementâs best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax-rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.
Contingent liabilities are disclosed when there is a possible obligation arising from past events, 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 a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made.
FOREIGN CURRENCY TRANSACTIONS
Foreign currency transactions are recorded at the exchange rates prevailing on the date of such transactions. Monetary assets and liabilities as at the Balance Sheet date are translated at the rates of exchange prevailing at the date of the Balance Sheet. Gains and losses arising on account of differences in foreign exchange rates on settlement/ translation of monetary assets and liabilities are recognised in the Statement of Profit and Loss. Non-monetary foreign currency items are carried at cost.
EARNINGS PER SHARE
Basic earnings per share are calculated by dividing the net profit or loss (excluding other comprehensive income) for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for events such as bonus issue, bonus element in a right issue, shares split and reserve share splits (consolidation of shares) that have changed the number of equity shares outstanding, without a corresponding change in resources. For the purpose of calculating diluted earnings per share, the net profit or loss (excluding other comprehensive income) for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
SEGMENT REPORTING
Operating segments, if any, are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The Board of Directors has been identified as being the chief operating decision maker.
The Board of Directors of Ador Fontech Limited assesses the financial performance and position of the group and makes strategic decisions.
LEASES
The determination of whether an arrangement is a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is a lease if fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement. Further, the classification of a lease as either a finance lease or an operating lease is based on whether the risks and rewards of ownership shall pass to the lessee.
CASH FLOW STATEMENT
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less, that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the Balance Sheet.
Cash flows are reported using indirect method, whereby profit before tax is adjusted for the effects of transactions of non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. Cash flows are reported using indirect method, whereby profit before tax is adjusted for the effects of transactions of non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows.
A. FIRST TIME ADOPTION OF IND-AS
Recognition in the financial statements
These are the Companyâs first separate financial statements prepared in accordance with Ind-AS applicable as at March 31, 2018.
The accounting policies set out in note 1 have been applied in preparing the financial statements for the year ended March 31, 2018; the comparative information presented in these financial statements for the year ended March 31, 2017 and in the preparation of opening Ind-AS Balance Sheet as at April 1,2016 (the date of transition). In preparing its opening Ind-AS Balance Sheet, the Company has adjusted amounts reported previously in financial statements prepared in accordance with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act (previous GAAP or Indian GAAP).
An explanation of transition from the previous GAAP to Ind-AS, has affected the Companyâs financial position, financial performance and cash flows which are as follows:
OPTIONAL EXEMPTIONS AVAILED
Business combinations
The Company has availed business combination exemption on the first time adoption of Ind-AS and accordingly business combinations prior to the date of transition have not been restated to the accounting prescribed under Ind-AS-103.
The Company will apply the requirements of Ind-AS-103 â Business combinations occurring after the date of transition to Ind-AS.
Deemed cost
Ind-AS-101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements as at the date of transition to Ind-AS, measured as per the previous GAAP and use that as its deemed cost as on the date of transition, after making necessary adjustments for de-commissioning liabilities. This exemption can also be used for intangible assets covered by Ind-AS-38-intangible assets and investment property covered by Ind-AS-40-Investment Properties.
Accordingly, the Company has elected to measure all of its property, plant and equipment, intangible assets and investment properties at their previous GAAP carrying value.
Investment in subsidiaries and jointly controlled entities
Ind-AS-101 permits a first-time adopter to elect to continue with the carrying value of all of its subsidiaries and joint controlled entities as recognised in the financial statements, as at the date of transition to Ind-AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition.
Accordingly, the Company has elected to measure all of its investments in subsidiaries and joint venture at their previous GAAP carrying value.
MANDATORY EXCEPTIONS APPLIED
Estimates
An entityâs estimates in accordance with Ind-AS as at the date of transition to Ind-AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.
Ind-AS estimates as at April 1,2016 are consistent with the estimates as at the same date made in conformity with previous GAAP, except where Ind-AS required a different basis for estimates as compared to the previous GAAP.
De-recognition of financial assets and liabilities
Ind-AS-101 requires a first-time adopter to apply de-recognition provisions of Ind-AS-109 prospectively for transactions occurring on or after the date of transition to Ind-AS. However, Ind-AS-101 allows a first-time adopter to apply de-recognition requirements of Ind-AS-109 retrospectively from the date of the entity choosing to do so, provided information needed to apply Ind-AS-109 to financial assets and financial liabilities, as a result of past transactions has been obtained and is available, as at the time of initially accounting for those transactions.
The Company has applied de-recognition provisions of Ind-AS-109 prospectively from the date of transition to Ind-AS.
Classification and measurement of financial assets
Ind- AS-101 requires an entity to assess classification and measurement of financial assets on the basis of the facts and circumstances that exist on the date of transition to Ind-AS.
Explanations to reconciliations
B.1 IMPACT ON ACCOUNT OF REVERSAL OF PROPOSED DIVIDEND (INCLUDING TAX)
Previous GAAP
Proposed dividends were recognised as a liability as an adjusting event occurring after the Balance Sheet date.
Ind-AS
Proposed dividends of previous year are recognised as liability in the form of an adjusting event occurring after the Balance Sheet date as per Ind-AS-37 read with para 107 of Ind-AS-1. However, from the current year, it is a non-adjusting event occurring after the Balance Sheet date and hence not recognised in the books.
B.2 IMPACT OF ACCOUNTING FOR INVESTMENT AT FAIR VALUE THROUGH PROFIT AND LOSS ACCOUNT
Previous GAAP
Non-current investment are measured at cost and current investments are measured at lower of cost or fair value.
Ind-AS
For the purposes of Ind-AS-109, mutual fund investments will be accounted at fair value through profit and loss and other financial instruments on a fair value basis, at each reporting date.
B.4 IMPACT ON ACCOUNT OF CREATION OF PROVISION BASED ON EXPECTED CREDIT LOSS
Previous GAAP
The Company provides for doubtful debts based on realisation period and policy framed by the Company, which in turn is based on incurred loss model i.e. when there is an objective evidence of impairment.
Ind-AS
As per Ind-AS- 109, impairment loss shall be recognised as per the expected credit loss model on all financial assets (other than those measured at fair value).
B.5 IMPACT ON ACCOUNT OF DEFERRED TAXES
The impact of transition adjustments together with Ind-AS mandate of using the Balance Sheet approach (against profit and loss approach in the previous GAAP) for computation of deferred tax has not impacted the reserves as on date of transition as also the Statement of Profit and Loss account.
Mar 31, 2017
General information
Ador Fontech Limited was incorporated in India on August 22, 1974 and is a frontrunner organization that operates on the philosophy of âpartnering'' with its clients in recommending and implementing value-added fusion, surfacing, spraying and environmental solutions. The Company is dedicated to the supply of products, services and solutions that meet and exceed the needs of its end-users under the broad gamut of âLife enhancement of industrial components''. The Company is a public limited company [CIN: L31909KA1974PLC020010] and is listed on the Bombay Stock Exchange (BSE).
Notel 1.0 Summary of ''Significant Accounting Policies''
The following significant accounting policies have been adopted in the preparation and presentation of the financial statements:
1.01 Basis of preparation of financial statements
These financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on the accrual basis except for certain financial instruments which are measured at fair values. GAAP comprises mandatory accounting standards as prescribed under Section 133 of the Companies Act, 2013 (âthe Act'') read with Rule 7 of the Companies (Accounts) Rules, 2014, the provisions of the Act (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). Accounting policies have been consistently applied except where a newly-issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
1.02 Use of estimates
The preparation of financial statements requires estimates and assumptions to be made that affect the reported balances of assets and liabilities as on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. All the assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in Schedule III to the Companies Act, 2013. Accounting estimates could change from period to period. Actual results could differ from these estimates. Appropriate changes in estimates are made as and when the Management becomes aware of the changes in the circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which the changes are made and if material, their effects are disclosed in the notes to the financial statements.
1.03 Revenue recognition
(a) Revenue from sale of goods is recognized on transfer of all significant risks and rewards of ownership to the buyer. The amounts recognized as sale is exclusive of Sales tax/VAT and are net of returns. It is stated at gross and net of excise duty. (b) Income from conversion job is recognized on its completion and on its acceptance by the customers.
(c) Dividend income is accounted for in the year in which the right to receive the same is established. (d) Interest income is recognized using the time-proportion method, based on rates implicit in the transaction.
1.04 Fixed assets
Tangible assets shown under gross block are valued at cost of acquisition inclusive of inward freight, duties, taxes and other incidental expenses/adjustments related to its acquisition. All such direct costs are capitalized when the tangible fixed assets are ready for use. Intangible assets relating to product development are recorded at actual cost incurred on the development of products and are capitalized once the products receive approval from relevant authorities and the same are carried at cost less accumulated amortization.
1.05 Depreciation and amortization
a. (i) Schedule II to the Companies Act, 2013 prescribes useful lives for fixed assets and allows Companies to use higher/lower useful lives and residual values if such useful lives and residual values can be technically supported and justification for difference is disclosed in the financial statements.
(ii) Considering the applicability of Schedule II, the management has re-estimated useful life and residual values of all its fixed assets. The management believes that the depreciation rates currently used fairly reflect its estimate of the useful lives and residual values of fixed asset.
b. Depreciation on tangible assets purchased during the year has been calculated as under: (i) All assets (except leasehold interest): On written down value basis. (ii) Lease hold land: On straight line basis over the period of lease. (iii) Intangible assets: Over a period of approximately four years, so as to effectively depreciate the assets over the specified useful life leaving behind a residual value of five percent.
c. Depreciation on additions to fixed assets during the current year are charged on pro-rata basis, for the period of use.
1.06 Impairment of assets
An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired.
1.07 Investments
Trade investments are the investments made to enhance the Company''s business interests. Investments are either classified as current or long-term based on the Management''s intention. Current investments are carried at cost. Cost of overseas investments comprises the Indian rupee value of consideration paid for the investment translated at the exchange rate prevalent on the date of investment. Long-term investments are carried at cost less provisions recorded to recognize any decline, other than temporary, in the carrying value of each investment.
1.08 Inventories
(a) Traded goods, raw materials and packing materials: At cost or net realizable value, whichever is lower. (b)Process stock: At cost or estimated realizable value, whichever is lower. (c) Finished goods: At cost or net realizable value, whichever is lower and are inclusive of cenvat thereon. (d) Excise duty relating to the difference between closing and opening stock is recognized as part of changes in inventories of finished goods, work in progress and stock-in trade. Note: Cost is determined on a weighted average basis.
1.09 Employee benefits
Gratuity: The Company has computed its liability towards future payments of gratuity to employees, on actuarial basis and the charge for current year is debited to the Statement of Profit and Loss.
Superannuation: The Company contributes towards superannuation fund, for future payment of retirement benefits to employees. The contributions accruing during each year are charged to the Statement of Profit and Loss.
Leave encashment: Liabilities are determined by actuarial valuation done at the end of the year and the charge for the current year is debited to the Statement of Profit and Loss.
Provident fund: Employer''s contribution to provident fund is charged to the Statement of Profit and Loss.
1.10 Foreign currency transactions
Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction or that approximates the actual rate on the date of the transaction. Any income or expense on account of exchange difference, either on settlement or on translation is recognized in the Statement of Profit and Loss. Assets and liabilities in foreign currencies are restated at the year-end exchange rates.
1.11 Leases
Lease rental payments under operating lease are recognized as an expense on straight line basis in the Statement of Profit and Loss over the lease term.
1.12 Post-sale-client support and warranties
The Company provides its clients with a fixed-period warranty for corrections of errors and support on all its fixed-price, fixed-time frame contracts. Costs associated with such support services are accrued at the time when related revenues are recorded and included in the Statement of Profit and Loss.
1.13 Taxes on income
Current tax: Provision for current tax is made based on tax liability computed after considering tax allowances and exemptions. Deferred tax: Provision for deferred tax is made using the applicable rate of taxation, for all timing differences, which arise during a year and are reversed in subsequent periods.
1.14 Provisions and contingent liabilities
Based on the best estimate of the Management, provisions are determined on the outflow of economic benefits, which are required to settle obligations, as at the reporting date. Where no reliable estimate can be made, a disclosure is made as contingent liability. Disclosure for contingent liability is also made when there is a possible obligation that may, but probably will not, require an outflow of the Company''s resources.
1.15 Cash flow statement
Cash flows are reported using indirect method, whereby profit before tax is adjusted for the effects of transactions of non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows.
1.16 Dividend and its presentation
To facilitate comparison w.r.t previous year, dividend is shown as an appropriation of reserve and as part of short term provision. However, retention in equity can be facilitated, in which case reserve and short term provisions would be more by the value of dividend and tax thereon.
1.17 Schedule III
The financial statements have been drawn as per Schedule III to the Companies Act, 2013. Nonetheless, wherever data is nil, the line item has been omitted to facilitate ease in reading. This includes the following (i) Money received against share warrants (ii) Share application money pending allotment (iii) Deferred Government grants (iv) Minority interest (v) Foreign currency monetary item translation differences (vi) Tangible assets pertaining to capital work-in-progress (vii) Goodwill on consolidation .
Mar 31, 2016
Company information
Ador Fontech Limited is incorporated in India on August 22, 1974 and is a frontrunner organization that operates on the philosophy of ''partnering'' with its clients in recommending and implementing value-added fusion, surfacing, spraying and environmental solutions. The Company is dedicated to the supply of products, services and solutions that meet and exceed the needs of its end-users under the broad gamut of ''Life enhancement of industrial components''. The Company is a public limited company [CIN: L31909KA1974PLC020010] & is listed on the Bombay Stock Exchange (BSE).
Note1 1.0 Summary of Significant Accounting Policies
The following significant accounting policies have been adopted in the preparation and presentation of the financial statements:
1.01 Basis of preparation of financial statements
These financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on the accrual basis except for certain financial instruments which are measured at fair values. GAAP comprises mandatory accounting standards as prescribed under Section 133 of the Companies Act, 2013 (''the Act'') read with Rule 7 of the Companies (Accounts) Rules, 2014, the provisions of the Act (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
1.02 Use of estimates
The preparation of financial statements requires estimates and assumptions to be made that affect the reported balances of assets and liabilities as on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. All the assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in Schedule III to the Companies Act, 2013. Accounting estimates could change from period to period. Actual results could differ from these estimates. Appropriate changes in estimates are made as and when the Management becomes aware of the changes in the circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which the changes are made and if material, their effects are disclosed in the notes to the financial statements.
1.1 Revenue recognition
a. Revenue from sale of goods is recognized on transfer of all significant risks and rewards of ownership to the buyer. The amounts recognized as sale is exclusive of Sales tax/VAT and are net of returns. It is stated at gross and net of excise duty.
b. Income from conversion job is recognized on its completion and on its acceptance by the customers.
c. Dividend income is accounted for in the year in which the right to receive the same is established.
d. Interest income is recognized using the time-proportion-method, based on rates implicit in the transaction.
1.2 Fixed assets
Tangible assets shown under gross block are valued at cost of acquisition inclusive of inward freight, duties, taxes and other incidental expenses/adjustments related to its acquisition. All such direct costs are capitalized when the tangible fixed assets are ready for use. Intangible assets relating to product development are recorded at actual cost incurred on the development of products and are capitalized once the products receive approval from relevant authorities and the same are carried at cost less accumulated amortization.
1.3 Depreciation and amortization
a. (i) Schedule II to the Companies Act, 2013 prescribes useful lives for fixed assets and allows Companies to use higher/lower useful lives and residual values if such useful lives and residual values can be technically supported and justification for difference is disclosed in the financial statements. (ii) Considering the applicability of Schedule II, the Management has re-estimated useful lives and residual values of all its fixed assets. Management also believes that the depreciation rates currently used fairly reflect its estimate of useful lives and residual values of fixed asset.
b. Depreciation on tangible assets purchased during the year have been calculated as under: (i) All assets (except leasehold interest): On written down value basis. (ii) Lease hold land: On straight line basis over the period of lease. (iii) Intangible assets: Over a period of approximately four years, so as to effectively depreciate the assets over the specified useful lives leaving behind a residual value of five percent.
c. Depreciation on additions to fixed assets during the current year are charged on pro-rata-basis, for the period of use.
1.4 Impairment of assets
An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.
1.5 Investments
Trade investments are investments made to enhance the Company''s business interests. Investments are either classified as current or long-term based on the Management''s intention. Current investments are carried at cost. Cost of overseas investments comprises the Indian rupee value of consideration paid for the investment translated at the exchange rate prevalent on the date of investment. Long-term investments are carried at cost less provisions recorded to recognize any decline, other than temporary, in the carrying value of each investment.
1.6 Inventories
a. Traded goods, raw materials and packing materials: At cost or net realizable value, whichever is lower.
b. Process stock: At cost or estimated realizable value, whichever is lower.
c. Finished goods: At cost or net realizable value, whichever is lower and are inclusive of cenvat thereon.
d. Excise duty relating to the difference between closing and opening stock is recognised as part of changes in inventories of finished goods, work-in-progress and stock-in trade.
Note: Cost is determined on a weighted average basis.
1.7 Employee benefits
Gratuity: The Company has computed its liability towards future payments of gratuity to employees, on actuarial basis and the charge for current year is debited to the Statement of Profit and Loss. Superannuation: The Company contributes towards superannuation fund, for future payment of retirement benefits to employees. The contributions accruing during each year are charged to the Statement of Profit and Loss.
Leave encashment: Liabilities are determined by actuarial valuation done at the end of the year and the charge for the current year is debited to the Statement of Profit and Loss.
Provident fund: Employer''s contribution to provident fund is charged to the Statement of Profit and Loss.
1.8 Foreign currency transactions
Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction or that approximates the actual rate on the date of the transaction. Any income or expense on account of exchange difference, either on settlement or on translation is recognized in the Statement of Profit and Loss. Assets and liabilities in foreign currencies are restated at the year-end-exchange rates.
1.9 Leases
Lease rental payments under operating lease are recognized as an expense on straight line basis in the Statement of Profit and Loss over the lease term.
1.10 Post-sale-client support and warranties
The Company provides its clients with a fixed-period warranty for corrections of errors and support on all its fixed-price, fixed-time-frame contracts. Costs associated with such support services are accrued at the time when related revenues are recorded and included in the Statement of Profit and Loss. The Company estimates such costs based on historical experience and the same are reviewed annually for any material changes in assumptions.
1.11 Taxes on income
Current tax: Provision for current tax is made based on tax liability computed after considering tax allowances and exemptions. Deferred tax: Provision for deferred tax is made using the applicable rate of taxation, for all timing differences, which arise during a year and are reversed in subsequent periods.
1.12 Provisions and contingent liabilities
Based on the best estimate of the Management, provisions are determined on the outflow of economic benefits, which are required to settle obligations, as at the reporting date. Where no reliable estimate can be made, a disclosure is made as contingent liability. Disclosure for contingent liability is also made when there is a possible obligation that may, but probably will not, require an outflow of the Company''s resources.
1.13 Cash flow statement
Cash flows are reported using indirect method, whereby profit before tax is adjusted for the effects of transactions of non-cash-nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. Cash flows from operating, investing and financing activities of the Company are segregated accordingly.
Note 2:
2.01 Share capital: The Company has only one class of shares, referred to as equity shares having a par value of '' 2/- per share. Each holder of equity share is entitled to one vote per share and dividend as may be declared at the Annual General Meeting. The right of the shareholders is governed by the Articles of Association and the Companies Act. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.
d. As on the date of the Balance Sheet
(i) The Company has not issued any equity share as fully paid pursuant to contracts without payment being received in cash. (ii) The Company has not issued any fully paid bonus share. (iii) The Company also did not buy back any equity share.
e. Issue/conversion of equity shares: As on the date of the Balance Sheet, the Company has not issued securities like convertible preference shares, convertible debentures etc., which are convertible in to equity/preference shares.
Mar 31, 2015
1.01 Basis of preparation of the financial statements
These financial statements are prepared in accordance with Indian
Generally Accepted Accounting Principles (GAAP) under the historical
cost convention on accrual basis except for certain financial
instruments which are measured at fair values. GAAP comprises mandatory
accounting standards as prescribed under Section 133 of the Companies
Act, 2013 ('the Act') read with Rule 7 of the Companies (Accounts)
Rules, 2014, the provisions of the Act ( to the extent notified) and
guidelines issued by the Securities and Exchange Board of India (SEBI).
Accounting policies have been consistently applied except where a newly
issued accounting standard is initially adopted or a revision to an
existing accounting standard requires a change in the accounting policy
hitherto in use.
1.02 Use of estimates
The preparation of financial statements requires estimates and
assumptions to be made that affect the reported balances of assets and
liabilities as on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. All assets
and liabilities have been classified as current or non-current as per
the Company's normal operating cycle and other criteria set out in
Schedule III to the Companies Act, 2013. Accounting estimates could
change from period to period. Actual results could differ from these
estimates.
1.03 Revenue recognition
a. Revenue from sale of goods is recognised on transfer of all
significant risks and rewards of ownership to the buyer. The amount
recognised as sale is exclusive of Sales tax/VAT and are net of
returns. It is stated at gross and net of excise duty.
b. Income from conversion job is recognised on its completion and on
its acceptance by the customers.
c. Dividend income is accounted for in the year in which the right to
receive the same is established.
d. Interest income is recognised using time-proportion-method, based
on rates implicit in the transaction.
1.04 Fixed assets
Tangible assets shown under gross block are valued at cost of
acquisition inclusive of inward freight, duties, taxes and other
incidental expenses/adjustments related to its acquisition. All such
direct costs are capitalised when the tangible fixed assets are ready
for use. Intangible assets relating to product development are recorded
at actual cost incurred on the development of products and are
capitalised once the products receive approval from relevant
authorities and the same are carried at cost less accumulated
amortisation.
1.05 Depreciation and amortisation
a. (i) Till the year ended March 31,2014, depreciation rates prescribed
under Schedule XIV were treated minimum rates and the Company was not
allowed to charge depreciation at lower rates, even if such lower rates
were justified by the estimated useful life of the asset. From the
current year Schedule XIV has been replaced by Schedule II of the
Companies Act, 2013. The replaced Schedule II prescribes useful lives
for fixed assets which, in many cases, are different from the lives
prescribed under the erstwhile Schedule XIV.However, Schedule II allows
Companies to use higher /lower useful lives and residual values if such
useful lives and residual values can be technically supported and
justification for difference is disclosed in the financial statements.
(ii) Considering the applicability of Schedule II, the Management has
re-estimated useful lives and residual values of all its fixed assets.
The Management believes that depreciation rates currently used fairly
reflects its estimate of useful lives & residual values of fixed assets
and in compliance of Schedule II of the Companies Act, 2013.
b. Residual value of assets whose useful lives had expired as at the
beginning of the year were charged to Reserves & Surplus.
c. Depreciation on tangible assets purchased during the year has been
calculated as under-(i) All assets (except leasehold interest): On
written down value basis. (ii) Lease hold land: On straight line basis
over the period of lease. (iii) Intangible assets: Over a period of
approximately four years-so as to effectively depreciate assets over
the specified useful lives leaving behind a residual value of five
percent.
d. Depreciation on additions to fixed assets during the current year
are charged on pro-rata basis, for the period of use.
1.06 Impairment of assets
An impairment loss is charged to the Statement of Profit and Loss in
the year in which an asset is identified as impaired. The impairment
loss recognised in prior accounting period is reversed, if there has
been a change in the estimate of recoverable amount.
1.07 Investments
Trade investments are investments made to enhance the Company's
business interests. Investments are either classified as current or
long-term based on the Management's intention. Current investments are
carried at cost. Cost of overseas investments comprise Indian rupee
value of consideration paid for investment translated at the exchange
rate prevalent on the date of the investment. Long-term investments are
carried at cost less provisions recorded to recognise any decline,
other than temporary, in the carrying value of each investment.
1.08 Inventories (cost is determined on a weighted average basis)
a. Traded goods, raw materials and packing materials: At cost or net
realisable value, whichever is lower.
b. Process stock: At cost/estimated realisable value, whichever is
lower.
c. Finished goods: At cost or net realisable value, whichever is lower
and are inclusive of cenvat thereon.
d. Excise duty relating to the difference between closing and opening
stock is recognised as part of changes in inventories.
1.09 Employee benefits
Gratuity: The Company has computed its liability towards future payment
of gratuity to employees, on actuarial basis & the charge for current
year is debited to the Statement of Profit and Loss.
Superannuation: The Company contributes towards superannuation fund,
for future payment of retirement benefits to employees. The
contributions accruing during each year are charged to the Statement of
Profit and Loss.
Leave encashment: Liabilities are determined by actuarial valuation
done at the end of the year and the charge for the current year is
debited to the Statement of Profit and Loss.
Provident fund: Employer's contribution to provident fund is charged to
the Statement of Profit and Loss.
1.10 Foreign currency transactions
Transactions denominated in foreign currencies are recorded at the
exchange rate prevailing on the date of the transaction or that
approximates the actual rate on the date of the transaction. Any income
or expense on account of exchange difference, either on settlement or
on translation is recognised in the Statement of Profit and Loss.
Assets and liabilities in foreign currencies are restated at the year
end exchange rate.
1.11 Leases
Lease rental payments under operating lease are recognised as an
expense on straight line basis in the Statement of Profit and Loss over
the lease term.
1.12 Post-sale-client support and warranties
The Company provides its clients with a fixed-period-warranty for
corrections of errors and support on all its fixed price, fixed-time-
frame contracts. Costs associated with such support services are
accrued at the time when related revenues are recorded and included in
the Statement of Profit and Loss. The Company estimates such costs
based on historical experience and reviews the same annually for any
material changes in assumptions.
1.13 Taxes on income
Current tax: Provision for current tax is made based on tax liability
computed after considering tax allowances.
Deferred tax: Provision for deferred tax is made using the applicable
rate of taxation, for all timing differences, which arise during a year
and are reversed in subsequent periods.
1.14 Provisions and contingent liabilities
Based on the best estimate of the Management, provisions are determined
on the outflow of economic benefits, which are required to settle
obligations, as at the reporting date. Where no reliable estimate can
be made, a disclosure is made as contingent liability. Disclosure for
contingent liability is also made when there is a possible obligation
that may, but probably will not, require an outflow of the Company's
resources.
1.15 Cash flow statement
Cash flows are reported using indirect method, whereby profit before
tax is adjusted for the effects of transactions of non-cash nature, any
deferrals or accruals of past or future operating cash
receipts/payments and item of income or expenses associated with
investing/financing cash flows. Cash flows from operating investing and
financing activities of the Company are segregated accordingly.
Mar 31, 2014
Basis of preparation of financial statements
These financial statements are prepared under the historical cost basis
of accounting and evaluated on a going concern basis, with revenues
recognised and expenses accounted for on their accrual to comply in all
material aspects with the Accounting Standards notified under the
Companies (Accounting Standards) Rules 2006 (as amended) and the
relevant provisions of the Companies Act, 1956 read with General
Circular #15/2013 dated 13th September 2013 issued by the Ministry of
Corporate Affairs in respect of Section 133 of the Companies Act, 2013
and the guidelines issued by the Securities and Exchange Board of India
(SEBI).
Use of estimates
The preparation of financial statements requires estimates and
assumptions to be made that affect the reported balances of assets and
liabilities as on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. All the
assets and liabilities have been classified as current or non current
as per the Company''s normal operating cycle and other criteria set out
in Schedule VI to the Companies Act, 1956. Accounting estimates could
change from period to period. Actual results could differ from these
estimates. Appropriate changes in estimates are made as and when the
Management becomes aware of the changes in the circumstances
surrounding the estimates. Changes in estimates are reflected in the
financial statements in the period in which the changes are made and if
material their effects are disclosed in the notes to the financial
statements.
The following significant accounting policies have been adopted in the
preparation and presentation of the financial statements:
1.1 Revenue recognition
a. Revenue from sale of goods is recognised on transfer of all
significant risks and rewards of ownership to the buyer. The amount
recognised as sale is exclusive of Sales tax/VAT and are net of
returns. It is stated at gross and net of excise duty.
b. Income from conversion job is recognised on its completion and on
its acceptance by the customers.
c. Dividend income is accounted for in the year in which the right to
receive the same is established.
d. Interest income is recognised using time-proportion method, based
on rates implicit in the transaction.
1.2 Fixed assets
Tangible assets shown under gross block are valued at cost of
acquisition inclusive of inward freight, duties, taxes and other
incidental expenses/adjustments related to its acquisition. All such
direct costs are capitalised when the tangible fixed assets are ready
for use. Intangible assets relating to product development are recorded
at actual cost incurred on the development of products and are
capitalised once the products are approved by the authorities and the
same is being carried at cost less accumulated amortisation.
1.3 Depreciation and amortisation
a. Depreciation on tangible assets has been calculated in accordance
with the revised Schedule XIV of the Companies Act, 1956:
i. All assets (except leasehold interest): On written down value
basis.
ii. Lease hold land: On straight line basis (over lease period).
iii. Intangible assets: Over a period of approx. four years.
b. Depreciation on additions to fixed assets during the current year
are charged on pro-rata basis, for the period of use.
c. Depreciation methods, useful lives and residual values of fixed
assets are reviewed at each reporting date.
1.4 Impairment of assets
An impairment loss is charged to the Statement of Profit and Loss in
the year in which an asset is identified as impaired. The impairment
loss recognised in prior accounting period is reversed if there has
been a change in the estimate of recoverable amount.
1.5 Investments
Investments are valued at cost inclusive of dividend re-invested
thereon (where applicable).
1.6 Inventories
a. Traded goods, raw materials and packing materials: At cost or net
realisable value, whichever is lower.
b. Process stock: At cost or estimated realisable value, whichever is
lower.
c. Finished goods: At cost or net realisable value, whichever is lower
and are inclusive of cenvat thereon.
d. Excise duty relating to the difference between closing and opening
stock is recognised as part of changes in inventories of finished
goods, work in progress and stock-in trade.
Note: Cost is determined on a weighted average basis.
1.7 Employee benefits
a. Gratuity: The Company has computed its liability towards future
payments of gratuity to employees, on actuarial basis and the charge
for current year is debited to the Statement of Profit and Loss.
b. Superannuation: The Company contributes towards superannuation
fund, for future payment of retirement benefits to employees. The
contributions accruing during each year are charged to the Statement of
Profit and Loss.
c. Leave encashment: Liabilities are determined by actuarial valuation
done at the end of the year and the charge for the current year is
debited to the Statement of Profit and Loss.
d. Provident fund: Employer''s contribution to provident fund is
charged to the Statement of Profit and Loss.
1.8 Foreign currency transactions
Transactions denominated in foreign currencies are recorded at the
exchange rate prevailing on the date of the transaction or that
approximates the actual rate on the date of the transaction. Any income
or expense on account of exchange difference, either on settlement or
on translation is recognised in the Statement of Profit and Loss.
Assets and liabilities in foreign currencies are restated at the
year-end exchange rates.
1.9 Leases
Lease rental payments under operating lease are recognised as an
expense on straight line basis in the Statement of Profit and Loss over
the lease term.
1.10 Taxes on income
a. Current tax: Provision for current tax is made based on tax
liability computed after considering tax allowances and exemptions.
b. Deferred tax: Provision for deferred tax is made using the
applicable rate of taxation, for all timing differences, which arise
during a year and are reversed in subsequent periods.
1.11 Provisions and contingent liabilities
Based on the best estimate of the Management, provisions are determined
on the outflow of economic benefits, which are required to settle
obligations, as at the reporting date. Where no reliable estimate can
be made, a disclosure is made as contingent liability. Disclosure for
contingent liability is also made when there is a possible obligation
that may, but probably will not, require an outflow of the Company''s
resources.
1.12 Cash flow statement
Cash flows are reported using indirect method, whereby profit before
tax is adjusted for the effects of transactions of non-cash nature, any
deferrals or accruals of past or future operating cash receipts or
payments and item of income or expenses associated with investing or
financing cash flows. Cash flows from operating, investing and
financing activities of the Company are segregated accordingly.
The Company adopts the accrual concept in the preparation of Accounts.
Assets and liabilities are recorded at historical cost. These costs are
not adjusted to reflect the changing value in the purchasing power of
money (inflation). Further, based on the nature of activities, the
Company has determined its operating cycle as twelve months for the
purpose of classification of its assets and liabilities as current and
non-current.
2.01 Shareholders'' fund
The Company has only one class of shares, referred to as equity shares
having a par value of Rs. 2/- per share. Each holder of equity share is
entitled to one vote per share and dividend as may be declared at the
Annual General Meeting. The right of the shareholders is governed by
the Articles of Association and the Companies Act.
d. Share warrants
Rupees two hundred and sixty seven lakhs was received from J B Advani
and Company Private Limited (JBA), the promoters towards issue of
17,50,000 warrants on preferential basis. Since necessary approvals
were not received before the close of the year, the share warrants were
not issued. The amount has since been refunded as per the provisions of
the Companies Act, 2013 with commitment/undertaking from JBA executed
for specific performance / requirements to subscribe, subject to
necessary approvals/consents from requisite authorities.
e. As on the date of the Balance Sheet
i. The Company has not issued any equity share as fully paid pursuant
to contracts without payment being received in cash.
ii. The Company has not issued any fully paid bonus share.
iii. The Company also did not buy back any equity share.
f. Issue/conversion of equity shares
As on the date of the Balance Sheet, the Company has not issued
securities like convertible preference shares, convertible debentures,
etc., which are convertible in to equity/preference shares.
Mar 31, 2013
1.01 Revenue recognition
(a) Revenue from sale of goods is recognised on transfer of all
significant risks and rewards of ownership to the buyer. The amount
recognised as sale is exclusive of sales tax/VAT and are net of
returns. It is stated at gross and net of excise duty.
Excise duty relating to the difference between closing and opening
stock is recognised as part of changes in inventories of finished
goods, work in progress and stock-in trade.
(b) Income from conversion job is recognised on its completion and on
its acceptance by the customers.
(c) Dividend income is accounted for in the year in which the right to
receive the same is established.
(d) Interest income is recognised using the time-proportion method,
based on rates implicit in the transaction.
1.02 Fixed assets
Tangible assets shown under gross block are valued at cost of
acquisition inclusive of inward freight, duties, taxes and other
incidental expenses/adjustments related to its acquisition. All such
direct costs are capitalised when the tangible fixed assets are ready
for use. Intangible assets relating to product development are
recorded at actual cost incurred on the development of products and are
capitalised once the products receive approval from relevant
authorities and the same are carried at cost less accumulated
amortisation.
1.03 Depreciation and amortisation
(a) Depreciation on tangible assets has been calculated in accordance
with the revised Schedule XIV of the Companies Act, 1956: (i) All
assets (except leasehold interest): On written down value basis.
(ii) Lease hold land: On straight line basis over the period of lease.
(iii) Intangible assets: Over a period of approximately four years.
(b) Depreciation on additions to fixed assets during the current year
are charged on pro-rata basis, for the period of use.
(c) Depreciation methods, useful lives and residual values of fixed
assets are reviewed at each reporting date.
1.04 Impairment of assets
An impairment loss is charged to the Statement of Profit and Loss in
the year in which an asset is identified as impaired. The impairment
loss recognised in prior accounting period is reversed if there has
been a change in the estimate of recoverable amount.
1.05 Investments
Valued at cost inclusive of dividend re-invested thereon (where
applicable).
1.06 Inventories
(a) Traded goods, raw materials and packing materials: At cost or net
realisable value, whichever is lower.
(b) Process stock: At cost or estimated realisable value, whichever is
lower and
(c) Finished goods: At cost or net realisable value, whichever is lower
and are inclusive of cenvat thereon. Note: Cost is determined on a
weighted average basis.
1.07 Employee benefits
(a) Gratuity: The Company has computed its liability towards future
payments of gratuity to employees, on actuarial basis and the charge
for current year is debited to the Statement of Profit and Loss.
(b) Superannuation: The Company contributes towards superannuation
fund, for future payment of retirement benefits to employees. The
contributions accruing during each year are charged to the Statement of
Profit and Loss.
(c) Leave encashment: Liabilities are determined by actuarial valuation
done at the end of the year and the charge for the current year is
debited to the Statement of Profit and Loss.
(d) Provident fund: Employer''s contribution to provident fund is
charged to the Statement of Profit and Loss.
1.08 Foreign currency transactions
Transactions denominated in foreign currencies are recorded at the
exchange rate prevailing on the date of the transaction or that
approximates the actual rate on the date of the transaction. Any income
or expense on account of exchange difference, either on settlement or
on translation is recognised in the Statement of Profit and Loss.
Assets and liabilities in foreign currencies are restated at the
year-end exchange rates.
1.09 Leases
Lease rental payments under operating lease are recognised as an
expense on straight line basis in the Statement of Profit and Loss over
the lease term.
1.10 Taxes on income
(a) Current tax: Provision for current tax is made based on tax
liability computed after considering tax allowances and exemptions.
(b) Deferred tax: Provision for deferred tax is made using the
applicable rate of taxation, for all timing differences, which arise
during a year and are reversed in subsequent periods.
1.11 Provisions and contingent liabilities
Based on the best estimate of the Management, provisions are determined
on the outflow of economic benefits, which are required to settle
obligations, as at the reporting date. Where no reliable estimate can
be made, a disclosure is made as contingent liability. Disclosure for
contingent liability is also made when there is a possible obligation
that may, but probably will not, require an outflow of the Company''s
resources.
1.12 Cash flow statement
Cash flows are reported using indirect method, whereby profit before
tax is adjusted for the effects of transactions of non-cash nature, any
deferrals or accruals of past or future operating cash receipts or
payments and item of income or expenses associated with investing or
financing cash flows. Cash flows from operating, investing and
financing activities of the Company are segregated accordingly.
Mar 31, 2012
Basis of preparation of financial statements
These financial statements are prepared under the historical cost basis
of accounting and evaluated on a going concern basis, with revenues
recognized and expenses accounted for on their accrual to comply in all
material aspects with the applicable accounting principles and
applicable Accounting Standards notified U/s. 211 (3C) of the Companies
Act, 1956; other relevant provisions of the Companies Act, 1956 and the
guidelines issued by the Securities and Exchange Board of India (SEBI).
Use of estimates
The preparation of financial statements require estimates and
assumptions to be made that affect the reported balances of assets as
on the date of the financial statements and the reported amount of
revenues and expenses during the reporting period. Accounting estimates
could change from period to period. Actual results could differ from
these estimates. Appropriate changes in estimates are made as and when
the Management becomes aware of the changes in the circumstances
surrounding the estimates. Changes in estimates are reflected in the
financial statements in the period in which the changes are made and if
material, their effects are disclosed in the notes to the financial
statements.
The following significant accounting policies are adopted in the
preparation and presentation of these financial statements:
1 Revenue recognition
(a) Sales are recognized when goods are supplied and are recorded net
of discounts. Sale revenues are presented net of value-added taxes in
the Statement of profit and loss.
(b) Income from conversion job is recognized on its completion and on
its acceptance by the customers.
(c) Dividend income is accounted for in the year in which the right to
receive the same is established.
(d) Interest income is recognized using the time-proportion method,
based on rates implicit in the transaction.
2 Fixed assets
Tangible assets shown under gross block are valued at cost of
acquisition inclusive of inward freight, duties, taxes and other
incidental expenses related to its acquisition. All such direct costs
are capitalized when the tangible fixed assets are ready for use.
Intangible assets relating to product development are recorded at
actual cost incurred on development of products and are capitalized
once the products receive approval from the relevant authorities and
the same are carried at cost less accumulated depreciation.
3 Depreciation and amortization
(a) Depreciation on tangible assets has been calculated in accordance
with the revised Schedule XIV of the Companies Act, 1956 as under:
(i) All assets except leasehold interest-on written down value basis.
(ii) On lease hold land-on straight line basis over the period of
lease.
(iii) In case of intangible assets-over a period of four years.
(b) Depreciation on additions to fixed assets during the current year
are charged on a pro-rata basis, for the period of use.
(c) Depreciation methods, useful lives and residual values of fixed
assets are reviewed at each reporting date.
4 Impairment of assets
An impairment loss is charged to the Statement of profit and loss in
the year in which an asset is identified as impaired. The impairment
loss recognized in prior accounting period is reversed if there has
been a change in the estimate of recoverable amount.
5 Investments
Valued at cost, inclusive of dividend reinvested thereon.
6 Inventories
(a) Trading goods - At cost or net realizable value, whichever is
lower.
(b) Raw materials and packing materials - At cost or net realizable
value.
(c) Process stock - At cost or estimated realizable value, whichever is
lower and
(d) Finished goods - At cost or net realizable value, whichever is
lower and are inclusive of convert thereon.
Note: Cost is determined on a weighted average basis.
7 Employee benefits
(a) Gratuity: The Company has computed its liability towards future
payments of gratuity to employees, on actuarial basis and the charge
for the current year is debited to the Statement of profit and loss.
(b) Superannuation: The Company contributes towards its employees'
superannuation fund, for future payment of retirement benefits to
employees. The contributions accruing during each year are charged to
the Statement of profit and loss.
(c) Leave encashment: Liabilities are determined by actuarial valuation
done at the end of the year and the charge for current year is debited
to the Statement of profit and loss.
(d) Provident fund: Employer's contribution to provident fund is
charged to the Statement of profit and loss.
8 Foreign currency transactions
Transactions denominated in foreign currencies are recorded at the
exchange rate prevailing on the date of the transaction or that
approximates the actual rate on the date of transaction. Any income or
expense on account of exchange difference, either on settlement or on
translation, is recognised in the Statement of profit and loss.
Liabilities payable in foreign currency are restated at the year-end
exchange rates.
9 Leases
Lease rental payments under operating leases are recognized as an
expense on a straight line basis in the Statement of profit and loss
over the lease term.
10 Taxes on income
(a) Current tax
Provision for current tax is made based on tax liability computed after
considering tax allowances and exemptions.
(b) Deferred tax
Provision for deferred tax is made using the applicable rate of
taxation, for all timing differences which arise during the year and
are reversed in subsequent periods.
11 Provisions and contingent liabilities
Based on the best estimate of the Management, provisions are determined
of the outflow of economic benefits which are required to settle the
obligation as at the reporting date. Where no reliable estimate can be
made, disclosure is made as contingent liability. A disclosure for a
contingent liability is also made when there is a possible obligation
that may, but probably will not, require an outflow of the Company's
resources.
12 Cash flow statement
Cash flows are reported using the indirect method, whereby profit
before tax is adjusted for the effects of transactions of non-cash
nature, any deferrals or accruals of past or future operating cash
receipts or payments and item of income or expenses associated with
investing or financing cash flows. Cash flows from operating, investing
and financing activities of the Company are segregated, accordingly.
Mar 31, 2011
These accounts have been prepared under the historical cost basis of
accounting and evaluated on a going concern basis with revenues
recognised and expenses accounted for on their accrual.
The financial statements have been prepared in conformity with the
generally accepted accounting principles and accounting standards
referred to in Section 211(3C) of the Companies Act, 1956.
a. Sale of manufactured items are net of excise duty and accounted for
on despatch. Income from services is recognised on its completion and
acceptance by the customers.
b. Inventories : Inventories comprise costs of purchase, conversion
and other costs incurred in bringing the inventories to their present
location and condition. Raw materials, work-in-progress, finished and
traded goods are valued at lower of cost and net realisable value.
Excise duty is included in the value of finished goods inventory. Cost
is determined on a weighted average basis. Customs duty on goods where
title has passed to the Company is included in the value of inventory.
The net realisable value of work-in-progress is determined with
reference to the estimated selling price less estimated cost of
completion and costs necessary to make sale of related finished goods.
c. Investments are valued at cost (including dividends re-invested).
d. Fixed assets shown under gross block are valued at cost of
acquisition inclusive of inward freight, duties, taxes and incidental
expenses related to acquisition. They are shown at their historical
value.
e. Depreciation has been provided on fixed assets in accordance with
the rates specified in Schedule XIV of the Companies Act, 1956, on
written down value basis on all assets of the Company, except for
leasehold land which is amortised over the period of lease.
f. Expenditure incurred in foreign currencies have been recorded at
the exchange rate current on the date when the relevant transaction(s)
took place. Liabilities payable in foreign currencies are restated at
the year end exchange rate(s). The gain or loss due to
decrease/increase in rupee liability on account of fluctuations in the
rate of exchange has been accounted in the Profit and loss account.
g. Employee benefits:
(i) Gratuity: The Company contributes to the gratuity of its employees
through Group Gratuity Fund Trust. The contributions have been computed
on actuarial basis so as to cover the Companys liability.
(ii) Superannuation: The Company contributes through an employees
Superannuation Fund Trust for future payment of retirement benefits to
its employees. The contributions accruing during each year are charged
to the Profit and loss account.
(iii) Leave encashment liabilities are determined by actuarial
valuation done at the end of the year and the current years charge is
debited to the Profit and loss account.
(iv) Contribution to Provident Fund is charged to the Profit and loss
account.
(v) The Company contributes to premia on the Life Insurance Policies of
its employees and the same is charged to the Profit and loss account.
h. Commission and incentives paid to employees as part of pay for
performance have been included under Ãcommission on sales.
i. Product development costs are charged as an expense in the year in
which they are incurred.
j. The carrying amounts of assets are reviewed at each Balance sheet
date to ascertain any indication of impairment based on
internal/external factors. An impairment loss is recognised based on
estimation, if there would arise a significant variation, in the
carrying amount of an asset over its estimated recoverable amount.
k. Provision for deferred taxation is made using the applicable rate of
taxation, for all timing differences which arise during the year and
are reversed in subsequent periods.
l. Provision for warranties for replacement of parts and rework of job
works are based on past experience and are at a percentage of the sale
value, as estimated by the Companys management. On a critical review
of the warranty claims, reassessment has been made.
Mar 31, 2010
These accounts have been prepared under the historical cost basis of
accounting and evaluated on a going concern basis with revenues
recognised and expenses accounted for on their accrual.
The financial statements have been prepared in conformity with the
Generally Accepted Accounting principles and Accounting Standards
referred to in Section 211 (3C) of the Companies Act, 1956.
a. Sale of manufactured items are net of excise duty and accounted for
on despatch. Income from services is recognised on its completion and
acceptance by the customers.
b. Inventories are valued at lower of cost or net realisable value.
c. Investments are valued at cost (including dividends reinvested).
d. Fixed assets shown under gross block are valued at cost of
acquisition inclusive of inward freight, duties, taxes and incidental
expenses related to acquisition. They are shown at their historical
value.
e. Depreciation has been provided on fixed assets in accordance with
the rates specified in Schedule XIV of the Companies Act, 1956, on
written down basis on all assets of the Company, except for leasehold
land which is amortised over the period of the lease.
f. Expenditure incurred in foreign currencies have been recorded at
the exchange rate current on the date when the relevant transaction (s)
took place. Liabilities payable in foreign currencies are restated at
the year-end exchange rate(s). The gain or loss due to
decrease/increase in rupee liability on account of fluctuations in the
rate of exchange has been accounted in the Profit and Loss Account.
g. Employee benefits:
(i) Gratuity: The Company contributes for gratuity to its employees
through Group Gratuity Fund Trust. The contributions have been computed
on actuarial basis so as to cover the CompanyÃs liability.
(ii) Superannuation: The Company contributes through an EmployeesÃ
Superannuation Fund Trust for future payment of retirement benefits to
its employees. The contributions accruing during each year are charged
to the Profit and Loss Account.
(iii) Leave encashment liabilities are determined by actuarial
valuation done at the end of the year and the current
year charge is debited to the Profit and Loss Account. (iv)
Contribution to Provident fund is charged to the Profit and Loss
Account.
(v) The Company contributes towards life insurance policies of its
Employees and the same is charged to the Profit and Loss Account. h.
Commission and incentives paid to employees as part of pay for
performance has been categorised under Ãselling expenditureÃ.
i. Product development costs are charged as an expense in the year in
which they are incurred.
j. The carrying amounts of assets are reviewed at each Balance Sheet
date to ascertain any indication of impairment based on
internal/external factors. An impairment loss is recognised based on
estimation, if there would arise a significant variation, in the
carrying amount of an asset over its estimated recoverable amount.
k. Provision for deferred taxation is made using the applicable rate of
taxation for all timing differences which arise during the year and are
reversed in subsequent periods.
l. Provision for warranties for replacement of parts and rework of job
works are based on past experience and are at a percentage of the sale
value, as estimated by the CompanyÃs management.