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Accounting Policies of Amara Raja Batteries Ltd. Company

Mar 31, 2017

Notes to the financial statements

All amounts are in Rs,crores, except share data and where otherwise stated

1. Corporate Information

Amara Raja Batteries Limited ("the Company”) is one of the largest manufacturer of lead-acid storage batteries for industrial and automotive applications in India. The equity shares of the Company are listed on the BSE Limited and the National Stock Exchange of India Limited. The Company''s products are supplied to customer groups viz., Telecom, Railways, Power Control, Solar and UPS under Industrial Battery business; and to Automobile OEMs, Replacement Market and Private Label Customers under Automotive Battery business. The Company''s products are exported to various countries in the Indian Ocean Rim. The Company also provides installation, commissioning and maintenance services. The leading automotive and industrial battery brands of the Company are Amaron®, Power Zone™, Power Stack®, AmaronVolt™ and Quanta®.

2. Significant Accounting Policies

A. Statement of compliance

These financial statements have been prepared in accordance with Indian Accounting Standards (Ind ASs) notified under Section 133 of the Companies Act, 2013, read together with the the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016 as applicable.

Upto the year ended March 31, 2016, the Company prepared its financial statements in accordance with the requirements of previous GAAP, which includes Standards notified under Section 133 of the Companies Act, 2013 read together with Rule 7 of the Companies (Accounts) Rules 2014 ("Previous GAAP").

These are the Company''s first Ind AS financial statements. The date of transition to Ind AS is April 1, 2015. Reconciliations and description of the effect of the transition to Ind AS from previous GAAP is given in Note 45.

B. Basis of preparation and presentation

These financial statements have been prepared on historical cost convention and on an accrual basis except for certain financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies set out below. These financial statements are presented in Indian Rupees (Rs,) which is also the Company''s functional currency.

Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date.

C. Use of estimates and judgments

The preparation of the financial statements in conformity with Ind AS requires Management to make judgments, estimates and assumptions that affect the application of the accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from those estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

The following are the critical judgments and estimates that have been made in the process of applying the Company''s accounting policies that have the most significant effect on the amounts recognized in the financial statements.

i) Provision for warranty

The Company estimates and provides for liability for product warranties in the year in which the products are sold. These estimates are established using historical information on the nature, frequency, quantum of warranty claims and corrective actions against product failures and the estimates are reviewed annually for any material changes in assumptions. The cost of warranty is net of realizable scrap value and includes the applicable taxes and duties like excise duty and also the best estimate of relevant freight expenses. The timing of outflows will vary based on the actual warranty claims.

ii) Useful lives of Property, plant and equipment

Property, plant and equipment represent a significant proportion of the asset base of the Company. The charge in respect of periodic depreciation is derived after determining an estimate of an asset''s expected useful life and the expected residual value at the end of its life. The useful lives and residual values of Company''s assets are determined by Management at the time the asset is acquired and is reviewed at the end of each reporting period. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technology. This reassessment may result in change in depreciation expense in future periods.

iii) Fair value measurement of financial instruments

Some of the Company''s assets and liabilities are measured at fair value for financial reporting purposes. In estimating the fair value of an asset or liability, the Company uses market-observable data to the extent available. Where Level 1 inputs are not available, the fair value is measured using valuation techniques, including the discounted cash flow model, which involves various judgments and assumptions. The Company also engages third party qualified values to perform the valuation in certain cases. The appropriateness of valuation techniques and inputs to the valuation model are reviewed by the Management.

iv) Income Taxes

The Company''s tax jurisdiction is India. Significant judgments are involved in estimating budgeted profits for the purpose of paying advance tax, determining the provision for income taxes, including amount expected to be paid / recovered for uncertain tax positions.

v) Defined benefit obligations

The Company uses actuarial assumptions viz., discount rate, mortality rates, salary escalation rate etc., to determine such employee benefit obligations.

vi) Other estimates

The preparation of financial statements involves estimates and assumptions that affect the reported amount of assets, liabilities, disclosure of contingent liabilities at the date of financial statements and the reported amount of revenues and expenses for the reporting period. Specifically, the Company estimates the probability of collection of accounts receivable by analyzing historical payment patterns, customer concentrations, customer credit-worthiness and current economic trends. If the financial condition of a customer deteriorates, additional allowances may be required.

D. Inventories

Inventories are stated at the lower of cost and the net realizable value after providing for obsolescence and other losses, where considered necessary. Net realizable value represents the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale. The method of determination of cost of various categories of inventories is as follows:

(i) Raw materials and bought-out components, stores and spares and loose tools: Weighted average cost. Cost includes purchase cost and other attributable expenses.

(ii) Finished Goods and Work-in-progress - Weighted average cost of production which comprises direct material cost, direct wages and appropriate overheads based on normal level of activity. Excise duty is included in the value of finished goods.

(iii) Stock-in-trade: Weighted average cost.

E. Property, plant and equipment

(i) Recognition and measurement:

Property, plant and equipment are measured at cost less accumulated depreciation/ amortization and impairment losses, if any. Cost comprises the purchase price net of any trade discounts and rebates, any import duties and other taxes (other than those subsequently recoverable from the tax authorities), any directly attributable expenditure in making the asset ready for its intended use. Machinery spares which can be used only in connection with an item of Property, plant and equipment and whose use is expected to be irregular are capitalized and depreciated over the useful life of the spares or the principal item of the relevant assets, whichever is lower.

Capital work in progress are items of Property, plant and equipment which are not yet ready for their intended use and are carried at cost, comprising direct cost and related incidental expenses.

(ii) Depreciation:

Depreciation on property, plant and equipment has been provided on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013 except in respect of the following category of assets, in which case the life of the assets has been assessed based on technical advice taking into account the nature of the asset, the estimated usage of the asset, the operating condition of the asset, past history of replacement, maintenance support, etc.:

The useful lives of the assets are periodically reviewed and re-determined and the unamortized depreciable amount is charged over the remaining useful life of such assets.

Assets costing Rs,5,000 and below are fully depreciated in the year of acquisition.

Assets acquired under finance lease and leasehold improvements are amortized over the lower of estimated useful life and lease term.

The cost and related accumulated depreciation are eliminated from the financial statements upon sale or disposition of the assets and the resultant gains or losses are recognized in the Statement of Profit and Loss.

F. Intangible assets

Intangible assets are stated at cost less accumulated amortization and impairment. Intangible assets are amortized over their respective estimated useful lives on straight-line basis, from the date that they are available for use.

G. Impairment

(i) Financial assets

In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss. The Company follows ''simplifi ed approach'' for recognition of impairment loss allowance on trade receivables. The application of simplifi ed approach does not require the Company to track changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.

For recognition of impairment loss on other financial assets and risk exposure, the Company determines whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If in subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognizing impairment loss allowance based on 12 month ECL.

Lifetime ECLs are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12 month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date.

ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the entity expects to receive (i.e. all shortfalls), discounted at the original effective interest rate (EIR). When estimating the cash flows, an entity is required to consider:

(i) All contractual terms of the financial instrument (including prepayment, extension etc.) over the expected life of the financial instrument. However, in rare cases when the expected life of the financial instrument cannot be estimated reliably, then the entity is required to use the remaining contractual term of the financial instrument.

(ii) Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

As a practical expedient, the Company uses a provision matrix to determine impairment loss on portfolio of its trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivables and is adjusted for forward- looking estimates. At every reporting date, the historical observed default rates are updated and changes in forward-looking estimates are analyzed.

ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/expense in the Statement of Profit and Loss. The Balance Sheet presentation for financial instruments is described below:

Financial assets measured at amortized cost, contractual revenue receivable:

ECL is presented as an allowance, i.e. as an integral part of the measurement of those assets in the Balance Sheet. The allowance reduces the net carrying amount. Until the asset meets write off criteria, the Company does not reduce impairment allowance from the gross carrying amount.

(ii) Non-financial assets

The Company assesses at each reporting date whether there is any objective evidence that a non-financial asset or a group of non-financial assets is impaired. If any such indication exists, the Company estimates the amount of impairment loss.

An impairment loss is calculated as the difference between an asset''s carrying amount and recoverable amount. Losses are recognized in the Statement of Profit and Loss and reflected in an allowance account. When the Company considers that there are no realistic prospects of recovery of the asset the relevant amounts are written off. If the amount of impairment loss subsequently decreases and the decrease can be related objectively to an event occurring after the impairment was recognized then the previously recognized impairment loss is reversed through the Statement of Profit and Loss.

The recoverable amount of an asset on cash generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using the pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing assets are grouped together into the smallest group of assets that generate cash inflows from continuing use that are largely independent of the cash inflows of other assets or group of asset ("the cash generating unit").

H. Foreign currency transactions and translations

In preparing the financial statements of the Company, transactions in currencies other than the entity''s functional currency (foreign currencies) are recognized at the rate of exchange prevailing at the dates of the transactions. Monetary assets and liabilities relating to foreign currency transactions remaining unsettled at the end of each reporting period are translated at the exchange rates prevailing at that date. Non-monetary items that are measured at historical cost in a foreign currency, are translated using the exchange rate at the date of the transaction. Non-monetary items that are measured at fair value in a foreign currency are translated using exchange rates at the date when fair value is measured. Exchange differences arising on actual payment/ realization and translations referred to above are recognized in the Statement of Profit and Loss.

I. Government grants

Government grants are not recognized until there is reasonable assurance that the Company will comply with the conditions attaching to them and that the grants will be received.

Government grants related to revenue are recognized on a systematic basis in the Statement of Profit and Loss over the periods necessary to match them with the related costs which they are intended to compensate. Such grants are deducted in reporting the related expense. When the grant relates to an asset, it is recognized as deferred revenue in the Balance Sheet and transferred to the Statement of Profit and Loss on a systematic and rational basis over the useful lives of the related assets.

The benefit of a government loan at a below-market rate of interest is treated as a government grant, measured as the difference between proceeds received and the fair value of the loan based on prevailing market interest rates.

J. Employee benefits

(i) Defined contribution plans

The Company''s contributions to Provident Fund (Government administered), Employees'' State Insurance Scheme and Superannuation Fund (under a scheme of Life Insurance Corporation of India), considered as defined contribution plans are charged as an expense in the Statement of Profit and Loss when the employees have rendered services entitling them to the contributions.

(ii) Defined benefit plans

For defined benefit plans in the form of gratuity fund administered under a scheme of the Life Insurance Corporation of India, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. The defined benefit obligations recognized in the Balance Sheet represents the present value of the defined obligations as reduced by the fair value of plan assets, if applicable. Re-measurement, comprising actuarial gains and losses and the return on plan assets (excluding net interest), is reflected immediately in the Balance Sheet with a charge or credit recognized in other comprehensive income in the period in which they occur and are re-classified to the Statement of Profit and Loss in the subsequent periods. Past service cost is recognized in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset.

The Company presents the first two components of defined benefit costs in the Statement of Profit and Loss under the line item ''Employee benefits expense''.

(iii) Short term and other long term employee benefits

The employees of the Company are entitled to compensated absences. The employees can carry forward a portion of the unutilized accumulating compensated absences and utilize it in future periods or receive cash at retirement or termination of employment. The Company records an obligation for compensated absences in the period in which the employee renders the services that increases this entitlement. The Company measures the expected cost of compensated absences as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the end of the reporting period. The Company recognizes accumulated compensated absences based on actuarial valuation. Non-accumulating compensated absences are recognized in the period in which the absences occur. The Company recognizes actuarial gains and losses immediately in the Statement of Profit and Loss.

K. Revenue recognition

Revenue is recognized when it is probable that economic benefits associated with a transaction flows to the Company in the ordinary course of its activities and the amount of revenue can be measured reliably. Revenue is measured at fair value of the consideration received or receivable, net of returns, trade discounts, incentives, rebates and other similar allowances.

Revenue includes only the gross inflows of economic benefits, including excise duty received and receivable by the Company, on its own account. Amounts collected on behalf of third parties such as sales tax and value added tax are excluded from revenue.

(a) Sale of goods:

Revenue from sale of goods is recognized when the Company transfers all significant risks and rewards of ownership to the buyer, while the Company retains neither continuing managerial involvement nor effective control over goods sold.

(b) Rendering of services:

Revenue from installation, commissioning and maintenance services is recognized based on the agreements with the customers and when services are rendered with reference to the stage of completion which can be measured reliably.

(c) Other Income:

Interest income is recognized using effective interest method. Royalty income is recognized on accrual basis in accordance with the terms of the agreement. Dividend income is accounted for in the year when the right to receive such dividend is established and the amount of dividend can be measured reliably.

L. Financial Instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instruments. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial asset or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial asset or financial liabilities at fair value through profit or loss are recognized immediately in the Statement of the Profit and Loss.

Purchase or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trade) are recognized on trade date. While, loans and borrowings and payables are recognized net of directly attributable transaction costs.

For the purpose of subsequent measurement, financial instruments of the Company are classified in the following categories: non-derivative financial assets comprising amortized cost, equity instruments at fair value through other comprehensive income (FVTOCI) or fair value through profit or loss (FVTPL) and non-derivative financial liabilities at amortized cost. Management determines the classification of its financial instruments at initial recognition.

The classification of financial instruments depends on the objective of the Company''s business model for which it is held and on the substance of the contractual terms / arrangements.

(a) Non-derivative financial assets

(i) Financial assets at amortized cost

A financial asset shall be measured at amortized cost if both of the following conditions are met:

- the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and

- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

They are presented as current assets, except for those maturing later than 12 months after the reporting date which are presented as non-current assets. Financial assets are measured initially at fair value plus transaction costs and subsequently carried at amortized cost using the effective interest method, less any impairment loss.

Financial assets at amortized cost are represented by trade receivables, security deposits, cash and cash equivalents and eligible current and non-current assets.

Cash comprises cash on hand, cash at bank, cheques 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.

(ii) Equity instruments at FVTOCI

On initial recognition, the Company can make an irrevocable election (on an instrument-by-instrument basis) to present the subsequent changes in fair value in other comprehensive income (OCI) pertaining to investments in equity instruments. This election is not permitted if the equity investment is held for trading. These elected investments are initially measured at fair value plus transaction costs. Subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in the "equity instruments through other comprehensive income". The cumulative gain or loss is not reclassified to profit or loss on disposal of the investments.

Dividends on these investments in equity instruments are recognized in the Statement of Profit and Loss when the Company''s right to receive the dividends is established and the amount of dividend can be measured reliably.

(iii) Financial assets at fair value through profit or loss (FVTPL)

FVTPL is a residual category for financial assets. Any financial asset which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as FVTPL.

In addition the Company may elect to designate the financial asset, which otherwise meets amortized cost or FVTOCI criteria, as FVTPL if doing so eliminates or significantly reduces a measurement or recognition inconsistency.

Financial assets included within the FVTPL category are measured at fair value at the end of each reporting period, with any gains or losses arising on re-measurement recognized in the Statement of Profit and Loss. The net gain or loss recognized in the Statement of Profit and Loss incorporates any dividend or interest earned on the financial asset and is included in the ''Other income'' line item.

De-recognition of financial assets

The Company de-recognizes financial assets when the contractual right to the cash flows from the asset expires or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. On de-recognition of a financial asset (except as mentioned above for financial assets measured at FVTOCI), the difference between the carrying amount and the consideration received and receivable is recognized in the Statement of Profit and Loss.

(b) Non-derivative financial liabilities at amortized cost

Financial liabilities at amortized cost represented by borrowings, trade and other payables are initially recognized at fair value, and subsequently measured at amortized cost using the effective interest method.

The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.

De-recognition of financial liability

The Company de-recognizes financial liabilities, when and only when, the Company''s obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liabilities de-recognized and the consideration paid and payable is recognized in the Statement of Profit and Loss.

M. Leases

Finance lease

Assets taken on lease by the Company in its capacity as lessee, where the Company has substantially all the risks and rewards of ownership are classified as finance lease. Such leases are capitalized at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments and a liability is recognized for an equivalent amount.

Operating lease

Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the less or, are recognized as operating lease. Operating lease payments are recognized on a straight line basis over the lease term in the Statement of Profit and Loss, unless the lease agreement explicitly states that increase is on account of inflation.

N. Income Taxes

Income tax expense represents the sum of the tax currently payable and deferred tax. Current and deferred tax are recognized in the Statement of Profit and Loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity respectively.

Current Tax

Current tax is measured at the amount expected to be paid to or recovered from the taxation authorities based on the taxable profit for the year. Taxable profit differs from "Profit before tax” as reported in the Statement of Profit and Loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible under the Income Tax Act, 1961. The tax rates and tax laws used to compute the current tax amount are those that are enacted or substantively enacted by the reporting date and applicable for the period. The Company offsets current tax assets and current tax liabilities, where it has a legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis or to realize the asset and liability simultaneously.

Deferred Tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such deferred tax assets and liabilities are not recognized if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognized if the temporary difference arises from the initial recognition of goodwill.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of such deferred tax assets to be utilized.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting date.

O. Provisions, contingent liabilities and contingent assets

Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle such obligation and a reliable estimate can be made of the amount of such obligation.

The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (where the effect of the time value of money is material).

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognized as an asset if it is virtually certain that reimbursement will be recovered and the amount of the receivable can be measured reliably.

A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not require an outflow of resources embodying economic benefits or the amount of such obligation cannot be measured reliably. When there is a possible obligation or a present obligation in respect of which likelihood of outflow of resources embodying economic benefits is remote, no provision or disclosure is made.

P. Research and development expenses

Revenue expenditure pertaining to research is charged to the Statement of Profit and Loss. Development costs of products are also charged to the Statement of Profit and Loss unless a product''s technical feasibility has been established, in which case such expenditure is capitalized. The amount capitalized comprises expenditure that can be directly attributed or allocated on a reasonable and consistent basis to creating, producing and making the asset ready for its intended use. Property, plant and equipment utilized for research and development are capitalized and depreciated in accordance with the policies stated for property, plant and equipment.

Q. Earnings per share

Basic earnings per share is computed by dividing profit or loss attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

Diluted earnings per share is determined by adjusting the profit or loss attributable to equity shareholders and the weighted average number of equity shares outstanding for the effects of all dilutive potential equity shares.

R. Cash and cash equivalents

Cash and cash equivalents for purposes of cash flow statement include cash on hand, in banks and demand deposits with banks, net of outstanding bank overdrafts that are repayable on demand, book overdraft and are considered part of the Company''s cash management system.

S. New standards and interpretations not yet adopted

Standards issued but not effective

In March 2017, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2017, notifying amendments to Ind AS 7, ''Statement of cash flows'' and Ind AS 102, ''Share-based payment.'' The amendment relating to Ind AS 7 is applicable to the Company from April 1, 2017.

Amendment to Ind AS 7:

The amendment to Ind AS 7 requires the entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and noncash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the balance sheet for liabilities arising from financing activities, to meet the disclosure requirement.

The effect on the financial statements is being evaluated by the Company.

Notes: (i) The cost of inventories recognized as an expense during the year has been disclosed on the face of the Statement of Profit and Loss, Notes 23 and 27.

(ii) The cost of inventories recognized as an expense includes Rs,0.87 crores (during 2015-16: Rs,0.26 crores) in respect of write downs of inventory to net realizable value, and has been reduced by t Nil (during 2015-16: t Nil) in respect of reversal of such write-downs.

(iii) There are no inventories expected to be recovered after more than twelve months

(iv) The mode of valuation of inventories has been stated in Note 2.D

Notes: (i) The average credit period for aftermarket sales is one week and for sales to other customers, is in the range of 30 - 60 days. No interest is charged on overdue receivables, except for overdue balances of related parties.

(ii) Of the trade receivables balance, Rs,99.72 crores (as at March 31, 2016 : Rs,113.48 crores; as at April 1, 2015: Rs,81.15 crores) is due from one of the Company''s large customers. There are no other customers who represent more than 5% of the total balance of trade receivables.

(iii) The Company has used a practical expedient by computing the expected credit loss allowance for doubtful trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and adjusted for forward-looking estimates. The expected credit loss allowance is based on the ageing of the days the receivables are due and the rates used in the provision matrix.

(ii) Rights, preferences and restrictions attached to the equity shares:

The Company has only one class of shares referred to as equity shares having a face value of Rs,1/- each. Each holder of equity share is eligible for one vote per share held. The Company declares and pays dividends in Indian rupees and foreign currency. The dividend proposed by the Board of Directors is subject to the approval of the Shareholders in the ensuing Annual General Meeting, except in the case of interim dividend. In the event of liquidation, the holders of equity shares will be entitled to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to the number of equity shares held by the shareholders.


Mar 31, 2015

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. The financial statements are prepared to comply in all material respects with the Accounting Standards as prescribed under Section 133 of the Companies Act, 2013 ('Act') read with Rule 7 of Companies (Accounts) Rules, 2014, the pronouncements of the Institute of Chartered Accountants of India, the relevant provisions of the Companies Act, 2013 and Companies Act, 1956 to the extent applicable and guidelines issued by the Securities and Exchange Board of India. The Accounting policies have been consistently applied except where a newly issued Accounting Standard is initially adopted or a revision to an existing Accounting Standard or amendments to the provisions of any statue which requires a change in the accounting policy hitherto in use.

b. Use of Estimates

The preparation of the financial statements requires management of the Company to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities, revenue and expenses and disclosures relating to the contingent liabilities and commitments. Examples of such estimates include provisions for warranty claims, provisions for doubtful debts and advances, provisions for sales incentive and promotional schemes offered to customers, employee benefit plans, useful lives of fixed assets and provisions for impairment. The management believes that the estimates used in preparation of the financial statements are prudent and reasonable.

The judgments, estimates and underlying assumptions are made with the management's best knowledge of the business environment and are reviewed on an ongoing basis. However, future results could differ from these estimates. Any revision to accounting estimates is recognised prospectively in the current and future periods.

c. Fixed assets

Fixed assets are stated at cost of acquisition or construction less accumulated depreciation. The cost of fixed assets is inclusive of freight, non-refundable duties and taxes, the cost of installation/erection, pre-production expenses including cost of trial runs and other incidental expenses incurred to bring the asset to its present location and condition.

Intangible assets are stated at cost of acquisition less accumulated amortisation. All costs, including financing costs on specific borrowings utilised for financing the assets, incurred till the time the asset is put to use for intended purpose are capitalised.

Capital work-in-progress and intangible assets under development are stated at the amount expended upto the date of Balance Sheet.

d. Depreciation and Amortisation

Depreciation on fixed assets is provided on straight line basis, at the higher of the following

a) Rates determined on the basis of useful life of the assets estimated by the management or

b) Rates specified in Schedule II of the Companies Act, 2013.

The following are the estimated useful lives adopted by the management in computing depreciation.

Depreciation on assets added/ disposed off during the year is provided on pro-rata basis from/upto the date of addition or disposal, as the case may be.

Individual assets costing up to Rs. 5,000 each are fully depreciated in the year of purchase since in the opinion of the management; the estimated useful lives of the said assets are below one year.

Intangible assets, comprising of expenditure on computer software, are amortised on a straight line method over a period of five years. Cost of lease hold land and cost of leasehold land development fee is amortised over the period of lease on proportionate basis.

e. Impairment of Assets

At each Balance Sheet date, the Company reviews the carrying amounts of the assets to determine whether there is any indication of impairment of assets. If any indication exists, the recoverable amount is estimated, at the higher of the realisable value and value in use, as considered appropriate. If the estimated recoverable amount is less than the carrying amount, an impairment loss is recognised in the Statement of profit and loss. Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

The impairment loss recognised in the previous accounting periods, if any, is reversed if there has been any change in the estimated recoverable amount.

f. Borrowing Costs

Borrowing costs, that are directly attributable to the acquisition or construction of assets, that necessarily take a substantial period of time to get ready for its intended use, are capitalised as part of the cost of qualifying asset when it is possible that they will result in future economic benefits and the cost can be measured reliably. Other borrowing costs are recognised as an expense in the period in which they are incurred.

g. Investments

Trade investments are the investments meant to enhance the Company's interest. Investments are classified as current or non-current based on the management's intention at the time of investment. Long-term investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such diminution is other than of temporary nature.

Current investments are carried at lower of cost and fair market value.

h. Inventories

i) Inventories are valued at lower of cost and net realisable value.

ii) In respect of raw materials, bought-out items, consumables, stores and spares, cost is ascertained on a weighted average basis. Cost includes freight, handling charges and non-recoverable taxes and duties.

iii) In respect of work-in-process and finished goods, cost is determined on weighted average basis. Cost includes all direct costs and applicable production overheads incurred in bringing such inventories to their present location and condition. Finished goods are valued inclusive of excise duty.

iv) Goods in transit are stated at actual cost incurred upto the date of Balance Sheet.

v) Scrap is valued at an estimated net realisable value.

Provision for obsolescence is made wherever necessary. Obsolete inventory items when identified and technically determined, are valued at estimated net realisable value.

i. Revenue Recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.

i) Revenue from sale of goods is recognised when the risks and rewards in respect of ownership are transferred to the buyer under the terms of the contract which usually coincide with the dispatch of goods to the customer or when they are unconditionally appropriated under the terms of sale.

ii) Sales include excise duty and service charges recovered and are stated net of trade discounts, allowances and sales returns.

iii) Revenue from sale of services is recognised to the extent of services performed as per the agreements/arrangements with the customers.

iv) Interest income is recognised on a time proportion basis taking into account the amounts invested and the rate of interest.

v) Cash discounts are recognised on a time proportion basis with reference to the due date for payment and actual date of payment.

vi) Dividend income is accounted for in the year in which the right to receive the payment is established.

vii) Insurance claims are recognized upon acceptance by the Insurance Company.

viii) Royalty income is recognized in accordance with the substance of the relevant agreement and on an accrual basis.

j. Employee Benefits

I) Defined Contribution Plans

i) Company's contribution to Employees Provident Fund and Employees State Insurance are made under a defined contribution plan, and are accounted for at actual cost in the year of accrual. Provident Fund contributions are made to the Government administered Provident Fund towards which the Company has no further obligations beyond its monthly contributions.

ii) Company's contribution to Superannuation Fund in respect of employees who are members are made under a defined contribution plan, being administrated by Life Insurance Corporation of India and are recognised in the Statement of Profit and Loss at predetermined rates in the year in which the employees have rendered service. The Company has no further obligations to the Scheme beyond its monthly contributions.

II) Defined Benefit Plans

i) Company's liability towards Gratuity in respect of eligible employees at retirement, death, incapacitation or termination of employment is funded and is being administrated by the Life Insurance Corporation of India. Cost of providing these benefits is determined on the basis of actuarial valuation at the end of each financial year using projected unit credit method and the incremental expense thereon is recognised in the Statement of Profit and Loss in the year in which the employee has rendered service.

ii) Expense arising on account of unutilised leave which is unfunded is arrived at as per actuarial valuation and is recognised in the Statement of Profit and Loss in the year in which the employee has rendered service in lieu of such leave.

iii) Actuarial gains or losses arising from experience adjustments and changes in actuarial assumptions are recognised in the Statement of Profit and Loss in the year in which they arise.

k. Research and Development Expenses

Capital expenditure on Research and Development is classified under tangible/intangible assets and depreciated in accordance with the Company's policy mentioned above.

Research costs are charged to revenue as and when incurred. Development expenditure incurred on an individual project is recognised as an intangible asset when the capitalisation criteria is met. Other development costs are recognised in the Statement of Profit and Loss as and when incurred.

Development expenditure as capitalised above is amortised over the estimated period of useful life or economic benefits not exceeding ten years.

l. Foreign Currency Transactions

i) The reporting currency of the Company is Indian Rupee.

ii) Transactions in foreign currency are initially recorded in the reporting currency at the exchange rate prevailing on the date of transaction and charged or credited to revenue with the difference in rate of exchange arising on actual receipt/payment during the year.

iii) At each Balance Sheet date

- Foreign currency monetary items are reported using the rate of exchange on that date.

- Foreign currency non-monetary items are reported using the exchange rate at which they were initially recognised.

iv) In respect of forward exchange contracts in the nature of hedges

- Premium or discount on the contract is amortised over the term of the contract.

- Exchange differences on the contract are recognised as profit or loss in the period in which they arise.

v) In respect of commodity hedging

- The realised gain or loss in respect of commodity hedging contracts, the price period of which has expired during the year, is recognised in the Statement of Profit and Loss.

- In respect of contracts, which are outstanding as on the date of Balance Sheet are valued at prevailing market price and the resultant gain/loss, if any, is recognised in the Statement of Profit and Loss.

m. Income Taxes

Income tax expense comprises current tax and deferred tax.

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

ii) Deferred tax is recognised, on timing differences, being the difference between taxable income and accounting income that originate in one period and capable of reversal in one or more subsequent periods, at the rate of tax enacted or substantively enacted by the balance sheet date.

iii) Deferred tax assets arising on account of brought forward losses and unabsorbed depreciation are recognised only when there is virtual certainty supported by convincing evidence that such assets will be realised in future period. Deferred tax assets arising on other temporary timing differences are recognised only if there is a reasonable certainty of their realisation in future period.

n. Provisions, Contingent Liabilities and Contingent assets

Provisions are recognised only when there is a present obligation as a result of past events and when a reliable estimate of the amount of obligation can be made. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.

Contingent liability is disclosed for (i) Possible obligation which will be confirmed only by future events not wholly within the control of the Company or (ii) Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made. The Company does not recognise contingent liabilities but the same are disclosed in the Notes.

Contingent assets are not recognised in the financial statements since this may result in the recognition of income that may never be realised.

o. Product Warranties

The Company estimates and provides for liability for product warranties in the year in which the products are sold. These estimates are established using historical information on the nature, frequency, quantum of warranty claims and corrective actions against product failures and the estimates are reviewed annually for any material changes in assumptions. The cost of warranty is net of realisable scrap value and includes the applicable taxes and duties like excise duty and also the best estimate of relevant freight expenses. The timing of outflows will vary based on the actual warranty claims. Provision is also recognised for product warranties in respect of claims received and remaining unsettled as at the date of Balance Sheet.

p. Late Delivery Charges

The liability on account of late delivery charges, due to delay in delivery of finished products is accounted for on accrual basis as per the terms of the contracts after adjusting for claims which are no longer required.

q. Provision for doubtful trade receivables

Receivables due from customers, which remain unpaid for more than one year from the due date and / or other receivables which are otherwise considered doubtful are recognized and provided for as provision for doubtful trade receivables.

r. Dividends

Provision for dividends payable, including income tax thereon, is recognised in the books of account as proposed by the Board of Directors, pending approval of shareholders at the ensuing Annual General Meeting.

s. Cash and cash equivalents

Cash and cash equivalents comprise of cash at bank and on hand, including cheques on hand. The Company considers all highly liquid investments, which are readily convertible into cash, to be cash equivalents.

t. Leases

The Leases where the Lessor effectively retains substantially all the risks and benefits of ownership of the leased assets are classified as operating leases. Operating lease payments are recognised as an expense in the Statement of Profit and Loss as per the applicable lease terms.

u. Segment Reporting

The Company is engaged in the business of manufacture and sale of lead acid storage batteries. This, in the context of Accounting Standard 17 on Segment Reporting, as specified in the Companies (Accounting Standards) Rules, 2006, is considered to constitute one single primary segment. Further, there is no reportable secondary segment i.e. Geographical Segment.


Mar 31, 2014

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. The financial statements are prepared to comply in all material respects with the Accounting Standards notified under Section 211(3C) of the Companies Act, 1956, read with the General Circular 15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013, the pronouncements of the Institute of Chartered Accountants of India, the relevant provisions of the Companies Act, 1956 and the Companies Act, 2013 and guidelines issued by the Securities and Exchange Board of India

b. Use of Estimates

The preparation of the financial statements requires the management of the Company to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities, revenue and expenses and disclosures relating to the contingent liabilities and commitments. The management believes that the estimates used in preparation of the financial statements are prudent and reasonable.

The judgments, estimates and underlying assumptions are made with the management''s best knowledge of the business environment and are reviewed on an ongoing basis. However, future results could differ from these estimates. Any revision to accounting estimates is recognised prospectively in the current and future periods

c. Fixed assets

Fixed assets are stated at cost of acquisition or construction less accumulated depreciation. The cost of fixed assets is inclusive of freight, non-refundable duties and taxes, financial costs on specific borrowings utilised for financing the assets upto the date of commissioning, the cost of installation/erection, pre-production expenses including cost of trial runs and other incidental expenses incurred to bring the asset to its present location and condition Intangible assets are stated at cost of acquisition less accumulated amortisation. All costs, including financing costs on specific borrowings utilised for financing the assets, incurred till the time the asset is put to use for intended purpose are capitalised

Capital work-in-progress and intangible assets under development are stated at the amount expended upto the date of Balance Sheet.

d. Depreciation and Amortisation

Depreciation on fixed assets is provided on a straight line basis, at the following rates, which are determined on the basis of useful life of the assets estimated by the management or at rates specified in Schedule XIV to the Companies Act, 1956, whichever is higher:

Depreciation on assets added/ disposed off during the year is provided on pro-rata basis from/upto the date of addition or disposal, as the case may be.

Individual assets costing up to Rs.5,000 each are fully depreciated in the year of purchase.

Intangible assets, comprising of expenditure on computer software, are amortised on a straight line method over a period of five years

Cost of lease hold land including development fee is amortised over the period of lease on proportionate basis

e. Impairment of Assets

At each Balance Sheet date, the Company reviews the carrying amounts of the assets to determine whether there is any indication of impairment of assets. If any indication exists, the recoverable amount is estimated, at the higher of the realisable value and value in use, as considered appropriate. If the estimated recoverable amount is less than the carrying amount, an impairment loss is recognised in the Statement of Profit and Loss. Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs

The impairment loss recognised in the previous accounting periods, if any, is reversed if there has been any change in the estimated recoverable amount.

f. Borrowing Costs

Borrowing costs, that are directly attributable to the acquisition or construction of assets, that necessarily take a substantial period of time to get ready for its intended use, are capitalised as part of the cost of qualifying asset when it is possible that they will result in future economic benefits and the cost can be measured reliably. Other borrowing costs are recognised as an expense in the period in which they are incurred

g. Investments

Trade investments are the investments meant to enhance the Company''s interest. Investments are classified as current or non-current based on the management''s intention at the time of investment. Long-term investments are stated at cost. Provision for diminution in the value of ong-term investments is made only if such diminution is other than of temporary nature.

Current investments are carried at lower of cost and fair market value.

h. Inventories

i) Inventories are valued at lower of cost and net realisable value.

ii) In respect of raw materials, bought-out items, consumables, stores and spares, cost is ascertained on a weighted average basis. Cost ncludes freight, handling charges and non-recoverable taxes and duties

ii) In respect of work-in-process and finished goods, cost is determined on weighted average basis. Cost includes all direct costs and applicable production overheads incurred in bringing such inventories to their present location and condition. Finished goods are valued nclusive of excise duty.

iv) Goods in transit are stated at actual cost incurred upto the date of Balance Sheet.

v) Scrap is valued at an estimated net realisable value.

Provision for obsolescence is made wherever necessary. Obsolete inventory items when identified and technically determined, are valued at estimated net realisable value.

i. Revenue Recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured

i) Revenue from sale of goods is recognised when the risks and rewards in respect of ownership are transferred to the buyer under the terms of the contract which usually coincide with the dispatch of goods to the customer or when they are unconditionally appropriated under the terms of sale.

ii) Sales include excise duty and service charges recovered and are stated net of trade discounts, allowances and sales returns

ii) Revenue from sale of services is recognised to the extent of services performed as per the agreements/arrangements with the customers

iv) Interest income is recognised on a time proportion basis taking into account the amounts invested and the rate of interest.

v) Cash discounts are recognised on a time proportion basis with reference to the due date for payment and actual date of payment.

vi) Dividend income is accounted for in the year in which the right to receive the payment is established

vii) Insurance claims are recognised upon acceptance by the Insurance Company.

viii) Royalty income is recognised in accordance with the substance of the relevant agreement and on an accrual basis

j. Employee Benefits

I) Defined Contribution Plans

i) Company''s contributions to Employees Provident Fund and Employees State Insurance are made under a defined contribution plan, and are accounted for at actual cost in the year of accrual. Provident Fund contributions are made to the Government administered Provident Fund towards which the Company has no further obligations beyond its monthly contributions

ii) Company''s contributions to Superannuation Fund in respect of employees who are members are made under a defined contribution plan, being administrated by Life Insurance Corporation of India and are recognised in the Statement of Profit and Loss at predetermined rates in the year in which the employees have rendered service. The Company has no further obligations to the Scheme beyond its monthly contributions

II) Defined Benefit Plans

i) Company''s liability towards Gratuity in respect of eligible employees at retirement, death, incapacitation or termination of employment is funded and is being administrated by the Life Insurance Corporation of India. Cost of providing these benefits is determined on the basis of actuarial valuation at the end of each financial year using projected unit credit method and the incremental expense thereon is recognised in the Statement of Profit and Loss in the year in which the employee has rendered service.

ii) Expense arising on account of unutilised leave which is unfunded is arrived at as per actuarial valuation and is recognised in the Statement of Profit and Loss in the year in which the employee has rendered service in lieu of such leave.

ii) Actuarial gains or losses arising from experience adjustments and changes in actuarial assumptions are recognised in the Statement of Profit and Loss in the year in which they arise.

k. Research and Development Expenses

Capital expenditure on Research and Development is classified under tangible/intangible assets and depreciated in accordance with the Company''s policy mentioned above.

Research costs are charged to revenue as and when incurred. Development expenditure incurred on an individual project is recognised as an ntangible asset when the capitalisation criteria is met. Other development costs are recognised in the Statement of Profit and Loss as and when ncurred

Development expenditure as capitalised above is amortised over the estimated period of useful life or economic benefits not exceeding ten years

I. Foreign Currency Transactions

i) The reporting currency of the Company is Indian Rupee.

ii) Transactions in foreign currency are initially recorded in the reporting currency at the exchange rate prevailing on the date of transaction and charged or credited to revenue with the difference in rate of exchange arising on actual receipt/payment during the year.

ii) At each Balance Sheet date

- Foreign currency monetary items are reported using the rate of exchange on that date.

- Foreign currency non-monetary items are reported using the exchange rate at which they were initially recognised iv) In respect of forward exchange contracts in the nature of hedges

- Premium or discount on the contract is amortised over the term of the contract.

- Exchange differences on the contract are recognised as profit or loss in the period in which they arise, v) In respect of commodity hedging

- The realised gain or loss in respect of commodity hedging contracts, the price period of which has expired during the year, is recognised in the Statement of Profit and Loss

- In respect of contracts, which are outstanding as on the date of Balance Sheet are valued at prevailing market price and the resultant gain/loss, if any, is recognised in the Statement of Profit and Loss

m. Income Taxes

ncome tax expense comprises current tax and deferred tax.

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

ii) Deferred tax is recognised, on timing differences, being the difference between taxable income and accounting income that originate in one period and capable of reversal in one or more subsequent periods, at the rate of tax enacted or substantively enacted by the Balance Sheet date.

ii) Deferred tax assets arising on account of brought forward losses and unabsorbed depreciation are recognised only when there is virtual certainty supported by convincing evidence that such assets will be realised in future period. Deferred tax assets arising on other temporary timing differences are recognised only if there is a reasonable certainty of their realisation in future period

n. Provisions, Contingent Liabilities and Contingent Assets

Provisions are recognised only when there is a present obligation as a result of past events and when a reliable estimate of the amount of obligation can be made. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates

Contingent liability is disclosed for (i) Possible obligation which will be confirmed only by future events not wholly within the control of the Company or (ii) Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made. The Company does not recognise contingent liabilities but the same are disclosed in the notes

Contingent assets are not recognised in the financial statements since this may result in the recognition of income that may never be realised

o. Product Warranties

The Company estimates and provides for liability for product warranties in the year in which the products are sold. These estimates are established using historical information on the nature, frequency, quantum of warranty claims and corrective actions against product failures The cost of warranty is net of realisable scrap value and includes the applicable taxes and duties like excise duty and also the best estimate of relevant freight expenses. The timing of outflows will vary based on the actual warranty claims. Provision is also recognised for product warranties in respect of claims received and remaining unsettled as at the date of Balance Sheet.

p. Late Delivery Charges

The liability on account of late delivery charges, due to delay in delivery of finished products is accounted for on accrual basis as per the terms of the contracts after adjusting for claims which are no longer required

q. Provision for doubtful trade receivables

Receivables due from customers, which remain unpaid for more than one year from the due date and / or other receivables which are otherwise considered doubtful are recognised and provided for as provision for doubtful trade receivables

r. Dividends

Provision for dividends payable, including income tax thereon, is recognised in the books of account as proposed by the Board of Directors, pending approval of shareholders at the ensuing Annual General Meeting

s. Cash and cash equivalents

Cash and cash equivalents comprise of cash at bank and on hand, including cheques on hand. The Company considers all highly liquid nvestments, which are readily convertible into cash, to be cash equivalents

t. Leases

The Leases where the Lessor effectively retains substantially all the risks and benefits of ownership of the leased assets are classified as operating leases. Operating lease payments are recognised as an expense in the Statement of Profit and Loss as per the applicable lease terms

u. Segment Reporting

The Company is engaged in the business of manufacture and sale of lead-acid storage batteries. This, in the context of Accounting Standard 17 on Segment Reporting, as specified in the Companies (Accounting Standards) Rules, 2006, is considered to constitute one single primary segment. Further, there is no reportable secondary segment i.e. Geographical Segment.

b) Rights, preferences and restrictions attached to equity shares

The Company has one class of equity shares having a face value of Rs.1 each. Each holder of equity share is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to approval of the shareholders in the Annual General Meeting, except in case of interim dividend. In the event of liquidation, the holders of equity share will be entitled to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding

d) Aggregate number of bonus shares issued during the period of five years immediately preceding the reporting date

During the financial year 2008-09 the Company has allotted 28,468,750 equity shares of face value of Rs.2 each as fully paid-up bonus shares by capitalising part of general reserve.

Interest free sales tax deferment

The Company has availed interest free sales tax deferment under Andhra Pradesh sales tax deferment scheme (Target 2000) from the financial year 1997-98 as per the eligibility norms in respect of expanded capacities. The Company has availed total deferment of Rs.811.40 million since March,1998, which is repayable after a period of 14 years from the date of each availment in annual installments

- Eligible amount of interest free sales tax deferment - Rs.813.33 million

- Period eligible for availment - January 1998 till September 2015


Mar 31, 2013

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. The financial statements are prepared to comply in all material respects with the Accounting Standards notified under section 211(3C) of the Companies Act, 1956, the pronouncements of the Institute of Chartered Accountants of India, the relevant provisions of the Companies Act, 1956 and guidelines issued by the Securities and Exchange Board of India.

b. Use of Estimates

The preparation of the financial statements requires the management of the Company to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities, revenue and expenses and disclosures relating to the contingent liabilities and commitments. The management believes that the estimates used in preparation of the financial statements are prudent and reasonable.

The judgments, estimates and underlying assumptions are made with the management''s best knowledge of the business environment and are reviewed on an ongoing basis. However, future results could differ from these estimates. Any revision to accounting estimates is recognised prospectively in the current and future periods.

c. Fixed assets

Fixed assets are stated at cost of acquisition or construction less accumulated depreciation. The cost of fixed assets is inclusive of freight, non-refundable duties and taxes, financial costs on specific borrowings utilised for financing the assets upto the date of commissioning, the cost of installation/erection and other incidental expenses incurred to bring the asset to its present location and condition.

Intangible assets are stated at cost of acquisition less accumulated amortisation. All costs, including financing costs on specific borrowings utilised for financing the assets, incurred till the time the asset is put to use for intended purpose are capitalised. Capital work-in-progress and intangible assets under development are stated at the amount expended upto the date of Balance Sheet.

d. Depreciation and Amortisation

Depreciation on fixed assets is provided on a straight line basis, at the following rates, which are determined on the basis of useful life of the assets estimated by the management or at rates specified in Schedule XIV to the Companies Act, 1956, whichever is higher:

(Refer Note No. 23 of the financial statements for the additional depreciation accounted due to revision in the estimated useful life of fixed assets during the year).

Depreciation on assets added/disposed off during the year is provided on pro-rata basis from/upto the date of addition or disposal, as the case may be.

Individual assets costing up to H5,000 each are fully depreciated in the year of purchase.

Intangible assets, comprising of expenditure on computer software, are amortised on a straight line method over a period of five years.

Cost of leasehold land is amortised over the period of lease on proportionate basis.

e. Impairment of Assets

At each Balance Sheet date, the Company reviews the carrying amounts of the assets to determine whether there is any indication of impairment of assets. If any indication exists, the recoverable amount is estimated, at the higher of the realisable value and value in use, as considered appropriate. If the estimated recoverable amount is less than the carrying amount, an impairment loss is recognised in the Statement of Profit and Loss. Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

The impairment loss recognised in the previous accounting periods, if any, is reversed if there has been any change in the estimated recoverable amount.

f. Borrowing Costs

Borrowing costs, that are directly attributable to the acquisition or construction of assets, that necessarily take a substantial period of time to get ready for its intended use, are capitalised as part of the cost of qualifying asset when it is possible that they will result in future economic benefits and the cost can be measured reliably. Other borrowing costs are recognised as an expense in the period in which they are incurred.

g. Investments

Trade investments are the investments meant to enhance the Company''s interest. Investments are classified as current or non- current based on the management''s intention at the time of investment. Long-term investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such diminution is other than of temporary nature.

Current investments are carried at lower of cost and fair market value.

h. Inventories

i) Inventories are valued at lower of cost and net realisable value.

ii) In respect of raw materials, bought-out items, consumables, stores and spares, cost is ascertained on a weighted average basis. Cost includes freight, handling charges and non-recoverable taxes and duties.

iii) In respect of work-in-process and finished goods, cost is determined on weighted average basis. Cost includes all direct costs and applicable production overheads incurred in bringing such inventories to their present location and condition. Finished goods are valued inclusive of excise duty.

iv) Goods in transit are stated at actual cost incurred upto the date of Balance Sheet.

v) Scrap is valued at estimated net realisable value.

Provision for obsolescence is made wherever necessary. Obsolete inventory items when identified and technically determined, are valued at estimated net realisable value.

i. Revenue Recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.

i) Revenue from sale of products is recognised when the risks and rewards in respect of ownership are transferred to the buyer under the terms of the contract which usually coincide with the dispatch of goods to the customer or when they are unconditionally appropriated under the terms of sale.

ii) Sales include excise duty and service charges recovered and are stated net of trade discounts, allowances and sales returns.

iii) Revenue from sale of services is recognised to the extent of services performed as per the agreements/arrangements with the customers.

iv) Interest income is recognised on a time proportion basis taking into account the amounts invested and the rate of interest.

v) Dividend income is accounted for in the year in which the right to receive the payment is established.

j. Employee Benefits

I) Defined Contribution Plans

i) Company''s contribution to Employees Provident Fund and Employees State Insurance are made under a defined contribution plan, and are accounted for at actual cost in the year of accrual. Provident Fund contributions are made to the Government administered Provident Fund towards which the Company has no further obligations beyond its monthly contributions.

ii) Company''s contribution to Superannuation Fund in respect of employees who are members are made under a defined contribution plan, being administrated by Life Insurance Corporation of India and are recognised in the Statement of Profit and Loss at predetermined rates in the year in which the employees have rendered service. The Company has no further obligations to the Scheme beyond its monthly contributions.

II) Defined Benefits Plans

i) Company''s liability towards Gratuity in respect of eligible employees at retirement, death, incapacitation or termination of employment is funded and is being administrated by Life Insurance Corporation of India. Cost of providing these benefits is determined on the basis of actuarial valuation at the end of each financial year using projected unit credit method and the incremental expense thereon is recognised in the Statement of Profit and Loss in the year in which the employee has rendered service.

ii) Expense arising on account of unutilised leave which is unfunded is arrived at as per actuarial valuation and is recognised in the Statement of Profit and Loss in the year in which the employee has rendered service in lieu of such leave.

iii) Actuarial gains or losses arising from experience adjustments and changes in actuarial assumptions are recognised in the Statement of Profit and Loss in the year in which they arise.

k. Research and Development Expenses

Capital expenditure on Research and Development is classified under tangible/intangible assets and depreciated in accordance with the Company''s policy mentioned above.

Research costs are charged to revenue as and when incurred. Development expenditure incurred on an individual project is recognised as an intangible asset when the capitalisation criteria are met. Other development costs are recognised in the Statement of Profit and Loss as and when incurred.

Development expenditure as capitalised above is amortised over the estimated period of useful life or economic benefits not exceeding ten years.

l. Foreign Currency Transactions

i) The reporting currency of the Company is Indian Rupee.

ii) Transactions in foreign currency are initially recorded in the reporting currency at the exchange rate prevailing on the date of transaction and charged or credited to revenue with the difference in rate of exchange arising on actual receipt/payment during the year.

iii) At each Balance Sheet date

- Foreign currency monetary items are reported using the rate of exchange on that date.

- Foreign currency non-monetary items are reported using the exchange rate at which they were initially recognised.

iv) In respect of forward exchange contracts in the nature of hedges

- Premium or discount on the contract is amortised over the term of the contract.

- Exchange differences on the contract are recognised as profit or loss in the period in which they arise.

v) In respect of commodity hedging

- The realised gain or loss in respect of commodity hedging contracts, the price period of which has expired during the year, is recognised in the Statement of Profit and Loss.

- In respect of contracts, which are outstanding as on the date of Balance Sheet are valued at prevailing market price and the resultant gain/loss, if any, is recognised in the Statement of Profit and Loss.

m. Income Taxes

Income tax expense comprises current tax and deferred tax.

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

ii) Deferred tax is recognised, on timing differences, being the difference between taxable income and accounting income that originate in one period and capable of reversal in one or more subsequent periods, at the rate of tax enacted or substantively enacted by the Balance Sheet date.

iii) Deferred tax assets arising on account of brought forward losses and unabsorbed depreciation are recognised only when there is virtual certainty supported by convincing evidence that such assets will be realised in future period. Deferred tax assets arising on other temporary timing differences are recognised only if there is a reasonable certainty of their realisation in future period. n. Provisions, Contingent Liabilities and Contingent Assets

Provisions are recognised only when there is a present obligation as a result of past events and when a reliable estimate of the amount of obligation can be made. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.

Contingent liability is disclosed for (i) Possible obligation which will be confirmed only by future events not wholly within the control of the Company; or (ii) Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made. The Company does not recognise contingent liabilities but the same are disclosed in the notes.

Contingent assets are not recognised in the financial statements since this may result in the recognition of income that may never be realised.

o. Product Warranties

The Company estimates and provides for liability for product warranties in the year in which the products are sold. These estimates are established using historical information on the nature, frequency, quantum of warranty claims and corrective actions against product failures. The cost of warranty is net of realisable scrap value and includes the applicable taxes and duties like excise duty and also the best estimate of relevant freight expenses. The timing of outflows will vary based on the actual warranty claims. Provision is also recognised for product warranties in respect of claims received and remaining unsettled as at the date of Balance Sheet.

p. Late Delivery Charges

The liability on account of late delivery charges, due to delay in delivery of finished products is accounted for on accrual basis as per the terms of the contracts after adjusting for claims which are no longer required.

q. Provision for doubtful trade receivables

Receivables due from customers, which remain unpaid for more than one year from the due date and / or other receivables which are otherwise considered doubtful are recognised and provided for as provision for doubtful trade receivables.

r. Dividends

Provision for dividends payable, including income tax thereon, is recognised in the books of account as proposed by the Board of Directors, pending approval of shareholders at the ensuing Annual General Meeting.

s. Cash and cash equivalents

Cash and cash equivalents comprise of cash at bank and on hand, including cheques on hand. The Company considers all highly liquid investments, which are readily convertible into cash, to be cash equivalents.

t. Leases

The Leases where the Lessor effectively retains substantially all the risks and benefits of ownership of the leased assets are classified as operating leases. Operating lease payments are recognised as an expense in the Statement of Profit and Loss as per the applicable lease terms.

u. Segment Reporting

The Company is engaged in the business of manufacture and sale of lead-acid storage batteries. This, in the context of Accounting Standard 17 on Segment Reporting, as specified in the Companies (Accounting Standards) Rules, 2006, is considered to constitute one single primary segment. Further, there is no reportable secondary segment i.e. Geographical Segment.


Mar 31, 2012

A. Basis of Preparation of Financial Statements

The Company has prepared the financial statements under historical cost convention on accrual basis of accounting and in accordance with the Generally Accepted Accounting Principles in India. The financial statements are prepared to comply in all material respects with the Accounting Standards notified under Section 211 (3C) of the Companies Act, 1956, the pronouncements of the Institute of Chartered Accountants of India, the relevant provisions of the Companies Act, 1956 and guidelines issued by the Securities and Exchange Board of India.

b. Use of Estimates

The preparation of the financial statements requires management of the Company to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and disclosures relating to the contingent liabilities and commitments. The management believes that the estimates used in preparation of the financial statements are prudent and reasonable.

The judgements, estimates and underlying assumptions are made with the management's best knowledge of the business environment and are reviewed on an ongoing basis. However, future results could differ from these estimates. Any revision to accounting estimates is recognised prospectively in the current and future periods.

c. Fixed assets

Fixed assets are stated at cost of acquisition or construction less accumulated depreciation. The cost of fixed assets is inclusive of freight, non-refundable duties and taxes, financial costs on specific borrowings utilised for financing the assets upto the date of commissioning, the cost of installation/erection and other incidental expenses incurred to bring the asset to its present location and condition.

Intangible assets are stated at cost of acquisition less accumulated amortisation. All costs, including financing costs on specific borrowings utilised for financing the assets, incurred till the time the asset is put to use for intended purpose are capitalised.

d. Depreciation and Amortisation

Depreciation is charged on a pro-rata basis at the straight line method rates prescribed in schedule XIV to the Companies Act, 1956 except in respect of the following, where the depreciation is charged based on their estimated useful life:

Computers - 4 Years; Office Equipment - 8 Years; Moulds - 3 Years

Individual assets costing up to Rs5,000/- each are fully depreciated in the year of purchase.

Intangible assets, comprising of expenditure on computer software, are amortised on a straight line method over a period of four years.

e. Impairment of Assets

At each Balance Sheet date, the Company reviews the carrying amounts of assets to determine whether there is any indication of impairment of assets. If any indication exists, the recoverable amount is estimated, at the higher of the realisable value and value in use, as considered appropriate. If the estimated recoverable amount is less than the carrying amount, an impairment loss is recognised in the Statement of Profit and Loss. Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. As per the assessment conducted by the Company as at March 31, 2012, there were no indications that the fixed assets have suffered an impairment loss.

f. Borrowing Costs

Borrowing Costs, that are directly attributable to the acquisition or construction of assets, that necessarily take a substantial period of time to get ready for its intended use, are capitalised as part of the cost of qualifying asset when it is possible that

they will result in future economic benefits and the cost can be measured reliably. Other borrowing costs are recognised as an expense in the period in which they are incurred.

g. Investments

Trade investments are the investments meant to enhance the Company's interest. Investments are classified as current or non- current based on the management's intention at the time of investment. 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 permanent in nature.

h. Inventories

i) Inventories are valued at the lower of cost and net realisable value.

ii) In respect of raw materials, bought-out items, consumables, stores and spares, including stock-in-transit, cost is ascertained on a weighted average basis. Cost includes freight, handling charges and non-recoverable taxes and duties.

iii) In respect of work-in-process and finished goods, cost includes all direct costs and applicable production overheads incurred in bringing such inventories to their present location and condition. Cost of finished goods includes excise duty.

iv) Scrap is valued at an estimated net realisable value.

Provision for obsolescence is made wherever necessary.

i. Revenue Recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.

i) Revenue from sale of products is recognised when the risks and rewards in respect of ownership are transferred to the buyer under the terms of the contract which usually coincide with the dispatch of goods to customer or when they are unconditionally appropriated under the terms of sale.

ii) Sales include excise duty and service charges recovered and are stated net of trade discounts, allowances and sales returns.

iii) Revenue from sale of services is booked based on agreements/arrangements with the concerned parties.

iv) Interest on investments and deposits is booked on a time proportion basis taking into account the amounts invested and the rate of interest.

v) Dividend income is accounted for in the year in which the right to receive the payment is established.

j. Employee Benefits

I) Defined Contribution Plans

i) Company's contribution to Employees Provident Fund and Employees State Insurance are made under a defined contribution plan, and are accounted for at actual cost in the year of accrual.

ii) Company's contribution to Superannuation Fund in respect of employees who are members are made under a defined contribution plan, being administered by the Life Insurance Corporation of India and are recognised in the Statement of Profit and Loss at predetermined rates in the year in which the employees have rendered service.

II) Defined Benefit Plans

i) Company's liability to Gratuity to eligible employees at retirement, death, incapacitation or termination of employment is funded and is being administered by the Life Insurance Corporation of India. Cost of providing these benefits is determined on the basis of actuarial valuation at the end of each financial year and the incremental expense thereon is recognised in the Statement of Profit and Loss in the year in which the employee has rendered service.

ii) Expenses on account of unutilised leave which is unfunded is arrived at as per actuarial valuation and is recognised in the Statement of Profit and Loss in the year in which the employee has rendered service in lieu of such leave.

iii) Actuarial gains or losses arising from experience adjustments and changes in actuarial assumptions are recognised in the Statement of Profit and Loss in the year in which they arise.

k. Research and Development Expenses

Capital expenditure on Research and Development is classified under tangible/intangible assets and depreciated in accordance with the Company's policy mentioned above.

Research costs are charged to revenue as and when incurred. Development expenditure incurred on an individual project is recognised as an intangible asset when the capitalisation criteria are met. Other development costs are recognised in the Statement of Profit and Loss as and when incurred.

Development expenditure as capitalised above is amortised over the estimated period of useful life or economic benefits not exceeding ten years.

I. Foreign Currency Transactions

i) The reporting currency of the Company is Indian Rupee.

ii) Transactions in foreign currency are initially recorded in the reporting currency at the exchange rate prevailing on the date of transaction, and charged or credited to revenue with the difference in the rate of exchange arising on actual receipt/payment during the year.

iii) At each Balance Sheet date

- Foreign currency monetary items are reported using the rate of exchange on that date.

- Foreign currency non-monetary items are reported using the exchange rate at which they were initially recognised.

iv) In respect of forward exchange contracts in the nature of hedges

- Premium or discount on the contract is amortised over the term of the contract.

- Exchange differences on the contract are recognised as profit or loss in the period in which they arise.

v) In respect of commodity hedging

- The realised gain or loss in respect of commodity hedging contracts, the price period of which has expired during the year, is recognised in the Statement of Profit and Loss.

- In respect of contracts, which are outstanding as on the date of Balance Sheet are valued at prevailing market price and the resultant gain/loss, if any, is recognised in the Statement of Profit and Loss.

m. Income Taxes

Income tax expense comprises current tax and deferred tax.

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

ii) Deferred tax is recognised, on timing differences, being the difference between taxable income and accounting income that originate in one period and capable of reversal in one or more subsequent periods, at the rate of tax enacted or substantively enacted by the Balance Sheet date.

iii) Deferred tax assets arising on account of brought forward losses and unabsorbed depreciation are recognised only when there is virtual certainty supported by convincing evidence that such assets will be realised in future period. Deferred tax assets arising on other temporary timing differences are recognised only if there is a reasonable certainty of their realisation.

n. Provisions, Contingent Liabilities and Contingent assets

Provisions are recognised only when there is a present obligation as a result of past events and when a reliable estimate of the amount of obligation can be made. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.

Contingent liability is disclosed for (i) Possible obligation which will be confirmed only by future events not wholly within the control of the Company or (ii) Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made. The Company does not recognise contingent liabilities but the same are disclosed in the Notes.

Contingent assets are not recognised in the financial statements since this may result in the recognition of income that may never be realised.

o. Product Warranties

The Company estimates and provides for liability for product warranties in the year in which the products are sold. These estimates are established using historical information on the nature, frequency and quantum of warranty claims; and management's estimate regarding possible future incidence based on corrective actions against product failures. The cost of warranty includes the applicable taxes and duties like excise duty and also the best estimate of relevant freight expenses. The timing of outflows will vary based on the actual warranty claims. Provision is also recognised for product warranties in respect of claims received and remaining unsettled as at the date of Balance Sheet.

p. Late Delivery Charges

The liability on account of late delivery charges, due to delay in delivery of finished products is accounted for on accrual basis as per the terms of the contract after adjusting for any claims which are no longer required.

q. Dividends

Provision for dividends payable, including income tax thereon, is recognised in the books of account as proposed by the Board of Directors, pending approval of shareholders at the Annual General Meeting.

r. Cash and cash equivalents

Cash and cash equivalents comprise of cash at bank and on hand, including cheques on hand. The Company considers all highly liquid investments, which are readily convertible into cash, to be cash equivalents.

s. Leases

The Leases where the Lessor effectively retains substantially all the risks and benefits of ownership of the leased assets are classified as operating leases. Operating lease payments are recognised as an expense in the Statement of Profit and Loss as per the applicable lease terms.

t. Segment Reporting

The Company is engaged in the business of manufacture and sale of lead acid storage batteries. This, in the context of Accounting Standard 17 on Segment Reporting, as specified in the Companies (Accounting Standards) Rules, 2006, is considered to constitute one single primary segment. Further, there is no reportable secondary segment i.e. Geographical Segment.


Mar 31, 2011

1. General

Financial statements are prepared under historical cost convention and in accordance with generally accepted accounting practices.

2. Fixed assets

Fixed assets are stated at cost net of CENVAT and VAT credit less accumulated depreciation. Cost of acquisition of fixed assets is inclusive of freight, duties and taxes, interest, if any, on specific borrowings utilised for financing the assets upto the date of commissioning, the cost of installation/erection, and other incidental expenses.

3. Intangible assets

Intangible assets are stated at cost of acquisition less accumulated amortisation. Intangible assets, which are in the nature of computer software are amortised over a period of 4 years on straight line method.

4. Depreciation

Depreciation is provided on straight line basis in accordance with the rates and rules prescribed under Schedule - XIV to the Companies Act, 1956, except in respect of the following, where the depreciation is provided based on their estimated useful life

Computers - 4 Years ; Office Equipment - 8 Years; Moulds - 3 Years

5. Investments

Long-term investments are stated at cost less provision required, if any, for the permanent diminution in value thereof. Dividends thereon are accounted as and when received.

6. Inventories

a. Finished goods are valued at lower of cost or market value.

b. Raw Materials, Work in Process, Stores and Spares, Materials in transit etc., are valued at cost.

c. Scrap is valued at an estimated net realisable value.

7. Sales

Gross Sales are inclusive of Excise Duty, Sales tax/VAT, Service tax, Insurance, Octroi, Service charges etc., recovered thereon and net of trade discounts / trade incentives.

8. Employee Benefits

I) Defined Contribution Plans

a) Company's contribution to Employees Provident Fund and Employees State Insurance are made under a defined contribution plan, and are accounted for at actual cost in the year of accrual.

b) Company's contribution to Superannuation Fund in respect of employees who are members are made under a defined contribution plan, being administrated by the Life Insurance Corporation of India Limited, and are charged to Profit and Loss Account at predetermined rates in the year in which the employees have rendered service.

II) Defined Benefit Plans

a) Company's liability to Gratuity on retirement of its eligible employees is funded and is being administrated by the Life Insurance Corporation of India Limited. The incremental expense thereon for each year is arrived at as per actuarial valuation and is recognised and charged to Profit and Loss Account in the year in which the employee has rendered service.

b) Expenses on account of unutilised leave which is unfunded is arrived at as per actuarial valuation and is recognised and charged to Profit and Loss Account in the year in which the employee has rendered service in lieu of such leave.

c) Gains / Losses arrived at in the above actuarial valuations are charged to Profit and Loss Account.

9. Research and Development Expenses Research and Development costs of revenue nature are charged to revenue as and when incurred, and of capital nature is capitalised and depreciation thereon is provided as per the rates prescribed in schedule XIV to the Companies Act, 1956.

10. Foreign Currency Transactions

a) Transactions in foreign currency are initially accounted at the exchange rate prevailing on the date of transaction, and charged to revenue with the difference in the rate of exchange arising on actual receipt/payment during the year.

b) At each Balance Sheet date

- Foreign currency monetary items are reported using the rate of exchange on that date.

- Foreign currency non-monetary items are reported using the exchange rate at which they were initially recognised.

c) In respect of forward exchange contracts in the nature of hedges

- Premium or discount on the contract is amortised over the term of the contract.

- Exchange differences on the contract are recognised as profit or loss in the period in which they arise.

11. Warranty Claims and Provisions The company makes provision for the probable future liability on account of warranty as at the end of the financial year, in addition to meeting the actual warranty claimed.

12. Late Delivery Charges The liability on account of late delivery charges, due to delay in delivery of finished products is accounted for on accrual basis as per the terms of the contracts after adjusting for the claims which are no longer required.

13. Taxation Provision is made for Income-tax liability estimated to arise on the results for the year at the current rate of tax in accordance with the Income tax Act, 1961.

- Deferred tax resulting from timing differences between book and tax profits is accounted for under the liability method, at the rate of tax enacted or substantively enacted by the balance sheet date.

- Deferred tax assets arising on account of brought forward losses and unabsorbed depreciation are recognised only when there is virtual certainty supported by convincing evidence that such assets will be realised. Deferred tax assets arising on other temporary timing differences are recognised only if there is a reasonable certainty of realisation.

14. Dividends Provision is made in the accounts for the dividends payable by the Company, as recommended by the Board of Directors, pending approval of the shareholders at the Annual General Meeting. Income Tax on dividends payable is provided for in the year to which such dividends relate.

15. Impairment of Assets At the date of each Balance Sheet, the company evaluates indications of the impairment internally, if any, to the carrying amount of its fixed and other assets. If any indication does exist, the recoverable amount is estimated at the higher of the realisable value and value in use, as considered appropriate. If the estimated realisable value is less than the carrying amount, an impairment loss is recognised.

Reversal of impairment losses recognised in prior years is recorded when there is an indication that the impairment losses recognised for the asset no longer exist or have decreased. However, the increase in carrying amount of an asset due to reversal of an impairment loss is recognised to the extent it does not exceed the carrying amount that would have been determined (net of depreciation) had no impairment loss been recognised for the asset in prior years.

16. Contingent Liabilities Contingent liabilities are not recognised in the accounts, but are disclosed after a careful evaluation of the concerned facts and legal issues involved.

17. Borrowing Costs Borrowing costs directly attributable for acquisition of qualifying assets are capitalised as part of the asset. Other borrowing costs are charged to revenue as and when incurred.

18. Commodity Hedging The realised gain or loss in respect of commodity hedging contracts, the price period of which has expired during the year, is recognised in the Profit & Loss account. In respect of contracts, which are outstanding as on date of Balance Sheet are valued at prevailing market price and the resultant loss, if any, is provided.


Mar 31, 2010

1. General

Financial statements are prepared under historical cost convention and in accordance with generally accepted accounting practices.

2. Fixed Assets

Fixed assets are stated at cost net of CENVAT and VAT credit less accumulated depreciation. Cost of acquisition of fixed assets is inclusive of freight, duties and taxes, interest, if any, on specific borrowings utilised for financing the assets upto the date of commissioning, the cost of installation/erection, and other incidental expenses.

3. Intangible Assets

Intangible assets are stated at cost of acquisition less accumulated amortisation. Intangible assets, which are in the nature of computer software are amortised over a period of 4 years on straight line method.

4. Depreciation

Depreciation is provided on straight line basis in accordance with the rates and rules prescribed under Schedule - XIV to the Companies Act, 1956, except in respect of the following, where the depreciation is provided based on their estimated useful life

Computers - 4 Years ; Office Equipments – 8 Years; Moulds – 3 Years

5. Investments

Long-term investments are stated at cost less provision required, if any, for the permanent diminution in value thereof. Dividends thereon are accounted as and when received.

6. Inventories

a. Finished goods are valued at lower of cost or market value.

b. Raw Materials, Work in Process, Stores and Spares, Materials in transit etc., are valued at cost.

c. Stock of scrap is valued at an estimated net realisable value.

7. Sales

Gross Sales are inclusive of Excise duty, Sales tax/VAT, Service tax, Insurance, Octroi, Service charges etc., recovered thereon.

8. Employee Benefits

I) Defined Contribution Plans

a) Company’s contribution to Employees Provident Fund and Employees State Insurance are made under a defined contribution plan, and are accounted for at actual cost in the year of accrual.

b) Company’s contribution to Superannuation Fund in respect of employees who are members are made under a defined contribution plan, being administrated by the Life Insurance Corporation of India Limited, and are charged to Profit and Loss Account at predetermined rates in the year in which the employees have rendered service.

II) Defined Benefit Plans

a) Company’s liability to Gratuity on retirement of its eligible employees is funded and is being administrated by the Life Insurance Corporation of India Limited. The incremental expense thereon for each year is arrived at as per actuarial valuation and is recognised and charged to Profit and Loss Account in the year in which the employee has rendered service.

b) Expenses on account of unutilised leave which is unfunded is arrived at as per actuarial valuation and is recognised and charged to Profit and Loss Account in the year in which the employee has rendered service in lieu of such leave.

c) Gains / losses arrived at in the above actuarial valuations are charged to Profit and Loss Account.

9. Research and Development Expenses Research and development costs of revenue nature are charged to revenue as and when incurred, and of capital nature is capitalised and depreciation thereon is provided as per the rates prescribed in schedule XIV to the Companies Act, 1956.

10. Foreign Currency Transactions

a) Transactions in foreign currency are initially accounted at the exchange rate prevailing on the date of transaction, and charged to revenue with the difference in the rate of exchange arising on actual receipt/payment during the year.

b) At each Balance Sheet date

- Foreign currency monetary items are reported using the rate of exchange on that date.

- Foreign currency non-monetary items are reported using the exchange rate at which they were initially recognised.

c) In respect of forward exchange contracts in the nature of hedges

- Premium or discount on the contract is amortised over the term of the contract.

- Exchange differences on the contract are recognised as profit or loss in the period in which they arise.

11.Warranty Claims and Provisions

The Company makes provision for the probable future liability on account of warranty as at the end of the financial year, in addition to meeting the actual warranty claimed.

12.Late Delivery Charges

The liability on account of late delivery charges, due to delay in delivery of finished products is accounted for on accrual basis as per the terms of the contracts after adjusting for the claims which are no longer required.

13.Taxation

Provision is made for Income-tax liability estimated to arise on the results for the year at the current rate of tax in accordance with the Income Tax Act, 1961.

- Deferred tax resulting from timing differences between book and tax profits is accounted for under the liability method, at the current rate of tax.

- Deferred tax assets arising on account of brought forward losses and unabsorbed depreciation are recognised only when there is virtual certainty supported by convincing evidence that such assets will be realised. Deferred tax assets arising on other temporary timing differences are recognised only if there is a reasonable certainty of realisation.

14.Dividends

Provision is made in the accounts for the dividends payable by the Company as recommended by the Board of Directors, pending approval of the shareholders at the Annual General Meeting. Income Tax on dividends payable is provided for in the year to which such dividends relate.

15.Impairment of Assets

At the date of each Balance Sheet, the Company evaluates indications of the impairment internally, if any, to the carrying amount of its fixed and other assets. If any indication does exist, the recoverable amount is estimated at the higher of the realisable value and value in use, as considered appropriate. If the estimated realisable value is less than the carrying amount, an impairment loss is recognised.

Reversal of impairment losses recognised in prior years is recorded when there is an indication that the impairment losses recognised for the asset no longer exist or have decreased. However, the increase in carrying amount of an asset due to reversal of an impairment loss is recognised to the extent it does not exceed the carrying amount that would have been determined (net of depreciation) had no impairment loss been recognised for the asset in prior years.

16.Contingent Liabilities

Contingent liabilities are not recognised in the accounts, but are disclosed after a careful evaluation of the concerned facts and legal issues involved.

17.Borrowing Costs

Borrowing costs directly attributable for acquisition of qualifying assets are capitalised as part of the asset. Other borrowing costs are charged to revenue as and when incurred.

18.Commodity Hedging

The realised gain or loss in respect of commodity hedging contracts, the price period of which has expired during the year, is recognised in the Profit and Loss account. In respect of contracts, which are outstanding as on date of Balance Sheet are valued at prevailing market price and the resultant loss, if any, is provided.

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