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Accounting Policies of Apar Industries Ltd. Company

Mar 31, 2017

1. General information

Apar Industries Limited, founded by Late Shri. Dharmsinh D. Desai in the year 1958 is one among the best established companies in India, operating in the diverse fields of electrical and metallurgical engineering. Over the ensuing years it has been offering value added products and services in Power Transmission Conductors, Petroleum Specialties and Power & Telecom Cables.

2. Basis of accounting

These financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (Ind AS) to comply with Section 133 of the Companies Act, 2013 ("the 2013 Act"), and the relevant provisions of the 2013 Act/ Companies Act 1956 ("the 1956 Act"), as applicable. For all periods up to and for the year ended 31 March 2016, the Company''s has prepared its financial statements in accordance with accounting standards notified under the section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP).

These financial statements are the Company''s first Ind AS financial statements and are covered by Ind AS 101, First-time adoption of Indian Accounting Standards (Ind AS 101). The transition to Ind AS has been carried out from the accounting principles generally accepted in India ("Indian GAAP") which is considered as the "Previous GAAP" for purposes of Ind AS 101. An explanation of how the transition to Ind AS has affected the Company''s equity and its net profit is provided in Note 51

3. Functional and presentation currency

These financial statements are presented in Indian rupees (INR), which is the Company''s functional currency. All amounts have been rounded off to two decimal places to the nearest crore, unless otherwise indicated.

4. Basis of measurement

The financial statements have been prepared on the historical cost basis except for the following items:

- certain financial assets and liabilities (including mutual fund investments and derivatives) that are measured at fair value;

- defined benefit plans - plan assets measured at fair value;

- share-based payments;

5. Key estimates and assumptions

The preparation of financial statements in accordance with Ind AS requires use of estimates and assumptions for some items, which might have an effect on their recognition and measurement in the (i) balance sheet and (ii) statement of profit and loss. The actual amounts realised may differ from these estimates.

Estimates and assumptions are required in particular for:

- Determination of the estimated useful lives of tangible assets

Useful lives of tangible assets are based on the life prescribed in Schedule II of the Companies Act, 2013. In cases, where the useful lives are different from that prescribed in Schedule II, they are based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers'' warranties and maintenance support.

- Recognition and measurement of defined benefit obligations

The obligation arising from defined benefit plan is determined on the basis of actuarial assumptions. Key actuarial assumptions include discount rate, trends in salary escalation, actuarial rates and life expectancy. The discount rate is determined by reference to market yields at the end of the reporting period on government bonds. The period to maturity of the underlying bonds correspond to the probable maturity of the post-employment benefit obligations.

- Recognition of deferred tax assets

Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the carrying values of assets and liabilities and their respective tax bases, and unutilized business loss and depreciation carryforwards and tax credits. Deferred tax assets are recognized to the extent that it is probable that future taxable income will be available against which the deductible temporary differences, unused tax losses, depreciation carry-forwards and unused tax credits could be utilized.

- Recognition and measurement of other provisions

The recognition and measurement of other provisions are based on the assessment of the probability of an outflow of resources, and on past experience and circumstances known at the balance sheet date. The actual outflow of resources at a future date may therefore vary from the amount included in other provisions.

- Discounting of long-term financial assets/liabilities

All financial assets/liabilities are required to be measured at fair value on initial recognition. In case of financial liabilities which are required to subsequently measured at amortized cost, interest is accrued using the effective interest method.

- Fair value of financial instruments

Derivatives and investments in mutual funds are carried at fair value. Derivatives includes Foreign Currency Forward Contracts, Commodity futures contracts and Interest Rate Swaps. Fair value of Foreign Currency Forward Contracts and commodity future contracts are determined using the fair value reports provided by merchant bankers and LME brokers respectively. Fair value of Interest Rate Swaps are determined with respect to current market rate of interest.

- Sales incentives and Customer Loyalty Programmes

Rebates are generally provided to distributors or dealers as an incentive to sell the Company''s products. Rebates are based on purchases made during the period by distributor / customer. The company determines the estimates of benefit accruing to the distributors/ dealers based on the schemes introduced by the Company.

The amount allocated to the loyalty programme/ incentive is deferred, and is recognized as revenue when the Company has fulfilled its obligations to supply the discounted products under the terms of the programme or when it is no longer probable that the points under the programme will be redeemed.

The cash incentives offered under various schemes are in the nature of sales promotion and provision for such incentives are provided for.

6. Measurement of fair values

The Company''s accounting policies and disclosures require the measurement of fair values for financial instruments.

The Company has an established control framework with respect to the measurement of fair values. The management regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the management assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which such valuations should be classified.

When measuring the fair value of a financial asset or a financial liability, the Company uses observable market data as far as possible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.

- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

- Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

The Company recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

7. Standards issued but not yet effective

Ind AS 115 Revenue from Contract with Customers: In February 2015, the Ministry of Corporate Affairs had notified Ind AS 115, Revenue from Contract with Customers. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity''s contracts with customers.

The Company''s is in the process of making an assessment of the impact of Ind AS 115 upon initial application. As at the date of this report, the Company''s management does not expect that the impact on the Company''s results of operations and financial position will be material upon adoption of Ind AS 115.

8. Significant accounting policies followed by the company

A. Foreign currency

i. Foreign currency transactions

Transactions in foreign currencies are translated into the respective functional currencies of companies at the exchange rates at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined. Foreign currency differences are generally recognized in profit or loss. Non-monetary items that are measured based on historical cost in a foreign currency are not translated.

Any income or expense on account of exchange difference either on settlement or on translation is recognized in the Statement of profit and loss.

B. Revenue

i. Sale of goods and Services

Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates. Revenue is recognized when significant risks, rewards and controls of ownership in the goods are transferred to the buyer. Revenues are recognized when collectability of the resulting receivable is reasonably assured.

In respect of service activities, income is recognized as and when services are rendered.

ii. Lease income:

The Company has determined that the payments by the lessee are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases. Accordingly rental income arising from operating leases is accounted for on an accrual basis as per the terms of the lease contract

iii. Dividend income is recognized when the right to receive the payment is established.

C. Employee benefits

i. Short term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the Company''s has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

ii. Defined contribution plans

- Provident Fund Scheme

The Company makes specified monthly contributions towards employee provident fund directly to the Government under the Employees Provident Fund Act, 1952 and is not obliged to bear the shortfall, if any, between the return on investments made by the Government from the contributions and the notified interest rate.

- Superannuation Scheme

The Company makes specified contributions to the superannuation fund administered by the Company and the return on investments is adequate to cover the commitments under the scheme. The Company''s contribution paid/payable under these schemes is recognized as expense in the Statement of profit and loss during the period in which the employee renders the related service.

iii. Defined benefit plans

The following post - employment benefit plans are covered under the defined benefit plans:

- Gratuity Fund

The Company''s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.

The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Company, the recognized asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.

Re-measurement of the net defined benefit/liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in OCI. Net interest expense/(income) on the net defined liability/(assets) is computed by applying the discount rate, used to measure the net defined liability/(asset), to the net defined liability/(asset) at the start of the financial year after taking into account any changes as a result of contribution and benefit payments during the year. Net interest expense and other expenses related to defined benefit plans are recognized in profit or loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognized immediately in profit or loss. The Company''s recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.

iv. Other long-term employee benefits

Long-term Compensated Absences and Long Wages Schemes are provided for on the basis of an actuarial valuation, using the Projected Unit Credit Method, as at the date of the Balance Sheet. Actuarial gains / losses comprising of experience adjustments and the effects of changes in actuarial assumptions are immediately recognized in the Statement of Profit and Loss .

D. Finance income and finance costs

The Company''s finance income and finance costs include:

- interest income;

- interest expense;

- the net gain or loss on financial assets at FVTPL

- exchange differences arising from monetary assets and liabilities Interest income or expense is recognized using the effective interest rate method.

Share issue expenses are written off against share premium account if any or amortized over a period of 5 years.

E. Grants/ Subsidies

Government grants are recognized where there is reasonable assurance that the grant will be received and all attached conditions will be complied with.

Where the grant relates to an asset the cost of the asset is shown at gross value and grant thereon is treated as capital grant which is recognized as income in the statement of profit and loss over the period and in proportion in which depreciation is charged.

Revenue grants are recognized in the statement of profit and loss in the same period as the related cost, which they are intended to compensate, are accounted for.

F. Income Tax

Income tax expense comprises current and deferred tax. It is recognized in profit or loss except to the extent that it relates to a business combination, or items recognized directly in equity or in OCI.

i. Current tax

Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. It is measured using tax rates enacted or substantively enacted at the reporting date. Current tax also includes any tax arising from dividends.

Current tax assets and liabilities are offset only if, the Company:

a) has a legally enforceable right to set off the recognized amounts; and

b) intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.

ii. Deferred tax

Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for:

- temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss;

- temporary differences related to investments in subsidiaries and associates to the extent that the Company''s is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and

- taxable temporary differences arising on the initial recognition of goodwill.

Deferred tax assets are recognized for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized; such reductions are reversed when the probability of future taxable profits improves.

Unrecognized deferred tax assets are reassessed at each reporting date and recognized to the extent that it has become probable that future taxable profits will be available against which they can be used.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date.

The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset only if:

a) the entity has a legally enforceable right to set off current tax assets against current tax liabilities; and

b) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on the same taxable entity.

Deferred tax asset / liabilities in respect of temporary differences which originate and reverse during the tax holiday period are not recognized. Deferred tax assets / liabilities in respect of temporary differences that originate during the tax holiday period but reverse after the tax holiday period are recognized.

G. Inventories

Inventories are measured at the lower of standard cost and net realizable value. Inventory of scrap is valued at estimated realizable value.The cost of inventories is determined using the weighted average method. Inventories of finished goods include excise duty as applicable.

H. Property, plant and equipment

i. Recognition and measurement

Items of property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses.

The cost of an item of property, plant and equipment comprises:

a) its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates.

b) any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

c) the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located, the obligation for which an entity incurs either when the item is acquired or as a consequence of having used the item during a particular period for purposes other than to produce inventories during that period.

Income and expenses related to the incidental operations, not necessary to bring the item to the location and condition necessary for it to be capable of operating in the manner intended by management, are recognized in profit or loss.

If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted and depreciated for as separate items (major components) of property, plant and equipment.

Any gain or loss on disposal of an item of property, plant and equipment is recognized in profit or loss.

The cost of the property, plant and equipment''s at 1st April 2015, the Company''s date of transition to Ind AS, was determined with reference to its carrying value at that date.

ii. Subsequent expenditure

Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Company''s.

iii. Depreciation

Depreciation is provided, pro rata to the period of use, based on useful lives specified in Schedule II to the Companies Act, 2013 except in the case where the estimated useful life based on management experience and technical evaluation differs.

Depreciation is charged on the Straight Line or the Written Down Value based on the method consistently followed by the respective entities in the Company.

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

Capital expenditure in respect of which ownership does not vest with the Company is amortized over a period of five years. Leasehold land is amortized over the period of lease.

I. Intangible Assets

Intangible assets which are acquired by the Company and have finite useful lives are measured at cost less accumulated amortization and any accumulated impairment losses.

All other expenditure, including expenditure on internally generated goodwill and brands, is recognized in profit or loss as incurred.

Amortization

Amortization is calculated to write off the cost of intangible assets less their estimated residual values using the straight-line method over their estimated useful lives, and is generally recognized in profit or loss.

Enterprise resource planning cost: Cost of implementation of ERP Software including all related direct expenditure is amortized over a period of 5 years on successful implementation.

The cost of the intangible assets at 1st April 2015, the Company''s date of transition to Ind AS, was determined with reference to its carrying value at that date.

J. Borrowing costs

Borrowing costs that are directly attributable to the acquisition or construction of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalized as part of the cost of that asset till the date it is ready for its intended use or sale. Other borrowing costs are recognized as an expense in the period in which they are incurred.

K. Share-based payments:

a. Employees of the Company receive remuneration in the form of share-based payments, whereby employees render services as consideration for equity instruments (equity-settled transactions).

b. The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model.

c. That cost is recognized, together with a corresponding increase in share-based payment (SBP) reserves in equity, over the period in which the performance and/or service conditions are fulfilled. The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Company''s best estimate of the number of equity instruments that will ultimately vest.

d. When the terms of an equity-settled award are modified, the minimum expense recognized is the expense had the terms had not been modified, if the original terms of the award are met. An additional expense is recognized for any modification that increases the total fair value of the share-based payment transaction, or is otherwise beneficial to the employee as measured at the date of modification. Where an award is cancelled by the entity or by the counterparty, any remaining element of the fair value of the award is expensed immediately through profit or loss

e. The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share.

L. Treasury Shares

Own equity instruments that are reacquired (treasury shares) are recognized at cost and deducted from equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Company''s own equity instruments. Any difference between the carrying amount and the consideration, if reissued, is recognized in capital reserve.

M. 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 instruments also include derivative contracts such as foreign currency foreign exchange forward contracts, Commodity future Contracts, interest rate swaps and currency options; and embedded derivatives in the host contract.

Financial instruments also covers contracts to buy or sell a non-financial item that can be settled net in cash or another financial instrument, or by exchanging financial instruments, as if the contracts were financial instruments, with the exception of contracts that were entered into and continue to be held for the purpose of the receipt or delivery of a non-financial item in accordance with the entity''s expected purchase, sale or usage requirements.

i. Financial assets Classification

The Company shall classify financial assets as subsequently measured at amortized cost, fair value through other comprehensive income or fair value through profit or loss on the basis of its business model for managing the financial assets and the contractual cash flow characteristics of the financial asset.

Initial recognition and measurement

All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Purchases 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 trades) are recognized on the trade date, i.e., the date that the Company''s commits to purchase or sell the asset.

Debt instruments at amortized cost

- A debt instrument'' is measured at the amortized cost if both the following conditions are met:

a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and

b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.

- After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in finance income in the profit or loss. The losses arising from impairment are recognized in the profit or loss. This category generally applies to trade and other receivables.

Debt instrument at fair value through profit and loss (FVTPL)

- Any debt instrument, which does not meet the criteria for categorization as at amortized cost or as FVOCI, is classified as at FVTPL.

- In addition, the Company may elect to classify a debt instrument, which otherwise meets amortized cost or FVOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as accounting mismatch'').

- Debt instruments included within the FVTPL category are measured at fair value with all changes recognized in the profit and loss.

- All equity investments in scope of Ind-AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at FVTPL. For all other equity instruments, the Company''s decides to classify the same either as at FVOCI or FVTPL. The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.

- The company has elected to apply the exemption available in respect of the carrying value of the investments held in subsidiaries, joint ventures and associates in accordance with Ind AS 27.

- Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the profit and loss.

Derecognition

- A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar financial assets) is primarily derecognized (i.e. removed from the Company''s balance sheet) when:

- The rights to receive cash flows from the asset have expired, or

- The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a pass-through'' arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset

- When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognize the transferred asset to the extent of the Company continuing involvement. In that case, the Company also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.

- Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.

Impairment of financial assets

In accordance with Ind-AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:

a) Financial assets that are debt instruments, and are measured at amortized cost e.g., loans, debt securities, deposits, and bank balance.

b) Trade receivables - The application of simplified 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. Trade receivables are tested for impairment on a specific basis after considering the sanctioned credit limits, security like letters of credit, security deposit collected etc. and expectations about future cash flows.

ii. Financial liabilities

Classification

The Company classifies all financial liabilities as subsequently measured at amortized cost, except for financial liabilities at fair value through profit or loss. Such liabilities, including derivatives that are liabilities, shall be subsequently measured at fair value.

Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.

All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable and incremental transaction cost.

Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the statement of profit and loss.

The Company''s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments.

Financial guarantee contracts

Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognized initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind-AS 109 and the amount recognized less cumulative amortization.

Derecognition

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement of profit or loss.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.

iii. Derivative financial instruments and hedge accounting

The Company holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures.

Derivatives are initially measured at fair value. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are generally recognized in profit or loss.

The Company designates certain derivatives as hedging instruments to hedge the variability in cash flows associated with highly probable forecast transactions arising from changes in foreign exchange rates and interest rates.

At inception of designated hedging relationships, the Company documents the risk management objective and strategy for undertaking the hedge. The Company also documents the economic relationship between the hedged item and the hedging instrument, including whether the changes in cash flows of the hedged item and hedging instrument are expected to offset each other.

Cash Flow Hedges

When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the derivative is recognized in OCI and accumulated in the other equity under the "effective portion of cash flow hedges". The effective portion of changes in the fair value of the derivative that is recognized in OCI is limited to the cumulative change in fair value of the hedged item, determined on the present value basis, from the inception of the hedge. Any ineffective portion of changes in the fair value of the derivative is recognized immediately in profit and loss.

When the hedged forecast transaction subsequently results in the recognition of a non-financial item such as inventory, the amount accumulated in the other equity is included directly in the initial cost of the non-financial item when it is recognized. For all other hedged forecast transactions, the amount accumulated in other equity is reclassified to profit and loss in the same period or periods during which the hedged expected future cash flows affect profit and loss.

If a hedge no longer meets the criteria for hedge accounting or the hedging instrument is sold, expires, is terminated or is exercised, then hedge accounting is discontinued prospectively. When hedge accounting for cash flow hedges is discontinued, the amount that has been accumulated in other equity remains there until, for a hedge of a transaction resulting in the recognition of a non-financial item, it is included in the non-financial items cost of initial recognition or for other cash flow hedges, it is reclassified to profit and loss in the same period as the hedged future cash flows affect the profit and loss.

If the hedged cash flows are no longer expected to occur, then the amounts that have been accumulated in the other equity are immediately reclassified to profit and loss.

Provisions and contingent liabilities

Provisions are determined by discounting the expected future cash flows specific to the liability. The unwinding of the discount is recognized as finance cost. A provision for onerous contracts is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Company recognizes any impairment loss on the assets associated with that contract.

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

A contingent asset is not recognized but disclosed in the financial statements where an inflow of economic benefit is probable.

N. Leases

i. Lease payments

Payments made under operating leases are recognized in profit or loss on a straight line basis over the term of the lease unless such payments are structured to increase in line with expected general inflation to compensate for the less or’s expected inflationary cost increase. Lease incentives received are recognized as an integral part of the total lease expense, over the term of the lease.

ii. Lease assets

Assets held by the Company under leases that transfer to the Company''s substantially all of the risks and rewards of ownership are classified as finance leases. The leased assets are measured initially at an amount equal to the lower of their fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the assets are accounted for in accordance with the accounting policy applicable to that asset.

Assets held under other leases are classified as operating leases and are not recognized in the Company''s statement of financial position.

O. Impairment of non-financial assets

The carrying values of assets/cash generating units at each balance sheet date are reviewed for impairment if any indication of impairment exists. If the carrying amount of the assets exceed the estimated recoverable amount, an impairment is recognized for such excess amount.

The recoverable amount is the greater of the net selling price and their value in use.

Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor. When there is indication that an impairment loss recognized for an asset (other than a revalued asset) in earlier accounting periods which no longer exists or may have decreased, such reversal of impairment loss is recognized in the Statement of Profit and Loss, to the extent the amount was previously charged to the Statement of Profit and Loss. In case of revalued assets, such reversal is not recognized.

P. Cash and cash equivalents

Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.

For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Company cash management.

Q. Segment Reporting

The Chief Operational Decision Maker monitors the operating results of its business Segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit and loss and is measured consistently with profit or loss in the financial statements.

The Accounting Policies adopted for segment reporting are in line with the Accounting Policies of the Company. Segment assets include all operating assets used by the business segments and consist principally of fixed assets, trade receivables and inventories. Segment liabilities include the operating liabilities that result from the operating activities of the business. Segment assets and liabilities that cannot be allocated between the segments are shown as part of unallocated corporate assets and liabilities respectively. Income / Expenses relating to the enterprise as a whole and not allocable on a reasonable basis to business segments are reflected as unallocated corporate income / expenses.

R. Earnings per share

Basic Earnings per share is calculated by dividing the net profit for the period attributable to the equity shareholders by the weighted average number of equity shares outstanding during the period. For the purpose of calculating diluted earnings per share, the net profit for the period attributable to the equity shareholders and the weighted average number of equity shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.

e Terms/rights attached to equity shares

i) The Company has one class of equity shares having a par value of '' 10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

ii) During the year ended 31 March 2017, recommended dividend for the financial year 2016 -17 @ Rs 10/- per share aggregating to Rs 46.06 crore (including dividend tax Rs 7.79 crore) on 38,268,619 Equity shares of Rs 10 each fully paid.

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

h Shares Reserved for issue under options

There are no shares reserved for issue under options and contracts / commitments for the sale of shares / disinvestment.

i Scheme of Amalgamation of Apar Lubricants Limited (ALL)

At the hearing held on 23rd October, 2015, the Honorable High Court of Gujarat at Judicature at Ahmadabad have sanctioned the Scheme of Amalgamation of Apar Lubricants Limited (ALL) (wholly-owned subsidiary of the Company) with Apar Industries Limited (AIL) w.e.f. 1st January, 2015 (being the appointed date). The effective date of the Scheme is 10th November, 2015, being the date on which Certified Copy of the High Court Order and the Scheme filed with Registrar of Companies, Gujarat.

Pursuant to the Scheme :

(i) The Authorized Share Capital of AIL enhanced by Rs 10 crore and now stands at Rs. 1,019,987,500 divided into 101,998,750 Equity Shares of Rs. 10 each;

(ii) The ALL stand dissolved without winding-up; and

(iii) The Scheme has accordingly been given effect to in the financial statements with effect from the Appointed date. All the assets and liabilities excluding fixed assets of ALL have been transferred to the Company at the book value as recorded in books of Transferor Company. Fixed assets have been recorded at its estimated market value. The Company has followed ''Purchase Method'' of accounting as per the Accounting Standard (AS) 14 ''Accounting for Amalgamations''."

(iv) The scheme of amalgamation is followed as per the court order hence goodwill is not tested for impairment, instead amortization of goodwill is carried out as laid down in court scheme

(v) The net loss Rs, 0.00 crore of the Transferor Company from the appointed date i.e. 1st January, 2015 till 31st March, 2015 has been transferred to the surplus in Statement of profit and loss in the books of the company, thereby adjusting opening reserves. This loss has been arrived at after charging amortization of Goodwill of Rs, 0.44 crore (net of tax) for the relevant period.

Nature and purpose of reserves

i. Cash flow hedging reserve

The hedging reserve comprises the effective portion of the cumulative net change in the fair value of hedging instruments used in cash flow hedges.

ii. Securities premium reserve

The Securities Premium used to record the premium received on the issue of shares. It is utilized in accordance with the provisions of the Companies Act 2013. The reserve also comprises the profit on treasury shares sold 16,35,387.

iii. Capital reserve

The reserve comprises of profits/gains of capital nature earned by the Company and credited directly to such reserve.

iv. Capital redemption reserve

Capital redemption reserve represents amounts set aside by the Company for future redemption of capital.

v. General reserve

General reserve forms part of the retained earnings and is permitted to be distributed to shareholders as part of dividend.

Information about the Company''s exposure to liquidity risk, foreign currency and interest rate are included in Note 37, 38 and 39 respectively Details of security:

a Rupee term loans and foreign currency loan from banks are secured as under:

i The Foreign Currency term loan from Union Bank of India, Hong Kong , is secured by first charge by way of equitable mortgage by deposit of title deeds of Company''s Athola properties and exclusive hypothecation charge on the assets acquired by the Company with the proceeds of the facility situated at other locations.

ii The rupees term loan from ING Vysya Bank Ltd (now Kotak Mahindra Bank) is secured by first charge by way of equitable mortgage by deposit of title deed of Company''s Khatalwad properties and hypothecation of movable plant and machinery at Khatalwad excluding movable machinery hypothecated to ECB Lenders.

b Terms of repayment of term loan :

i In respect of Rupee Term Loan from Bank in 10 quarterly installments till September, 2019, 9 installments of '' 3.33 crore each and last of '' 3.34 crore

ii In respect of Foreign Currency Term Loans from Union Bank of India,Hongkong; in May ,2017 '' 11.67 crore; in May, 2018 '' 14.88 crore.

The Company does not have any continuing default as on the Balance Sheet date in repayment of loans and interest.

The company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.

Significant management judgment is required in determining provision for income tax, deferred income tax assets and liabilities and recoverability of deferred income tax assets. The recoverability of deferred income tax assets is based on estimates of taxable income by each jurisdiction in which the relevant entity operates and the period over which deferred income tax assets will be recovered.

Note :

Working capital loans from banks (secured) are secured by :

(i) hypothecation of specified stocks, specified book debts of the Company.

(ii) first charge by way of equitable mortgage by deposit of title deeds of Company''s specified immovable properties, both present and future.

The Company does not have any continuing default as on the Balance Sheet date in repayment of loans and interest.

There are no Micro, Small and Medium Enterprises, to whom the Group owes dues, which are outstanding for more than 45 days as at the balance sheet date. The above information regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company.


Mar 31, 2015

1. Basis of Preparation of financial statements :

The financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (''GAAP'') under the historical cost-convention on the accrual basis. GAAP comprises mandatory accounting standards as prescribed under Section 133 of the Companies Act, 2013 (the Act'') read with Rule 7 of the Companies (Accounts) Rules, 2014, the provisions of the Act (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). Accounting policies have been consistently applied except, where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard required a change in the accounting policy hitherto in use.

2. Use of estimates :

The preparation of financial statements is in conformity with generally accepted accounting principles (''GAAP'') which requires the management of the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities on the date of the financial statements. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in current and future periods.

3. Fixed assets, Depreciation and Amortisation :

(I) Fixed assets are stated at cost of acquisition / construction (net of CENVAT) less accumulated depreciation. Cost includes purchase price and other costs attributable to acquisition / construction of fixed assets.

(II) (i) Depreciation on assets is provided over the useful lives of assets as prescribed under Schedule II of the Companies Act, 2013.

(ii) In respect of following assets, based on management experience and independent technical evaluation carried out by external technical consultants, the management has estimated useful lives, which are different then prescribed in Schedule II.

(iii) Depreciation is provided on written down value method except in respect of building and plant and machinery purchased after 30.4.1987, which are depreciated on straight line method.

(iv) Capital Expenditure in respect of which ownership does not vest with the Company is amortized over a period of five years. Leasehold land is amortized over the period of lease.

(v) In respect of Cable division all assets are depreciated on straight line method.

(vi) Borrowing costs attributable to acquisition/construction of qualifying assets within the meaning of the Accounting Standard (AS) 16 Borrowing Costs'' are capitalised as a part of the cost of fixed assets.

(vii) Pre-operation expenses including trial run expenses (net of revenue) are capitalised.

4. Impairment of assets :

The Company assesses, at each balance sheet date, whether there is any indication of impairment of the carrying amount of the Company''s assets. An impairment loss is recognised in the Statement of profit and loss, wherever the carrying amount of the assets exceeds its estimated recoverable amount. The recoverable amount is greater of the net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value, based on an appropriate discounting factor. Impairment losses are recognised in the Statement of profit and loss. The impairment loss recognised in prior accounting period is reversed if there has been change in recoverable amount.

5. Investments :

All long term investments are stated at cost. Provision for diminution in value of long term investments is made if it is other than temporary in nature. Current investments are valued at lower of cost and market value.

6. Inventories :

Inventories are valued at lower of standard cost or net realizable value. Cost includes material cost, cost of labour and attributable

manufacturing overheads. Cost of materials is arrived at on weighted average basis. Inventory of scrap is valued at estimated realisable value. Inventories of finished goods include excise duty as applicable.

7. Government grants :

(i) Government grants are recognised in the financial statements when they are received and there is reasonable assurance that the Company will comply with the conditions attached to them.

(ii) Government grants, which are in the nature of refundable interest free loans received from government/semi-government authorities, are credited to secured/unsecured loans.

(iii) Government grants which are in the nature of subsidies received from government/semi-government authorities and which are non-refundable are credited to reserves.

8. Employee stock options :

In respect of the employee stock options, the excess of fair price on the date of grant over the exercise price is recognised as deferred compensation cost amortized over vesting period.

9. Voluntary retirement schemes :

Compensations paid under voluntary retirement schemes are amortized over a period not exceeding 5 years, up to 31st March, 2010. The expenses incurred after 31st March, 2010 are charged to Statement of profit and loss.

10. Enterprise resource planning cost :

Cost of implementation of ERP Software including all related direct expenditure is amortized over a period of 5 years on successful implementation.

11. Share issue expenses :

Share issue expenses are written off against share premium account if any or amortized over a period of 5 years.

12. Revenue recognition :

(i) Sale of goods is recognised on despatch to customers and on date of shipment in case of exports. Sales exclude amounts recovered towards sales tax and excise duty and is net of returns.

(ii) Price variation claims are accounted in accordance with the terms of contract and/or upon admittance by customers.

(iii) Dividend income on investment is recognised when the right to receive payment is established.

(iv) In respect of service activities, income is recognised as and when services are rendered.

(v) Lease rental on operating lease is accounted on accrual basis.

13. Post-employment benefits :

Defined Contribution Plans: In respect of the Company''s provident fund scheme, the Company makes specified monthly contributions towards employee provident fund directly to the Government under the Employees Provident Fund Act, 1952 and is not obliged to bear the shortfall, if any, between the return on investments made by the Government from the contributions and the notified interest rate. In respect of the Company''s approved superannuation scheme, the Company makes specified contributions to the superannuation fund administered by the Company and the return on investments is adequate to cover the commitments under the scheme. The Company''s contribution paid/payable under these schemes is recognised as expense in the Statement of profit and loss during the period in which the employee renders the related service.

Defined Benefit Plans: In respect of the Company''s gratuity and leave wages schemes, the present value of the obligation under such scheme is determined based on actuarial valuation using the Projected Unit Credit Method. The discount rates used for determining the present value of the obligation is based on the market yields on Government securities as at the balance sheet date. Actuarial gains and losses are recognised immediately in the Statement of profit and loss. Long-term compensated absences are provided for based on actuarial valuation, made at the year end, by independent actuaries.

14. Translation of foreign currency :

(i) The Company translates foreign currency transactions during the year, at the conversion rates prevailing on transaction dates.

(ii) Monetary items remaining unsettled at the year end are translated / reported at the year end rate. Exchange differences arising on such revaluation are recognised in the Statement of profit and loss.

(iii) Non-Monetary items (other than fixed assets) are reported at the exchange rate at which they are accounted.

(iv) In case of forward contracts, premium on the forward contracts is recognised as income or expense over the life of the contract.

(v) Any income or expense on account of exchange difference either on settlement or on translation is recognised in the Statement of profit and loss except in case of long term liabilities, where they relate to acquisition of fixed assets, in which case they are adjusted to the carrying cost of such assets.

15. Derivative Contracts :

Derivative contract entered into, to hedge commodity/forex unexecuted Firm commitment and highly probable forecast transaction are recognised in the financial statement at fair value as on Balance sheet date. The gains or losses arising out of fair valuation of derivative contracts are recognised in the Statement of profit and loss or Balance sheet as the case may be after applying the test of hedge effectiveness. The gain or losses are recognised as Hedge Reserve'' in the Balance sheet when the hedge is effective and where the hedge is ineffective the same is recognised in the Statement of profit and loss. The gains and losses on roll over or cancellation of derivative contract which qualify as effective hedge are recognised in the Statement of profit and loss in the same period in which the hedge item is accounted.

16. Export benefits/Incentives :

The Company accounts for excise duty rebate on deemed and physical exports, duty entitlements and Focus benefits on physical exports on accrual basis. Premium on special import licence is credited in the accounts as and when realised. The benefits in the form of entitlements to Advance Licenses for duty free import of raw materials in respect of exports made are accounted when such imports are made. The benefits in the form of entitlements to status holders licenses are accounted when licenses are utilised.

17. Claims against the Company not acknowledged as debts :

The demands under disputed showcause notices / orders of statutory authorities are provided in the accounts on the basis of management''s estimate and the balance, if any, are included in contingent liability.

18. Taxes on income :

(a) Tax on income for the current period is determined on the basis of estimated taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961 and based on the expected outcome of assessments / appeals.

(b) Deferred tax is recognised on timing differences between the accounted income and the taxable income for the year, and quantified using the tax rates and laws enacted or substantively enacted as on the balance sheet date.

(c) Deferred tax assets relating to unabsorbed depreciation / business losses are recognised and carried forward to the extent there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

(d) Other deferred tax assets are recognised and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

19. Provision for contingencies :

A provision is recognised when there is a present obligation as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and in respect of which reliable estimates can be made. Disclosure of 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. When likelihood of such outflow is remote, no provision or disclosure is made. Provision arising from litigations, assessments by statutory authorities, etc. is made when the Company based on legal advise wherever necessary estimates that the liability has been incurred and the amount can be reasonably estimated.

20. Accounting for interest in joint ventures :

Interest in joint ventures (i.e., jointly controlled entity) are accounted for as follows :

(a) income on investment in incorporated jointly controlled entity is recognised when the right to receive the same is established.

(b) investment in such joint venture is carried at cost after providing for any Permanent diminution in value.

21. Borrowing costs :

(a) Borrowing costs that are attributable to the acquisition, construction or production of a qualifying asset are capitalized as part of the cost of such asset till such time as the asset is ready for its intended use or sale. A qualifying asset is an asset that necessarily requires a substantial period of time (generally over twelve months) to get ready for its intended use or sale.

(b) All other borrowing costs are recognised as expense in the period in which they are incurred.

22. Lease accounting :

Operating lease rentals are expensed with reference to lease terms and other considerations.

a. Reconciliation of the number of shares outstanding at the beginning and at the end of the year. Equity Shares

*Issued during the year to the Employees / Director under Apar Industries Limited Stock Option Plan - 2007 at Rs.207.05 per share. b. Terms/rights attached to equity shares

i) The Company has one class of equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled

to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of

Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

ii) During the year ended 31st March 2015, the amount of per share dividend recognised as distributions to equity shareholders is Rs. 3.50, ( Previous year Rs. 5.25 ).

iii) In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the

Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares

held by the shareholders.

As per records of the Company, including its register of shareholders/members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownerships of shares.

d. Shares reserved for issue under options

The Company provides share-based payment to its employees. During the year ended 31st March 2015, an Employee Stock Option Plan (ESOP) was in existence. The relevant details of the scheme and the grant are as below :

Members'' approval was obtained at the Annual General Meeting held on 9th August, 2007 for introduction of Employee Stock Option Scheme to issue and grant upto 1,616,802 options, but the Board has granted 175,150 options till date.

During the year, Company has alloted 26072 equity shares of Rs. 10/- each to employees/Directors of the Company under Employee stock option plan 2007 at an exercise price of Rs. 207.05 per share.

— The Foreign Currency term loan from Credit Agricole CI Bank, Singapore is secured by exclusive charge on the assets acquired by the Company with the proceeds of the facility.

— The Foreign Currency term loan from Union Bank of India, Hong Kong is secured by first charge by way of equitable mortgage by deposit of title deeds of Company''s Athola properties and exclusive hypothecation charge on the assets acquired by the Company with the proceeds of the facility situated at other locations.

— The rupees term loan from ING Vysya Bank Ltd (Now Kotak Mahindra Bank) is secured by first charge by way of equitable mortgage by deposit of title deed of Company''s Khatalwada properties and hypothecation of movable plant & machinery at Khatalwada excluding movable machinery hypothecated to ECB Lenders.

— Terms of repayment of term loan.

— In respect of Foreign Currency Term Loans from Bank in August, 2015Rs.9.37 crore, in May, 2016 Rs.10.00 crore, in August, 2016 Rs. 12.50 crore, in May, 2017Rs.11.25 crore, in May, 2018Rs.14.37 crore,.

— In respect of Rupee Term Loan from Bank in 15 quarterly installments commencing from March, 2016 till September, 2019, 14 installments of Rs. 3.33 crore each and last of Rs. 3.34 crore.

Working capital loans from banks (secured) Rs. 162.32 crore are secured by :

(i) hypothecation of specified stocks, specified book debts of the Company.

(ii) first charge by way of equitable mortgage by deposit of title deeds of Company''s specified immovable properties, both present and future.

(The above information regarding micro and small enterprises has been determined on the basis of information available with the Company],

Note:

(a] There are no amounts due and outstanding to be credited to the Investor Education and Protection Fund as on 31st March, 2015,

(b] Other payables includes security deposit, book overdraft and advance from customers,

1] Registration of Petroleum Specialities FZE in Hamriyah, Sharjah: The Company''s Wholly-owned Subsidiary, Petroleum Specialities Pte. Ltd, Singapore, (PSPL] is setting up a manufacturing facility in the Hamriyah Free Zone Authority, UAE, for the manufacture of a comprehensive range of Speciality oils and Lubricants. For the purpose, it has incorporated on 18th November, 2014, a wholly owned subsidiary Company Viz Petroleum Specialities FZE, in the Free trade Zone, Sharjah, UAE.

2] During the year, the Company (AIL] has purchased 169,181 Equity shares representing 2.50% of the Share of Apar Chematek Lubricants Limited (ACLL] held by Chematek S.p.A. The said shares were transferred in the name of the Company on 22nd July, 2014. Consequent upon the transfer of above 169,181 equity shares in the name of AIL, the shareholding of AIL in ACLL was increased to 100%. The name of the Company (ACLL] was change from ''Apar Chematek Lubricants Limited'' to ''Apar Lubricants Limited'' with effect from 5th September, 2014.

During the year, the Board of Directors of Apar Lubricants Limited (ALL] and Apar Industries Limited (AIL] at their respective Board Meetings held on 5th February, 2015, have decided to amalgamate ALL with AIL with effect from the Appointed Date of 1st January, 2015, subject to the approvals of the Hon''able High Court of Gujarat and other regulatory authorities.

Note :

[i] There are no amounts due and outstanding to be credited to the Investor Education and Protection Fund as at 31st March, 2015.

[ii] Against letters of credit for Company''s import of raw materials and working capital loans.


Mar 31, 2013

1. Basis of Preparation of financial statements:- The financial statements are prepared on accrual basis under the historical cost convention and comply in all material aspects with the generally accepted accounting principles in India, the Accounting Standards prescribed under Section 211(3C) of the Companies Act,1956 and the applicable provisions thereof.

2. Use of estimates:- The preparation of financial statements is in conformity with generally accepted accounting principles ("GAAP") which requires the management of the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities on the date of the financial statements. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in current and future periods.

3. Fixed assets, Depreciation and Amortisation:-

(i) Fixed assets are stated at cost of acquisition / construction (net of CENVAT) less accumulated depreciation. Cost includes purchase price and other costs attributable to acquisition / construction of fixed assets.

(ii) Depreciation on assets is provided at the rates and in the manner prescribed under Schedule XIV of the Companies Act, 1956 (except as stated in

(iii) below):

(a) On written down value method except in respect of building and plant and machinery purchased after 30.4.1987, which are depreciated on straight line method.

(b) Capital Expenditure in respect of which ownership does not vest with the Company is amortised over a period of five years. Leasehold land is amortised over the period of lease.

(c) Certain items of plant and machinery which have been considered to be continuous process plant by the management are depreciated at the prescribed rates.

(d) In respect of Cable division all assets are depreciated on straight line method.

(iii) In the cases where the estimated useful life of the asset is less as compared to useful life estimated in Schedule XIV of the Companies Act, 1956, such assets are depreciated at rates higher than those prescribed under Schedule XIV of the Companies Act, 1956.

Asset Rate

Factory building at Nalagarh Over the lease period of 8 years (iv) In respect of assets costing less than Rs. 5,000 each and temporary structures, 100% depreciation is provided in the year of addition.

(v) Borrowing costs attributable to acquisition/construction of qualifying assets within the meaning of the Accounting Standard (AS) 16 on "Borrowing Costs" are capitalised as a part of the cost of fixed assets.

(vi) Pre-operation expenses including trial run expenses (net of revenue) are capitalised.

4. Impairment of assets: -

The Company assesses, at each balance sheet date, whether there is any indication of impairment of the carrying amount of the Company''s assets. An impairment loss is recognised in the Statement of profit and loss wherever the carrying amount of the assets exceeds its estimated recoverable amount. The recoverable amount is greater of the net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value, based on an appropriate discounting factor. Impairment losses are recognised in the Statement of profit and loss. The impairment loss recognised in prior accounting period is reversed if there has been change in recoverable amount.

5. Investments: -

All long term investments are stated at cost. Provision for diminution in value of long term investments is made if it is other than temporary in nature. Current investments are valued at lower of cost and market value.

6. Inventories :- Inventories are valued at lower of standard cost or net realisable value. Cost includes material cost, cost of labour and attributable manufacturing overheads. Cost of materials is arrived at on weighted average basis. Inventory of scrap is valued at estimated realisable value. Inventories of finished goods include excise duty as applicable.

7. Government grants: -

(i) Government grants are recognised in the financial statements when they are received and there is reasonable assurance that the Company will comply with the conditions attached to them.

(ii) Government grants, which are in the nature of refundable interest free loans received from government/semi-government authorities, are credited to secured/unsecured loans.

(iii) Government grants which are in the nature of subsidies received from government/semi-government authorities and which are non-refundable are credited to reserves.

8. Employee stock options:- In respect of the employee stock options, the excess of fair price on the date of grant over the exercise price is recognised as deferred compensation cost amortised over vesting period.

9. Voluntary retirement schemes:- Compensations paid under voluntary retirement schemes are amortised over a period not exceeding 5 years, up to March 31, 2010. The expenses incurred after March 31, 2010 are charged to Statement of profit and loss.

10. Enterprise resource planning cost:- Cost of implementation of ERP Software including all related direct expenditure is amortised over a period of 5 years on successful implementation.

11. Share issue expenses:- Share issue expenses are written off against share premium account if any or amortised over a period of 5 years.

12. Revenue recognition:- (i) Sale of goods is recognised on despatch to customers and on date of shipment in case of exports. Sales exclude amounts recovered towards sales tax and excise duty and is net of returns.

(ii) Price variation claims are accounted in accordance with the terms of contract and/or upon admittance by customers.

(iii) Dividend income on investment is recognised when the right to receive payment is established.

(iv) In respect of service activities, income is recognised as and when services are rendered.

(v) Lease rental on operating lease is accounted on accrual basis.

13. Post-employment benefits:- Defined Contribution Plans: In respect of the Company''s provident fund scheme, the Company makes specified monthly contributions towards employee provident fund directly to the Government under the Employees Provident Fund Act, 1952 and is not obliged to bear the shortfall, if any, between the return on investments made by the Government from the contributions and the notified interest rate. In respect of the Company''s approved superannuation scheme, the Company makes specified contributions to the superannuation fund administered by the Company and the return on investments is adequate to cover the commitments under the scheme. The Company''s contribution paid/payable under these schemes is recognised as expense in the Statement of profit and loss during the period in which the employee renders the related service.

Defined Benefit Plans: In respect of the Company''s gratuity and leave wages schemes, the present value of the obligation under such scheme is determined based on actuarial valuation using the Projected Unit Credit Method. The discount rates used for determining the present value of the obligation is based on the market yields on Government securities as at the balance sheet date. Actuarial gains and losses are recognised immediately in the Statement of profit and loss. Long-term compensated absences are provided for based on actuarial valuation, made at the year end, by independent actuaries.

14. Translation of foreign currency:- (i) The Company translates foreign currency transactions during the year, at the conversion rates prevailing on transaction dates.

(ii) Monetary items remaining unsettled at the year end are translated / reported at the year end rate. Exchange differences arising on such revaluation are recognised in the Statement of profit and loss.

(iii) Non-Monetary items (other than fixed assets) are reported at the exchange rate at which they are accounted.

(iv) In case of forward contracts, premium on the forward contracts is recognised as income or expense over the life of the contract.

(v) Any income or expense on account of exchange difference either on settlement or on translation is recognised in the Statement of profit and loss except in case of long term liabilities, where they relate to acquisition of fixed assets, in which case they are adjusted to the carrying cost of such assets.

15. Derivative Contracts:- Derivative contract entered into, to hedge commodity/forex unexecuted Firm commitment and highly probable forecast transaction are recognised in the Financial Statement at fair value as on Balance sheet date. The gains or losses arising out of fair valuation of derivative contracts are recognised in the Statement of profit and loss or Balance sheet as the case may be after applying the test of hedge effectiveness. The gain or losses are recognised as ''Hedge Reserve'' in the Balance Sheet when the hedge is effective and where the hedge is ineffective the same is recognised in the Statement of profit and loss. The gains and losses on roll over or cancellation of derivative contract which qualify as effective hedge are recognised in the Statement of profit and loss in the same period in which the hedge item is accounted.

16. Export benefits/Incentives:- The Company accounts for excise duty rebate on deemed and physical exports, duty entitlements and Focus benefits on physical exports on accrual basis. Premium on special import licence is credited in the accounts as and when realised. The benefits in the form of entitlements to Advance Licenses for duty free import of raw materials in respect of exports made are accounted when such imports are made. The benefits in the form of entitlements to status holders licenses are accounted when licenses are utilised.

17. Claims against the Company not acknowledged as debts:- The demands under disputed showcause notices / orders of statutory authorities are provided in the accounts on the basis of management''s estimate and the balance, if any are included in contingent liability.

18. Taxes on income:- (a) Tax on income for the current period is determined on the basis of estimated taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961 and based on the expected outcome of assessments / appeals.

(b) Deferred tax is recognised on timing differences between the accounted income and the taxable income for the year, and quantified using the tax rates and laws enacted or substantively enacted as on the balance sheet date.

(c) Deferred tax assets relating to unabsorbed depreciation / business losses are recognised and carried forward to the extent there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

(d) Other deferred tax assets are recognised and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

19. Provision for contingencies:- A provision is recognised when there is a present obligation as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and in respect of which reliable estimates can be made. Disclosure of 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. When likelihood of such outflow is remote, no provision or disclosure is made. Provision arising from litigations, assessments by statutory authorities, etc. is made when the Company based on legal advise wherever necessary estimates that the liability has been incurred and the amount can be reasonably estimated.

20. Accounting for interest in joint ventures:- Interest in joint ventures (i.e., jointly controlled entity) are accounted for as follows:

(a) income on investment in incorporated jointly controlled entity is recognised when the right to receive the same is established.

(b) investment in such joint venture is carried at cost after providing for any Permanent diminution in value.

21. Borrowing costs:- (a) Borrowing costs that are attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of such asset till such time as the asset is ready for its intended use or sale. A qualifying asset is an asset that necessarily requires a substantial period of time (generally over twelve month) to get ready for its intended use or sale.

(b) All other borrowing costs are recognised as expense in the period in which they are incurred.

22. Lease accounting:- Operating lease rentals are expensed with reference to lease terms and other considerations.


Mar 31, 2012

1. Basis of Preparation of financial statements:-

The financial statements are prepared on accrual basis under the historical cost convention and comply in all material aspects with the generally accepted accounting principles in India, the Accounting Standards prescribed under Section 211(3C) of the Companies Act, T9-56 and the applicable provisions thereof.

2. Use of estimates:-

The preparation of financial statements is in conformity with generally accepted accounting principles ("GAAP") which requires the management of the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities on the date of the financial statements. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in current and future periods.

3. Fraed assets, depreciation and amortisation:-

(i). fixed assets are stated at cost of acquisition / construction (net of CENVAT) less accumulated depreciation. Cost includes purchase price arid other costs attributable to acquisition / construction of fixed assets.

(ii) Depreciation on assets is provided at the rates and in the manner prescribed under Schedule XIV of the Companies Act, 1956 (except as stated in (iii) below):

(a) On written down value method except in respect of building and plant and machinery purchased after 30.4.1987, which are depreciated on straight line method.

(b) Capital expenditure in respect of which ownership does not vest with the Company is amortised over a period of five years. Leasehold land is amortised over the period of lease.

(c) Certain items of plant and machinery which have been considered to be continuous process plant by the management are depreciated at the prescribed rates.

(d) In respect of Cable division (erstwhile Uniflex Cables Limited) all assets are depreciated on straight line method.

(iii) In the cases where the estimated useful life of the asset is less as compared to useful life estimated in Schedule XIV of the Companies Act, 1956, such assets are depreciated at rates higher than those prescribed under Schedule XIV of the Companies Act. 1956.

Asset Rate

Factory building at Nalagarh Over the lease period of 8 years

(iv) In respect of assets costing less than Rs. 5,000 each and temporary structures, 100% depreciation is provided in the year of addition.

(v) Borrowing costs attributable to acquisition/construction of qualifying assets within the meaning of the Accounting Standard (AS) 16 on "Borrowing Costs" are capitalised as a part of the cost of fixed assets.

(vi) Pre-operation expenses including trial run expenses (net of revenue) are capitalised.

4. Iimpaiinnnefit of assets: -

The Company assesses, at each balance sheet date, whether there is any indication of impairment of the carrying amount of the Company's assets. An impairment loss is recognised in the Statement of profit and loss wherever the carrying amount of the assets exceeds its estimated recoverable amount. The recoverable amount is greater of the net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value, based on an appropriate discounting factor. Impairment losses are recognised in the Statement of profit and loss. The impairment loss recognised in prior accounting period is reversed if there has been change in recoverable amount.

5. Investments: -

All long term investments are stated at cost. Provision for diminution in value of long term investments is made if it is other than temporary in nature. Current investments are valued at lower of cost and market value.

6. Inventories

Inventories are valued at lower of standard cost or net realisable value. Cost includes material cost, cost of labour and attributable manufacturing overheads. Cost of materials is arrived at on weighted average basis except in respect of Cable division (erstwhile Uniflex Cables Limited) where it is on FIFO basis. Inventory of scrap is valued at estimated realisable value. Inventories of finished goods include excise duty as applicable.

7. Government grants: -

(i) Government grants are recognised in the financial statements when they are received and there is reasonable assurance that the Company will comply with the conditions attached to them.

(ii) Government grants, which are in the natuie of refundable interest free loans received from government/semi-government authorities, are credited to securcd/unsecurcd loans.

(iii) Government grants which are in the nature of subsidies received from government/semi government authorities and which are non refundable are credited to reserves.

8. Employee stock options:-

In respect of the employee stock options, the excess of fair price on the date of grant over the exercise price is recognised as deferred compensation cost amortised over vestii.g peiiod.

9. Voluntary relit cment schcmcs:-

Compensations paid under voluntary retirement schemes arc amortised over a period not exceeding 5 years, up to 31st March, 2010. The expenses incurred after 31st March, 2010 are charged to Statement of profit and less.

10. Enterprise resouice planning cost.

Cost of implementation of ERP Software includiny all ielated uiied expenditure is amortised ovei a period of five years on successful implementation.

11. Share issue expenses:

Share issue expenses are written off against share premium account if any or amortised over a period of five /ears.

12. Revenue recognition: -

(i) Sale of goods is recognised on despate! i to customers and on date of shipment in case of exports. Sales exclude amounts recovered towards sales tax and excise duty and is net of returns.

(ii) Price variation claims are accounted in accordance with the terms of contract and/or upon admittance by customers.

(iii) Dividend income on investment is recognised when the right to receive payment is established.

(iv) In respect of service activities, income is recognised as and when services are rendRs.red

(v) Lease rental on operating lease is accounted on accrual basis

13. Post-employment benefits:

Defined Contribution Plans: In respect of the Company's provident fund scheme, the Company makes specified monthly contributions towards employee provident fund directly to the Government under the Employees Provident Fund Act, 1952 and is not obliged to bear the shortfall, if any, between the rctui: i on investments made by the Government from the contributions and the notified interest rate. In respect of the Company's approved superannuation scheme, the Company makes specified contributions to the superannuation fund administeied by the Company and the return on investments is adequate to cover the commitments under the scheme. The Company's contiibution paid/payable under these schemes is recognised as expense in the Statement of profit and loss duiing the period in which the employee renders the related se; vice.

Defined Benefit Plans. In respect of the Company's yiatuity and leave wages schemes, the present value of the obligation under such scheme is detennined based on actuarial valuation usiiiy the Projected Unit Credit Method. The discount rates used for determining the present value of the obligation is based on the market yields on Government securities as at the balancc sheet date. Actuarial gains and losses are recognised immediately in the Statement of profit and loss. Long term compensated absences are provided for based on actuarial valuation, made at the year end, by independent actuaries.

14. Translation of foreign currency :-

(i) The Company translates foreign currency transactions during the year, at the conversion rates prevailing on transaction dates.

(ii) Monetary items remaining unsettled at the year end are translated / reported at the year end rate Fxchange differences arising on such revaluation are recognised in the Statement of profit and loss.

(iii) Non-Monetary items (other than fixed assets) are reported at the exchange rate at which they are accounted.

(iv) In case of forward contracts, premium on the forward contracts is recognised as income or expense over the life of the contract.

(v) Any income or expense on account of exchange difference either on settlement or on translation is recognised in the Statement of profit and loss except in case of long term liabilities, where they relate to acquisition of fixed assets, in which case they are adjusted to the carrying cost of such assets.

15. Derivative contracts:-

Derivative contract entered into, to hedge commodity/forex unexecuted Firm commitment and highly probable forecast transaction are recognised in the Financial Statement at fair value as on Balance sheet date. The gains or losses arising out of fair valuation of derivative contracts are recognised in the Statement of profit and loss or Balance sheet as the case may be after applying the test of hedge effectiveness. The gain or losses are recognised as 'Hedge Reserve' in the Balance Sheet when the hedge is effective and where the hedge is ineffective the same is recognised in the Statement of profit and loss. The gains and losses on roll over or cancellation of derivative contract which qualify as effective hedge are recognised in the Statement of profit and loss in the same period in which the hedge item is accounted.

16. Export benefits/incentives: -

The Company accounts for excise duty rebate on deemed and physical exports, duty entitlements and Focus benefits on physical exports on accrual basis. Premium on special import licence is credited in the accounts as and when realised. The benefits in the form of entitlements to Advance Licenses for duty free import of raw materials in respect of exports made are accounted when such imports are made.

17. Claims against the Company not acknowledged as debts: -

The demands under disputed showcause notices / orders of statutory authorities are provided in the accounts on the basis of management's estimate and the balance, if any are included in contingent liability.

18. Taxes on income:-

(a) Tax on income for the current period is determined on the basis of estimated taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961 and based on the expected outcome of assessments / appeals.

(b) Deferred tax is recognised on timing differences between the accounted income and the taxable income for the year, and quantified using the tax rates and laws enacted or substantively enacted as on the balance sheet date.

(c) Deferred tax assets relating to unabsorbed depreciation / business losses are recognised and carried forward to the extent there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

(d) Other deferred tax assets are recognised and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

19. Provision for contingencies:-

A provision is recognised when there is a present obligation as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and in respect of which reliable estimates can be made. Disclosure of 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. When likelihood of such outflow is remote, no provision or disclosure is made. Provision arising from litigations, assessments by statutory authorities, etc. is made when the Company, based on legal advise wherever necessary, estimates that the liability has been incurred and the amount can be reasonably estimated.

20. Accounting for interest in joint ventures

Interest in joint ventures (i.e., jointly controlled entity) are accounted for as follows:

(a) income on investment in incorporated jointly controlled entity is recognised when the right to receive the same is established.

(b) investment in such joint venture is carried at cost after providing for any permanent diminution in value.

21. Borrowing costs

(a) Borrowing costs that are attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of such asset till such time as the asset is ready for its intended use or sale. A qualifying asset is an asset that necessarily requires a substantial period of time (generally over twelve month) to get ready for its intended use or sale.

(b) All other borrowing costs are recognised as expense in the period in which they are incurred.

22. Lease accounting

Operating lease rentals are expensed with reference to lease terms and other considerations.

b. Disclosure as required by Accounting Standard (AS) 14 Accounting for Amalgamations :

(i) Uniflex Cables Limited (UCL) was engaged in the business of manufacturing & sale of insulated Wires and Cables including Optical fibre and jelly- filled Cables.

(ii) UCL was declared as Sick Industrial Company by Hon'ble Board for Industrial & Financial Reconstruction (BIFR) on 15th October, 2010.

(iii) Pursuant to the Rehabilitation Scheme of UCL, envisaging Amalgamation of UCL with the Company by Hon'ble BIFR vide the Order dated 13th September, 2012 sanctioned Amalgamation retrospectively with effect from 1 st April, 2010 (the appointed date). The Scheme has accordingly, been given effect in financial statements. The effective date of amalgamation is 18th September, 2012.

(iv) The amalgamation has been accounted for under the 'Pooling of Interest method' as prescribed by Accounting Standard (AS) 14 Accounting for Amalgamations, specified by the Companies (Accounting Standard) Rules, 2006. Accordingly, the assets, liabilities including contingent liabilities and reserve of UCL as at 1st April, 2010 have been taken at their book values as stipulated in the said Scheme.The reserves of the transferor Company have been transferred to the respective reserves.

(v) Based on the approved exchange ratio as provided in the Scheme, 2,498,037 number of equity shares will be issued to the equity share holders of UCL in the ratio of 1 equity share of the face value of Rs. 10 each in the Company for every 10 equity shares held in erstwhile UCL. In terms of the Scheme, the said equity shares, when issued and allotted by the Company shall rank, in all respects pari-passu with the existing equity shares of the Company. Pending allotment of the said equity shares, the amount has been disclosed under 'Share Capital Suspense Account' in Note 2.

(vi) The difference between the amount of share capital of the erstwhile UCL and the amount of fresh share capital issued by the Company on amalgamation amounting to Rs. 224.82 million is treated as capital reserve and has been added to the Capital Reserve of the Company.

(viii) As provided in the Scheme 1,635,388 number of equity shares to be issued by the Company in lieu of 16,353,875 number of equity shares held by the Company in the erstwhile UCL will be transferred to 'AIL Benefit Trust' for the sole benefit of the Company. Accordingly, the cost (net of provision for dimunition in value) of the aforesaid investment of the Company Rs. 278.83 million is reflected as "Receivable from AIL Benefit Trust", under 'Other Current Assets' in "Note 19".

(ix) After giving effect to the scheme net-worth of erstwhile UCL, has become positive and as such the company will make an application to Hon'ble BIFR to take discharge from BIFR.

(x) Deferred tax asset ofRs. 263.50 million has been created for carried forward losses/depreciation and timing differences of erstwhile UCL by crediting to General Reserve.

(xi) In view of amalgamation, current year figures are not strictly comparable to those of the previous year.


Mar 31, 2011

1. Basis of preparation of financial statements:- The financial statements are prepared on accrual basis under the historical cost convention and comply in all material aspects with the generally accepted accounting principles in India, the Accounting Standards prescribed under section 211(3C) of the Companies Act, 1956 and the applicable provisions thereof.

2. Use of estimates:- The preparation of financial statements is in conformity with generally accepted accounting principles ("GAAP") which requires the management of the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities on the date of the financial statements. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in current and future periods.

3. Fixed assets, depreciation and amortisation:- (i) Fixed assets are stated at cost of acquisition/construction (net of CENVAT) less accumulated depreciation. Cost includes

purchase price and other costs attributable to acquisition/construction of fixed assets.

(ii) Depreciation on assets is provided at the rates and in the manner prescribed under Schedule XIV of the Companies Act, 1956 (except as stated in (iii) below):

(a) On written down value method except in respect of building and plant and machinery purchased after 30.04.1987, which are depreciated on straight line method.

(b) Capital expenditure in respect of which ownership does not vest with the Company is amortised over a period of five years. Leasehold land is amortised over the period of lease.

(c) Certain items of plant and machinery which have been considered to be continuous process plant by the management are depreciated at the prescribed rates.

(iii) In cases where the estimated useful life of the asset is less as compared to useful life estimated in Schedule XIV of the Companies Act, 1956, such assets are depreciated at rates higher than those prescribed under Schedule XIV of the Companies Act, 1956.

Asset Rate

Factory building at Nalagarh Over the lease period of 8 years

(iv) In respect of assets costing less than Rs. 5,000 each and temporary structures, 100% depreciation is provided in the year of addition.

(v) Borrowing costs attributable to acquisition/construction of qualifying assets within the meaning of the Accounting Standard 16 on "borrowing costs" are capitalised as a part of the cost of fixed assets.

(vi) Pre-operation expenses including trial run expenses (net of revenue) are capitalised.

4. Impairment of assets: -

The Company assesses, at each balance sheet date, whether there is any indication of impairment of the carrying amount of the Company's assets. An impairment loss is recognised in the profit and loss account wherever the carrying amount of the assets exceeds its estimated recoverable amount. The recoverable amount is greater of the net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value, based on an appropriate discounting factor. Impairment losses are recognised in the profit and loss account. The impairment loss recognised in prior accounting period is reversed if there has been change in recoverable amount.

5. Investments: -

All long term investments are stated at cost. Provision for diminution in value of long term investments is made if it is other than temporary in nature. Current investments are valued at lower of cost and market value.

6. Inventories :- Inventories are valued at lower of standard cost or net realisable value. Cost includes material cost, cost of labour and attributable manufacturing overheads. Cost of materials is arrived at on weighted average basis. Inventory of scrap is valued at estimated realisable value. Inventories of finished goods include excise duty as applicable.

7. Government grants: -

(i) Government grants are recognised in the financial statements when they are received and there is reasonable assurance that the Company will comply with the conditions attached to them.

(ii) Government grants, which are in the nature of refundable interest free loans received from government/semi-government authorities, are credited to secured/unsecured loans.

(iii) Government grants which are in the nature of subsidies received from government/semi-government authorities and which are non-refundable are credited to reserves.

8. Employee stock options:- In respect of the employee stock options, the excess of fair price on the date of grant over the exercise price is recognised as deferred compensation cost amortised over vesting period.

9. Voluntary retirement schemes:- Compensations paid under voluntary retirement schemes are amortised over a period not exceeding 5 years, up to March 31, 2010.

10.Enterprise resource planning cost:

Cost of implementation of ERP software, including all related direct expenditure is amortised over a period of 5 years on successful implementation.

11.Share issue expenses:

Share issue expenses are written off against share premium account, if any, or amortised over a period of 5 years.

12.Revenue recognition: -

(i) Sale of goods is recognised on despatch to customers and on date of shipment in case of exports. Sales exclude amounts recovered towards sales tax and excise duty and is net of returns.

(ii) Price variation claims are accounted in accordance with the terms of contract and/or upon admittance by customers.

(iii) Dividend income on investment is recognised when the right to receive payment is established.

(iv) In respect of service activities, income is recognised as and when services are rendered.

(v) Lease rental on operating lease is accounted on accrual basis.

13.Post-employment benefits:

Defined contribution plans: In respect of the Company's provident fund scheme, the Company makes specified monthly contributions towards employee provident fund directly to the government under the Employees Provident Fund Act, 1952 and is not obliged to bear the shortfall, if any, between the return on investments made by the Government from the contributions and the notified interest rate. In respect of the Company's approved superannuation scheme, the Company makes specified contributions to the superannuation fund administered by the Company and the return on investments is adequate to cover the commitments under the scheme. The Company's contribution paid/payable under these schemes is recognised as expense in the profit and loss account during the period in which the employee renders the related service.

Defined benefit plans: In respect of the Company's gratuity and leave wages schemes, the present value of the obligation under such scheme is determined based on actuarial valuation using the Projected Unit Credit Method. The discount rates used for determining the present value of the obligation is based on the market yields on government securities as at the balance sheet date. Actuarial gains and losses are recognised immediately in the profit and loss account. Long-term compensated absences are provided for based on actuarial valuation, made at the year end, by independent actuaries.

14.Translation of foreign currency :- (i) The Company translates foreign currency transactions during the year, at the conversion rates prevailing on transaction dates.

(ii) Monetary items remaining unsettled at the year end are translated/reported at the year end rate. Exchange differences arising on such revaluation are recognised in the profit and loss account.

(iii) Non-monetary items (other than fixed assets) are reported at the exchange rate at which they are accounted.

(iv) In case of forward contracts, premium on the forward contracts is recognised as income or expense over the life of the contract.

15.Hedging transactions (metals):- All gains or losses in respect of hedging transactions are recognised in the financial statements on settlement/squaring off. Commission etc. in respect of such transactions is accounted on accrual basis.

16. Export benefits/incentives: -

The Company accounts for excise duty rebate on deemed and physical exports, duty entitlements and focus benefits on physical exports on accrual basis. Premium on special import licence is credited in the accounts as and when realised. The benefits in the form of entitlements to advance licenses for duty free import of raw materials in respect of exports made are accounted when such imports are made.

17. Claims against the Company not acknowledged as debts: -

The demands under disputed showcause notices/orders of statutory authorities are provided in the accounts on the basis of management's estimate and the balance, if any, are included in contingent liability.

18. Taxes on income:- (a) Tax on income for the current period is determined on the basis of estimated taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961 and based on the expected outcome of assessments/appeals.

(b) Deferred tax is recognised on timing differences between the accounted income and the taxable income for the year, and quantified using the tax rates and laws enacted or substantively enacted as on the balance sheet date.

(c) Deferred tax assets relating to unabsorbed depreciation/business losses are recognised and carried forward to the extent there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

(d) Other deferred tax assets are recognised and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

19. Provision for contingencies:- A provision is recognised when there is a present obligation as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and in respect of which reliable estimates can be made. Disclosure of 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. When likelihood of such outflow is remote, no provision or disclosure is made. Provision arising from litigations, assessments by statutory authorities etc., is made when the Company based on legal advise wherever necessary, estimates that the liability has been incurred and the amount can be reasonably estimated.

20.Accounting for interest in joint ventures

Interest in joint ventures (i.e., jointly controlled entity) are accounted for as follows:

(a) Income on investment in incorporated jointly controlled entity is recognised when the right to receive the same is established.

(b) Investment in such joint venture is carried at cost after providing for any permanent diminution in value.


Mar 31, 2010

1. Basis of Preparation of financial statements:

The financial statements are prepared on accrual basis under the historical cost convention and comply in all material aspects with the generally accepted accounting principles in India, the Accounting Standards prescribed under section 211(3C) of the Companies Act, 1956 and the applicable provisions thereof.

2. Use of estimates:

The preparation of financial statements is in conformity with generally accepted accounting principles ("GAAP") which requires the management of the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities on the date of the financial statements. Actual results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.

3. Significant accounting policies:

A) Fixed assets. Depreciation and Amortization:

i) Fixed assets are stated at cost of acquisition / construction (net of CENVAT) less accumulated depreciation. Cost includes purchase price and other costs attributable to acquisition / construction of fixed assets.

ii) Depreciation on assets is provided at the rates and in the manner prescribed under Schedule XIV of the Companies Act, 1956 (except as stated in (iii) below):

a) On written down value method except in respect of building and plant and machinery purchased after 30.4.1987, which are depreciated on straight line method.

b) Capital Expenditure in respect of which ownership does not vest with the Company is amortized over a period of five years. Leasehold land is amortized over the period of lease.

c) Certain items of plant and machinery which have been considered to be continuous process plant by the management are depreciated at the prescribed rates.

iii) In the cases where the estimated useful life of the asset is less as compared to useful life estimated in Schedule XIV of

the Companies Act, 1956, such assets are depreciated at rates higher than those prescribed under Schedule XIV of the

Companies Act, 1956.

Asset Rate

Factory building at Nalagarh Over the lease period of 8 years

iv) In respect of assets costing less than Rs.5,000 each and temporary structures, 100% depreciation is provided in the year

of addition. v) Borrowing costs attributable to acquisition/construction of qualifying assets within the meaning of the accounting

standard 16 on "borrowing costs" are capitalised as a part of the cost of fixed assets. vi) Pre-operation expenses including trial run expenses (net of revenue) are capitalized.

B) Impairment of assets:

The Company assesses, at each balance sheet date, whether there is any indication of impairment of the carrying amount of the Companys assets. An impairment loss is recognized in the profit and loss account wherever the carrying amount of the assets exceeds its estimated recoverable amount. The recoverable amount is greater of the net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value, based on an appropriate discounting factor. Impairment losses are recognized in the profit and loss account. The impairment loss recognized in prior accounting period is reversed if there has been change in recoverable amount.

C) Investments:

All long term investments are stated at cost. Provision for diminution in value of long term investments is made if it is other than temporary in nature. Current investments are valued at lower of cost and market value.

D) Inventories:

Inventories are valued at lower of standard cost or net realizable value. Cost includes material cost, cost of labour and attributable manufacturing overheads. Cost of materials is arrived at on weighted average basis. Inventory of scrap is valued at estimated realisable value. Inventories of Finished Goods include excise duty as applicable.

E) Government Grants:

i) Government grants are recognised in the financial statements when they are received and there is reasonable assurance

that the Company will comply with the conditions attached to them. ii) Government grants, which are in the nature of refundable interest free loans received from government/semi-government

authorities, are credited to secured/unsecured loans. iii) Government grants which are in the nature of subsidies received from government/semi-government authorities and

which are non-refundable are credited to reserves.

F) Employee stock options:

In respect of the employee stock options, the excess of fair price on the date of grant over the exercise price is recognized

as deferred compensation cost amortized over vesting period. G) Voluntary Retirement Schemes:

Compensations paid under voluntary retirement schemes are amortized over a period not exceeding 5 years, up to 31st March,2010.

H) Enterprise Resource Planning Cost:

Cost of implementation of ERP Software including all related direct expenditure is amortized over a period of 5 years on successful implementation.

I) Share Issue Expenses:

Share issue expenses are written off against share premium account, if any, or amortized over a period of 5 years.

i) Revenue recognition:

i) Sale of goods is recognised on despatch to customers and on date of shipment in case of exports. Sales exclude amounts

recovered towards sales tax and excise duty and is net of returns. ii) Price variation claims are accounted in accordance with the terms of contract and/or upon admittance by customers. iii) Dividend income on investment is recognised when the right to receive payment is established. iv) In respect of service activities, income is recognised as and when services are rendered. v) Lease rental on operating lease is accounted on accrual basis.

K) Post-employment benefits:

Defined Contribution Plans: In respect of the Companys provident fund scheme, the Company makes specified monthly contributions towards employee provident fund directly to the Government under the Employees Provident Fund Act, 1952 and is not obliged to bear the shortfall, if any, between the return on investments made by the Government from the contributions and the notified interest rate. In respect of the Companys approved superannuation scheme, the Company makes specified contributions to the superannuation fund administered by the Company and the return on investments is adequate to cover the commitments under the scheme. The Companys contribution paid/payable under these schemes is recognized as expense in the profit and loss account during the period in which the employee renders the related service.

Defined Benefit Plans: In respect of the Companys gratuity and leave wages schemes, the present value of the obligation under such scheme is determined based on actuarial valuation using the Projected Unit Credit Method. The discount rates used for determining the present value of the obligation is based on the market yields on Government securities as at the balance sheet date. Actuarial gains and losses are recognized immediately in the Profit & Loss Account. Long term compensated absences are provided for based on actuarial valuation, made at the year end, by independent actuaries.

L) Translation of foreign currency:

i) The Company translates foreign currency transactions during the year, at the conversion rates prevailing on transaction

dates. ii) Monetary items remaining unsettled at the year end are translated / reported at the year end rate. Exchange differences

arising on such revaluation are recognised in the Profit and Loss Account. iii) Non-Monetary items (other than fixed assets) are reported at the exchange rate at which they are accounted. iv) In case of forward contracts, premium on the forward contracts is recognized as income or expense over the life of the

contract.

M) Hedging transactions (Metals):

All gains or losses in respect of hedging transactions are recognised in the financial statements on settlement/squaring off. Commission etc. in respect of such transactions is accounted on accrual basis.

N) Export benefits/Incentives:

The Company accounts for excise duty rebate on deemed and physical exports, duty entitlements and Focus benefits on physical exports on accrual basis. Premium on special import licence is credited in the accounts as and when realised. The benefits in the form of entitlements to Advance Licenses for duty free import of raw materials in respect of exports made are accounted when such imports are made.

O) Claims against the Company not acknowledged as debts:

The demands under disputed showcause notices / orders of statutory authorities are provided in the accounts on the basis of managements estimate and the balance, if any, are included in contingent liability.

P) Taxes on income:

Provision for taxation is made for both current and deferred taxes. Provision for current tax is made, at current rate of tax, based on assessable income. Deferred tax resulting from timing differences between the book profits and the tax profits is accounted for to the extent that the timing differences are expected to crystallize.

Deferred tax assets are not recognised on unabsorbed depreciation and carry forward losses unless there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets will be realized.

Q) Provision for contingencies:

A provision is recognized when there is a present obligation as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and in respect of which reliable estimates can be made. Disclosure of 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. When likelihood of such outflow is remote, no provision or disclosure is made. Provision arising from litigations, assessments by statutory authorities, etc. is made when the Company, based on legal advise wherever necessary, estimates that the liability has been incurred and the amount can be reasonably estimated.

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