Accounting Policies of Bharat Gears Ltd. Company
Mar 31, 2018
Note 1 : significant accounting policies
1.1 Basis of preparation:
The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 as amended by the Companies (Indian Accounting Standards) Rules, 2016. For all periods up to and including the year ended 31 March 2017, the Company 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 for the year ended 31 March, 2018 are the Companyâs first Ind AS financial statements. The date of transition to Ind AS is 01 April, 2016. Refer Note 4 for information on how the Company adopted Ind AS.
The financial statements have been prepared on the historical cost basis. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
The financial statements are presented in Indian Rupees (Rs.) which is also the Companyâs functional currency. All values are rounded to nearest lacs with two decimal except when otherwise indicated.
1.2 Current versus non-current classification:
Based on the nature of products/activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as twelve months for the purpose of classification of its assets and liabilities as current and non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities respectively.
1.3 Foreign currencies:
Transactions in currencies other than the Companyâs functional currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions.
At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences on monetary items are recognised in the Statement of Profit and Loss in the period in which they arise.
Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
1.4 Fair value measurement:
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value for measurement and/or disclosure in these financial statements is determined on such a basis.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, which are described as follows:
Level 1 inputs
Level 1 inputs are quoted prices in active markets for identical assets or liabilities that the entity can access at the measurement date. A quoted market price in an active market provides the most reliable evidence of fair value and is used without adjustment to measure fair value whenever available, with limited exceptions. If an entity holds a position in a single asset or liability and the asset or liability is traded in an active market, the fair value of the asset or liability is measured within Level 1 as the product of the quoted price for the individual asset or liability and the quantity held by the entity, even if the marketâs normal daily trading volume is not sufficient to absorb the quantity held and placing orders to sell the position in a single transaction might affect the quoted price.
Level 2 inputs
Level 2 inputs are inputs other than quoted market prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 2 inputs include:
-quoted prices for similar assets or liabilities in active markets
-quoted prices for identical or similar assets or liabilities in markets that are not active
-inputs other than quoted prices that are observable for the asset or liability, for example-interest rates and yield curves observable at commonly quoted interval
-implied volatilities
-credit spreads
-inputs that are derived principally from or corroborated by observable market data by correlation or other means (âmarket-corroborated inputsâ)
Level 3 inputs
Level 3 inputs are unobservable inputs for the asset or liability. Unobservable inputs are used to measure fair value to the extent that relevant observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. An entity develops unobservable inputs using the best information available in the circumstances, which might include the entityâs own data, taking into account all information about market participant assumptions that is reasonably available.
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
1.5 Property, plant and equipment:
Capital work-in-progress, property, plant and equipment are stated at cost of acquisition or construction, net of accumulated depreciation and accumulated impairment losses, if any. Cost includes financing cost relating to borrowed funds attributable to the construction or acquisition of qualifying tangible assets upto the date the assets are ready for use. The estimated useful lives, residual values, are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
When an item of property, plant and equipment is scrapped or otherwise disposed off, the cost and related depreciation are removed from the books of account and resultant profit or loss, if any, is reflected in the Statement of Profit and Loss.
Depreciation on property, plant and equipment has been provided on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013.
Estimated useful lives of the the assests are as follows:
Builidings : 3 - 60 years
Plant and equipments (owned/on lease) : 15 years
Office equipments : 3 - 6 years
Furniture and fixtures : 8 -10 years
Vehicles : 8 years
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
Leasehold land was amortised over the remaining period of lease.
1.6 Intangible assets:
Intangible assets (i.e computer software) are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses.
Computer software are amortised on straight line basis over the estimated useful life of 6 years.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the Statement of Profit and Loss when the asset is derecognised.
1.7 Inventories:
Inventories are valued at the lower of cost and net realisable value, except for scrap which is valued at net realisable value.
Cost comprises of material cost and expenditure incurred in normal course of business in bringing inventories to its location and includes, where applicable, appropriate overheads.
Material cost is arrived at on weighted average basis.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
1.8 Impairment of assets:
At the end of each reporting period, the Company assesses whether there is any indication that an asset or a group of assets (cash generating unit) may be impaired. If any such indication exists, the recoverable amount of the asset or cash generating unit is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing the value in use, the estimated future cash flows are discounted at their present value using the pre-tax discount rate that reflects current market assessment of time value of money and the risks specific to the assets for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the Statement of Profit and Loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in the Statement of Profit and Loss.
1.9 Cash and cash equivalents:
Cash and cash equivalents 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 Companyâs cash management.
1.10 Financial instruments:
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets and financial liabilities are recognized when a Company becomes a party to the contractual provisions of the instruments.
(i) Initial recognition and measurement:
Financial assets and financial liabilities are recognized when a Company becomes a party to the contractual provisions of the instruments. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit and loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in the Statement of Profit and Loss.
(ii) subsequent measurement of financial assets:
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace. All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.
(iii) Derecognition of financial assets:
The Company derecognises a financial asset when and only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. On derecognition of a financial asset in its entirety, the difference between the assetâs carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in the Statement of Profit and Loss if such gain or loss would have otherwise been recognised in the Statement of Profit and Loss on disposal of that financial asset.
(iv) Impairment of financial assets:
The Company applies the expected credit loss model for recognising impairment loss on financial assets. The Company follows âsimplified approachâ for recognition of impairment loss allowance. 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.
(v) subsequent measurement of financial liabilities:
All the financial liabilities are subsequently measured at amortised cost using the effective interest rate method or at fair value through profit and loss. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.
(vi) Derecognition of financial liabilities:
A financial liability is derecognised 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 recognised in the Statement of Profit and Loss.
1.11 Provisions & Contingencies:
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of past event; it is probable that an outflow of resources embodying economic benefit will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are based on best estimate of the expenditure required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimate. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
Provisions for warranty-related costs are recognised when the product is sold or service provided to the customer. Initial recognition is based on historical experience. The initial estimate of warranty-related costs is revised annually.
Contingent liability is disclosed in the case of:
- a present obligation arising from past events, when it is not probable that an outflow of resources will be required to settle the obligation;
- a present obligation arising from past events, when no reliable estimate is possible;
- a possible obligation arising from past events, unless the probability of outflow of resources is remote.
A contingent asset is disclosed where an inflow of economic benefits is probable.
Provisions, contingent liabilities and contingent assets are reviewed at each Balance Sheet date.
A contingent asset is disclosed where an inflow of economic benefits is probable.
Provisions, contingent liabilities and contingent assets are reviewed at each Balance Sheet date.
1.12 Revenue recognition:
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and inclusive of excise duty but excluding other taxes or duties collected on behalf of the government.
The specific recognition criteria described below must also be met before revenue is recognised.
(a) Sale of goods and rendering of services:
Revenue from sale of goods and rendering of services including export benefits thereon are recognised when the products are shipped or services rendered, i.e. when significant risks and rewards of ownership are passed on to the customers. Sales are net of sales tax/value added tax, GST and trade discounts.
(b) Construction contracts:
Revenue from contracts for construction of furnaces is recognised on the percentage of completion method based on the stage of completion determined with reference to the contract costs incurred up to the year end and the estimated total costs of the contracts. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.
(c) Tooling development income:
Net income, if any, from development of tools is recognised as income as and when the development of tool is complete or on expiry of five years from completion of development, whichever is earlier.
(d) Interest income:
Interest income is recorded on time proportion basis using the effective interest rate (EIR).
1.13 Retirement and other employee benefits:
(i) Retirement benefit costs and long term compensated absences
Payment to defined contribution retirement benefit plans i.e recognised provident fund and superannuation fund are recognised as an expense when employees have rendered service entitling them to the contributions.
Companyâs liability towards gratuity, compensated absences and terminal ex-gratia is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the return of plan assets (excluding net interest), is reflected immediately in the balance sheet with a charge or credit recognised in other comprehensive income (OCI) in the period in which they occur. Remeasurement recognised in the other comprehensive income is reflected immediately in retained earnings and is not reclassified to profit or loss. Past service cost is recognised in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the defined benefit liability or asset. Defined benefit costs are categorised as follows:
- service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);
- net interest expense or income; and
- remeasurement
The Company presents the first two components of defined benefit costs in the Statement of Profit and Loss in the line item âEmployee benefits expenseâ. Curtailment gains and losses are accounted for as past service cost.
The retirement benefit obligation recognised in the balance sheet represents the actual deficit or surplus in the Companyâs defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.
(ii) Other employee benefits
A liability is recognized for benefits accruing to the employees in respect of wages and salaries and annual leave in the period the related service is rendered at the undiscounted amount of the benefits expected to be paid in exchange of that service.
Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange of related service.
Voluntary retirement scheme payouts are recognised as an expense in the period in which they are incurred.
1.14 Borrowing costs:
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale, are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs incurred in connection with the borrowing of funds. Borrowing costs also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
1.15 Leases:
Assets leased by the Company in its capacity as a lessee, where substantially all the risks and rewards of ownership vest in the Company are classified as finance leases. Such leases are capitalised at the inception of the lease at the lower of the fair value and the present value of the minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost so as to obtain a constant periodic rate of interest on the outstanding liability for each year.
Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are recognised as operating leases. Lease rentals under operating leases are recognised in the Statement of Profit and Loss on a straight-line basis over the lease term. Where the rentals are structured solely to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increases, such increases are recognised in the year in which such benefits accrue.
1.16 Taxes on income:
Income tax expense represents the sum of the tax currently payable and deferred tax.
(a) Current tax:
Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India. Current income tax relating to items recognised outside profit or loss are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate. Advance taxes and provisions for current income taxes are presented in the balance sheet after off-setting advance tax paid and income tax provision arising in the same tax jurisdiction and where the relevant taxpaying units intend to settle the asset and liability on a net basis.
(b) Deferred tax:
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable temporary differences.
Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to the taxes on income levied by same governing taxation laws.
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit and loss (either in other comprehensive income or in equity).
1.17 Earnings per share:
Basic earnings per share is calculated by dividing the net profit/(loss) for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The weighted average number of shares outstanding during the year is adjusted for events such as bonus issue that have changed the number of shares outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net profit/(loss) for the year attributable to equity shareholders and the weighted average number of equity shares outstanding during the year are adjusted for the effects of all dilutive potential equity.
The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognised in the period in which results are known/materialised.
In particular, information about significant areas of estimation, uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements are included in the following notes:
(i) Property, plant and equipment - Refer Notes 2.5 & 5(A)
(ii) Intangible assets - Refer Notes 2.6 & 5(B)
(iii) Revenue recognition from Construction contracts - Refer Notes 2.12(b) & 22
(iv) Taxes on income - Refer Notes 2.16 & 30
(v) Retirement and other employee benefits - Refer Notes 2.13 & 32
Mar 31, 2017
Note 1 : Significant accounting policies
1.1 Basis of accounting and preparation of financial statements:
The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013 (the Act) and the relevant provisions of the Act. The financial statements have been prepared on an accrual basis under the historical cost convention. Also Refer Note 11(D) for treatment pertaining to Revaluation reserve.
1.2 Use of estimates:
The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which results are known/materialized.
1.3 Property, plant and Equipment and Intangible assets:
(a) Property, plant and equipment:
Property, plant and equipment are stated at cost of acquisition or construction or (as at 31 March, 2016: at revalued amounts) less accumulated depreciation/amortization and impairment losses, if any. Cost comprises of purchase/acquisition price, import duties, taxes and any directly attributed cost of bringing the asset to its working condition for its intended use. Financing cost on borrowings for acquisition or construction of assets, for the period up to the date of acquisition of assets or when the assets are ready to be put to use/the date of commencement of commercial production, is included in the cost of assets.
Assessment of indication of impairment of an asset is made at the year-end and impairment loss, if any, is recognized.
Depreciation/amortization is provided over the economic useful life of the assets on the basis stated hereunder:
Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value.
Depreciation on property, plant and equipment has been provided on the straight-line method as per the useful life prescribed in Schedule II to the Act [Refer Note 11(D)].
Leasehold land was amortized over the remaining period of lease.
(b) Intangible assets
Intangible assets are stated at cost of acquisition less accumulated amortization and impairment losses, if any.
Intangible assets (i.e. computer software) are amortized over their estimated useful life on straight line method.
1.4 Inventories:
Inventories are valued at the lower of cost and net realizable value, except for scrap which is valued at net realizable value.
Cost comprises of material cost and expenditure incurred in normal course of business in bringing inventories to its location and includes, where applicable, appropriate overheads.
Material cost is arrived at on weighted average basis.
1.5 Contracts for furnace construction:
When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognized as an expense immediately.
1.6 Foreign currency transactions:
Foreign currency transactions during the year are recorded at the rate of exchange prevailing at the date of transaction. All foreign currency monetary items outstanding at the year end are translated at year end exchange rates. All foreign exchange gains or losses on settlement and translation are accounted for in the Statement of Profit and Loss. In case of forward exchange contracts, premium or discounts are amortized as expense or income over the life of the contract. Profit or loss arising on cancellation or renewal of such forward exchange contracts are recognized as income or as expenses for the year.
1.7 Revenue recognition:
Sale of products and services including export benefits thereon are recognized when the products are shipped or services rendered, i.e. when significant risks and rewards of ownership are passed on to the customers. Sales are net of sales tax/value added tax and trade discounts.
Revenue from contracts for construction of furnaces is recognized on the percentage of completion method based on the stage of completion determined with reference to the contract costs incurred up to the year end and the estimated total costs of the contracts.
Net income, if any, from development of tools is recognized as income as and when the development of tool is complete or on expiry of five years from completion of development, whichever is earlier.
Interest income is recognized on time proportion basis.
1.8 Employee benefits:
(a) Defined contribution plan:
The Company''s contributions to the recognized provident fund and superannuation fund are charged to the Statement of Profit and Loss.
(b) Defined benefit plan/Long term compensated absences:
The Company''s liability towards Gratuity (Funded), Terminal Ex-gratia (Unfunded) and Compensated absences (Unfunded) is determined on the basis of the year end actuarial valuation done by an independent actuary. The actuarial gains and losses determined by the actuary are recognized immediately in the Statement of Profit and Loss as an income or expense.
1.9 Taxation:
Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the applicable tax rates and the provisions of the Income Tax Act, 1961 and other applicable tax laws.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognized as an asset in the Balance Sheet when it is highly probable that future economic benefit associated with it will flow to the Company.
Deferred tax is calculated at current statutory income tax rate and is recognized, subject to the consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.
Deferred tax liabilities are recognized for all timing differences. Deferred tax assets are recognized for timing differences of items other than unabsorbed depreciation and carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realized. Deferred tax assets are recognized on unabsorbed depreciation and carry forward of losses only to the extent that there are timing differences, the reversal of which will result in sufficient income or there is virtual certainty supported by convincing evidence that sufficient taxable income will be available against which such deferred tax assets can be realized. The carrying amount of deferred tax asset is reviewed at each Balance Sheet date. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each balance sheet date for their realisability.
Deferred tax relating to items directly recognized in reserves are recognized in reserves and not in the Statement of Profit and Loss.
1.10 Contingencies/Provisions:
Provision is recognized when the Company has a present obligation as a result of past event; it is probable that an outflow of resources embodying economic benefit will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate of the expenditure required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimate. A contingent liability is disclosed, unless the possibility of an outflow of resources embodying the economic benefit is remote.
1.11 Cash and cash equivalents (for purposes of Cash Flow Statement):
Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.
1.12 Cash Flow Statement:
Cash flows are reported using the indirect method, whereby profit/(loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.
1.13 Operating Cycle:
Based on the nature of products/activities of the Company and the normal time between acquisition of assets and their realization in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
1.14 Leases:
Assets leased by the Company in its capacity as a lessee, where substantially all the risks and rewards of ownership vest in the Company are classified as finance leases. Such leases are capitalized at the inception of the lease at the lower of the fair value and the present value of the minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost so as to obtain a constant periodic rate of interest on the outstanding liability for each year.
Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are recognized as operating leases. Lease rentals under operating leases are recognized in the Statement of Profit and Loss on a straight-line basis over the lease term.
Mar 31, 2016
Note I : Significant accounting policies
Note Particulars 1.1 Basis of accounting and preparation of financial statements:
The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013 ("the Act") and the relevant provisions of the Act. The financial statements have been prepared on an accrual basis under the historical cost convention except for the revalued fixed assets as stated in Note 11 - "Fixed assets".
1.2 Use of estimates:
The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which results are known/materialized.
1.3 Fixed assets and depreciation/amortization:
Fixed assets are stated at cost of acquisition or construction or at revalued amounts less accumulated depreciation/amortization and impairment losses, if any Cost comprises of purchase/acquisition price, import duties, taxes and any directly attributed cost of bringing the asset to its working condition for its intended use. Financing cost on borrowings for acquisition or construction of fixed assets, for the period up to the date of acquisition of fixed assets or when the assets are ready to be put to use/the date of commencement of commercial production, is included in the cost of fixed assets.
Assessment of indication of impairment of an asset is made at the year-end and impairment loss, if any is recognized. Depreciation/amortization is provided over the economic useful life of the assets on the basis stated hereunder:
(a) Tangible assets
Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value. Depreciation on tangible fixed assets has been provided on the straight-line method as per the useful life prescribed in Schedule II to the Act [Refer Note 11(D)].
Leasehold land is amortized over the remaining period of lease.
(b) Intangible assets
Intangible assets (i.e computer software) are amortized over their estimated useful life on straight line method.
1.4 Inventories:
Inventories are valued at the lower of cost and net realizable value, except for scrap which is valued at net realizable value.
Cost comprises of material cost and expenditure incurred in normal course of business in bringing inventories to its location and includes, where applicable, appropriate overheads.
Material cost is arrived at on weighted average basis.
1.5 Contracts for furnace construction:
When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognized as an expense immediately
1.6 Foreign currency transactions:
Foreign currency transactions during the year are recorded at the rate of exchange prevailing at the date of transaction. All foreign currency monetary items outstanding at the yearend are translated at year end exchange rates. All foreign exchange gains or losses on settlement and translation are accounted for in the Statement of Profit and Loss. In case of forward exchange contracts, premium or discounts are amortized as expense or income over the life of the contract. Profit or loss arising on cancellation or renewal of such forward exchange contracts are recognized as income or as expenses for the year
1.7 Revenue recognition:
Sale of products and services including export benefits thereon are recognized when the products are shipped or services rendered, i.e. when significant risks and rewards of ownership are passed on to the customers. Sales are net of sales tax/value added tax and trade discounts.
Revenue from contracts for construction of furnaces is recognized on the percentage of completion method based on the stage of completion determined with reference to the contract costs incurred up to the year end and the estimated total costs of the contracts.
Net income, if any from development of tools is recognized as income as and when the development of tool is complete or on expiry of five years from completion of development, whichever is earlier Interest income is recognized on time proportion basis.
1.8 Employee benefits:
(a) Defined contribution plan:
The Company''s contributions to the recognized provident fund and superannuation fund are charged to the Statement of Profit and Loss.
(b) Defined benefit plan/Long term compensated absences:
The Company''s liability towards Gratuity (Funded), Terminal Ex-gratia (Unfunded) and Compensated absences (Unfunded) is determined on the basis of the year end actuarial valuation done by an independent actuary The actuarial gains and losses determined by the actuary are recognized immediately in the Statement of Profit and Loss as an income or expense.
1.9 Taxation:
Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the applicable tax rates and the provisions of the Income Tax Act, 1961 and other applicable tax laws.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognized as an asset in the Balance Sheet when it is highly probable that future economic benefit associated with it will flow to the Company
Deferred tax is calculated at current statutory income tax rate and is recognized , subject to the consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.
Deferred tax liabilities are recognized for all timing differences. Deferred tax assets are recognized for timing differences of items other than unabsorbed depreciation and carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realized. Deferred tax assets are recognized on unabsorbed depreciation and carry forward of losses only to the extent that there are timing differences, the reversal of which will result in sufficient income or there is virtual certainty supported by convincing evidence that sufficient taxable income will be available against which such deferred tax assets can be realized. The carrying amount of deferred tax asset is reviewed at each Balance Sheet date. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each balance sheet date for their reliability
Deferred tax relating to items directly recognized in reserves are recognized in reserves and not in the Statement of Profit and Loss.
1.10 Contingencies/Provisions:
Provision is recognized when the Company has a present obligation as a result of past event; it is probable that an outflow of resources embodying economic benefit will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate of the expenditure required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimate. A contingent liability is disclosed, unless the possibility of an outflow of resources embodying the economic benefit is remote.
1.11 Cash and cash equivalents (for purposes of Cash Flow Statement):
Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.
1.12 Cash Flow Statement:
Cash flows are reported using the indirect method, whereby profit/(loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.
1.13 Operating Cycle:
Based on the nature of products/activities of the Company and the normal time between acquisition of assets and their realization in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
1.14 Leases:
Assets leased by the Company in its capacity as a lessee, where substantially all the risks and rewards of ownership vest in the Company are classified as finance leases. Such leases are capitalized at the inception of the lease at the lower of the fair value and the present value of the minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost so as to obtain a constant periodic rate of interest on the outstanding liability for each year
Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the less or are recognized as operating leases. Lease rentals under operating leases are recognized in the Statement of Profit and Loss on a straight-line basis over the lease term.
The Company has only one class of Equity shares having a face value of '' 10 each. Every member shall be entitled to be present and to speak and vote and upon a poll the voting right of every member present in person or by proxy shall be in proportion to his share of the paid-up equity share capital of the Company The Company in General Meeting may declare dividends to be paid to members according to their respective rights. While no dividends shall exceed the amount recommended by the Board, the Company in General Meeting may declare a smaller dividend.
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.
Mar 31, 2015
1.1 Basis of accounting and preparation of financial statements:
The financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards specified under
Section 133 of the Companies Act, 2013, read with Rule 7 of the
Companies (Accounts) Rules, 2014 and the relevant provisions of the
Companies Act, 2013 ("the Act"). The financial statements have been
prepared on an accrual basis under the historical cost convention
except for the revalued fixed assets as stated in Note 11 - "Fixed
assets". The accounting policies adopted in the preparation of the
financial statements are consistent with those followed in the previous
year except for change in the accounting policy for depreciation [Refer
Note 11(D)].
1.2 Use of estimates:
The preparation of financial statements requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of financial statements and the reported amount
of revenues and expenses during the reporting period. Difference
between the actual results and estimates are recognised in the period
in which results are known/materialised.
1.3 Fixed assets and depreciation/amortisation:
Fixed assets are stated at cost of acquisition or construction or at
revalued amounts less accumulated depreciation/amortisation and
impairment losses, if any. Cost comprises of purchase/acquisition
price, import duties, taxes and any directly attributed cost of
bringing the asset to its working condition for its intended use.
Financing cost on borrowings for acquisition or construction of fixed
assets, for the period up to the date of acquisition of fixed assets or
when the assets are ready to be put to use/the date of commencement of
commercial production, is included in the cost of fixed assets.
Assessment of indication of impairment of an asset is made at the
year-end and impairment loss, if any, is recognized.
Depreciation/amortisation is provided over the economic useful life of
the assets on the basis stated hereunder:
(a) Tangible assets
Depreciable amount for assets is the cost of an asset, or other amount
substituted for cost, less its estimated residual value. Depreciation
on tangible fixed assets has been provided on the straight-line method
as per the useful life prescribed in Schedule II to the Act [Refer Note
11(D)].
Leasehold land is amortised over the remaining period of lease.
(b) Intangible assets
Intangible assets (i.e computer software) are amortised over their
estimated useful life on straight line method.
1.4 Inventories:
Inventories are valued at the lower of cost and net realisable value,
except for scrap which is valued at net realisable value.
Cost comprises of material cost and expenditure incurred in normal
course of business in bringing inventories to its location and
includes, where applicable, appropriate overheads.
Material cost, other than those of automotive components which is on
specific identification basis, is arrived at on weighted average basis.
1.5 Contracts for furnace construction:
When it is probable that total contract costs will exceed total
contract revenue, the expected loss is recognised as an expense
immediately.
1.6 Foreign currency transactions:
Foreign currency transactions during the year are recorded at the rate
of exchange prevailing at the date of transaction. All foreign currency
monetary items outstanding at the year end are translated at year end
exchange rates. All foreign exchange gains or losses on settlement and
translation are accounted for in the Statement of Profit and Loss. In
case of forward exchange contracts, premium or discounts are amortised
as expense or income over the life of the contract. Profit or loss
arising on cancellation or renewal of such forward exchange contracts
are recognised as income or as expenses for the year.
1.7 Revenue recognition:
Sales/Processing charges are accounted on the basis of actual
dispatches when significant risks and rewards of ownership are passed
on to the customers. Sales are net of sales tax/value added tax and
trade discounts.
Revenue from contracts for construction of furnaces is recognised on
the percentage of completion method based on the stage of completion
determined with reference to the contract costs incurred up to the year
end and the estimated total costs of the contracts.
Net income, if any, from development of tools is recognised as income
as and when the tools are sold in terms of respective contracts/supply
under the contract is completed/on the expiry of commercial useful life
of tools/on expiry of five years from completion of development,
whichever is earliest.
Interest income is recognised on time proportion basis.
1.8 Employee benefits:
(a) Defined contribution plan:
The Company's contributions to the recognised provident fund and
superannuation fund are charged to the Statement of Profit and Loss.
(b) Defined benefit plan/Long term compensated absences:
The Company's liability towards gratuity (Funded), terminal Ex-gratia
(Unfunded) and compensated absences (Unfunded) is determined on the
basis of the year end actuarial valuation done by an independent
actuary. The actuarial gains and losses determined by the actuary are
recognised immediately in the Statement of Profit and Loss as an income
or expense.
1.9 Taxation:
Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the applicable tax rates and the
provisions of the Income Tax Act, 1961 and other applicable tax laws.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which
gives future economic benefits in the form of adjustment to future
income tax liability, is considered as an asset if there is convincing
evidence that the Company will pay normal income tax. Accordingly, MAT
is recognised as an asset in the Balance Sheet when it is highly
probable that future economic benefit associated with it will flow to
the Company.
Deferred tax is calculated at current statutory income tax rate and is
recognised, subject to the consideration of prudence, on timing
differences, being the difference between taxable income and accounting
income that originate in one period and are capable of reversal in one
or more subsequent periods.
Deferred tax liabilities are recognised for all timing differences.
Deferred tax assets are recognised for timing differences of items
other than unabsorbed depreciation and carry forward losses only to the
extent that reasonable certainty exists that sufficient future taxable
income will be available against which these can be realised. Deferred
tax assets are recognised on unabsorbed depreciation and carry forward
of losses only to the extent that there are timing differences, the
reversal of which will result in sufficient income or there is virtual
certainty supported by convincing evidence that sufficient taxable
income will be available against which such deferred tax assets can be
realised. The carrying amount of deferred tax asset is reviewed at
each Balance Sheet date. Deferred tax assets and liabilities are offset
if such items relate to taxes on income levied by the same governing
tax laws and the Company has a legally enforceable right for such set
off. Deferred tax assets are reviewed at each balance sheet date for
their realisability.
Deferred tax relating to items directly recognised in reserves are
recognised in reserves and not in the Statement of Profit and Loss.
1.10 Contingencies/Provisions:
Provision is recognised when the Company has a present obligation as a
result of past event; it is probable that an outflow of resources
embodying economic benefit will be required to settle the obligation,
in respect of which a reliable estimate can be made. Provisions are not
discounted to its present value and are determined based on best
estimate of the expenditure required to settle the obligation at the
Balance Sheet date. These are reviewed at each Balance Sheet date and
adjusted to reflect the current best estimate. A contingent liability
is disclosed, unless the possibility of an outflow of resources
embodying the economic benefit is remote.
1.11 Cash and cash equivalents (for purposes of Cash Flow Statement):
Cash comprises cash on hand and demand deposits with banks. Cash
equivalents are short-term balances (with an original maturity of three
months or less from the date of acquisition), highly liquid investments
that are readily convertible into known amounts of cash and which are
subject to insignificant risk of changes in value.
1.12 Cash Flow Statement:
Cash flows are reported using the indirect method, whereby
profit/(loss) before extraordinary items and tax is adjusted for the
effects of transactions of non-cash nature and any deferrals or
accruals of past or future cash receipts or payments. The cash flows
from operating, investing and financing activities of the Company are
segregated based on the available information.
1.13 Operating Cycle:
Based on the nature of products/activities of the Company and the
normal time between acquisition of assets and their realisation in cash
or cash equivalents, the Company has determined its operating cycle as
12 months for the purpose of classification of its assets and
liabilities as current and non-current.
1.14 Leases:
Assets leased by the Company in its capacity as a lessee, where
substantially all the risks and rewards of ownership vest in the
Company are classified as finance leases. Such leases are capitalised
at the inception of the lease at the lower of the fair value and the
present value of the minimum lease payments and a liability is created
for an equivalent amount. Each lease rental paid is allocated between
the liability and the interest cost so as to obtain a constant periodic
rate of interest on the outstanding liability for each year.
Lease arrangements where the risks and rewards incidental to ownership
of an asset substantially vest with the lessor are recognised as
operating leases. Lease rentals under operating leases are recognised
in the Statement of Profit and Loss on a straight-line basis over the
lease term.
The Company has only one class of Equity shares having a face value of
Rs. 10 each. Every member shall be entitled to be present, and to speak
and vote and upon a poll the voting right of every member present in
person or by proxy shall be in proportion to his share of the paid-up
equity share capital of the Company. The Company in General Meeting may
declare dividends to be paid to members according to their respective
rights. While no dividends shall exceed the amount recommended by the
Board, the Company in General Meeting may declare a smaller dividend.
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.
Mar 31, 2014
1.1 Basis of accounting and preparation of financial statements:
The financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards notified under
Section 211(3C) of the Companies Act, 1956 ("the 1956 Act") (which
continue to be applicable in respect of Section 133 of the Companies
Act, 2013 ("the 2013 Act") in terms of General Circular 15/2013 dated
13 September, 2013 of the Ministry of Corporate Affairs) and the
relevant provisions of the 1956 Act/the 2013 Act, as applicable. The
financial statements have been prepared on an accrual basis under the
historical cost convention except for the revalued fixed assets as
stated in Note 11 - "Fixed assets".
1.2 Use of estimates:
The preparation of financial statements requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of financial statements and the reported amount
of revenues and expenses during the reporting period. Difference
between the actual results and estimates are recognised in the period
in which results are known/materialised.
1.3 Fixed assets and depreciation/amortisation:
Fixed assets are stated at cost of acquisition or construction or at
revalued amounts less accumulated depreciation/amortisation. Cost
comprises of purchase/acquisition price, import duties, taxes and any
directly attributed cost of bringing the asset to its working condition
for its intended use. Financing cost on borrowings for acquisition or
construction of fixed assets, for the period up to the date of
acquisition of fixed assets or when the assets are ready to be put to
use/the date of commencement of commercial production, is included in
the cost of fixed assets.
Assessment of indication of impairment of an asset is made at the
year-end and impairment loss, if any, is recognized.
Depreciation/amortisation is provided over the economic useful life of
the assets on the basis stated hereunder:
(a) Tangible assets
The company provides for depreciation on tangible fixed assets to write
off 95% of the cost either on written down value (WDV) method or
straight line method (SLM) as stated below in the manner and at the
rates not lower than those prescribed in Schedule XIV to the Companies
Act, 1956 except for Factory buildings and roads acquired prior to
1.8.1986 on which depreciation is provided on SLM method at the rate of
1.61%/3.28%.
The method of depreciation used for different category of assets is as
given below:
1) Buildings and roads, Plant and equipment - SLM
2) Furniture and fixtures, Vehicles and Office equipment - WDV
Depreciation on revalued amounts is transferred from revaluation
reserve to the Statement of Profit and Loss. Leasehold land is
amortised over the remaining period of lease.
(b) Intangible assets
Intangible assets (i.e. computer software) are amortised on written
down value basis at the rate of 40%.
1.4 Inventories:
Inventories are valued at the lower of cost and net realisable value,
except for scrap which is valued at net realisable value.
Cost comprises of material cost and expenditure incurred in normal
course of business in bringing inventories to its location and
includes, where applicable, appropriate overheads.
Material cost, other than those of automotive components which is on
specific identification basis, is arrived at on weighted average basis.
1.5 Contracts for furnace construction:
When it is probable that total contract costs will exceed total
contract revenue, the expected loss is recognised as an expense
immediately.
1.6 Foreign currency transactions:
Foreign currency transactions during the year are recorded at the rate
of exchange prevailing at the date of transaction. All foreign currency
monetary items outstanding at the year end are translated at year end
exchange rates. All foreign exchange gains or losses on settlement and
translation are accounted for in the Statement of Profit and Loss. In
case of forward exchange contracts premium or discounts are amortised
as expense or income over the life of the contract. Profit or loss
arising on cancellation or renewal of such forward exchange contracts
are recognised as income or as expenses for the year.
1.7 Revenue recognition:
Sales/Processing charges are accounted on the basis of actual
dispatches when significant risks and rewards of ownership are passed
on to the customers. Sales are net of sales tax/value added tax and
trade discounts.
Revenue from contracts for construction of furnaces is recognised on
the percentage of completion method based on the stage of completion
determined with reference to the contract costs incurred up to the year
end and the estimated total costs of the contracts.
Net income, if any, from development of tools is recognised as income
as and when the tools are sold in terms of respective contracts/supply
under the contract is completed/on the expiry of commercially useful
life of tools/on expiry of five years from completion of development,
whichever is earliest.
Interest income is recognised on time proportion basis.
1.8 Employee benefits:
(a) Defined contribution plan:
The Company''s contributions to the recognised provident fund and
superannuation fund are charged to the Statement of Profit and Loss.
(b) Defined benefit plan/Long term compensated absences:
The Company''s liability towards gratuity (Funded), terminal Ex-gratia
(Unfunded) and compensated absences (Unfunded) is determined on the
basis of the year end actuarial valuation done by an independent
actuary. The actuarial gains and losses determined by the actuary are
recognised immediately in the Statement of Profit and Loss as an income
or expense.
1.9 Taxation:
Current tax is determined as the amount of tax payable in respect of
estimated taxable income for the year.
Deferred tax is calculated at current statutory income tax rate and is
recognised, subject to the consideration of prudence, on timing
differences, being the difference between taxable income and accounting
income that originate in one period and are capable of reversal in one
or more subsequent periods.
Deferred tax assets are recognised on unabsorbed depreciation and carry
forward of losses only to the extent that there are timing differences,
the reversal of which will result in sufficient income or there is
virtual certainty supported by convincing evidence that sufficient
taxable income will be available against which such deferred tax assets
can be realised. The carrying amount of deferred tax asset is reviewed
at each Balance Sheet date.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which
gives future economic benefits in the form of adjustment to future
income tax liability, is considered as an asset if there is convincing
evidence that the Company will pay normal income tax. Accordingly, MAT
is recognised as an asset in the Balance Sheet when it is highly
probable that future economic benefit associated with it will flow to
the Company.
1.10 Contingencies/Provisions:
Provision is recognised when the Company has a present obligation as a
result of past event; it is probable that an outflow of resources
embodying economic benefit will be required to settle the obligation,
in respect of which a reliable estimate can be made. Provisions are not
discounted to its present value and are determined based on best
estimate of the expenditure required to settle the obligation at the
Balance Sheet date. These are reviewed at each Balance Sheet date and
adjusted to reflect the current best estimate. A contingent liability
is disclosed, unless the possibility of an outflow of resources
embodying the economic benefit is remote.
1.11 Cash and cash equivalents (for purposes of Cash Flow Statement):
Cash comprises cash on hand and demand deposits with banks. Cash
equivalents are short-term balances (with an original maturity of three
months or less from the date of acquisition), highly liquid investments
that are readily convertible into known amounts of cash and which are
subject to insignificant risk of changes in value.
1.12 Cash Flow Statement:
Cash flows are reported using the indirect method, whereby
profit/(loss) before extraordinary items and tax is adjusted for the
effects of transactions of non-cash nature and any deferrals or
accruals of past or future cash receipts or payments. The cash flows
from operating, investing and financing activities of the Company are
segregated based on the available information.
1.13 Operating Cycle:
Based on the nature of products/activities of the Company and the
normal time between acquisition of assets and their realisation in cash
or cash equivalents, the Company has determined its operating cycle as
12 months for the purpose of classification of its assets and
liabilities as current and non-current.
Mar 31, 2013
1.1 Basis of accounting and preparation of financial statements:
The financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards notified under
the Companies (Accounting Standards) Rules'' 2006 (as amended) and the
relevant provisions of the Companies Act'' 1956. The financial
statements have been prepared on accrual basis under the historical
cost convention except for the revalued fixed assets as stated in Note
11 - "Fixed assets".
1.2 Use of estimates:
The preparation of financial statements requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of financial statements and the reported amount
of revenues and expenses during the reporting period. Difference
between the actual results and estimates are recognised in the period
in which results are known / materialised.
1.3 Fixed assets and depreciation:
Fixed assets are stated at cost of acquisition or construction or at
revalued amounts less accumulated depreciation. Cost comprises of
purchase/acquisition price'' import duties'' taxes and any directly
attributed cost of bringing the asset to its working condition for its
intended use. Financing cost on borrowings for acquisition or
construction of fixed assets'' for the period up to the date of
acquisition of fixed assets or when the assets are ready to be put to
use/the date of commencement of commercial production'' is included in
the cost of fixed assets.
Assessment of indication of impairment of an asset is made at the
year-end and impairment loss'' if any'' is recognized. Depreciation is
provided over the economic useful life of the assets on the basis
stated hereunder:
(a) Tangible assets
The company provides for depreciation on tangible fixed assets to write
off 95% of the cost either on written down value (WDV) method or
straight line method (SLM) as stated below in the manner and at the
rates not lower than those prescribed in Schedule XIV to the Companies
Act'' 1956 except for Factory buildings and roads acquired prior to
1.8.86 on which depreciation is provided on SLM method at the rate of
1.61% / 3.28%.
The method of depreciation used for different category of assets is as
given below:
1) Buildings and roads'' Plant and equipment - SLM
2) Furniture and fixtures'' vehicles and Office equipment - WDV
Depreciation on revalued amounts is transferred from revaluation
reserve to the Statement of Profit and Loss.
Leasehold land is amortised over the remaining period of lease.
(b) Intangible assets
Intangible assets (i.e. computer software) are amortised on written
down value basis at the rate of 40%.
1.4 Inventories:
Inventories are valued at the lower of cost and net realisable value''
except for scrap which is valued at net realisable value.
Cost comprises of material cost and expenditure incurred in normal
course of business in bringing inventories to its location and
includes'' where applicable'' appropriate overheads.
Material cost'' other than those of automotive components which is on
specific identification basis'' is arrived at on weighted average basis.
1.5 Contracts for furnace construction:
When it is probable that total contract costs will exceed total
contract revenue'' the expected loss is recognised as an expense
immediately.
1.6 Foreign currency transactions:
Foreign currency transactions during the year are recorded at the rate
of exchange prevailing at the date of transaction. All foreign currency
monetary items outstanding at the year end are translated at year end
exchange rates. All foreign exchange gains or losses on settlement and
translation are accounted for in the Statement of Profit and Loss. In
case of forward exchange contracts premium or discounts are amortised
as expense or income over the life of the contract. Profit or loss
arising on cancellation or renewal of such forward exchange contracts
are recognised as income or as expenses for the year.
1.7 Revenue recognition:
Sales/Processing charges are accounted on the basis of actual
dispatches when significant risks and rewards of ownership are passed
on to the customers. Sales are net of sales tax/value added tax and
trade discounts.
Revenue from contracts for construction of furnaces is recognised on
the percentage of completion method based on the stage of completion
determined with reference to the contract costs incurred up to the year
end and the estimated total costs of the contracts.
Net income'' if any'' from development of tools is recognised as income
as and when the tools are sold in terms of respective contracts/supply
under the contract is completed/on the expiry of commercially useful
life of tools/on expiry of five years from completion of development''
whichever is earliest.
Interest income is recognised on time proportion basis.
1.8 Employee benefits:
(a) Defined contribution plan:
The Company''s contributions to the provident fund and superannuation
fund are charged to the Statement of Profit and Loss.
(b) Defined benefit plan / Long- term compensated absences:
The Company''s liability towards gratuity (Funded)'' terminal Ex-gratia
(Unfunded) and compensated absences (Unfunded) is determined on the
basis of the year end actuarial valuation done by an independent
actuary. The actuarial gains and losses determined by the actuary are
recognised immediately in the Statement of Profit and Loss as an income
or expense.
1.9 Taxation:
Current tax is determined as the amount of tax payable in respect of
estimated taxable income for the year.
Deferred tax is calculated at current statutory income tax rate and is
recognised'' subject to the consideration of prudence'' on timing
differences'' being the difference between taxable income and accounting
income that originate in one period and are capable of reversal in one
or more subsequent periods.
Deferred tax assets are recognised on unabsorbed depreciation and carry
forward of losses only to the extent that there are timing differences''
the reversal of which will result in sufficient income or there is
virtual certainty that sufficient taxable income will be available
against which such deferred tax assets can be realised. The carrying
amount of deferred tax asset is reviewed at each Balance Sheet date.
Minimum Alternative Tax (MAT) credit asset is recognized only when and
to the extent there is convincing evidence that the Company will pay
normal income tax during the specified period. The carrying amount of
MAT credit asset is reviewed at each Balance Sheet date.
1.10 Contingencies/Provisions:
Provision is recognised when the Company has a present obligation as a
result of past event; it is probable that an outflow of resources
embodying economic benefit will be required to settle the obligation''
in respect of which a reliable estimate can be made. Provisions are not
discounted to its present value and are determined based on best
estimate of the expenditure required to settle the obligation at the
Balance Sheet date. These are reviewed at each Balance Sheet date and
adjusted to reflect the current best estimate. A contingent liability
is disclosed'' unless the possibility of an outflow of resources
embodying the economic benefit is remote.
Mar 31, 2012
Note 1.1: Basis of Accounting and Preparation of Financial Statements
The financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards notified under
the Companies (Accounting Standards) Rules, 2006 (as amended) and the
relevant provisions of the Companies Act, 1956. The financial
statements have been prepared on accrual basis under the historical
cost convention except for the revalued fixed assets as stated in Note
11 - "Fixed Assets".
Note 1.2 : Fixed Assets and Depreciation
Fixed assets are stated at cost of acquisition or construction or at
revalued amounts less accumulated depreciation. Cost comprises of
purchase / acquisition price, import duties, taxes and any directly
attributed cost of bringing the asset to its working condition for its
intended use. Financing cost on borrowings for acquisition or
construction of fixed assets, for the period up to the date of
acquisition of fixed assets or when the assets are ready to be put to
use / the date of commencement of commercial production, is included in
the cost of fixed assets.
Assessment of indication of impairment of an asset is made at the year
end and impairment loss, if any, is recognized.
Depreciation is provided over the economic useful life of the assets on
the basis stated hereunder:
(a) Tangible assets
The company provides for depreciation on tangible fixed assets to write
off 95% of the cost either on written down value (WDV) method or
straight line method (SLM) as stated below in the manner and at the
rates not lower than those prescribed in Schedule XIV to the Companies
Act, 1956 except for Factory buildings and roads acquired prior to
1.8.86 on which depreciation is provided on SLM method at the rate of
1.61% / 3.28%.
The method of depreciation used for different category of assets is as
given below:
1) Factory buildings & roads, buildings (other than factory buildings
except corporate Office), plant and machinery, electrical installations
and water supply installations - SLM
2) Corporate office (Buildings), furniture and fixtures, computers,
office and miscellaneous equipment and vehicles - WDV
Depreciation on revalued amounts is transferred from revaluation
reserve to the Statement of profit & loss. Leasehold land is amortised
over the remaining period of lease.
(b) Intangible assets
Intangible assets (i.e. computer software) are amortised on written
down value basis at the rate of 40%.
Note 1.3 : Inventories
Inventories are valued at the lower of cost and net realisable value,
except for scrap which is valued at net realisable value.
Cost comprises of material cost and expenditure incurred in normal
course of business in bringing inventories to its location and
includes, where applicable, appropriate overheads.
Material cost, other than those of automotive components which is on
specific identification basis, is arrived at on weighted average basis.
Note 1.4 : Contracts for Furnace Construction
When it is probable that total contract costs will exceed total
contract revenue, the expected loss is recognised as an expense
immediately.
Note 1.5: Foreign Currency Transactions
Foreign currency transactions during the year are recorded at the rate
of exchange prevailing at the date of transaction. All foreign currency
monetary items outstanding at the year end are translated at year end
exchange rates. All foreign exchange gains or losses on settlement and
translation are accounted for in the Statement of Profit and Loss. In
case of forward exchange contracts premium or discounts are amortised
as expense or income over the life of the contract. Profit or loss
arising on cancellation or renewal of such forward exchange contracts
are recognised as income or as expenses for the year.
Note 1.6: Revenue Recognition
Sales/ Processing charges are accounted on the basis of actual
dispatches when significant risks and rewards of ownership are passed
on to the customers. Sales are net of sales tax / value added tax and
trade discounts.
Revenue from contracts for construction of furnaces is recognised on
the percentage of completion method based on the stage of completion
determined with reference to the contract costs incurred up to the year
end and the estimated total costs of the contracts.
Net income, if any, from development of tools is recognised as income
as and when the tools are sold in terms of respective contracts/ supply
under the contract is completed/ on the expiry of commercially useful
life of tools/ on expiry of five years from completion of development,
whichever is earliest.
Interest Income is recognised on time proportion basis.
Note 1.7 : Employee Benefits
(a) Defined Contribution Plan:
The Company's contributions to the Provident Fund and Superannuation
Fund are charged to the Statement of Profit and Loss .
(b) Defined Benefit Plan / Long Term Compensated Absences:
The Company's liability towards gratuity (Funded), terminal Ex-gratia
(Unfunded) and compensated absences (Unfunded) is determined on the
basis of the year end actuarial valuation done by an independent
actuary. The actuarial gains and losses determined by the actuary are
recognised immediately in the Statement of Profit and Loss as an income
or expense.
Note 1.8: Taxation
Current tax is determined as the amount of tax payable in respect of
estimated taxable income for the year.
Deferred tax is calculated at current statutory income tax rate and is
recognised, subject to the consideration of prudence, on timing
differences, being the difference between taxable income and accounting
income that originate in one period and are capable of reversal in one
or more subsequent periods.
Deferred tax assets are recognised on unabsorbed depreciation and carry
forward of losses only to the extent that there are timing differences,
the reversal of which will result in sufficient income or there is
virtual certainty that sufficient taxable income will be available
against which such deferred tax assets can be realised. The carrying
amount of deferred tax assets is reviewed at each Balance Sheet date.
Minimum Alternative Tax (MAT) credit asset is recognized only when, and
to the extent there is convincing evidence that the Company will pay
normal Income Tax during the specified period. The carrying amount of
MAT credit asset is reviewed at each Balance Sheet date.
Note 1.9 : Contingencies / Provisions
Provision is recognised when the Company has a present obligation as a
result of past event; it is probable that an outflow of resources
embodying economic benefit will be required to settle the obligation,
in respect of which a reliable estimate can be made. Provisions are not
discounted to its present value and are determined based on best
estimate of the expenditure required to settle the obligation at the
Balance Sheet date. These are reviewed at each Balance Sheet date and
adjusted to reflect the current best estimate. A contingent liability
is disclosed, unless the possibility of an outflow of resources
embodying the economic benefit is remote.
Note 1.10 : Use of Estimates
The preparation of financial statements requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of financial statements and the reported amount
of revenues and expenses during the reporting period. Difference
between the actual results and estimates are recognised in the period
in which results are known / materialised.
Mar 31, 2010
I) Basis of Accounting:
The financial statements are prepared on accrual basis under the
historical cost convention, except for the revalued fixed assets as
stated in Schedule 4 - Fixed Assets, and in accordance with the
accounting standards specified in the Companies (Accounting Standards)
Rules, 2006 notified by the Central Government in terms of Section 211
(3C) of the Companies Act, 1956.
ii) Fixed assets and depreciation:
Fixed assets are stated at cost of acquisition or construction or at
revalued amounts less accumulated depreciation. Cost comprises of
purchase / acquisition price, import duties, taxes and any directly
attributed cost of bringing the asset to its working condition for its
intended use. Financing cost on borrowings for acquisition or
construction of fixed assets, for the period up to the date of
acquisition of fixed assets or when the assets are ready to be put to
use / the date of commencement of commercial production, is included in
the cost of fixed assets.
Assessment of indication of impairment of an asset is made at the
year-end and impairment loss, if any, is recognized.
Depreciation is provided on the basis stated hereunder:
(a) Tangible assets
The Company provides for depreciation on tangible fixed assets to write
off 95% of the cost either on written down value (WDV) method or
straight line method (SLM) in the manner and at the rates prescribed in
Schedule XIV to the Companies Act, 1956 except for Factory Buildings
and roads acquired prior to 1.8.86 on which depreciation is provided on
SLM method at the rate of 1.61% / 3.28%
Depreciation on revalued amounts is transferred from revaluation
reserve to the profit and loss account.
Leasehold land is amortised over the remaining period of lease.
(b) Intangible assets
Intangible assets (i.e. computer software) are amortised on written
down value basis at the rate of 40%.
iii) Inventories:
Inventories are valued at the lower of cost and net realisable value,
except for scrap which is valued at net realisable value.
Cost comprises of material cost and expenditure incurred in normal
course of business in bringing inventories to its location and
includes, where applicable, appropriate overheads.
Material cost, other than those of automotive components which is on
specific identification basis, is arrived at on weighted average basis.
iv) Contracts for furnace construction:
When it is probable that total contract costs will exceed total
contract revenue, the expected loss is recognised as an expense
immediately.
v) Foreign Currency Transactions:
Foreign currency transactions during the year are recorded at the rate
of exchange prevailing at the date of transaction. All foreign
currency monetary items outstanding at the year end are translated at
year end exchange rates. All foreign exchange gains or losses are
accounted for in the Profit and Loss account. In case of forward
exchange contracts premium or discounts are amortised as expense or
income over the life of the contract. Exchange difference on such
forward exchange contracts are recognised in the Profit and Loss
Account in the year in which the exchange rate changes. Profit or Loss
arising on cancellation or renewal of such forward exchange contracts
are recognised as income or as expenses for the year.
vi) Revenue recognition:
Sales/ Processing charges are accounted on the basis of actual
dispatches to the customers. Sales are net of sales tax / value added
tax and trade discounts.
Revenue from contracts for construction of furnaces is recognised on
the percentage of completion method based on the stage of completion
determined with reference to the contract costs incurred up to the year
end and the estimated total costs of the contracts.
Net income, if any, from development of tools is recognised as income
as and when the tools are sold in terms of respective contracts/ supply
under the contract is completed/ on the expiry of commercially useful
life of tools/ on expiry of five years from completion of development,
whichever is earliest.
Interest Income is recognised on time proportion basis.
vii) Amortisation of Miscellaneous Expenditure:
Payments made to employees who have left under Voluntary Retirement
Scheme / Early Retirement Scheme on or before March 31, 2006, are
amortised over a period of 5 years from the year in which the liability
accrued. Payments made to employees who left on or after April 01,2006
under Voluntary Retirement Scheme are charged off in the year in which
the liability accrues.
Share issue expenses are amortised over a period of 5 years from the
year in which the shares are issued.
viii) Employee Benefits:
a) Defined Contribution Plan:
The Companys contributions to the Provident Fund and Superannuation
Fund are charged to the Profit and Loss Account.
b) Defined Benefit Plan / Long Term Compensated Absences:
The Companys liability towards gratuity (Funded), terminal Ex-gratia
(Unfunded) and compensated absences is determined on the basis of the
year end actuarial valuation done by an independent actuary. The
actuarial gains and losses determined by the actuary are recognised
immediately in the Profit and Loss Account as an income or expense.
ix) Taxation:
Current tax is determined as the amount of tax payable in respect of
estimated taxable income for the period.
Deferred tax is calculated at current statutory income tax rate and is
recognised, subject to the consideration of prudence, on timing
differences, being the difference between taxable income and accounting
income that originate in one period and are capable of reversal in one
or more subsequent periods.
Deferred tax assets are recognised on unabsorbed depreciation and carry
forward of losses only to the extent that there are timing differences,
the reversal of which will result in sufficient income or there is
virtual certainity that sufficient taxable income will be available
against which such deferred tax assets can be realised. The carrying
amount of deferred tax assets is reviewed at each Balance Sheet date.
Minimum Alternative Tax (MAT) credit asset is recognized only when and
to the extent there is convincing evidence that the Company will pay
normal Income Tax during the specified period. The carrying amount of
MAT credit asset is reviewed at each Balance Sheet date.
x) Contingencies/Provisions:
Provision is recognised when the Company has a present obligation as a
result of past event; it is probable that an outflow of resources
embodying economic benefit will be required to settle the obligation,
in respect of which a reliable estimate can be made. Provisions are not
discounted to its present value and are determined based on best
estimate of the expenditure required to settle the obligation at the
Balance Sheet date. These are reviewed at each Balance Sheet date and
adjusted to reflect the current best estimate. A contingent liability
is disclosed, unless the possibility of an outflow of resources
embodying the economic benefit is remote.
xi) Use of estimates:
The preperation of financial statements requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of financial statements and the reported amount
of revenues and expenses during the reporting period. Difference
between the actual results and estimates are recognised in the period
in which results are known / materialised.
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More Information on Bharat Gears Ltd.
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Bharat Gears Ltd. Tools
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Bharat Gears Ltd. Company Details
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Company History
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Bharat Gears Ltd. Key Financial Ratios
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Bharat Gears Ltd. Results
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Bharat Gears Ltd. Financial Data
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Bharat Gears Ltd. Reports
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- Auditors Report
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Bharat Gears Ltd. Corporate Announcements
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