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Accounting Policies of Elgi Equipments Ltd. Company

Mar 31, 2017

General Information

Elgi Equipments Limited ("the Company") is engaged in manufacturing of air compressors. The Company has manufacturing plants in different locations in India and has its registered office in Coimbatore. The Company is a public limited company and listed on both the Bombay Stock Exchange and the National Stock Exchange.

1 Significant accounting policies

This note provides a list of the significant accounting policies adopted in the preparation of the standalone financial statements. These policies have been consistently applied to all the years presented unless otherwise stated.

(a) Basis of preparation

(i) Compliance with Ind AS

The standalone financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act) Companies (Indian Accounting Standards) Rules, 2015) and other relevant provisions of the Act.

The financial statements up to year ended March 31, 2016 were prepared in accordance with the accounting standards notified under Companies (Accounting Standard) Rules, 2006 (as amended) and other relevant provisions of the Act.

These financial statements are the first financial statements of the Company under Ind AS. Refer Note 51 for an explanation of how the transition from previous GAAP to Ind AS has affected the Company''s financial position, financial performance and cash flows.

(ii) Historical cost convention

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

a) certain financial assets and liabilities (including derivative instruments) and commitments that are measured at fair value; and

b) defined benefit plans — plan assets measured at fair value.

(b) Accounting for Joint Operations

The Company recognizes its direct right to the assets, liabilities, revenues and expenses of joint operations and its share of any jointly held or incurred assets, liabilities, revenues and expenses. These have been incorporated in the financial statements under the appropriate headings. Details of the joint operations are set out in note 51 (C-1).

(c) Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The Managing Director (MD) of the company has been identified as the chief operating decision maker of Elgi Equipments Limited who assesses the financial performance and position of the Company, and makes strategic decisions. The business activities of the Company comprise of manufacturing and sale of compressors. Accordingly, there is no other reportable segment as per Ind AS 108 Operating Segments.

(d) Foreign currency translation

(i) Functional and presentation currency

Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the entity operates (''the functional currency''). The financial statements are presented in Indian Rupee (INR), which is the Company''s functional and presentation currency.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognized in profit or loss. A monetary item for which settlement is neither planned nor likely to occur in the foreseeable future is considered as a part of the entity''s net investment in that foreign operation.

Non-monetary items that are measured at fair value in a foreign currency are translated using exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as a part of the fair value gain or loss.

(iii) Foreign operations

The results and financial position of foreign operations (none of which has the currency of a hyper inflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows :

Assets and liabilities are translated at the closing rate at the date of that balance sheet.

Income and expenses are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which incomes and expenses are translated at the dates of the transactions), and all resulting foreign exchange differences are recognized in other comprehensive income.

When a foreign operation is sold, the associated exchange differences are reclassified to profit or loss as a part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.

The results and financial position of foreign operation which have a functional currency similar to the company are translated using the same principle enumerated in Note (d) (ii) above.

(e) Revenue recognition

Revenue is recognized at fair value of the consideration received and receivable. Amounts disclosed as revenue are inclusive of excise duty and net of returns, trade allowances, rebates, value added taxes and amount collected on behalf of third parties.

The Company recognizes revenue when the amount of revenue can be reliably measured and it is probable that future economic benefits will flow to the entity. The Company bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and specifics of each arrangement.

Sale of goods : Revenue from sale of goods is recognized when the significant risks and rewards of ownership in the goods are transferred to the buyer as per terms of the contract.

Duty drawback : Income from duty drawback is recognized on an accrual basis.

Royalty : Royalty is recognized on accrual basis in accordance with terms of respective agreements.

Rent : Rental Income is recognized on accrual basis in accordance with terms of respective rent agreements.

(f) Government grants

Grants from the government are recognized at their fair value where there is a reasonable assurance that the grant will be received and the Company will comply with all the attached conditions.

Government grants relating to income are deferred and recognized in the profit or loss over the period necessary to match them with the costs that they are intended to compensate and presented within other income.

Government grants relating to the purchase of property, plant and equipment are included in current and noncurrent liabilities as deferred income and are credited to profit or loss on a straight-line basis over the expected lives of the related assets and presented within other income.

(g) Income taxes

The income tax expense or credit for the period is the tax payable on the current period''s taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.

Current tax liabilities (assets) for the current and prior periods are measured at the amount expected to be paid to (recovered from) the taxation authorities, using the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred tax liabilities are not recognized if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit (tax loss). Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.

Deferred tax assets are recognized for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilize those temporary differences and losses.

Deferred tax liabilities are not recognized for temporary differences between the carrying amount and tax bases of investments in subsidiaries and interest in joint arrangements where the company is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.

Deferred tax assets are not recognized for temporary differences between the carrying amount and tax bases of investments in subsidiaries and interest in joint arrangements where it is not probable that the differences will reverse in the foreseeable future and taxable profit will not be available against which the temporary difference can be utilized.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.

Current and deferred tax is recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively.

(h) Leases

As a lessee

Leases of property, plant and equipment where the Company, as a lessee, has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease''s inception at the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in borrowings or other financial liabilities as appropriate. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the less or) are charged to profit or loss on a straight-line basis over the period of the lease unless the payments are structured to increase in line with expected general inflation to compensate for the less or’s expected inflationary cost increases.

As a less or

Lease income from operating leases where the Company is a less or is recognized in income on a straight-line basis over the lease term unless the receipts are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases. The respective leased assets are included in the balance sheet based on their nature.

(i) Impairment of assets

Goodwill and intangible assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset''s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset''s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.

(j) Cash and cash equivalents

For the purpose of presentation in the statement of cash flows, cash and cash equivalents include cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

(k) Trade receivables

Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less provision for impairment, if any.

(l) Inventories

Raw materials and stores, work in progress, traded and finished goods

Raw materials and stores, work in progress, traded and finished goods are stated at the lower of cost and net realizable value. Cost of raw materials and traded goods comprises cost of purchases. Cost of work-in-progress and finished goods comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity. Cost of inventories also include all other costs incurred in bringing the inventories to their present location and condition. Costs are assigned to individual items of inventory on the basis of first-in first-out basis. Costs of purchased inventory are determined after deducting rebates and discounts. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

(m) Investments and other financial assets

( i) Classification

The Company classifies its financial assets in the following measurement categories:

a) those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and

b) those measured at amortized cost.

The classification depends on the entity''s business model for managing the financial assets and the contractual terms of the cash flows. For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For investments in debt instruments, this will depend on the business model in which the investment is held. For investments in equity instruments, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income. The Company reclassifies debt investments when and only when its business model for managing those assets changes.

(ii) Measurement

At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.

Debt instruments

Subsequent measurement of debt instruments depends on the Company''s business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the Company classifies its debt instruments.

a) Amortized cost:

Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortized cost. A gain or loss on a debt investment that is subsequently measured at amortized cost and is not part of a hedging relationship is recognized in profit or loss when the asset is derecognized or impaired. Interest income from these financial assets is included in finance income using the effective interest rate method.

b) Fair value through other comprehensive income (FVOCI):

Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets'' cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income (FVOCI). Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognized in profit and loss. When the financial asset is derecognized, the cumulative gain or loss previously recognized in OCI is reclassified from equity to profit or loss and recognized in other income/ (expense). Interest income from these financial assets is included in other income using the effective interest rate method.

c) Fair value through profit or loss:

Assets that do not meet the criteria for amortized cost or FVOCI are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss and is not part of a hedging relationship is recognized in profit or loss and presented net in the statement of profit and loss within other income/ (expense) in the period in which it arises. Interest income from these financial assets is included in other income.

Equity instruments

The Company measures all equity investments at fair value, except for investments forming part of interest in subsidiaries and joint ventures, which are measured at cost. Where the Company''s management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss. Dividends from such investments are recognized in profit or loss as other income when the Company''s right to receive payments is established. Changes in the fair value of financial assets at fair value through profit or loss are recognized in other income/ (expense) in the statement of profit and loss. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.

(iii) Impairment of financial assets

The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortized cost and FVOCI debt instruments. The impairment methodology applied depends on whether there has been a significant increase in credit risk. Note 39 details how the Company determines whether there has been a significant increase in credit risk.

For trade receivables only, the Company applies the simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognized from initial recognition of the receivables.

(iv) Derecognition of financial assets

A financial asset is derecognized only when

a) The Company has transferred the rights to receive cash flows from the financial asset or

b) The Company retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.

Where the Company has transferred an asset, it evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognized. Where the Company has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognized.

Where the Company has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognized if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognized to the extent of continuing involvement in the financial asset.

(v) Income recognition

a) Interest income

Interest income from debt instruments is recognized using the effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of a financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses.

b) Dividends

Dividends are recognized in profit or loss only when the right to receive payment is established, it is probable that the economic benefits associated with the dividend will flow to the Company, and the amount of the dividend can be measured reliably.

Derivatives

(i) Derivatives that are not designated as hedges: The Company enters into certain derivative contracts to hedge risks which are not designated as hedges. Such contracts are accounted for at fair value through profit or loss and are included in other income / (expense).

(n) Offsetting financial instruments

Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.

(o) Property, Plant and Equipment

Freehold land is carried at historical cost. All other items of property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset''s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.

Transition to Ind AS on transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognized as at April 1, 2015 measured as per the previous GAAP adjusted for the impact of outstanding government grant relating to purchase of property plant and equipment and use the value so arrived as the deemed cost of the property, plant and equipment.

Depreciation methods, estimated useful lives and residual value Depreciation is calculated using the straight-line and written down value methods to allocate their cost, net of their residual values, over their estimated useful lives.

The useful lives have been determined based on Schedule II to the Companies Act, 2013, except roads where useful lives have been determined based on technical evaluation done by the management''s expert which are higher than those specified by Schedule II to the Companies Act, 2013, in order to reflect the actual usage of the assets. The residual values are not more than 5% of the original cost of the asset.

Asset Useful Life

Roads 10 Years

The assets'' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

An asset''s carrying amount is written down immediately to its recoverable amount if the asset''s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss within other income / (expense).

(p) Investment Properties

Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the Company, is classified as investment property. Investment property is measured initially at its cost, including related transaction costs. Subsequent expenditure is capitalized to the asset''s carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance costs are expensed when incurred. When part of an investment property is replaced, the carrying amount of the replaced part is derecognized.

Investment properties (other than land) are depreciated using the written down value method over their estimated useful lives. Investment properties have a useful life of 30 years. The useful lives have been determined based on Schedule II to the Companies Act, 2013.

Transition to Ind AS

On transition to Ind AS, the Company has elected to continue with the carrying value of all of its investment properties recognized as at April 1, 2015 measured as per the previous GAAP and use that carrying value as the deemed cost of investment properties.

(q) Intangible assets

The intangible asset includes technical know-how and computer software which are recorded at the cost of acquisition and are amortized over a period of five years or their legal / useful life whichever is less.

(r) Research and development

Research and development expenditure that do not meet the criteria for recognition as intangible assets are recognized as an expense as incurred. Development costs previously recognized as an expense are not recognized as an asset in the subsequent period.

Transition to Ind AS

On transition to Ind AS, the Company has elected to continue with the carrying value of all of intangible assets recognized as at April 1, 2015 measured as per the previous GAAP and use that carrying value as the deemed cost of intangible assets.

(s) Trade and other payables

These amounts represent liabilities for goods and services provided to the company prior to the end of financial year which are unpaid. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognized initially at their fair value and subsequently measured at amortized cost using the effective interest method.

(t) Borrowings

Borrowings are initially recognized at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognized in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalized as a prepayment for liquidity services and amortized over the period of the facility to which it relates.

Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss as other gains / (losses).

Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.

(u) Borrowing costs

General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.

Other borrowing costs are expensed in the period in which they are incurred.

(v) Financial guarantee contracts

Financial guarantee contracts are recognized as a financial liability at the time the guarantee is issued. The liability is initially measured at fair value and subsequently at the higher of the amount determined in accordance with Ind AS 37 and the amount initially recognized less cumulative amortization, where appropriate.

The fair value of financial guarantees is determined as the present value of the difference in net cash flows between the contractual payments under the debt instrument and the payments that would be required without the guarantee, or the estimated amount that would be payable to a third party for assuming the obligations.

Where guarantees in relation to loans or other payables of subsidiaries / joint ventures are provided for no compensation, the fair values are accounted for as contributions and recognized as part of the cost of the investment.

(w) Provisions

Provisions for legal claims, service warranties, volume discounts and returns are recognized when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognized for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

(x) Employee Benefits

( i) Short-term obligations

Liabilities for wages and salaries, including nonmonetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognized in respect of employees'' services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as other financial liability in the balance sheet.

(ii) Other long-term employee benefit obligations

The liabilities for earned leave that are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognized in profit or loss.

The obligations are presented as current liabilities in the balance sheet if the Company does not have an unconditional right to defer settlement for at least 12 months after the reporting period, regardless of when the actual settlement is expected to occur.

(iii) Post-employment obligations

The Company operates the following post-employment schemes:

(a) defined benefit plans such as gratuity and

(b) defined contribution plans such as provident fund and Superannuation fund.

Gratuity obligations

The liability or asset recognized in the balance sheet in respect of defined benefit gratuity plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method.

The present value of the defined benefit obligation denominated in INR is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.

The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the statement of profit and loss. Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance sheet.

Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognized immediately in profit or loss as past service cost.

Defined contribution plans

The Company pays provident fund and superannuation fund contributions to Employee Provident Fund Account as per Employees Provident Fund Act, 1952 and Life Insurance Corporation of India respectively. The Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognized as employee benefit expense when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in the future payments is available.

(iv) Bonus plans

The Company recognises a liability and an expense for bonuses. The Company recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

(x) Contributed Equity

Equity shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

(y) Dividends

Provision is made for the amount of any dividend declared, being appropriately authorized and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period.

(z) Earnings Per Share

(i) Basic earnings per share

Basic earnings per share is calculated by dividing:

= the profit attributable to owners of the Company

= by the weighted average number of equity shares outstanding during the financial year, adjusted for bonus elements in equity shares issued during the year and excluding treasury shares (note 47).

(ii) Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:

=the after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and

=the weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.

(aa) Rounding of amounts

All amounts disclosed in the financial statements and notes have been rounded off to the nearest millions as per the requirement of Schedule III, unless otherwise stated.

(ab) Standards issued but not yet effective

In March 2017, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2017, notifying amendments to Ind AS 7, Statement of Cash Flows and Ind AS 102, Share-Based Payment. These amendments are in accordance with the recent amendments made by International Accounting Standards Board (IASB) to IAS 7, Statement of Cash Flows and IAS 2, Share-Based Payment, respectively. The amendments are applicable to the Company from April 1, 2017.

Amendment to Ind AS 7

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

The Company is evaluating the disclosure requirements of the amendment and the effect of the same on the financial statements.

Amendment to Ind AS 102

The amendment to Ind AS 102 provides specific guidance for the measurement of cash-settled awards, modification of cash-settled awards and awards that include a net settlement feature in respect of withholding taxes.

It clarifies that the fair value of cash-settled awards is determined on a basis consistent with that used for equity-settled awards. Market-based performance conditions and non-vesting conditions are reflected in the ''fair values'', but non-market performance conditions and service vesting conditions are reflected in the estimate of the number of awards expected to vest. Also, the amendment clarifies that if the terms and conditions of a cash-settled share-based payment transaction are modified with the result that it becomes an equity-settled share-based payment transaction, the transaction is accounted for as such from the date of the modification. Further, the amendment requires the award that include a net settlement feature in respect of withholding taxes to be treated as equity-settled in its entirety. The cash payment to the tax authority is treated as if it was part of an equity settlement.

The Company does not have any share based payment transactions and therefore there is no impact on the financial statements of the company arising from the amendment to be notified.

2. Critical estimates and judgments

The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. Management also needs to exercise judgment in applying the Company''s accounting policies.

This note provides an overview of the areas that involved a higher degree of judgment or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgments is included in relevant notes together with information about the basis of calculation for each affected line item in the financial statements.

The areas involving critical estimates or judgments are:

Estimation of provision for - Note 25 warranty claims

Estimation of defined benefit - Note 25 (a) obligation

Estimation of current tax - Note 37

expense and payable

Estimates and judgments are continually evaluated. They are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Company and that are believed to be reasonable under the circumstances.

(iii) Defined contribution plans

The Company also has certain defined contribution plans. Contributions are made to provident fund in India for employees at the rate of 12% of basic salary as per regulations. The contributions are made to registered provident fund administered by the Government. The obligation of the Company is limited to the amount contributed and it has no further contractual nor any constructive obligation. The expense recognized during the period towards defined contribution plan is INR 57.11 Million (March 31, 2016 - INR 51.79 Million).

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognized in the balance sheet.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.

The expected rate of return on assets is determined based on the assessment made at the beginning of the year on the return expected on its existing portfolio, along with the estimated increment to the plan assets and expected yield on the respective assets in the portfolio during the year.

(vi) Risk exposure

The Company''s Gratuity fund is maintained by an approved trust (Life Insurance Corporation of India). A large portion of the investment made by the LIC is in government bonds and securities and other approved securities. Hence, the Company is not exposed to the risk of asset volatality as at the balance sheet date.

(vii) Defined benefit liability and employer contributions

The weighted average duration of the defined benefit obligation is 10.49 years (March 31, 2016 - 10.08 years, March 31, 2015 - 9.67 years).

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This consists of listed equity instruments, that have quoted price. The fair value of all equity instruments which are traded in the stock exchanges is valued using the closing price as at the reporting period.

Level 2: The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for deposits included in level 3.

There are no transfers between levels 1 and 2 during the year.

The company''s policy is to recognize transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period.

(ii) Valuation technique used to determine fair value

Specific valuation techniques used to value financial instruments include:

-the use of quoted market prices or dealer quotes for similar instruments

-the fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date

-the fair value of the remaining financial instruments is determined using discounted cash flow analysis.

The carrying amounts of trade receivables, trade payables, cash and cash equivalents, current loans to employees and subsidiaries, borrowings and other current financial liabilities and financial assets are considered to be the same as their fair values, due to their short-term nature.

The fair values for loans to employees were calculated based on cash flows discounted using a current lending rate. They are classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs including counterparty credit risk. The security deposits are payable on demand and hence their carrying amount is considered as fair value.

For financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values.


Mar 31, 2016

1.1 Basis for preparation of Financial Statements

The Company follows accrual method of Accounting. The financial statements have been prepared under the Historical Cost Convention and on the basis of going concern and in accordance with the Accounting Standards notified under the Companies Act, 1956 ("The Act") read with the general circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act 2013.

1.2 Inventories

Inventories have been valued at lower of cost and net realisable value. The cost of inventories has been assigned using the weighted average cost formula.

a) Purchased items - at FIFO - Net of CENVAT and VAT

b) Work-in-Progress - Purchase cost net of CENVAT and VAT plus proportionate Overheads

c) Manufactured items - at cost excluding selling at Factory overheads and VAT.

d) Traded Items - at cost and net of VAT.

e) Inventory at Branches / - at cost including applicable Foreign Branches taxes and duties.

1.3 Depreciation

Depreciation is charged on Straight line basis for Plant & Machinery, Vehicles and Computers and on Written Down Value basis for other assets. Rates prescribed under Schedule II of the Companies Act, 2013 are adopted.

1.4 Revenue Recognition

Sales : Sales, which includes excise duty, but excludes VAT, is recognised at the time of shipment of goods from plant or from stock points.

Royalty: Royalty is recognised on accrual basis in accordance with the terms of the relevant Agreement.

Rent: Rental income is recognised on accrual basis in accordance with terms of respective rent agreements.

Interest: Interest is recognised on accrual basis taking into account the amount outstanding and the rate applicable.

Dividend : Dividend is recognised and accounted when the right to dividend is established.

1.5 Fixed Assets

a) Fixed assets are recorded at historical cost of acquisition, which includes all taxes, duties and other direct expenses incurred up to the stage of commissioning of the asset, net of CENVAT and VAT, wherever applicable.

b) Capital work-in-progress:

Capital work-in-progress consisting of assets under construction, erection and commissioning are valued at cost incurred up to the date of Balance Sheet.

c) An asset is considered as impaired in accordance with Accounting Standard 28 on "Impairment of Asset", when at Balance Sheet date there are indications of impairment and the carrying amount of the Asset, or where applicable the cash generating unit to which the asset belongs, exceeds its recoverable amount ( i.e. the higher of the asset''s net selling price and value in use). The carrying amount is reduced to the recoverable amount and the reduction is recognized as an impairment loss in the Statement of Profit and Loss.

1.6 Foreign Currency Transactions

Transactions in foreign currency are recorded at exchange rate prevailing on the date of the transaction. For transactions settled within the year, exchange variance is charged to Statement of Profit and Loss. Outstanding liabilities and assets are restated at exchange rate prevailing at the end of the period. The resultant exchange variances are recognized in the Statement of profit and loss prepared for the period on a net off basis.

1.7 Investments

Long term investments are valued at cost. When there is a decline, other than temporary, the carrying amount is reduced to recognise the decline. Short term investments are valued at cost or fair value whichever is lower.

1.8 Employee Benefits

a) Provident Fund: Provident Fund contribution is as per the rates prescribed by the Employees Provident Fund Act 1952 and the same is charged to revenue account.

b) Superannuation: Company has an arrangement with Life Insurance Corporation of India for providing Superannuation benefits to employees eligible as per Company''s Rules. Company''s contribution to the Superannuation Fund is calculated as per agreed terms and provided in the accounts.

c) Leave Salary : Liability in respect of encashment of accumulated leave is provided based on actuarial valuation.

d) Gratuity: The Company operates a defined benefit plan for the payment of post employment benefits for its employees in the form of Gratuity fund scheme managed by Life Insurance Corporation of India. The expenditure are recognized based on the present value of obligation as determined in accordance with AS -15 on "Employee Benefits".

e) Other short term employee benefits: All the other short term employee benefits such as profit share, performance pay, etc are measured and provided on accrual basis.

1.9 Borrowing Cost

Borrowing cost includes:

a) Interest and Commitment charges on bank borrowings and other short term and long term borrowings.

b ) Amortization of ancillary costs incurred in connection with the arrangement of borrowings.

c) Finance charges in respect of assets acquired under finance leases or under other similar arrangements.

d) Exchange difference arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs.

1.10 Deferred Tax

Deferred Tax liabilities/assets are accounted for in respect of all timing differences, as per (AS)22.

1.11 Research & Development Expenses:

Revenue expenditure on Research and Development are charged off in the year in which they are incurred. Fixed Assets purchased for the purpose of research and development are depreciated as per the Company''s policy stated above.

1.12 Intangible Assets

Intangible Assets are recorded at the cost of acquisition and are amortised over a period of five years or its legal/ useful life whichever is less.

1.13 Provisions, Contingent Liabilities & Contingent Assets:

Provisions are recognized at the best estimate of the expenditure required to settle the present obligation at the balance sheet date.

Contingent liabilities do not warrant provisions, but are disclosed unless the possibility of outflow of resources is remote. Contingent assets are neither recognized nor disclosed in the financial statements.


Mar 31, 2015

1.1) Basis for preparation of Financial Statements

The Company follows accrual method of Accounting. The financial statements have been prepared under the Historical Cost Convention and on the basis of going concern and in accordance with the Accounting Standards notified under the Companies Act, 1956 ("The Act") read with the general circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act2013.

1.2) Inventories

Inventories have been valued at lower of cost and net realisable value. The cost of inventories has been assigned using the weighted average cost formula.

a) Purchaseditems - atFIFO-NetofCENVAT andVAT

b) Work-in-Progress - Purchasecostnetof CENVAT andVATplus proportionate Overheads

c) Manufactureditems - atcostexcludingselling at Factory overheads and VAT.

d) TradedItems - atcostandnetofVAT.

e) Inventoryat - atcostincluding Branches/ applicable Foreign Branches taxes and duties.

1.3) Depreciation

Depreciation is charged on Straight line basis for Plant & Machinery, Vehicles and Computers and on Written Down Value basis for other assets. Rates prescribed under Schedule II of the Companies Act, 2013 are adopted.

1.4) Revenue Recognition

Sales: Sales, which includes excise duty, but excludes VAT, is recognised at the time of shipment of goods from plantorfromstockpoints.

Royalty: Royalty is recognised on accrual basis in accordance with the terms of the relevant Agreement.

Rent: Rental income is recognised on accrual basis in accordance with terms of respective rent agreements.

Interest: Interest is recognised on accrual basis taking into account the amount outstanding and the rate applicable.

Dividend : Dividend is recognised and accounted when the right to dividend is established.

1.5) Fixed Assets

a) Fixed assets are recorded at historical cost of acquisition, which includes all taxes, duties and other direct expenses incurred up to the stage of commissioning of the asset, net of CENVAT and VAT, wherever applicable.

b) Capital work-in-progress:

Capital work-in-progress consisting of assets under construction, erection and commissioning are valued at cost incurred up to the date of Balance Sheet.

c) An asset is considered as impaired in accordance with Accounting Standard 28 on "Impairment of Asset", when at Balance Sheet date there are indications of impairment and the carrying amount of the Asset, or where applicable the cash generating unit to which the asset belongs, exceeds its recoverable amount (i.e. the higher of the asset''s net selling price and value in use). The carrying amount is reduced to the recoverable amount and the reduction is recognized as an impairment loss in theStatementofProfitand Loss.

1.6) ForeignCurrencyTransactions

Transactions in foreign currency are recorded at exchange rate prevailing on the date of the transaction. For transactions settled within the year, exchange variance is charged to Statement of Profit and Loss. Outstanding liabilities and assets are restated at exchange rate prevailing at the end of the year. The resultant exchange variances are recognized in the Statement of profit and loss prepared for the year on a net off basis.

1.7) Investments

Long term investments are valued at cost and short term investments are valued at cost or fair value

whichever is lower.

1.8) Employee Benefits

a) Provident Fund: Provident Fund contribution is as per the rates prescribed by the Employees Provident Fund Act 1952 and the same is charged to revenueaccount.

b) Superannuation: Company has an arrangement with Life Insurance Corporation of India for providing Superannuation benefits to employees eligible as per Company''s Rules. Company''s contribution to the Superannuation Fund is calculated as per agreed terms and provided in the accounts.

c) Leave Salary: Liability in respect of encashment of accumulated leave is provided based on actuarial valuation.

d) Gratuity: The Company operates a defined benefit plan for the payment of post employment benefits for its employees in the form of Gratuity fund scheme managed by Life Insurance Corporation of India. The expenditure are recognized based on the present value of obligation as determined in accordance with AS -15 on "Employee Benefits".

e) Other short term employee benefits: All the other short term employee benefits such as profit share, performance pay, etc are measured and provided on accrual basis.

1.9) Borrowing Cost Borrowing cost includes:

a) Interest and Commitment charges on bank borrowings and other short term and long term borrowings.

b) Amortization of ancillary costs incurred in connection with the arrangement of borrowings.

c) Finance charges in respect of assets acquired under finance leases or under other similar arrangements.

d) Exchange difference arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs.

1.10) Deferred Tax

Deferred Tax liabilities/assets are accounted for in respect of all timing differences, as per (AS)22.

1.11) Research & Development Expenses:

Revenue expenditure on Research and Development are charged off in the year in which they are incurred. Fixed Assets purchased for the purpose of research and development are depreciated as per the Company''s policy stated above.

1.12) Intangible Assets

Intangible Assets are recorded at the cost of acquisition and are amortised over a year of five years or its legal/useful life whichever is less.

1.13) Provisions, Contingent Liabilities & Contingent Assets:

Provisions are recognized at the best estimate of the expenditure required to settle the present obligation at the balance sheet date.

Contingent liabilities do not warrant provisions, but are disclosed unless the possibility of outflow of resources is remote. Contingent assets are neither recognized nor disclosed in the financial statements.

The Company has one class of equity shares having a par value ofRs. 1/- per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding. During the year ended March 31,2015, the amount of dividend per share recognized as distributions to equity shareholders is Rs.1/- (March 31,2014:Rs. 1/-).

Note:

Depreciation has been charged as per Schedule II of the Companies Act, 2013 with effect from 1st April 2014. Hence Depreciation charge for the year ended 31st March 2015 is higher by Rs.57.30 Million. In the case of assets whose useful lives are NIL as on 01.04.2014, the carrying value is adjusted against retained earnings and is disclosed above as Transition adjustment.


Mar 31, 2014

1.1) Basis for preparation of Financial Statements

The Company follows accrual method of Accounting. The financial statements have been prepared under the Historical Cost Convention and on the basis of going concern and in accordance with the Accounting Standards notified under the Companies Act, 1956 ("The Act").

1.2) Inventories

Inventories have been valued at lower of cost and net realisable value. The cost of inventories has been assigned using the weighted average cost formula.

a) Purchased items

- at FIFO - Net of CENVAT and VAT

b) Work-in-Progress - Purchase cost net of CENVAT and VAT plus proportionate Overheads

c) Manufactured items at Factory

- at cost excluding selling overheads and VAT.

d) Traded Items - at cost and net of VAT.

e) Inventory at Branches/ Foreign Branches

- at cost including applicable taxes and duties.

1.3) Depreciation

Depreciation is charged on Straight line basis for Plant & Machinery, Vehicles and Computers and on Written Down Value basis for other assets. Rates prescribed under Schedule XIV of the Companies Act, 1956 are adopted except for Computers which are depreciated over a period of 3 years at the rate of 33.33% per annum.

1.4) Revenue Recognition

Sales: Sales, which includes excise duty, but excludes VAT, is recognised at the time of shipment of goods I from plant or from stock points.

Royalty: Royalty is recognised on accrual basis in accordance with the terms of the relevant Agreement.

Rent: Rental income is recognised on accrual basis in accordance with terms of respective rent agreements.

Interest: Interest is recognised on accrual basis taking into account the amount outstanding and the rate applicable.

Dividend : Dividend is recognised and accounted when the right to dividend is established.

1.5) Fixed Assets

a) Fixed assets are recorded at historical cost of acquisition, which includes all taxes, duties and other direct expenses incurred up to the stage of commissioning of the asset, net of CENVAT and VAT, wherever applicable.

b) Capital work-in-progress:

Capital work-in-progress consisting of assets under construction, erection and commissioning are valued at cost incurred up to the date of Balance Sheet.

c) An asset is considered as impaired in accordance with Accounting Standard 28 on "Impairment of Asset", when at Balance Sheet date there are indications of impairment and the carrying amount of the Asset, or where applicable the cash generating unit to which the asset belongs, exceeds its recoverable amount (i.e. the higher of the asset''s net selling price and value in use). The carrying amount is reduced to the recoverable amount and the reduction is recognized as an impairment loss in the Statement of Profit and Loss.

1.6) Foreign Currency Transactions

Transactions in foreign currency are recorded at exchange rate prevailing on the date of the transaction. For transactions settled within the year, exchange variance is charged to Statement of Profit and Loss. Outstanding liabilities and assets are restated at exchange rate prevailing at the end of the year. The resultant exchange variances are recognized in the Statement of profit and loss prepared for the year on a net off basis.

1.7) Investments

Long term investments are valued at cost. However, when there is a decline, other than temporary, the carrying amount is reduced to recognise the decline. Short term investments are valued at cost or fair value whichever is lower.

1.8) Employee Benefits

a) Provident Fund: Provident Fund contribution is as per the rates prescribed by the Employees Provident Fund Act 1952 and the same is charged to revenue account.

b) Superannuation: Company has an arrangement with Life Insurance Corporation of India for providing Superannuation benefits to employees eligible as per Company''s Rules. Company''s contribution to the Superannuation Fund is calculated as per agreed terms and provided in the accounts.

c) Leave Salary: Liability in respect of encashment of accumulated leave is provided based on actuarial valuation.

d) Gratuity: The Company operates a defined benefit plan for the payment of post employment benefits for its employees in the form of Gratuity fund scheme managed by Life Insurance Corporation of India. The expenditure are recognized based on the present value of obligation as determined in accordance with AS-15 on "Employee Benefits".

e) Other short term employee benefits: All the other short term employee benefits such as profit share, performance pay, etc are measured and provided on accrual basis.

1.9) Borrowing Cost Borrowing cost includes:

a) Interest and Commitment charges on bank borrowings and other short term and long term borrowings.

b) Amortization of ancillary costs incurred in connection with thearrangementof borrowings.

c) Finance charges in respect of assets acquired under finance leases or under other similar arrangements.

d) Exchange difference arising from foreign currency borrowings to the extent that they are regarded as an adjustmentto interest costs.

1.10) Segment Reporting:

Segment information for reportable segments is prepared in conformity with the accounting policies adopted for preparing the financial statements of the Company as a whole. Costs that are directly attributable to be business segments are charged to the respective segments. Unallocated income/expenditure include general corporate income/expenditure which are not allocable to any business segment.

1.11) Deferred Tax

Deferred Tax liabilities/assets are accounted for in respect of all timing differences, as per (AS)22.

1.12) Research & Development Expenses:

Revenue expenditure on Research and Development are charged offintheyear in which they are incurred.

Fixed Assets purchased for the purpose of research and development are depreciated as per the Company''s policy stated above.

1.13) Intangible Assets

Intangible Assets are recorded at the cost of acquisition and are amortised over a period of five years or its legal/ useful life whichever is less.

1.14) Provisions, Contingent Liabilities & Contingent Assets:

Provisions are recognized at the best estimate of the expenditure required to settle the present obligation at the balance sheet date.

Contingent liabilities do not warrant provisions, but are disclosed unless the possibility of outflow of resources is remote.

Contingent assets are neither recognized nor disclosed in thefinancial statements.

2.1 Terms / Rights attached to Equity Shares

The Company has one class of equity shares having a par value of Rs..1/- per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding. During theyear ended March 31,2014, the amount of dividend per share recognized as distributions to equity shareholders is Rs.1/- (March 31,2013:Rs. 1/-).


Mar 31, 2013

1.1) Basis for preparation of Financial Statements

The Company follows accrual method of Accounting. The financial statements have been prepared under the Historical Cost Convention and on the basis of going concern and in accordance with the Accounting Standards referred to in the Section 211 (3C) of the Companies Act 1956, wherever applicable.

1.2) Inventories

Inventories have been valued at lower of cost and net realisable value. The cost of inventories has been assigned using the weighted average cost formula.

a) Purchased items - at FIFO - Net of CENVAT and VAT

b) Work-in-Progress - Purchase cost net of CENVAT and VAT plus proportionate overheads

c) Manufactured items - at cost excluding selling at Factory overheads and VAT.

d) Traded Items - at cost and net of VAT.

e) Inventory at - at cost including Branches/Foreign applicable Branches taxes and duties.

1.3) Depreciation

Depreciation is charged on Straight line basis for Plant & Machinery, Vehicles and Computers and on Written Down Value basis for other assets. Rates prescribed under Schedule XIV of the Companies Act, 1956 are adopted except for Computers which are depreciated over a period of 3 years at the rate of 33.33% per annum.

1.4) Revenue Recognition

Sales : Sales, which includes excise duty, but excludes VAT, is recognised at the time of shipment of goods from plant or from stock points.

Royalty: Royalty is recognised on accrual basis in accordance with the terms of the relevant Agreement.

Rent: Rental income is recognised on accrual basis in accordance with terms of respective rent agreements.

Interest: Interest is recognised on accrual basis taking into account the amount outstanding and the rate applicable.

Dividend : Dividend is recognised and accounted when the right to dividend is established.

1.5) Fixed Assets

a) Fixed assets are recorded at historical cost of acquisition, which includes all taxes, duties and other direct expenses incurred up to the stage of commissioning of the asset, net of CENVAT and VAT, wherever applicable.

b) Capital work-in-progress:

Capital work-in-progress consisting of assets under construction, erection and commissioning are valued at cost incurred up to the date of Balance Sheet.

c) An asset is considered as impaired in accordance with Accounting Standard 28 on "Impairment of Asset", when at Balance Sheet date there are indications of impairment and the carrying amount of th e Asset, or where applicable the cash generating unit to which the asset belongs, exceeds its recoverable amount ( i.e. the higher of the asset''s net selling price and value in use). The carrying amount is reduced to the recoverable amount and the reduction is recognized as an impairment loss in the Statement of Profit and Loss.

1.6) Foreign Currency Transactions

Transactions in foreign currency are recorded at exchange rate prevailing on the date of the transaction. For transactions settled within the year, exchange variance is charged to Statement of Profit and Loss. Outstanding liabilities and assets are restated at exchange rate prevailing at the end of the year. The resultant exchange variances are recognized in the Statement of profit and loss prepared for the year on a net off basis.

1.7) Investments

Long term investments are valued at cost and short term investments are valued at cost or fair value whichever is lower.

1.8) Employee Benefits

a) Provident Fund: Provident Fund contribution is as per the rates prescribed by the Employees Provident Fund Act 1952 and the same is charged to revenue account.

b) Superannuation: Company has an arrangement with Life Insurance Corporation of India for providing Superannuation benefits to employees eligible as per Company''s Rules. Company''s contribution to the Superannuation Fund is calculated as per agreed terms and provided in the accounts.

c) Leave Salary : Liability in respect of encashment of accumulated leave is provided based on actuarial valuation.

d) Gratuity: The Company operates a defined benefit plan for the payment of post employment benefits for its employees in the form of Gratuity fund scheme managed by Life Insurance Corporation of India. The expenditure are recognized based on the present value of obligation as determined in accordance with AS -15 on "Employee Benefits".

e) Other short term employee benefits: All the other short term employee benefits such as profit share, performance pay, etc are measured and provided on accrual basis.

1.9) Borrowing Cost

Borrowing cost includes:

a) Interest and Commitment charges on bank borrowings and other short term and long term borrowings.

b) Amortization of ancillary costs incurred in connection with the arrangement of borrowings.

c) Finance charges in respect of assets acquired under finance leases or under other similar arrangements.

d) Exchange difference arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs.

1.10) Segment Reporting:

Segment information for reportable segments is prepared in conformity with the accounting policies adopted for preparing the financial statements of the company as a whole. Costs that are directly attributable to be business segments are charged to the respective segments. Unallocated income/expenditure include general corporate income/expenditure which are not allocable to any business segment.

1.11) Deferred Tax

Deferred Tax liabilities/assets are accounted for in respect of all timing differences, as per (AS)22.

1.12) Research & Development Expenses:

Revenue expenditure on Research and Development are charged off in the year in which they are incurred.

Fixed Assets purchased for the purpose of research and development are depreciated as per the Company''s policy stated above.

1.13) Intangible Assets

Intangible Assets are recorded at the cost of acquisition and are amortised over a period of five years or its legal/ useful life whichever is less.

1.14) Provisions, Contingent Liabilities & Contingent Assets:

Provisions are recognized at the best estimate of the expenditure required to settle the present obligation at the balance sheet date.

Contingent liabilities do not warrant provisions, but are disclosed unless the possibility of outflow of resources is remote.

Contingent assets are neither recognized nor disclosed in the financial statements.


Mar 31, 2012

1.1 Basis for preparation of Financial Statements

The company follows accrual method of Accounting. The Financial Statements have been prepared under the historica cost convention and on the basis of going concern and in accordance with the accounting standards referred to in the section 211 (3C) of the companies Act 1956, wherever applicable.

1.2 Inventories

nventories have been valued at lower of cost and net realizable value. The cost of inventories has been assigned using the weighted average cost formula.

a) Purchased items - at FIFO - Net of CENVAT and VAT

b) Work-in-progress - purchase cost net of CENVAT and

VAT plus proportionate overheads

c) Manufactured items - at cost excluding selling at Factory overheads and VAT

d) Trading items - at cost and net of VAT

e) Inventory items at - at cost including applicable Branches / Foreign taxes and duties Branches

1.3 Depreciation

i. Depreciation is charged as detailed below:

1. Plant & Machinery - Straight Line Method and vehicles

2. Computers - Straight Line Method over a

period of three years

3. R & D Assets - Written Off in the period of

purchase

4. Assets costing - Written Off in the period of less than Rs. 5000 purchase

5. All other assets - Written Down Value Method

ii. Where the historical cost of an existing depreciable asset has undergone a change, the change in the cost is amortized over the residual life of the asset.

1.4 Revenue Recognition

Sales: Sales, which includes excise duty, but excludes VAT, is recognised at the time of shipment of goods from plant or from stock points.

Royalty: Royalty is recognized on accrual basis in accordance with the terms of the relevant agreement.

Rent: Rental income is recognized on accrual basis in accordance with the terms of respective rent agreements.

Interest: Interest is recognized on accrual basis taking into account the amount outstanding and the rate applicable.

Dividend: Dividend is recognized and accounted when the right to dividend is established.

1.5 Fixed Assets

a) Fixed assets are recorded at historical cost of acquisition, which includes all taxes, duties and other direct expenses incurred up to the stage of commissioning of the asset, net of CENVAT and VAT, wherever applicable.

b) Capital work-in-progress:

Capital work in progress consisting of assets under construction, erection and commissioning are valued at cost incurred up to the date of Balance Sheet.

c) An asset is considered as impaired in accordance with Accounting Standard 28 on "Impairment of Asset", when at Balance Sheet date there are indications of impairment and the carrying amount of the Asset, or where applicable the cash generating unit to which the asset belongs, exceeds its recoverable amount ( i.e. the higher of the asset's net selling price and value in use). The carrying amount is reduced to the recoverable amount and the reduction is recognized as an impairment loss in the Profit and Loss Account.

1.6 Foreign Currency Transactions

Transactions in foreign currency are recorded at exchange rate prevailing on the date of the transaction. For transactions settled within the year, exchange variance is charged to Profit and Loss Account. Outstanding liabilities and assets are restated at exchange rate prevailing at the end of the year. The resultant exchange variances are recognized in the profit and oss account prepared for the year on a net off basis.

1.7 Investments:

Long term investments are valued at cost and the short term investments are valued at cost or fair value whichever is lower.

1.8 Employee Benefits

a) Provident Fund : Provident Fund contribution is as per the rates prescribed by the Employees Provident Fund Act 1952 and the same is charged to revenue account.

b) Superannuation: Company has an arrangement with Life Insurance Corporation of India for providing Superannuation benefits to employees eligible as per Company's Rules. Company's contribution to the Superannuation Fund is calculated as per agreed terms and provided in the accounts.

c) Leave Salary : Liability in respect of encashment of accumulated leave has been provided as per actuaria valuation.

d) Gratuity : The Company operates a defined benefit plan for the payment of post employment benefits for its employees in the form of Gratuity fund scheme managed by Life Insurance Corporation of India. The expenditure are recognized based on the present value of obligation as determined in accordance with AS-15 on "Employee Benefits".

e) Other short term employee benefits: All the other short term employee benefits such as performance pay, etc are measured and provided on accrual basis.

1.9 Borrowing Cost

Borrowing cost includes:

a) Interest and commitment charges on bank borrowings and other short term and long term borrowings

b) Amortization of ancillary costs incurred in connection with the arrangement of borrowings

c) Finance charges in respect of assets acquired under finance leases or under other similar arrangements.

d) Exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs

1.10 Deferred Tax

Deferred Tax liability/assets are accounted for in respect of all timing differences, as per (AS)22

1.11 Intangible Assets

ntangible Assets are recorded at the cost of acquisition and are amortized over a period of five years or its legal/ useful life whichever is less.


Mar 31, 2011

1) Basis for preparation of Financial Statements

The Company follows accrual method of Accounting. The Financial Statements have been prepared under the Historical Cost Convention and on the basis of going concern and in accordance with the Accounting Standards referred to in the Section 211 (3C) of the Companies Act 1956, wherever applicable.

2) Inventories

nventories have been valued at lower of cost and net realisable value. The cost of inventories has been assigned using the weighted average cost formula.

a) Purchased items - at FIFO - Net of CENVAT and VAT

b) Work-in-Progress - Purchase cost net of CENVAT and VAT plus roportionate overheads

c) Manufactured - at cost excluding items at Factory selling overheads, and VAT.

d) Trading Items - at cost and net of VAT.

e) Inventory items at - at cost including Branches/ Foreign applicable taxes Branches and duties.

3) Depreciation

i. Depreciation is charged as detailed below:

1. Plant & Machinery - Straight Line Method and Vehicles

2. Computers - Straight Line Method

over a period of three years.

3. R & D Assets - Written off in the period

of Purchase

4 Assets costing - Written off in the period less than Rs.5000 of Purchase.

5. All other assets - Written Down Value

method

ii. Where the historical cost of an existing depreciable asset has undergone a change, the change in the cost is amortized over the residua life of the asset.

4) Revenue recognition

Sales : Sales, which includes excise duty, but excludes VAT, is recognised at the time of shipment of goods from plant or from stock points.

Royalty : Royalty is recognised on accrual basis in accordance with the terms of the relevant Agreement.

Rent : Rental income is recognised on accrual basis in accordance with terms of respective rent agreements.

Interest : Interest is recognised on accrual basis taking into account the amount outstanding and the rate applicable.

Dividend : Dividend is recognised and accounted when the right to dividend is established.

5) Fixed Assets

a) Fixed assets are recorded at historical cost of acquisition, which includes all taxes, duties and other direct expenses incurred up to the stage of commissioning of the asset, net of CENVAT and VAT, wherever applicable.

b) Capital work-in-progress:

Capital work in progress consisting of assets under construction, erection and commissioning are valued at cost incurred up to the date of Balance Sheet.

c) An asset is considered as impaired in accordance with Accounting Standard 28 on "Impairment of Asset", when at Balance Sheet date there are indications of impairment and the carrying amount of the Asset, or where applicable the cash generating unit to which the asset belongs, exceeds its recoverable amount ( i.e. the higher of the assets net selling price and value in use). The carrying amount is reduced to the recoverable amount and the reduction is recognized as an impairment loss in the Profit and Loss Account.

6) Foreign Currency Transactions

Transactions in foreign currency are recorded at exchange rate prevailing on the date of the transaction. For transactions settled within the year, exchange variance is charged to Profit and Loss account. Outstanding liabilities and assets are restated at exchange rate prevailing at the end of the year. The resultant exchange variances are recognized in the profit and loss account prepared for the year on a net off basis.

7) Investments

Long term investments are valued at cost and short term investments are valued at cost or fair value whichever is lower.

8) Employee Benefits

a) Provident Fund : Provident Fund contribution is as per the rates prescribed by the Employees Provident Fund Act 1952 and the same is charged to revenue account.

b) Superannuation: Company has an arrangement with Life Insurance Corporation of ndia for providing Superannuation benefits to employees eligible as per Companys Rules. Companys contribution to the Superannuation Fund is calculated as per agreed terms and provided in the accounts.

c) Leave Salary : Liability in respect of encashment of accumulated leave has been provided as per actuarial valuation.

d) Gratuity :The Company operates a defined benefit plan for the payment of post employment benefits for its employees in the form of Gratuity fund scheme managed by Life nsuranceCorporation of India. The expenditure are recognized based on the present value of obligation as determined in accordance with AS-15 on "Employee Benefits".

e) Other short term employee benefits: All the other short term employee benefits such as profit share, performance pay, etc are measured and provided on accrual basis.

9) Borrowing Cost

Borrowing cost includes:

a) Interest and Commitment charges on bank borrowings and other short term and long term borrowings.

b) Amortization of ancillary costs incurred in connection with the arrangement of borrowings.

c) Finance charges in respect of assets acquired under finance leases or under other similar arrangements.

d) Exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs.

10) Deferred Tax

Deferred Tax liability/assets are accounted for in respect of all timing differences, as per (AS)22.

11) Intangible Assets

ntangible Assets are recorded at the cost of acquisition and are amortised over a period of five years or its legal/useful life whichever is less.


Mar 31, 2010

1) Basis for preparation of financial statements The Company follows accrual method of Accounting. The financial statements have been prepared under the Historical cost convention on the basis of a going concern and in accordance with the accounting standards referred to in the Section 211(3C) of the Companies Act 1956, wherever applicable.

2) Inventories

Inventories have been valued at lower of cost and net realisable value. The cost of inventories has been assigned using the weighted average cost formula.

a) Purchased items - at FIFO-Net of

CENVAT and VAT

b) Work-in-Progress- Purchase cost net

of CENVAT and VAT plus proportionate overheads

c) Manufactured - at cost excluding

items at Factory selling overheads

and VAT

d) Trading Items - at cost and net of VAT

e) Inventory items - at cost including

at Branches/ applicable taxes Foregin Branches and duties.

3) Depreciation

i. Depreciation is charged at the rates specified in Schedule XIV of the Companies Act, 1956 asdetailed below:

1. Plant & Machinery - Straight line method and Vehicles

2. Assets costing less - Written off in the than Rs.5000 year of purchase.

3. All other assets - Written down value

method

ii. Where the historical cost of an existing depreciable asset has undergone a change, the change in the cost is amortized over the residual life of the asset.

4) Research and Development

Revenue expenditure is charged off in the period in which it is incurred. Capital expenditure is capitalised to the extent they have alternative economic use.

5) Revenue recognition

Sales : Sales, which includes excise duty,

but excludes VAT, is recognised at the time of shipment of goods from plant or from stock points.

Service income : Service income is recognised on completion of service.

Royalty : Royalty is recognised on accrual

basis in accordance with the terms of the relevant agreement.

Rent : Rental income is recognised on

accrual basis in accordance with terms of respective rent agreements.

Interest : Interest is recognised on accrual

basis taking into account the amount outstanding and the rate applicable.

Dividend : Dividend is recognised and

accounted when the right to dividend is established.

6) Fixed Assets

a) Fixed assets are recorded at historical cost of acquisition, which includes all taxes, duties and other direct expenses incurred up to the stage of commissioning of the asset, net of CENVAT and VAT, wherever applicable.

b) Capital work-in-progress:

Capital work in progress consisting of assets under construction, erection and commissioning are valued at cost incurred up to the date of Balance Sheet.

c) An asset is considered as impaired in accordance with Accounting Standard 28 on "Impairment of Asset", when at Balance Sheet date there are indications of impairment and the carrying amount of the Asset, or where applicable the cash generating unit to which the asset belongs, exceeds its recoverable amount ( i.e. the higher of the assets net selling price and value in use). The carrying amount is reduced to the recoverable amount and the reduction is recognized as an impairment loss in the Profit and Loss Account.

7) Foreign Currency Transactions

Transactions in foreign currency are recorded at exchange rate prevailing on the date of the transaction. For transactions settled within the year, exchange variance is charged to Profit and Loss account. Outstanding liabilities and assets are restated at exchange rate prevailing at the end of the year. The resultant exchange variances are recognized in the profit and loss account prepared for the year on a net off basis.

8) Investments

Long term investments are valued at cost and short term investments are valued at cost or fair value whichever is lower.

9) Retirement Benefits

a. Provident Fund : Provident Fund contribution is as per the rates prescribed by the Employees Provident Fund Act 1952 and the same is charged to revenue account.

b. Superannuation: Company has an arrangement with Life Insurance Corporation of India for providing Superannuation benefits to employees eligible as per Companys Rules.Companys contribution to the Superannuation Fund is calculated as per agreed terms and provided in the accounts.

c. Leave Salary : Liability for leave encashment has been provided as per actuarial valuation.

d. Gratuity :The Company operates a defined benefit plan for the payment of post employment benefits for its employees in the form of Gratuity fund scheme managed by Life Insurance Corporation of India. The expenses is recognized based on the present value of obligation is determined in accordance with AS-15 (R) on "Employee Benefits".

e. Other short term employee benefits: All the other short term employee benefits such as profit sharing, performance pay etc are measured and provided on actual basis.

10) Borrowing Cost

Borrowing cost includes:

a) Interest and Commitment charges on bank borrowings and other short term and long term borrowings.

b) Amortization of ancillary costs incurred in connection with the arrangement of borrowings.

c) Finance charges in respect of assets acquired underfinance leases or under other similar arrangements.

d) Exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs.

11) Deferred Tax

Deferred Tax liability/assets are accounted for in respect of all timing differences, as per (AS) 22.

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