Accounting Policies of Hilton Metal Forging Ltd. Company
Mar 31, 2015
1 Corporate information
Hilton Metal Forging Limited esatablished in 2005 is a manufacturer of
iron and steel forging, recognised export house, presently catering to
the needs of Oil and Gas, Refnanries and pharmaceautical industries.
The company has its plant at Village Ghonsai, Taluka Wada, Dist Thane
and Corporate office at 701 Palm Spring, Link Road, Malad West, Mumbai
400064, Maharashtra.
2 Significant accounting policies
The Company follows the mercantile system of accounting and recognises
income and expenditure on accrual basis except those having significant
uncertainities.
2.1 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. The accounting policies adopted in the preparation of the
financial statements are consistent with those followed in the previous
year.
2.2 Use of estimates
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognised in the periods in which
the results are known / materialise.
2.3 Inventories
Inventories are valued at the lower of cost (on FIFO / weighted average
basis) and the net realisable value after providing for obsolescence
and other losses, where considered necessary. Cost includes all charges
in bringing the goods to the point of sale, including octroi and other
levies, transit insurance and receiving charges. Work-in-progress and
fnished goods include appropriate proportion of overheads and, where
applicable, excise duty.
2.4 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.
2.5 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.
2.6 Depreciation and amortisation
Depreciation has been provided on the straight-line method as per the
rates prescribed in Schedule XIV to the Companies Act, 1956 except in
respect of the following categories of assets, in whose case the life
of the assets has been assessed as under:
Vehicles - 4 years
Computers and data processing equipments - 4 years
Assets costing less than Rs. 5,000 each are fully depreciated in the year
of capitalisation
The estimated useful life of the intangible assets and the amortisation
period are reviewed at the end of each financial year and the
amortisation method is revised to refect the changed pattern.
2.7 Revenue recognition
Sale of goods
Revenues / Income and Cost /Expenditure are generally accounted on
accrual basis as they are earned or incurred. Export benefits are
accounted for in the year of exports based on eligibility and when
there is no uncertainty in receiving the same.
2.8 Other income
Interest income is accounted on accrual basis. Dividend income is
accounted for when the right to receive it is established.
2.9 Tangible fixed assets
Fixed assets, are carried at cost less accumulated depreciation and
impairment losses, if any. The cost of fixed assets includes interest on
borrowings attributable to acquisition of qualifying fixed assets up to
the date the asset is ready for its intended use and other incidental
expenses incurred up to that date. Machinery spares which can be used
only in connection with an item of fxed asset and whose use is expected
to be irregular are capitalised and depreciated over the useful life of
the principal item of the relevant assets. Subsequent expenditure
relating to fixed assets is capitalised only if such expenditure results
in an increase in the future benefits from such asset beyond its
previously assessed standard of performance.
The Company till date has not revalued it assets.
Fixed assets retired from active use and held for sale are stated at
the lower of their net book value and net realisable value, if any, and
are disclosed separately in the Balance Sheet.
Capital work-in-progress:
Projects under which assets are not ready for their intended use and
other capital work-in-progress are carried at cost, comprising direct
cost, related incidental expenses and attributable interest.
2.11 Foreign currency transactions and translations
Initial recognition
Transactions in foreign currencies entered into by the Company and its
integral foreign operations are accounted at the exchange rates
prevailing on the date of the transaction or at rates that closely
approximate the rate at the date of the transaction.
Measurement of foreign currency monetary items at the Balance Sheet
date
Foreign currency monetary items (other than derivative contracts) of
the Company and its net investment in non-integral foreign operations
outstanding at the Balance Sheet date are restated at the year-end
rates.
In the case of integral operations, assets and liabilities (other than
non-monetary items), are translated at the exchange rate prevailing on
the Balance Sheet date. Non-monetary items are carried at historical
cost. Revenue and expenses are translated at the average exchange rates
prevailing during the year. Exchange differences arising out of these
translations are charged to the Statement of Profit and Loss.
Treatment of exchange differences
Exchange differences arising on settlement / restatement of short-term
foreign currency monetary assets and liabilities of the Company and its
integral foreign operations are recognised as income or expense in the
Statement of Profit and Loss. The exchange differences on restatement /
settlement of loans to non-integral foreign operations that are
considered as net investment in such operations are accumulated in a
"Foreign currency translation reserve" until disposal / recovery of the
net investment.
The exchange differences arising on restatement / settlement of
long-term foreign currency monetary items are capitalised as part of
the depreciable fixed assets to which the monetary item relates and
depreciated over the remaining useful life of such assets or amortised
on settlement / over the maturity period of such items if such items do
not relate to acquisition of depreciable fixed assets. The unamortised
balance is carried in the Balance Sheet as "Foreign currency monetary
item translation difference account" net of the tax effect thereon.
Accounting of forward contracts
Premium / discount on forward exchange contracts, which are not
intended for trading or speculation purposes, are amortised over the
period of the contracts if such contracts relate to monetary items as
at the Balance Sheet date. Refer Notes 2.23 for accounting for forward
exchange contracts relating to firm commitments and highly probable
forecast transactions.
2.12 Government grants, subsidies and export incentives
Export benefits are accounted for in the year of exports based on
eligibility and when there is no uncertainty in receiving the same.
2.13 Investments
Long-term investments (excluding investment properties), are carried
individually at cost less provision for diminution, other than
temporary, in the value of such investments. Current investments are
carried individually, at the lower of cost and fair value. Cost of
investments include acquisition charges such as brokerage, fees and
duties. Investment properties are carried individually at cost less
accumulated depreciation and impairment, if any. Investment properties
are capitalised and depreciated (where applicable) in accordance with
the policy stated for Tangible Fixed Assets. Impairment of investment
property is determined in accordance with the policy stated for
Impairment of Assets.
2.14 Employee benefits
Employee benefits include provident fund, gratuity fund, compensated
absences, long service awards and post-employment medical benefits.
Defined contribution plans
The Company's contribution to provident fund is considered as defned
contribution plans and are charged as an expense as they fall due based
on the amount of contribution required to be made.
Defined benefit plans
Retirement Benefits to the employees will be accounted in the year of
actual payment. The undiscounted amount of short term employee benefits
expacted to be paid in exchange for the services rendered by employees
are recognised during the year when the employees render the service.
these benefits includes performance incentives and companseted absences
which are expected o occur within twelve months after the end of the
period in which the employee renders the related service. the cost of
such companseted absences is accounted as under:
Short-term employee benefits
The undiscounted amount of short-term employee benefits expected to be
paid in exchange for the services rendered by employees are recognised
during the year when the employees render the service. These benefits
include performance incentive and compensated absences which are
expected to occur within twelve months after the end of the period in
which the employee renders the related service. The cost of such
compensated absences is accounted as under :
(a) in case of accumulated compensated absences, when employees render
the services that increase their entitlement of future compensated
absences; and
(b) in case of non-accumulating compensated absences, when the absences
occur.
Long-term employee benefits
Compensated absences which are not expected to occur within twelve
months after the end of the period in which the employee renders the
related service are recognised as a liability at the present value of
the defined benefit obligation as at the Balance Sheet date less the fair
value of the plan assets out of which the obligations are expected to
be settled. Long Service Awards are recognised as a liability at the
present value of the defend benefit obligation as at the Balance Sheet
date.
2.15 Borrowing costs
Borrowing costs include interest, amortisation of ancillary costs
incurred and exchange differences arising from foreign currency
borrowings to the extent they are regarded as an adjustment to the
interest cost. Costs in connection with the borrowing of funds to the
extent not directly related to the acquisition of qualifying assets are
charged to the Statement of Profit and Loss over the tenure of the loan.
Borrowing costs, allocated to and utilised for qualifying assets,
pertaining to the period from commencement of activities relating to
construction / development of the qualifying asset upto the date of
capitalisation of such asset is added to the cost of the assets.
Capitalisation of borrowing costs is suspended and charged to the
Statement of Profit and Loss during extended periods when active
development activity on the qualifying assets is interrupted.
2.16 Segment reporting
The Company identifies primary segments based on the dominant source,
nature of risks and returns and the internal organisation and
management structure. The operating segments are the segments for which
separate financial information is available and for which operating
profit/loss amounts are evaluated regularly by the executive Management
in deciding how to allocate resources and in assessing performance.
The accounting policies adopted for segment reporting are in line with
the accounting policies of the Company. Segment revenue, segment
expenses, segment assets and segment liabilities have been identified to
segments on the basis of their relationship to the operating activities
of the segment.
The Company is mainly engaged in Manufacturing of Steel Forgings and
Flanges and Forged Fittings for oil & gas industry, Petrochemicals and
refneries, which in the context of Accounting standard (AS) 17 "Segment
Reporting" is considered to be the only business segment
2.17 Earnings per share
Basic earnings per share is computed by dividing the profit / (loss)
after tax (including the post tax effect of extraordinary items, if
any) by the weighted average number of equity shares outstanding during
the year. Diluted earnings per share is computed by dividing the profit
/ (loss) after tax (including the post tax effect of extraordinary
items, if any) as adjusted for dividend, interest and other charges to
expense or income relating to the dilutive potential equity shares, by
the weighted average number of equity shares considered for deriving
basic earnings per share and the weighted average number of equity
shares which could have been issued on the conversion of all dilutive
potential equity shares. Potential equity shares are deemed to be
dilutive only if their conversion to equity shares would decrease the
net profit per share from continuing ordinary operations. Potential
dilutive equity shares are deemed to be converted as at the beginning
of the period, unless they have been issued at a later date. The
dilutive potential equity shares are adjusted for the proceeds
receivable had the shares been actually issued at fair value (i.e.
average market value of the outstanding shares). Dilutive potential
equity shares are determined independently for each period presented.
The number of equity shares and potentially dilutive equity shares are
adjusted for share splits / reverse share splits and bonus shares, as
appropriate.
2.18 Taxes on income
Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the provisions of the Income Tax
Act, 1961.
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 probable that
future economic benefit associated with it will fow to the Company.
Deferred tax is recognised on timing differences, being the differences
between the taxable income and the accounting income that originate in
one period and are capable of reversal in one or more subsequent
periods. Deferred tax is measured using the tax rates and the tax laws
enacted or substantially enacted as at the reporting date. Deferred tax
liabilities are recognised for all timing differences. Deferred tax
assets in respect of unabsorbed depreciation and carry forward of
losses are recognised only if there is virtual certainty that there
will be suffcient future taxable income available to realise such
assets. Deferred tax assets are recognised for timing differences of
other items only to the extent that reasonable certainty exists that
suffcient future taxable income will be available against which these
can be realised. 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.
Current and deferred tax relating to items directly recognised in
equity are recognised in equity and not in the Statement of Profit and
Loss.
2.19 Research and development expenses
Revenue Expenditure, including overheads on Research and Development is
charged out as expendiutre thorugh the natural heads of the expenses in
the year in which incurred.
2.20 Joint venture operations
The company doesn't have any joint venture.
2.21 Impairment of assets
The carrying values of assets / cash generating units at each Balance
Sheet date are reviewed for impairment. If any indication of impairment
exists, the recoverable amount of such assets is estimated and
impairment is recognised, if the carrying amount of these assets
exceeds their recoverable amount. The recoverable amount is the greater
of the net selling price and their value in use. Value in use is
arrived at by discounting the future cash fows to their present value
based on an appropriate discount factor. When there is indication that
an impairment loss recognised for an asset in earlier accounting
periods no longer exists or may have decreased, such reversal of
impairment loss is recognised in the Statement of Profit and Loss,
except in case of revalued assets.
2.22 Provisions and contingencies
A provision is recognised when the Company has a present obligation as
a result of past events and it is probable that an outfow of resources
will be required to settle the obligation in respect of which a
reliable estimate can be made. Provisions (excluding retirement
benefits) are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
Balance Sheet date. These are reviewed at each Balance Sheet date and
adjusted to refect the current best estimates. Contingent liabilities
are disclosed in the Notes.
2.23 Derivative contracts
The Company uses foreign currency forward contracts to hedge its risks
associated with foreign currency fuctuations relating to highly
probable forecast transactions. The Company designates such forward
contracts in a cash fow hedging relationship by applying the hedge
accounting principles set out in "Accounting Standard 30 Financial
Instruments: Recognition and Measurement". These forward contracts are
stated at fair value at each reporting date. Hedge accounting is
discontinued when the hedging instrument expires or is sold,
terminated, or exercised, or no longer qualifes for hedge accounting.
If the forecasted transaction is no longer expected to occur, the net
cumulative gain or loss recognised in "Hedging reserve account" is
immediately transferred to the Statement of Profit and Loss.
2.24 Share issues expenses
Share issue expenses and pe-operative exepnses are written off and
charged to profit and loss account The balance to the extent not written
off is carried as an asset and is amortised over a period of 10 years
2.25 Insurance claims
Insurance claims are accounted for on the basis of claims admitted /
expected to be admitted and to the extent that there is no uncertainty
in receiving the claims.
2.26 Service tax input credit
Service tax input credit is accounted for in the books in the period in
which the underlying service received is accounted and when there is no
uncertainty in availing / utilising the credits.
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
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. The accounting policies adopted in the preparation of
the financial statements are consistent with those followed in the
previous year.
1.2 Use of estimates
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognized in the periods in which
the results are known / materialize.
1.3 Inventories
Inventories are valued at the lower of cost (on FIFO / weighted average
basis) and the net realizable value after providing for obsolescence
and other losses, where considered necessary. Cost includes all charges
in bringing the goods to the point of sale, including octroi and other
levies, transit insurance and receiving charges. Work-in-progress and
finished goods include appropriate proportion of overheads and, where
applicable, excise duty.
1.4 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.
1.5 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.
1.6 Depreciation and amortization
Depreciation has been provided on the straight-line method as per the
rates prescribed in Schedule XIV to the Companies Act, 1956 except in
respect of the following categories of assets, in whose case the life
of the assets has been assessed as under:
Vehicles - 4 years
Computers and data processing equipments - 4 years
Assets costing less than Rs. 5,000 each are fully depreciated in the
year of capitalization
The estimated useful life of the intangible assets and the amortization
period are reviewed at the end of each financial year and the
amortization method is revised to reflect the changed pattern.
1.7 Revenue recognition
Sale of goods
Revenues / Income and Cost /Expenditure are generally accounted on
accrual basis as they are earned or incurred. Export benefits are
accounted for in the year of exports based on eligibility and when
there is no uncertainty in receiving the same.
1.8 Other income
Interest income is accounted on accrual basis. Dividend income is
accounted for when the right to receive it is established.
1.9 Tangible fixed assets
Fixed assets, are carried at cost less accumulated depreciation and
impairment losses, if any. The cost of fixed assets includes interest
on borrowings attributable to acquisition of qualifying fixed assets up
to the date the asset is ready for its intended use and other
incidental expenses incurred up to that date. Exchange differences
arising on restatement / settlement of long-term foreign currency
borrowings relating to acquisition of depreciable fixed assets are
adjusted to the cost of the respective assets and depreciated over the
remaining useful life of such assets. Machinery spares which can be
used only in connection with an item of fixed asset and whose use is
expected to be irregular are capitalized and depreciated over the
useful life of the principal item of the relevant assets. Subsequent
expenditure relating to fixed assets is capitalized only if such
expenditure results in an increase in the future benefits from such
asset beyond its previously assessed standard of performance.
Fixed assets acquired in full or part exchange for another asset are
recorded at the fair market value or the net book value of the asset
given up, adjusted for any balancing cash consideration. Fair market
value is determined either for the assets acquired or asset given up,
whichever is more clearly evident. Fixed assets acquired in exchange
for securities of the Company are recorded at the fair market value of
the assets or the fair market value of the securities issued, whichever
is more clearly evident.
The Company till date has not revalued it assets.
Fixed assets retired from active use and held for sale are stated at
the lower of their net book value and net realizable value and are
disclosed separately in the Balance Sheet.
Capital work-in-progress:
Projects under which assets are not ready for their intended use and
other capital work-in-progress are carried at cost, comprising direct
cost, related incidental expenses and attributable interest.
1.11 Foreign currency transactions and translations
Initial recognition
Transactions in foreign currencies entered into by the Company and its
integral foreign operations are accounted at the exchange rates
prevailing on the date of the transaction or at rates that closely
approximate the rate at the date of the transaction.
Measurement of foreign currency monetary items at the Balance Sheet
date
Foreign currency monetary items (other than derivative contracts) of
the Company and its net investment in non-integral foreign operations
outstanding at the Balance Sheet date are restated at the year-end
rates.
In the case of integral operations, assets and liabilities (other than
non-monetary items), are translated at the exchange rate prevailing on
the Balance Sheet date. Non-monetary items are carried at historical
cost. Revenue and expenses are translated at the average exchange rates
prevailing during the year. Exchange differences arising out of these
translations are charged to the Statement of Profit and Loss.
Treatment of exchange differences
Exchange differences arising on settlement / restatement of short-term
foreign currency monetary assets and liabilities of the Company and its
integral foreign operations are recognized as income or expense in the
Statement of Profit and Loss. The exchange differences on restatement
/ settlement of loans to non-integral foreign operations that are
considered as net investment in such operations are accumulated in a
"Foreign currency translation reserve" until disposal / recovery of the
net investment.
The exchange differences arising on restatement / settlement of
long-term foreign currency monetary items are capitalized as part of
the depreciable fixed assets to which the monetary item relates and
depreciated over the remaining useful life of such assets or amortized
on settlement / over the maturity period of such items if such items do
not relate to acquisition of depreciable fixed assets. The unamortized
balance is carried in the Balance Sheet as "Foreign currency monetary
item translation difference account" net of the tax effect thereon.
Accounting of forward contracts
Premium / discount on forward exchange contracts, which are not
intended for trading or speculation purposes, are amortized over the
period of the contracts if such contracts relate to monetary items as
at the Balance Sheet date.
Refer Notes 2.23 for accounting for forward exchange contracts relating
to firm commitments and highly probable forecast transactions.
1.12 Government grants, subsidies and export incentives
Export benefits are accounted for in the year of exports based on
eligibility and when there is no uncertainty in receiving the same.
1.13 Investments
Long-term investments (excluding investment properties), are carried
individually at cost less provision for diminution, other than
temporary, in the value of such investments. Current investments are
carried individually, at the lower of cost and fair value. Cost of
investments include acquisition charges such as brokerage, fees and
duties.
Investment properties are carried individually at cost less accumulated
depreciation and impairment, if any. Investment properties are
capitalized and depreciated (where applicable) in accordance with the
policy stated for Tangible Fixed Assets. Impairment of investment
property is determined in accordance with the policy stated for
Impairment of Assets.
1.14 Employee benefits
Employee benefits include provident fund, gratuity fund, compensated
absences, long service awards and post-employment medical benefits.
Defined contribution plans
The Company''s contribution to provident fund is considered as defined
contribution plans and are charged as an expense as they fall due based
on the amount of contribution required to be made.
Defined benefit plans
Retirement Benefits to the employees will be accounted in the year of
actual payment. The undiscounted amount of short term employee benefits
expected to be paid in exchange for the services rendered by employees
are recognized during the year when the employees render the service.
these benefits includes performance incentives and compensated absences
which are expected o occur within twelve months after the end of the
period in which the employee renders the related service. the cost of
such compensated absences is accounted as under:
Short-term employee benefits
The undiscounted amount of short-term employee benefits expected to be
paid in exchange for the services rendered by employees are recognized
during the year when the employees render the service. These benefits
include performance incentive and compensated absences which are
expected to occur within twelve months after the end of the period in
which the employee renders the related service. The cost of such
compensated absences is accounted as under :
(a) in case of accumulated compensated absences, when employees render
the services that increase their entitlement of future compensated
absences; and
(b) in case of non-accumulating compensated absences, when the absences
occur.
Long-term employee benefits
Compensated absences which are not expected to occur within twelve
months after the end of the period in which the employee renders the
related service are recognized as a liability at the present value of
the defined benefit obligation as at the Balance Sheet date less the
fair value of the plan assets out of which the obligations are expected
to be settled. Long Service Awards are recognized as a liability at
the present value of the defined benefit obligation as at the Balance
Sheet date.
1.15 Borrowing costs
Borrowing costs include interest, amortization of ancillary costs
incurred and exchange differences arising from foreign currency
borrowings to the extent they are regarded as an adjustment to the
interest cost. Costs in connection with the borrowing of funds to the
extent not directly related to the acquisition of qualifying assets are
charged to the Statement of Profit and Loss over the tenure of the
loan. Borrowing costs, allocated to and utilized for qualifying assets,
pertaining to the period from commencement of activities relating to
construction / development of the qualifying asset up to the date of
capitalization of such asset is added to the cost of the assets.
Capitalization of borrowing costs is suspended and charged to the
Statement of Profit and Loss during extended periods when active
development activity on the qualifying assets is interrupted.
1.16 Segment reporting
The Company identifies primary segments based on the dominant source,
nature of risks and returns and the internal organization and
management structure. The operating segments are the segments for which
separate financial information is available and for which operating
profit/loss amounts are evaluated regularly by the executive Management
in deciding how to allocate resources and in assessing performance.
The accounting policies adopted for segment reporting are in line with
the accounting policies of the Company. Segment revenue, segment
expenses, segment assets and segment liabilities have been identified
to segments on the basis of their relationship to the operating
activities of the segment.
The Company is mainly engaged in Manufacturing of Steel Forgings and
Flanges and Forged Fittings for oil & gas industry, Petrochemicals and
refineries, which in the context of Accounting standard (AS) 17
"Segment Reporting" is considered to be the only business segment
1.17 Earnings per share
Basic earnings per share is computed by dividing the profit / (loss)
after tax (including the post tax effect of extraordinary items, if
any) by the weighted average number of equity shares outstanding during
the year. Diluted earnings per share is computed by dividing the profit
/ (loss) after tax (including the post tax effect of extraordinary
items, if any) as adjusted for dividend, interest and other charges to
expense or income relating to the dilutive potential equity shares, by
the weighted average number of equity shares considered for deriving
basic earnings per share and the weighted average number of equity
shares which could have been issued on the conversion of all dilutive
potential equity shares. Potential equity shares are deemed to be
dilutive only if their conversion to equity shares would decrease the
net profit per share from continuing ordinary operations. Potential
dilutive equity shares are deemed to be converted as at the beginning
of the period, unless they have been issued at a later date. The
dilutive potential equity shares are adjusted for the proceeds
receivable had the shares been actually issued at fair value (i.e.
average market value of the outstanding shares). Dilutive potential
equity shares are determined independently for each period presented.
The number of equity shares and potentially dilutive equity shares are
adjusted for share splits / reverse share splits and bonus shares, as
appropriate.
1.18 Taxes on income
Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the provisions of the Income Tax
Act, 1961.
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 probable that
future economic benefit associated with it will flow to the Company.
Deferred tax is recognized on timing differences, being the differences
between the taxable income and the accounting income that originate in
one period and are capable of reversal in one or more subsequent
periods. Deferred tax is measured using the tax rates and the tax laws
enacted or substantially enacted as at the reporting date. Deferred tax
liabilities are recognized for all timing differences. Deferred tax
assets in respect of unabsorbed depreciation and carry forward of
losses are recognized only if there is virtual certainty that there
will be sufficient future taxable income available to realize such
assets. Deferred tax assets are recognized for timing differences of
other items 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 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.
Current and deferred tax relating to items directly recognized in
equity are recognized in equity and not in the Statement of Profit and
Loss.
1.19 Research and development expenses
Revenue Expenditure, including overheads on Research and Development is
charged out as expenditure through the natural heads of the expenses in
the year in which incurred.
1.20 Joint venture operations
The company doesn''t have any joint venture.
1.21 Impairment of assets
The carrying values of assets / cash generating units at each Balance
Sheet date are reviewed for impairment. If any indication of impairment
exists, the recoverable amount of such assets is estimated and
impairment is recognized, if the carrying amount of these assets
exceeds their recoverable amount. The recoverable amount is the greater
of the net selling price and their value in use. Value in use is
arrived at by discounting the future cash flows to their present value
based on an appropriate discount factor. When there is indication that
an impairment loss recognized for an asset in earlier accounting
periods no longer exists or may have decreased, such reversal of
impairment loss is recognized in the Statement of Profit and Loss,
except in case of revalued assets.
1.22 Provisions and contingencies
A provision is recognized when the Company has a present obligation as
a result of past events and it is probable that an outflow of resources
will be required to settle the obligation in respect of which a
reliable estimate can be made. Provisions (excluding retirement
benefits) are not discounted to their present value and are determined
based on the best estimate 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 estimates. Contingent liabilities
are disclosed in the Notes.
1.23 Derivative contracts
The Company uses foreign currency forward contracts to hedge its risks
associated with foreign currency fluctuations relating to highly
probable forecast transactions. The Company designates such forward
contracts in a cash flow hedging relationship by applying the hedge
accounting principles set out in "Accounting Standard 30 Financial
Instruments: Recognition and Measurement". These forward contracts are
stated at fair value at each reporting date. Hedge accounting is
discontinued when the hedging instrument expires or is sold,
terminated, or exercised, or no longer qualifies for hedge accounting.
If the forecasted transaction is no longer expected to occur, the net
cumulative gain or loss recognized in "Hedging reserve account" is
immediately transferred to the Statement of Profit and Loss.
1.24 Share issues expenses
Share issue expenses and per-operative expenses are written off and
charged to profit and loss account The balance to the extent not
written off is carried as an asset and is amortized over a period of 10
years
1.25 Insurance claims
Insurance claims are accounted for on the basis of claims admitted /
expected to be admitted and to the extent that there is no uncertainty
in receiving the claims.
1.26 Service tax input credit
Service tax input credit is accounted for in the books in the period in
which the underlying service received is accounted and when there is no
uncertainty in availing / utilizing the credits.
Mar 31, 2013
The Company follows the mercantile system of accounting and recognises
income and expenditure on accrual basis except those having significant
uncertainties.
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. The accounting policies adopted in the preparation of
the financial statements are consistent with those followed in the
previous year.
1.2 Use of estimates
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognized in the periods in which
the results are known / materialize.
1.3 Inventories
Inventories are valued at the lower of cost (on FIFO / weighted average
basis) and the net realizable value after providing for obsolescence
and other losses, where considered necessary. Cost includes all charges
in bringing the goods to the point of sale, including octroi and other
levies, transit insurance and receiving charges. Work-in-progress and
finished goods include appropriate proportion of overheads and, where
applicable, excise duty.
1.4 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.
1.5 Cash flow statement
Cash flows are reported using the indirect method, whereby profit
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.
1.6 Depreciation and amortisation
Depreciation has been provided on the straight-line method as per the
rates prescribed in Schedule XIV to the Companies Act, 1956 except in
respect of the following categories of assets, in whose case the life
of the assets has been assessed as under:
Vehicles - 4 years
Computers and data processing equipments - 4 years
The estimated useful life of the intangible assets and the amortization
period are reviewed at the end of each financial year and the
amortization method is revised to reflect the changed pattern.
1.7 Revenue recognition
Sale of goods
Revenues / Income is generally accounted on accrual basis as they are
earned. Export benefits are accounted for in the year of exports based
on eligibility and when there is no uncertainty in receiving the same.
Other income
Interest income is accounted on accrual basis. Dividend income is
accounted for when the right to receive it is established.
1.9 Tangible fixed assets
Fixed assets, are carried at cost less accumulated depreciation and
impairment losses, if any. The cost of fixed assets includes interest
on borrowings attributable to acquisition of qualifying fixed assets up
to the date the asset is ready for its intended use and other
incidental expenses incurred up to that date. Exchange differences
arising on restatement / settlement of long-term foreign currency
borrowings relating to acquisition of depreciable fixed assets are
adjusted to the cost of the respective assets and depreciated over the
remaining useful life of such assets. Machinery spares which can be
used only in connection with an item of fixed asset and whose use is
expected to be irregular are capitalized and depreciated over the
useful life of the principal item of the relevant assets. Subsequent
expenditure relating to fixed assets is capitalized only if such
expenditure results in an increase in the future benefits from such
asset beyond its previously assessed standard of performance.
Fixed assets acquired in full or part exchange for another asset are
recorded at the fair market value or the net book value of the asset
given up, adjusted for any balancing cash consideration. Fair market
value is determined either for the assets acquired or asset given up,
whichever is more clearly evident. Fixed assets acquired in exchange
for securities of the Company are recorded at the fair market value of
the assets or the fair market value of the securities issued, whichever
is more clearly evident.
The Company till date has not revalued it assets.
Fixed assets retired from active use and held for sale are stated at
the lower of their net book value and net realizable value and are
disclosed separately in the Balance Sheet.
Capital work-in-progress:
Projects under which assets are not ready for their intended use and
other capital work-in-progress are carried at cost, comprising direct
cost, related incidental expenses and attributable interest.
1.11 Foreign currency transactions and translations
Initial recognition
Transactions in foreign currencies entered into by the Company and its
integral foreign operations are accounted at the exchange rates
prevailing on the date of the transaction or at rates that closely
approximate the rate at the date of the transaction.
Measurement of foreign currency monetary items at the Balance Sheet
date
Foreign currency monetary items (other than derivative contracts) of
the Company and its net investment in non-integral foreign operations
outstanding at the Balance Sheet date are restated at the year-end
rates. In the case of integral operations, assets and liabilities
(other than non-monetary items), are translated at the exchange rate
prevailing on the Balance Sheet date. Non-monetary items are carried at
historical cost. Revenue and expenses are translated at the average
exchange rates prevailing during the year. Exchange differences arising
out of these translations are charged to the Statement of Profit and
Loss.
Treatment of exchange differences
Exchange differences arising on settlement / restatement of short-term
foreign currency monetary assets and liabilities of the Company and its
integral foreign operations are recognized as income or expense in the
Statement of Profit and Loss. The exchanged differences on restatement/
settlement of loansto non- integral foreign operations that are
considered as net investment in such operations are accumulated in a
"Foreign currency translation reserve" until disposal / recovery of the
net investment. The exchange differences arising on restatement /
settlement of long-term foreign currency monetary items are capitalized
as part of the depreciable fixed assets to which the monetary item
relates and depreciated over the remaining useful life of such assets
or amortized on settlement / over the maturity period of such items if
such items do not relate to acquisition of depreciable fixed assets.
The unamortized balance is carried in the Balance Sheet as "Foreign
currency monetary item translation difference account" net of the tax
effect thereon.
Accounting of forward contracts
Premium / discount on forward exchange contracts, which are not
intended for trading or speculation purposes, are amortized over the
period of the contracts if such contracts relate to monetary items as
at the Balance Sheet date. Refer Notes 2.23 for accounting for forward
exchange contracts relating to firm commitments and highly probable
forecast transactions.
1.12 Government grants, subsidies and export incentives nn
Export benefits are accounted for in the year of exports based on
eligibility and when there is nonwncertainty in receiving the same.
1.13 investments
Long-term investments (excluding investment properties), are carried
individually at cost less provision for diminution, other than
temporary, in the. value of such investments. Current investments are
carried individually, at the lower of cost and fair value. Cost of
investments include acquisition charges such as brokerage, fees and
duties,
1.14 Employee benefits
Employee benefits include provident fund, gratuity fund, compensated
absences, longservice awards and post-employment medical benefits.
Defined contribution plans
The Company''s contribution to provident fund is considered as defined
contribution ptaras.and are charged as an expense as they fall due
based on the amount of contribution required to be made.
Defined benefit plans
Retirement Benefits to the employees will be accounted in the year of
actual payment. Theundiscounted amount of short term employee benefits
expected to be paid in exchange for the services rendered by employees
are recognized during the year when the employees render the service,
these benefits includes performance incentives and compensated absences
which are expected to occur within twelve months after the end of the
period in which the employee renders the related service, the cost of
such compensated absences is accounted as under:
Short-term employee benefits
The undiscounted amount of short-term employee benefits expected to'' be
paid in exchange for the services rendered by employees are recognized
during the year when the employees render the service. These benefits
include performance incentive and compensated absences which are
expected to occur within twelve months after the end of the period in
which the employee renders the related service. The cost of such
compensated absences is accounted as under:
(a) in case of accumulated compensated absences, when employees render
the services that increase their entitlement of future compensated
absences; and
(b) in case of non-accumulating compensated absences, when the absences
occur.
Long-term employee benefits
Compensated absences which are not expected to occur within twelve
months after the end of the period in which the employee renders the
related service are recognized as a liability at the present value of
the defined benefit obligation as at the Balance Sheet date less the
fair value of the plan assets out of which the obligations are expected
to be settled. Long Service Awards are recognized as a liability at the
present value of the defined benefit obligation as at the Balance Sheet
date.
1.15 Borrowing costs
Borrowing costs include interest, amortization of ancillary costs
incurred and exchange differences arising from foreign currency
borrowings to the extent they are regarded as an adjustment to the
interest cost. Costs in connection with the borrowing of funds to the
extent not directly related to the acquisition of qualifying assets are
charged to the Statement of Profit and Loss over the tenure of the
loan. Borrowing costs, allocated to and utilized for qualifying assets,
pertaining to the period from commencement of activities relating to
construction / development of the qualifying asset up to the date of
capitalisation of such asset is added to the cost of the assets.
Capitalisation of borrowing costs is suspended and charged to the
Statement of Profit and Loss during extended periods when active
development activity on the qualifying assets is interrupted.
1.16 Segment reporting
The Company identifies primary segments based on the dominant source,
nature of risks and returns and the internal organization and
management structure. The operating segments are the segments for which
separate financial information is available and for which operating
profit / loss amounts are evaluated regularly by the executive
Management in deciding how to allocate resources and in assessing
performance.
The accounting policies adopted for segment reporting are in line with
the accounting policies of the Company. Segment revenue, segment
expenses, segment assets and segment liabilities have been identified
to segments on the basis of their relationship to the operating
activities of the segment. The Company is mainly engaged in
Manufacturing of Steel Forgings and Forged Fittings and is considered
only one segment in the context of Accounting standard (AS) 17 "Segment
Reporting"
1.17 Earnings per share
Basic earnings per share! is computed by dividing the profit after tax
(including the post tax effect of extraordinary items, if any) by the
weighted average number of equity shares outstanding during the year.
Diluted earnings per share is computed by dividing the profit after tax
(including the post tax effect of extraordinary items, if any) as
adjusted for dividend, interest and other charges to expense or income
relating to the dilutive potential equity shares, by the weighted
average number of equity shares considered for deriving basic earnings
per share and the weighted average number of equity shares which could
have been issued on the conversion of all dilutive potential equity
shares.
1.18 Research and development expenses
Revenue Expenditure, including overheads on Research and Development is
charged out as expenditure through the natural heads of the expenses in
the year in which incurred.
1.19 Joint venture operations
The company doesn''t have any joint venture.
1.20 Impairment of assets
The carrying values of assets / cash generating units at each Balance
Sheet date are reviewed for impairment. If any indication of impairment
exists, the recoverable amount of such assets is estimated and
impairment is recognized, if the carrying amount of these assets
exceeds their recoverable amount. The recoverable amount is the greater
of the net selling price and their value in use. Value in use is
arrived at by discounting the future cash flows to their present value
based on an appropriate discount factor. When there is indication that
an impairment loss recognized for an. asset in earlier accounting
periods no longer exists or may have decreased, such reversal of
impairment loss is recognized in the Statement of Profit and Loss,
except in case of revalued assets.
1.21 Taxes on income
Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the provisions of the Income Tax
Act, 1961. 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 probable that future economic benefit associated with it will flow
to the Company. Deferred tax is recognized on timing differences,
being the differences between the taxable income and the accounting
income that originate in one period and are capable of reversal in one
or more subsequent periods. Deferred tax is measured using the tax
rates and the tax laws enacted or substantially enacted as at the
reporting date. Deferred tax liabilities are recognized for all timing
differences. Deferred tax assets in respect of unabsorbed depreciation
and carry forward of losses are recognized only if there is virtual
certainty that there will be sufficient future taxable income available
to realize such assets. Deferred tax assets are recognized for timing
differences of other items 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 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
Sheefcoajg for their readability. Current and deferred tax relating to
items directly recognized in equity are recognized in equity and not in
the Statement of Profit and Loss.
1.22 Provisions and contingencies
A provision is recognized when the Company has a present obligation as
a result of past events and it is probable that an outflow of resources
will be required to settle the obligation in respect of which a
reliable estimate can be made. Provisions (excluding retirement
benefits) are not discounted to their present value and are determined
based on the best estimate 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 estimates. Contingent liabilities
are disclosed in the Notes.
1.23 Derivative contracts
The Company uses foreign currency forward contracts to hedge its risks
associated with foreign currency fluctuations relating to highly
probable forecast transactions. The Company designates such forward
contracts in a cash flow hedging relationship by applying the hedge
accounting principles set out in "Accounting Standard 30 Financial
Instruments: Recognition and Measurement". These forward contracts are
stated at fair value at each reporting date. Hedge accounting is
discontinued when the hedging instrument expires or is sold,
terminated, or exercised, or notonger qualifies for hedge accounting.
If the forecasted transaction is no longer expected to occur, the net
cumulaWS gain or loss recognized in "Hedging reserve account" is
immediately transferred to the Statement of Profit and Loss.
1.24 Share issues expenses
Share issue expenses and per-operative expenses are written off and
charged to profit and loss account The balance to the extent not
written off is carried as an asset and is amortized over a period of 10
years.
Mar 31, 2012
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. The accounting policies adopted in the preparation of
the financial statements are consistent with those followed in the
previous year.
2.2 Use of estimates
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts oJ assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognised in the periods in which
the results are known / materialise.
2.3 Inventories
Inventories are valued at the lower of cost (on FIFO / weighted average
basis) and the net realisable value after providing for obsolescence
and other losses, where considered necessary. Cost includes all charges
in bringing the goods to the point of sale, including octroi and other
levies, transit insurance and receiving charges. Work-in-progress and
finished goods include appropriate proportion of overheads and, where
applicable, excise duty.
2.4 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.
2.5 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
2.6 Depreciation and amortisation
Depreciation has been provided on the straight-line method as per the
rates prescribed in Schedule XIV to the Companies Act, 1956 except in
respect of the following categories of assets, in whose case the life
of the assets has been assessed as under:
Vehicles - 4 years
Computers and data processing equipments - 4 years
Assets costing less than Rs. 5,000 each are fully depreciated in the year
of capitalisation
Intangible assets are amortised over their estimated useful life as
follows:
Product marketing rights - 15 years (12 years remaining as at the
Balance Sheet date)
Other intangibles - 3 - 5 years (1-2 years remaining as at the Balance
Sheet date)
Amortisation of Product marketing rights over 15 years is based on the
term of the marketing right acquired and the economic benefits that are
expected to accrue to the Company over such period.
The estimated useful life of the intangible assets and the amortisation
period are reviewed at the end of each financial year and the
amortisation method is revised to reflect the changed pattern.
2.7 Revenue recognition
Sale of goods
Revenues / Income and Cost /Expenditure are genrally accounted on
accrual basis as they are earned or incurred. Export benefits are
accounted for in the year of exports based on eligibility and when
there is no uncertainity in receiving the same.
2.8 Other income
Interest income is accounted on accrual basis. Dividend income is
accounted for when the right to receive it is established.
2.9 Tangible fixed assets
Fixed assets, are carried at cost less accumulated depreciation and
impairment losses, if any. The cost of fixed assets includes interest
on borrowings attributable to acquisition of qualifying fixed assets up
to the date the asset is ready for its intended use and other
incidental expenses incurred up to that date. Exchange differences
arising on restatement / settlement of long-term foreign currency
borrowings relating to acquisition of depreciable fixed assets are
adjusted to the cost of the respective assets and depreciated over the
remaining useful life of such assets. Machinery spares which can be
used only in connection with an item of fixed asset and whose use is
expected to be irregular are capitalised and depreciated over the
useful life of the principal item of the relevant assets. Subsequent
expenditure relating to fixed assets is capitalised only if such
expenditure results in an increase in the future benefits from such
asset beyond its previously assessed standard of performance.
Fixed assets acquired in full or part exchange for another asset are
recorded at the fair market value or the net book value of the asset
given up, adjusted for any balancing cash consideration. Fair market
value is determined either for the assets acquired or asset given up,
whichever is more clearly evident. Fixed assets acquired in exchange
for securities of the Company are recorded at the fair market value of
the assets or the fair market value of the
The Company till date has not revalued it assets.
Fixed assets retired from active use and held for sale are stated at
the lower of their net book value and net realisable value and are
disclosed separately in the Balance Sheet.
Capital work-in-proaress:
Projects under which assets are not ready for their intended use and
other capital work-in- progress are carried at cost, comprising direct
cost, related incidental expenses and attributable interest.
2.10 Intangible assets
Intangible assets are carried at cost less accumulated amortisation and
impairment losses, if any. The cost of an intangible asset comprises
its purchase price, including any import duties and other taxes (other
than those subsequently recoverable from the taxing authorities), and
any directly attributable expenditure on making the asset ready for its
intended use and net of any trade discounts and rebates. Subsequent
expenditure on an intangible asset after its purchase / completion is
recognised as an expense when incurred unless it is probable that such
expenditure will enable the asset to generate future economic benefits
in excess of its originally assessed standards of performance and such
expenditure can be measured and attributed to the asset reliably, in
which case such expenditure is added to the cost of the asset.
2.11 Foreign currency transactions and translations
Initial recognition
Transactions in foreign currencies entered into by the Company and its
integral foreign operations are accounted at the exchange rates
prevailing on the date of the transaction or at rates that closely
approximate the rate at the date of the transaction.
Measurement of foreign currency monetary items at the Balance Sheet
date Foreign currency monetary items (other than derivative contracts)
of the Company and its net investment in non-integral foreign
operations outstanding at the Balance Sheet date are restated at the
year-end rates.
In the case of integral operations, assets and liabilities (other than
non-monetary items), are translated at the exchange rate prevailing on
the Balance Sheet date. Non-monetary items are carried at historical
cost. Revenue and expenses are translated at the average exchange rates
prevailing during the year. Exchange differences arising out of these
translations are charged to the Statement of Profit and Loss.
Treatment of exchange differences
Exchange differences arising on settlement / restatement of short-term
foreign currency monetary assets and liabilities of the Company and its
integral foreign operations are recognised as income or expense in the
Statement of Profit and Loss. The exchange differences on restatement /
settlement of loans to non-integral foreign operations that are
considered as net investment in such operations are accumulated in a
"Foreign currency translation reserve" until disposal / recovery of the
net investment.
The exchange differences arising on restatement / settlement of
long-term foreign currency monetary items are capitalised as part of
the depreciable fixed assets to which the monetary item relates and
depreciated over the remaining useful life of such assets or amortised
on settlement / over the maturity period of such items if such items do
not relate to acquisition of depreciable fixed assets. The unamortised
balance is carried in the Balance Sheet as "Foreign currency monetary
item translation difference account" net of the tax effect thereon.
Accounting of forward contracts
Premium / discount on forward exchange contracts, which are not
intended for trading or speculation purposes, are amortised over the
period of the contracts if such contracts relate to monetary items as
at the Balance Sheet date.
Refer Notes 2.26 for accounting for forward exchange contracts relating
to firm commitments and highly probable forecast transactions.
2.12 Government grants, subsidies and export incentives
Export benefits are accounted for in the year of exports based on
eligibility and when there is no uncertainty in receiving tWe same.
2.13 Investments
Long-term investments (excluding investment properties), are carried
individually at cost less provision for diminution, other than
temporary, in the value of such investments. Current investments are
carried individually, at the lower of cost and fair value. Cost of
investments include acquisition charges such as brokerage, fees and
duties.
Investment properties are carried individually at cost less accumulated
depreciation and impairment, if any. Investment properties are
capitalised and depreciated (where applicable) in accordance with the
policy stated for Tangible Fixed Assets. Impairment of investment
property is determined in accordance with the policy stated for
Impairment of Assets.
2.14 Employee benefits
Employee benefits include provident fund, gratuity fund, compensated
absences, long service awards and post-employment medical benefits.
Defined contribution plans
The Company's contribution to provident fund is considered as defined
contribution plans and are charged as an expense as they fall due based
on the amount of contribution required to be made.
Defined benefit plans
Retirement Benefits to the employees will be accounted in the year of
actual payment. The undiscounted amount of short term employee benefits
expacted to be paid in exchange for the services rendered by employees
are recognised during the year when the employees render the service,
these benefits includes performance incentives and companseted absences
which are expacted o occur within tweleve months after the end of the
period in which the employee renders the related service, the cost of
such companseted absences is accounted as under:
Short-term employee benefits
The undiscounted amount of short-term employee benefits expected to be
paid in exchange for the services rendered by employees are recognised
during the year when the employees render the service. These benefits
include performance incentive and compensated absences which are
expected to occur within twelve months after the end of the period in
which the employee renders the related service. The cost of such
compensated absences is accounted as under :
(a) in case of accumulated compensated absences, when employees render
the services that increase their entitlement of future compensated
absences; and
(b) in case of non-accumulating compensated absences, when the absences
occur.
Long-term employee benefits
Compensated absences which are not expected to occur within twelve
months after the end of the period in which the employee renders the
related service are recognised as a liability at the present value of
the defined benefit obligation as at the Balance Sheet date less the
fair value of the plan assets out of which the obligations are expected
to be settled. Long Service Awards are recognised as a liability at the
present value of the defined benefit obligation as at the Balance Sheet
date.
2.15 Borrowing costs
Borrowing costs include interest, amortisation of ancillary costs
incurred and exchange differences arising from foreign currency
borrowings to the extent they are regarded as an adjustment to the
interest cost. Costs in connection with the borrowing of funds to the
extent not directly related to the acquisition of qualifying assets are
charged to the Statement of Profit and Loss over the tenure of the
loan. Borrowing costs, allocated to and utilised for qualifying assets,
pertaining to the period from commencement of activities relating to
construction / development of the qualifying asset upto the date of
capitalisation of such asset is added to the cost of the assets.
Capitalisation of borrowing costs is suspended and charged to the
Statement of Profit and Loss during extended periods when active
development activity on the qualifying assets is interrupted.
2.16 Segment reporting
The Company identifies primary segments based on the dominant source,
nature of risks and returns and the internal organisation and
management structure. The operating segments are the segments for which
separate financial information is available and for which operating
profit/loss amounts are evaluated regularly by the executive Management
in deciding how to allocate resources and in assessing performance. .
2.16 The accounting policies adopted for segment reporting are in line
with the accounting policies of the Company. Segment revenue, segment
expenses, segment assets and segment liabilities have been identified
to segments on the basis of their relationship to the operating
activities of the segment.
The Company is mainly engaged in Manufacturing of Steel Forgings and
Flanges and Forged Fittings for oil & gas industry, Petrochemicals and
refineries, which in the context of Accounting standard (AS) 17
"Segment Reporting" is considered to be the only business segment
2.17 Earnings per share
Basic earnings per share is computed by dividing the profit / (loss)
after tax (including the post tax effect of extraordinary items, if
any) by the weighted average number of equity shares outstanding during
the year. Diluted earnings per share is computed by dividing the profit
/ (loss) after tax (including the post tax effect of extraordinary
items, if any) as adjusted for dividend, interest and other charges to
expense or income relating to the dilutive potential equity shares, by
the weighted average number of equity shares considered for deriving
basic earnings per share and the weighted average number of equity
shares which could have been issued on the conversion of all dilutive
potential equity shares. Potential equity shares are deemed to be
dilutive only if their conversion to equity shares would decrease the
net profit per share from: a continuing ordinary operations. Potential
dilutive equity shares are deemed to be converted as at the beginning
of the period, unless they have been issued at a later date. The
dilutive potential equity shares are adjusted for the proceeds
receivable had the shares been actually issued at fair value (i.e.
average market value of the outstanding shares). Dilutive potential
equity shares are determined independently for each period presented.
The number of equity shares and potentially dilutive equity shares are
adjusted for share splits / reverse share splits and bonus shares, as
appropriate.
2.18 Taxes on income
Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the provisions of the Income Tax
Act, 1961.
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 probable that
future economic benefit associated with it will flow to the Company.
Deferred tax is recognised on timing differences, being the differences
between the taxable income and the accounting income that originate in
one period and are capable of reversal in one or more subsequent
periods. Deferred tax is measured using the tax rates and the tax laws
enacted or substantially enacted as at the reporting date. Deferred tax
liabilities are recognised for all timing differences. Deferred tax
assets in respect of unabsorbed depreciation and carry forward of
losses are recognised only if there is virtual certainty that there
will be sufficient future taxable income available to realise such
assets. Deferred tax assets are recognised for timing differences of
other items 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 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.
Current and deferred tax relating to items directly recognised in
equity sure recognised in equity and not in the Statement of Profit and
Loss.
2.19 Research and development expenses
Revenue Expenditure, including overheads on Research and Development is
charged out as expendiutre thorugh the natural heads of the expenses in
the year in which incurred.
2.20 Joint venture operations
The company doesn't have any joint venture.
2.21 Impairment of assets
The carrying values of assets / cash generating units at each Balance
Sheet date are reviewed for impairment. If any indication of impairment
exists, the recoverable amount of such assets is estimated and
impairment is recognised, if the carrying amount of these assets
exceeds their recoverable amount. The recoverable amount is the greater
of the net selling price and their value in use. Value in use is
arrived at by discounting the future cash flows to their present value
based on an appropriate discount factor. When there is indication that
an impairment loss recognised for an asset in earlier accounting
periods no longer exists or may have decreased, such reversal of
impairment loss is recognised in the Statement of Profit and Loss,
except in case of revalued assets.
2.22 Provisions and contingencies
A provision is recognised when the Company has a present obligation as
a result of past events and it is probable that an outflow of resources
will be required to settle the obligation in respect of which a
reliable estimate can be made. Provisions (excluding retirement
benefits) are not discounted to their present value and are determined
based on the best estimate 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 estimates. Contingent liabilities
are disclosed in the Notes.
Mar 31, 2011
1. Basis of presentation of Financial Statement
The financial statements are prepared under historical cost conversion
in accordance with applicable Accounting Standards and relevant
presentation requirements of the Companies Act 1956. The Company
generally follows the mercantile system of accounting and recognizes
significant items of income and expenditure on accrual basis.
2 Fixed Assets:
(a) All Fixed Assets are stated at Cost of acquisition
(b) The Company provides depreciation on all assets on the 'straight
Line Method' in accordance with the provisions of Section 205(2)(b) of
the Companies Act, 1956.
3. Investments
Long Term Investments are stated at cost of acquisition.
4. Inventories
Finished Goods, Work-in-progress semi finished goods and raw material
are valued at cost or net realizable value which ever are lower.
Materials in transit are valued at cost-to-date. Stores, spares, fuels
components and loose tools are valued at cost or below cost. Cost
comprises all cost of purchases, cost of conversion and other costs
incurred in bringing the inventories to their present location and
conditions.
5. Foreign Currency Fluctuation:
Current assets and other liability in foreign currency out standing at
the close of the period are expressed in Indian Currency at the rate of
exchange prevailing on the date of balance sheet, except cases where
the loans/liabilities are covered under forward exchange contracts. Net
gain or loss due to increase/decrease in rupee liabilities are charged
to revenue.
Foreign Currency Transactions in respect of Export Sales, Import of
Material and other Revenue items are accounted at the exchange rate
prevailing on the date of transaction took place. Out standing Export
realization, payment obligation are accounted for at the prevailing
conversion rate at the close of the year and the difference in actual
realization of such document is accounted for in exchange fluctuation
account to be credited/charged to the respective account in the year of
realisation
6. Recognition of Income and Expenditure:
a. Revenues/Incomes and cost/expenditure are generally accounted on
accrual basis as they are earned or incurred.
b. Export Sales are accounted on basis of dates of bill of Lading.
c. Benefits on account of entitlement of import duty free material
under Advance License and Duty Entitlement Pass Book Scheme is
accounted in the year of export.
7. Use of Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenditure during the reporting period.
Difference between actual results and estimates are recognized in the
year in which the results are known /materialized.
8. Research and Development Expenditure:
Revenue expenditure, including Overheads on Research and Development is
charged out as expenditure through the natural heads of expenses in the
year in which incurred.
9. Retirement and other Employee related Benefits:
Retirement Benefits to the employees will be accounted in the year of
actual payment.
10. Accounting fortaxes on income:
Current tax is determined as an amount payable in respect of taxable
income for the year. Deferred tax is recognized, subject to the
consideration of prudence in respect of deferred tax assets arising due
to timing difference, being the difference between the taxable income
and accounting income which originate in one year and are capable of
reversal in one or more subsequent years.
11. Earning Per Share
In accordance with the Accounting Standard -20(AS-20) "Earning per
Share" issued by The Institute of Chartered Accountants of India, Basic
and diluted earning Per Share is computed using the weighted average
number of Shares outstanding during the period.
12. Treatment of MVAT
The Scheme of deferment of Sales Tax/MAVT opted by the Company was
discontinued on attainment of prescribed limit. The liability created
till 31st March 2007 continued to remain and shown under deferred tax
liability. The said liability is liable to pay after ten years and in
five yearly installments.
13. Impairment of Assets
The carrying amount of assets is reviewed at each Balance Sheet date.
If there is any indication of impairment based on internal/external
factors i.e when the carrying amount of the assets exceeds the
recoverable amount, an impairment loss is charged to the profit and
Loss Account in the year in which assets is identified as impaired. An
impairment loss recognized in prior accounting period is reversed or
reduced if there has been a favorable change in the estimate of the
recoverable amount.
Mar 31, 2010
1. Basis of presentation of Financial Statement
The financial statements are prepared under historical cost conversion
in accordance with applicable Accounting Standards and relevant
presentation requirements of the Companies Act 1956. The Company
generally follows the mercantile system of accounting and recognizes
significant items of income and expenditure on accrual basis.
2 Fixed Assets:
(a). All Fixed Assets are stated at Cost of acquisition
(b). The Company provides depreciation on all assets on the straight
Line Method in accordance with the provisions of Section 205(2)(b) of
the Companies Act, 1956.
3. Investments
Long Term Investments are stated at cost of acquisition.
4. Inventories
Finished Goods, Work-in-progress semi finished goods and raw material
are valued at cost or net realizable value which ever are lower.
Materials in transit are valued at cost-to-date. Stores, spares, fuels
components and loose tools are valued at cost or below cost. Cost
comprises all cost of purchases, cost of conversion and other costs
incurred in bringing the inventories to their present location and
conditions.
5. Foreign Currency Fluctuation:
Current assets and other liability in foreign currency out standing at
the close of the period are expressed in Indian Currency at the rate of
exchange prevailing on the date of balance sheet, except cases where
the loans/ liabilities are covered under forward exchange contracts.
Net gain or loss due to increase/decrease in rupee liabilities are
charged to revenue.
Foreign Currency Transactions in respect of Export Sales, Import of
Material and other Revenue items are accounted at the exchange rate
prevailing on the date of transaction took place. Out standing Export
realization, payment obligation are accounted for at the prevailing
conversion rate at the close of the year and the difference in actual
realization of such document is accounted for in exchange fluctuation
account to be credited/charged to the respective account in the year of
realisation
6. Recognition of Income and Expenditure:
a. Revenues/Incomes and cost/expenditure are generally accounted on
accrual basis as they are earned or incurred.
b. Export Sales are accounted on basis of dates of bill of Lading.
c. Benefits on account of entitlement of import duty free material
under Advance License and Duty Entitlement Pass Book Scheme is
accounted in the year of export.
7. Use of Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenditure during the reporting period.
Difference between actual results and estimates are recognized in the
year in which the results are known /materialized.
8. Research and Development Expenditure:
Revenue expenditure, including Overheads on Research and Development is
charged out as expenditure through the natural heads of expenses in the
year in which incurred.
9. Retirement and other Employee related Benefits:
Retirement Benefits to the employees will be accounted in the year of
actual payment.
10. Accounting for taxes on income:
11. Earning Per Share
In accordance with the Accounting Standard -20(AS-20) "Earning per
Share" issued by The Institute of Chartered Accountants of India, Basic
and diluted earning Per Share is computed using the weighted average
number of Shares outstanding during the period.
12. Treatment of MVAT
The Scheme of deferment of Sales Tax/MAVT opted by the Company was
discontinued on attainment of prescribed limit. The liability created
till 31st March 2007 continued to remain and shown under deferred tax
liability. The said liability is liable to pay after ten years and in
five yearly installments.
13. Impairment of Assets
The carrying amount of assets is reviewed at each Balance Sheet date.
If there is any indication of impairment based on internal/external
factors i.e when the carrying amount of the assets exceeds the
recoverable amount, an impairment loss is charged to the profit and
Loss Account in the year in which assets is identified as impaired. An
impairment loss recognized in prior accounting period is reversed or
reduced if there has been a favorable change in the estimate of the
recoverable amount.
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