Mar 31, 2018
1. SIGNIFICANT ACCOUNTING POLICIES
1.1. Basis of Preparation
The financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the âActâ) [Companies (Indian Accounting Standards) Rules, 2015] (as amended) and other relevant provisions of the Act.
The financial statements up to year ended 31st March, 2017 were prepared in accordance with the accounting standards notified under Companies (Accounting Standard) Rules, 2006 (as amended), Companies (Accounting Standards) Amendment Rules, 2016 and other relevant provisions of the Act. These financial statements are the first financial statements of the Company under Ind AS. Refer Significant Accounting Policy no. 1.24on âFirst Time Adoption of Ind ASâ for an explanation of how the transition from previous GAAP to Ind AS has affected the Companyâs financial position, financial performance and cash flows which is separately presented.
The Company follows the mercantile system of accounting and recognises income and expenditure on an accrual basis. The financial statements are prepared under the historical cost convention, except for the following:
- certain financial assets and liabilities that are measured at fair value;
- defined benefit plans where plan assets are measured at fair value; and
- share-based payments at fair value as on the grant date of options given to employees.
Estimates and assumptions used in the preparation of the financial statements and disclosures are based upon managementâs evaluation of the relevant facts and circumstances as of the date of the financial statements, which may differ from the actual results at a subsequent date. The critical estimates and judgments are presented in detail in Significant Accounting Policy no. 1.23.
All assets and liabilities have been classified as current or non-current as per the Companyâs normal operating cycle. An operating cycle is the time between the acquisition of assets for processing and the irrealisation in cash or cash equivalents. Asset out in the Schedule III to the Companies Act, 2013, since normal operating cycle cannot be identified for the Company and hence it is assumed to have a duration of twelve months.
Functional and presentation currency
These Ind AS Financial Statements are prepared in Indian Rupee which is the Companyâs functional currency. All financial information presented in Rupees has been rounded to the nearest lakhs with two decimals.
1.2. Property, Plant and Equipment (PPE):
i. Deemed cost on transition to Ind AS
The company has elected to continue with the carrying value of all of its property, plant and equipment (except leasehold land which has been carried at the value determined in accordance with Ind AS 17 âLeasesâ on the transition date) recognised as of April 1, 2016 (the transition date) measured as per the previous GAAP and use such carrying value as its deemed cost as of the transition date.
ii. Property, Plant & Equipmentâs are stated at cost of acquisition / construction except for Lands & Buildings which are stated at revalued amounts as at that date based on external valuersâ report, less accumulated depreciation and impairment loss, if any. The cost of Property, Plant & Equipment includes directly attributable expenses incurred for the purpose of acquiring/constructing these assets, net of cenvat credit/GST if any, on qualifying assets. Press Tools and such type of machinery items developed in house are capitalised at direct cost plus directly attributable overheads. Capital Work in progress comprises of the cost of Property, Plant & Equipment that are not ready for their intended use at the reporting date.
iii. The ministry of corporate affairs has made the component accounting approach for fixed assets mandatory from 1st April, 2015 vide notification dated 29th August, 2014. As per the external technical expertâs opinion, the companyâs fixed assets are of such nature that separate components are not distinctly identifiable having different useful life and therefore, component level accounting and reporting is not practically feasible for the company.
iv. The company estimates the useful lives of Property, Plant & Equipment as follows:
The company believes that useful lives as given above best represent the useful lives of these assets based on technical advice and are different from the useful lives as prescribed under Part C of Schedule II of the Companies Act, 2013. The useful lives of these assets are periodically reviewed.
v. The company has initially recognised property, plant & Equipment at their respective carrying value measured under previous GAAP (Deemed Cost). After initial recognition, the Company has chosen Cost Model for Property, Plant & Equipment accounting.
vi. De-recognition
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.
vii. Depreciation
Depreciation is provided on straight line method (SLM) and is based on useful lives of the assets as determined by external technical experts in accordance with requirement of Schedule II to the Companies Act, 2013.Depreciation on additions made during the year to Property, Plant & Equipment is charged on pro-rata basis. Freehold land is not depreciated.
The carrying value of long term leasehold land is amortized over a period of lease.
1.3. Intangible Assets
i. Deemed cost on transition to Ind AS
The company has elected to continue with the carrying value of all its Intangible Assets recognised as of April 1, 2016 (the transition date) measured as per the previous GAAP and use such carrying value as its deemed cost as of the transition date.
ii. Intangible Assets are stated at their cost of acquisition, net of cenvat credit/GST if any, less accumulated amortization and impairment loss, if any. Expenditure, identifiable and reliably measurable, incurred on product development yielding future economic benefits is recognized as internally generated Intangible Asset as per Ind AS-38 âIntangible Assetsâ.
iii. Amortization
Intangible Assets are amortized as follows:
a. Product development: over a period of ten years after commencement of commercial production of relevant item.
b. Computer Software (including License Fees) is amortized over a period of 3 years.
1.4. Impairment of Assets
At the end of each reporting period, the Company determines whether there is any indication that its assets have suffered an impairment loss with reference to their carrying amounts. If any indication of impairment exists, the recoverable amount (i.e. higher of the fair value less costs of disposal and value in use) of such assets is estimated and impairment is recognised, if the carrying amount exceeds the recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
When an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.
1.5. Leases
The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date, whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset, even if that right is not explicitly specified in the arrangement.
A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers substantially all the risks and rewards incidental to ownership to the Company is classified as a finance lease and accordingly all other leases that do not qualify as finance leases are classified as operating leases.
Rental expense from operating leases is generally recognised on a straight-line basis over the term of the relevant lease. Where the rentals are structured solely to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increases, such increases are recognised in the year in which such benefits accrue.
1.6. Revenue Recognition
Revenue is measured at the fair value of the consideration received or receivable. Revenue is recognised when it is earned, and no significant uncertainty exists as to its ultimate realization or collection.
1. Sales of Goods:
Revenue from sale of products is accounted for on dispatch of products from the works and which are followed by transfer of risks and rewards to the customers upto the time the financial statements of the company are approved by the board.
2. Other Operating Revenue:
Other operating revenues comprises of income from activities incidental to the operations of the company and is recognised when the right to receive the income is established and there exists no uncertainty of its ultimate realization or collection.
3. Rendering of Services:
Revenue from job work services is recognized when the services are performed and when there is no uncertainty of its realization or collection.
4. Insurance claims are accounted as and when admitted.
5. Other Income is accounted on accrual basis except when the realization of such income is uncertain. Interest income on financial asset is recognized using the effective interest rate method. Dividend income is accounted when right to receive the same is established.
1.7. Financial Instruments
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. T ransaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.
Classification of Financial Assets
The financial assets are initially measured at fair value. Transaction costs that are directly attributable to the acquisition of financial assets are added to the fair value of the financial assets on initial recognition.
After initial recognition
i) Financial assets (other than Investments) are subsequently measured at amortised cost using the effective interest method.
Effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Investments in debt instruments that meet the following conditions are subsequently measured at amortised cost:
- the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows;
- the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments on principal and interest on the principal amount outstanding.
Income on such debt instruments is recognised in profit or loss and is included in the âOther Incomeâ. The Company has not designated any debt instruments as fair value through other comprehensive income.
I. Investments in eqiiitv/Preference instruments of subsidiaries:
The Company measures its investments in equity instruments of subsidiaries at cost in accordance with Ind AS 27. The company measures its investments in preference instruments of subsidiaries which in substance are equity instruments as per the terms of said instruments at cost in accordance with Ind AS 27. At transition date, the Company has elected to continue with the carrying value of such investments measured as per the previous GAAP and use such carrying value as its deemed cost.
II. Investment in Equity instruments of Related Entity:
The company has designated its investments in Equity Shares of one of its related entity at fair value through OCI. Such financial assets are measured at fair value at the end of each reporting period, with gains or losses arising on re-measurement recognised in OCI which are not subsequently reclassified to P & L and are reported in Other Equity.
III. Other Financial assets which are not carried at amortised cost or FVTOCI are measured at fair value through P & L.
Such financial assets are measured at fair value at the end of each reporting period, with any gains or losses arising on re-measurement recognised in profit or loss.
Impairment of financial assets
The Company recognises loss allowances for expected credit losses on financial assets measured at amortised cost.
A financial asset is regarded as credit impaired when one or more events that may have a detrimental effect on estimated future cash flows of the asset have occurred. The Company applies the expected credit loss model for recognising impairment loss on financial assets (i.e. the shortfall between the contractual cash flows that are due and all the cash flows (discounted) that the Company expects to receive).
The Company follows âsimplified approachâ for recognition of impairment loss allowance on trade receivables. The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime Expected Credit Losses (ECLs) at each reporting date, right from its initial recognition.
The Company uses a provision matrix to determine impairment loss allowance on the group of trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivable and is adjusted for forward looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed. Expected credit losses are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the Company in accordance with the contract and the cash flows that the Company expects to receive).
Expected Credit Losses/ impairment loss allowance (or reversal) recognized during the period is recognized as income/ expense in the statement of profit and loss. This amount is reflected/reported under the head âother expensesâ in the statement of profit and loss.
De-recognition of financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. On de-recognition of a financial asset in its entirety, the difference between the assetâs carrying amount and the sum of the consideration received and receivable is recognised in the Statement of profit and loss.
The Company has applied the de-recognition requirements of financial assets prospectively for transactions occurring on or after April 1, 2016 (the transition date).
Financial liabilities and equity instruments Classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by an entity are recognised at the proceeds received, net of direct issue costs.
Financial liabilities
All financial liabilities are subsequently measured at amortised cost using the effective interest method. The carrying amounts of financial liabilities that are subsequently measured at amortised cost are determined based on the effective interest method. Interest expense that is not capitalised as part of costs of an asset is included in the âFinance Costsâ.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument.
Financial guarantee contracts issued by the Company are initially measured at their fair values and are subsequently measured (if not designated as at Fair value though profit or loss) at the higher of:
- the amount of impairment loss allowance determined in accordance with requirements of Ind AS 109; and
- the amount initially recognised less, when appropriate, the cumulative amount of income recognised in accordance with the principles of Ind AS 18.
The financial guarantees extended by the company for its subsidiaries are disclosed as âDeemed Investment in equity of subsidiariesâ under the head âInvestmentsâ.
De-recognition of financial liabilities
The Company derecognises financial liabilities when, and only when, the Companyâs obligations are discharged, cancelled or have expired. An exchange with a lender of debt instruments with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability (whether or not attributable to the financial difficulty of the debtor) is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.
The Company has applied the de-recognition requirements of financial liabilities prospectively for transactions occurring on or after April 1, 2016 (the transition date).
1.8. Foreign Currency Transactions
Transactions in foreign currency in respect of exports are recorded at exchange rates as notified by the concerned authorities at regular intervals. Transactions in foreign currency in respect of other items are recorded at the exchange rate prevailing on the date of transaction. Monetary assets and liabilities denominated in foreign currency are restated at year end exchange rates. Non-monetary items (Investments) denominated in foreign currency are stated using the exchange rate on the date of transaction. Exchange differences arising on settlement of transactions and on restatement of monetary items are recognized as income or expense in the year in which they arise, except in respect of the foreign borrowing liabilities, if any for acquisition of fixed assets, where such exchange difference is adjusted in the carrying cost of fixed assets.
1.9. Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
All other borrowing costs are recognised as expense in profit or loss in the period in which they are incurred.
1.10. Inventories
Inventories are valued at lower of weighted average Cost (exclusive of Taxes & Cenvat Credits / GST availed on inputs) and Net Realizable Value. Raw Material and Consumables are valued at weighted average Cost basis. Finished Goods and Work-in-Progress are valued at aggregate cost determined comprising Material Cost and Manufacturing Overheads. Scrap is valued at Net Realizable Value.
1.11. Taxes on Income
A. Current Tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.
Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Current tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
B. Deferred Tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
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.
1.12. Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The company is operating only in one segment viz. Auto Components.
1.13. Research and development
a. Revenue expenses pertaining to research activities are charged to statement of profit and loss under the respective heads of expenses.
b. Expenditure incurred on fixed assets used for R & D is capitalized under the respective heads of PPE and Intangible Assets.
c. Expenditure incurred on development activities which do not qualify as Intangible Asset is charged to the statement of Profit and Loss.
1.14. Cash Flow Statement
Cash flows are reported using indirect method as set out in Ind AS -7 âStatement of Cash Flowsâ, whereby profit / (loss) before 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.
1.15. Provisions, Contingent Liabilities and Contingent Assets
The assessments undertaken in recognising provisions and contingencies have been made in accordance with the applicable Ind AS-37 âProvisions, Contingent Liabilities and Contingent Assetsâ.
A. Provisions
Provisions are recognized when the Company has a present obligation (legal or constructive), as a result of past events, and it is probable that an outflow of resources, that can be reliably estimated, will be required to settle such an obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows to net present value using an appropriate pretax discount rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Unwinding of the discount is recognized in the statement of profit and loss as a finance cost. Provisions are reviewed at each reporting date and are adjusted to reflect the current best estimate.
B. Contingent Liabilities
The Contingent Liabilities are disclosed by way of a note to the Financial Statements, after careful evaluation by the management of the facts and legal aspects of the matter involved. Company has significant capital commitments in relation to various capital projects which are not recognized on the balance sheet. In the normal course of business, contingent liabilities may arise from litigation and other claims against the Company. Guarantees are also provided in the normal course of business. There are certain obligations which management has concluded, based on all available facts and circumstances, are not probable of payment or are very difficult to quantify reliably, and such obligations are treated as contingent liabilities and disclosed in the notes but are not reflected as liabilities in the financial statements. Although there can be no assurance regarding the final outcome of the legal proceedings in which the Company is involved, it is not expected that such contingencies will have a material effect on its financial position or profitability.
C. Contingent Assets
A Contingent Asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the entity.
A contingent asset, if any is not recognised but disclosed where an inflow of economic benefit is probable.
1.16. Business Combinations
a. Business combinations, involving entities or businesses are accounted for using acquisition method.
b. There is no common control business combination, involving entities or businesses in which all the combining entities or businesses are ultimately controlled by the same party or parties both before and after the business combination.
c. The Company has elected not to apply Ind AS 103 âBusiness Combinations âretrospectively to past business combinations that occurred before the transition date of April 1, 2016.
1.17. Selling/Marketing Expenses
a. Warranty is extended when the products are sold. Provisions for expected cost of warranty obligations from sale of products are recognised on the date of sale of the relevant products at the Managementâs best estimate of the expenditure required to settle the obligation which takes into account the empirical data on the nature, frequency and average cost of warranty claims and regarding possible future incidences.
b. Commission, Discount and other expenses payable on sales are recognized on determination of amount payable in accordance with arrangement/contracts with the parties.
1.18. Employee Benefits
A. Short Term Employee Benefits
Short T erm Employee benefits are recognised as an expense at the undiscounted amounts in the Statement of Profit & Loss of year in which the related services are rendered.
B. Defined Contribution Plans
Provident Fund & ESIC are defined contribution schemes established under a State Plan. The contributions to the schemes are charged to the Statement of Profit & Loss in the year of incurrence.
C. Defined Benefits Plans
The company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on postemployment at 15 daysâ salary (last drawn salary) for each completed year of services as per the rules of the company. The aforesaid liability is provided for on the basis of an actuarial valuation made using Projected Unit Credit Method at the end of financial year. The scheme is funded with an insurance company in the form of a qualifying insurance policy. Remeasurement gains/losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur in Other Comprehensive Income. These gains/losses which are recognised in Other Comprehensive Income are reflected in retained earnings and are not reclassified to profit or loss.
D. Compensated Absences
Employees are entitled to accumulate leave subject to certain limits for future encashment. The liability in respect of compensated absences is provided for on the basis of actuarial valuation made at the end of the financial year using Projected Unit Credit Method. The said liability is not funded.
1.19. Dividends
Provision is made for the amount of any final dividend declared in the accounts on the date of its approval by the shareholders and no longer at the discretion of the company. Interim dividends, if any are recorded as a liability on the date of declaration by the companyâs board of directors.
1.20. Earnings Per Share
The Earnings considered for ascertaining the Companyâs Earnings Per Share (EPS) comprises the Net Profit / Loss after Tax. The Number of Shares used in computing Basic EPS is the Weighted Average Number of Shares outstanding during the year. The number of shares used in computing diluted EPS comprises weighted average number of shares considered for deriving basis EPS, and also the weighted average number of equity shares that would be issued on the conversion of all dilutive potential equity shares. In case of dilutive potential equity shares, the difference between the number of shares issuable and number of shares that would have been issued at fair value are treated as diluted potential equity shares. Dilutive potential equity shares are deemed converted as of the beginning of the period, unless issued at a later date.
1.21. Share-based payment arrangements
Equity-settled share-based payments to employees (employee stock option plan) are measured by reference to the fair value of the equity instruments at the grant date. The fair value determined at the grant date of the equity-settled share-based payments is expensed over the vesting period, based on the Companyâs estimate of equity instruments that will eventually vest, with a corresponding increase in equity at the end of the year. At the end of each year, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the share options outstanding account.
1.22. Government Grants
Government grants (including export incentives) are recognised only when there is reasonable assurance that the Company will comply with the conditions attaching to them and the grants will be received.
Government grants are recognised in profit or loss on a systematic basis over the periods in which the Company recognises as expenses the related costs for which the grants are intended to compensate.
1.23. Summary Critical Estimates & Judgments
The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. The management also needs to exercise judgment in applying the Companyâs accounting policies. This not 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 below.
A. Deferred taxes
The company recognises that net future tax benefit related to deferred income tax assets to the extent that it is probable that the deductible temporary differences will reverse in the foreseeable future. Assessing the recoverability of deferred income tax assets requires the company to make significant estimates related to expectations of future taxable income, which may have a scope of causing a material adjustment to the carrying amounts of assets and liabilities.
B. Inventories
The impairment of inventories is done on the basis of its aging, discontinuance of products/model, damage conditions of goods, obsolesce, expected salability. The value is written down at its estimated realisable value less cost to sell.
C. Contingent liabilities
In the normal course of business, contingent liabilities may arise from litigations and other claims against the Company. Where the potential liabilities have a low probability of crystallising or are very difficult to quantify reliably, the Company treats them as contingent liabilities. Such liabilities are disclosed in the notes but are not provided for in the financial statements. Although there can be no assurance regarding the final outcome, the Company does not expect them to have a materially adverse impact on our financial position or profitability.
D. Provision for product Warranty
The Companyâs product warranty obligations and estimations thereof are determined using historical information on the type of product, nature, frequency and average cost of warranty claims and the estimates regarding possible future incidences of product failures. Changes in estimated frequency and amount of future warranty claims, which are inherently uncertain, can materially affect warranty expense.
E. Fair Value Measurements and Valuation Processes
Some of the Companyâs assets and liabilities are measured at fair value for financial reporting purposes. The Management determines the appropriate valuation techniques and inputs for the fair value measurements. In estimating the fair value of an asset or a liability, the Company used market-observable data to the extent it is available. Where Level 1 inputs are not available, the Company engaged third party qualified valuers to perform the valuations in order to determine the fair values based on the appropriate valuation techniques and inputs to fair value measurements. Fair Value of Financial Guarantees extended by the Company to secure credit facilities availed by the Companyâs subsidiaries from bank, has been determined based on estimated amount that would be payable to a third party for assuming the obligations. Information about the valuation techniques and inputs used in determining the fair value of various assets and liabilities are disclosed in Note 50.
1.24. FIRST TIME ADOPTION OF IND AS
These are Companyâs first financial statements prepared in accordance with Ind AS. The accounting policies set out in this financial statement have been applied in preparing the financial statements for the year ended 31March2018, the comparative information presented in these financial statements for the year ended 31st March 2017 and in the preparation of an opening Ind AS balance sheet at 1st April, 2016 (date of transition). In preparing its opening Ind AS balance sheet, the company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2006 (as amended), Companies (Accounting Standards) Amendment Rules, 2016 and other relevant provisions of the Act (âprevious GAAPâ or âIndian GAAPâ or âIGAAPâ). An explanation of how the transition from previous GAAP to Ind AS has affected companyâs financial position, financial performance and cash flow is set out in the following tables and notes.
Explanation 1 - Exemptions and exceptions availed
Explanation 2 - Total Comprehensive Income Reconciliation for the year ended 31st March, 2017 Explanation 3- Equity Reconciliation as at the date of transition (April 1, 2016) and as at 31st March, 2017 Explanation 4 - Impact on cash flows for the year ended 31st March, 2017
Explanation 1 - Exemptions and exceptions availed
Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous GAAP to Ind AS.
Ind AS Optional Exemptions - Deemed Cost
Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities. This exemption can also be used for intangible assets covered by Ind AS 38 Intangible Assets.
Accordingly, the company has elected to measure all of its property, plant and equipment (except leasehold land which has been carried at the value determined in accordance with Ind AS 17 âLeasesâ on the transition date) and intangible assets at their previous GAAP carrying values. The deemed cost of Land & building including leasehold land carries revalued amounts as their respective revaluations were broadly comparable to their fair value at the date of revaluation.
- Business Combinations
Ind AS 101 permits a first-time adopter to elect not to apply Ind AS 103 retrospectively to past business combinations. Accordingly, company has elected to apply Ind AS 103 prospectively.
- Investments in subsidiaries
Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its investment in subsidiaries at cost. Accordingly, the Company has elected to measure investment in subsidiaries at cost at their previous GAAP carrying values.
Ind AS Mandatory Exceptions - Estimates
An entityâs estimates in accordance with Ind As at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error. Ind AS estimates as at 1st April 2016 are consistent with the estimates as at the same date made in conformity with previous GAAP.
- Classification and measurement of financial assets
Ind AS 101 requires an entity to assess classification and measurement of financial assets (investment in debt instruments) on the basis of the facts and circumstances that exist at the date of transition to Ind AS. Accordingly classification and measurement of financial assets have been made based on the facts and circumstances that exist at the date of transition to Ind AS.
Mar 31, 2016
1.1 Basis Of Preparation
The Financial Statements are prepared under historical cost convention (Except for certain fixed assets which were carried to revalued amounts) on accrual basis and they are in consonance with generally accepted accounting principles in India and applicable Accounting Standards specified under section 133 of the Companies Act, 2013. read with Rule 7 of the Companies (Accounts) Rules. 2014 and other pronouncement of ICAI. The accounting policies adopted in preparation of financial statements are consistent with those followed in the previous yean
1.2 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 and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period. Although those estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates.
1.3 Fixed Assets / Intangible Assets
A. Tangible Fixed Assets
i. Fixed Assets are stated at cost of acquisition/construction except for land & Buildings which are stated at revalued amounts as at that date based on external valuers'' report, less accumulated depreciation and impairment loss, if any. The cost of fixed assets includes directly attributable expenses incurred for the purpose of acquiring fixed assets, net of cenvat credit on qualifying assets. Press Tools and such type of machinery items developed in house are capitalized at direct cost plus directly attributable overheads- Capital work in progress comprises of the cost of fixed assets that are not yet ready for their intended use at the reporting dote.
ii. The ministry of corporate affair has made the component accounting approach for fixed assets mandatory from 1st April, 2015, wide notification dated 29th August. 2014, As per external technical expert''s opinion, the company''s fixed assets are of such nature that separate components are not distinctly identifiable having different useful life. And therefore, component level accounting and reporting is not practically feasible for the company.
iii. The Company estimates the useful lives For fixed assets as follows;
Asset Classification Useful Life
Buildings {Including Temporary Shed) 3-30 years
Plant & Machinery 1-15 years
Furniture & Fixtures 1-10 years
Office Equipments 2-5 years
Pollution Equipments 2-8 years
Computers 1 -3 years
Electric Fittings 10 years
Vehicles 4-8 years
The Company believes that the useful lives as given above best represent the useful lives of these assets based on technical advice and is different from the useful lives as prescribed under Part C of Schedule II of the Companies Act. 2013. The useful lives of fixed assets are periodically reviewed.
B. Intangible Assets
Intangible assets are stated at cost of acquisition net of cenvat credit less accumulated amortization. Expenditure, identifiable and reliably measurable, incurred on product development yielding Future economic benefits is recognized as internally generated Intangible Asset as per Accounting Standard 26 "Intangible Assets".
1.4 Depreciation /Amortization
i. Depreciation is charged on straight-line method (SLM) and is based on useful lives of the assets as determined by external experts in accordance with requirements of Schedule II to the Companies Act. 2013. The additional charge of depreciation or account of revaluation is withdrawn from revaluation reserve and is credited to the General Reserve as per Guidance rots on the provisions of Schedule II to the Companies Act. 2013 issued by the Institute of Chartered Accountants of India. Depreciation on additions during the year to fixed assets 13 charged on prorat a basis.
ii Payments for Long Term leasehold lurid and expenses incurred Tor the development of such land ore amortized over a period of lease.
iii. Intangible Assets are amortized as follows .
a) Product Development- over a period of ten years after commencement of commercial production of relevant item
b) Computer Software (including License fees): over a period of three years.
1.5 Investments
Long term investments are stated at cost, Provision for diminution is made when such diminution is considered other than temporary in nature.
1.6 Inventories
Inventories are valued in accordance with Accounting Standard [AS)-2 "Valuation of Inventories" at lower of cost (exclusive of cenvat credits availed on inputs) and net realizable value. Raw materials & components. Stores and Packing material are valued or weighted average cost basis Finished Goods and Work-in-Progress are valued at aggregate cost determined, comprising material cost and manufacturing overheads. Finished Goods include Excise Duty. Scrap is valued at net realizable value.
1.7 impairment of Assets
Impairment of assets is recognized when there is an indication of impairment. On such indication, the recoverable amount of asset is estimated end if such estimation is less than its book value, the book value is reduced to its recoverable amount.
1.8 Revenue Recognition
i. Sales is accounted for on dispatch of products from the works and which are followed by transfer of risk and reward to the customers up to the time the financial statements of the Company are approved by the Board.
ii. Insurance Claims are accounted as and when admitted.
iii. Other income is accounted on accrual basis except when the realization of such income is uncertain. Dividend income is accounted when right to receive the same is established.
1.9 Foreign Currency Transactions
Transactions in foreign currency are records! at monthly exchange rates as notified by the concerned authorities. Monetary assets and liabilities denominated in foreign currency are restated at year end exchange rates. Non monetary Items (Investments) denominated in foreign currency ore stated using the exchange rate on the date of transaction. Exchange differences arising or settlement of transactions and on restatement of monetary items are recognized as income or expense in the year in which they arise, except in respect of the foreign borrowing liabilities, if any for acquisition of fixed assets, where such exchange difference is adjusted in the carrying cost of fixed assets.
1.10 Cenvat Credit
Cenvat credit available on the material inputs is adjusted against consumption. Cenvat credit available on capital goods is adjusted against cost of fixed assets. Cenvat credit renaming unutilized is shown as receivables in Short term Loans and Advances.
1.11 Selling/ Marketing Expenses
i. Warranty is extended or products sold. Warranty expenses are accrued / accounted as and when of aim is accepted.
ii. Commission 0 is count and other expenses payable on sales are recognized on determination of amount payable in accordance with arrangements / contracts with the parties.
1.1E Employee Benefits
A. Short Term Employee Benefits
Short term employee benefits ore recognized as an expense at the undiscounted amounts in the statement of profit and loss of year in which the related services are rendered.
B. Defined Contribution Plans
Provident Fund & ESIC are defined contribution schemes established under a State Flan. The contributions to the said schemes are charged to the statement of profit- and loss to the year of Incurrence.
C. Defined Benefit Plane
The company has a defined benefit gratuity plan. Every employee who has competed five years or more of service gets a gratuity on post employment at 15 days salary Hast drawn salary) for each completed year or services as per the rules of the company. The aforesaid liability is provided for on the basis of an actuarial valuation made using Projected Unit Credit. Method at the end of the financial year the scheme is funded with an insurance company in the form of a justifying Insurance policy. Actuarial gains/losses are recognized in statement of profit and loss in the year in which they arise.
D .Compensated Absence
Employees are emitted to accumulate leave subject to certain limits for future encashment. The liability in respect of compensated absences is provided for on the basis of actuarial valuation made at chi; end of the financial year using Projected Unit Credit Method. Fixed liability is not funded.
1.13 Research £ Development Expenses
1 Revenue expenses pertaining to research activities are charged to statement of profit and loss under the respective heads of expenses.
ii. Expenditure incurred on fixed assets used for R & D is capitalized under the head ''Fixed Assets"
iii. Expenditure incurred on development activities which do not qualify as Intangible Asset Is charged to statement of Profit and Loss
1.14 Borrowing Costs
Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalized as o part of cost of such as sec s. All other borrowing costs are recognized as expense in the period in which they are incurred.
1.15 Taxes on income
i. Provision for current tax is made for the amount of tax payable in respect of taxable income for the year under Income fax Act. 1361. Unutilized MAT credit is recognized.
ii. Deterred tax is recognized on timing differences: being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets are recognized only to the extent there is virtual certainty of its realization.
1.16 Provision and Contingent Liabilities
i Provisions in respect of present obligations arising out of past events are made in the accounts when reliable estimates can be made of the amount of the obligation.
ii. Contingent liabilities are disclosed by way of a note to the Financial Statements, after careful evaluation by the management of the facts and legal aspects of the matter involved.
1.17 Earnings per Share
The earnings considered for ascertaining the Company''s Earnings Per Share [EPS] comprises the net profit after tax. The number of shares used in computing Basic FPS is the weighted average number of shares outstanding during the year The number of shares used in computing diluted EPS comprises the weighted average shares considered for deriving basic EPS, and also the weighted average number of equity shares that would be issued on the conversion of ail dilutive potential equity shares. In case of dilutive potential equity shares, the difference between the number of shares issuable and the number of shares that would have been issued at fair value are treated as diluted potential equity shares. Dilutive potential equity shares are deemed converted as of the beginning of the period, unless issued at a later date.
1.18 Employee Stock Option Scheme
Stock options granted to the employees under the stock option scheme established are evaluated as per the accounting treatment prescribed by Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines. 1999. The Company follows the intrinsic value method of accounting for the options and accordingly, the excess of market value of the stock options as on date of grant over the exercise price of the options, if any, is recognized as deferred employee compensation and is charged to the statement of profit and loss on graded vesting basis over the vesting period of the options. The unamortized portion of the deferred employee compensation is netted out against âStock options Outstanding"
1.19 Government Grants
1 Government grant is recognized when there is reasonable assurance that the grant will be received and all relevant conditions are complied with,
ii. Grant received by way of investment subsidy in relation to total investment is credited to capital reserve.
Mar 31, 2015
1.1 General
The Financial Statements are prepared under historical cost convention
(Except for certain fixed assets which are carried at revalued amounts)
on accrual basis and they are in consonance with generally accepted
accounting principles in India and applicable Accounting Standards
specified under section 133 of the Companies Act, 2013, read with Rule
7 of the Companies (Accounts) Rules, 2014.
1.2 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 and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
period. Although these estimates are based upon management's best
knowledge of current events and actions, actual results could differ
from these estimates.
1.3 Fixed Assets / Intangible Assets
A. Fixed Assets
i. Fixed Assets are stated at cost of acquisition/construction except
for land & Buildings which are stated at revalued amounts as at that
date based on external valuers' report, less accumulated depreciation
and impairment loss, if any. The cost of fixed assets includes directly
attributable expenses incurred for the purpose of acquiring fixed
assets, net of cenvat credit on qualifying assets. Press Tools and such
type of machinery items developed in house are capitalized at direct
cost plus directly attributable overheads. Capital work in progress
comprises of the cost of fixed assets that are not yet ready for their
intended use at the reporting date.
ii. The Company estimates the useful lives for fixed assets as follows:
Asset Classification Useful Life
Buildings (Including Temporary Shed) 3-30 years Plant & Machinery 1-15
years
Furniture & Fixtures 1-10 years
Office Equipments 2-5 years
Pollution Equipments 2-8 years
Computers 1-3 years
Electric Fiitings 10 years
Vehicles 4-8 years
The Company believes that the useful lives as given above best
represent the useful lives of these assets based on tehnical advice and
is different from the useful lives as prescribed under Part C of
Schedule II of the Companies Act, 2013.
B. Intangible Assets
Intangible assets are stated at cost of acquisition net of cenvat
credit less accumulated amortization. Expenditure, identifiable and
reliably measurable, incurred on product development yielding future
economic benefits is recognized as internally generated Intangible
Asset as per Accounting Standard 26 on "Intangible Assets".
1.4 Depreciation / Amortisation
i. Depreciation is charged on straight-line method (SLM) and is based
on useful lives of the assets as determined by external experts in
accordance with requirements of Schedule II to the Companies Act, 2013.
The additional charge of depreciation on account of revaluation is
withdrawn from revaluation reserve and is credited to the General
Reserve as per Guidance note on the provisions of Schedule II to the
Companies Act, 2013 issued by The Institute of Chartered Accountants of
India. Depreciation on additions during the year to fixed assets is
charged on pro-rata basis.
ii. Payments for Long Term leasehold land and expenses incurred for the
development of such land are amortized over a period of lease.
iii. Intangible Assets are amortized as follows : a) Product
Development: over a period of ten years after commencement of
commercial production of relevant item.
b) Computer Software (including License fees): over a period of three
years.
1.5 Investments
Long Term Investments are stated at cost. Provision for diminution is
made when such diminution is considered other than temporary in nature.
1.6 Inventories
Inventories are valued in accordance with Accounting Standard tAS)-2
"Valuation of Inventories" at lower of cost (exclusive of cenvat
credits availed on inputs) and net realizable value. Raw material,
Stores and Packing material are valued on weighted average cost basis.
Finished Goods and Work-in-Progress are valued at aggregate cost
determined, comprising material cost and manufacturing overheads.
Finished Goods include Excise Duty. Scrap is valued at net realizable
value.
1.7 Impairment of Assets
Impairment of Assets is recognized when there is an indication of
impairment. On such indication, the recoverable amount of Asset is
estimated and if such estimation is less than its book value, the book
value is reduced to its recoverable amount.
1.8 Revenue Recognition
i. Sales and Services are accounted for on dispatch of products from
the works and which are followed by transfer of risk and reward to the
customers up to the time the financial statements of the Company are
approved by the Board.
ii. Insurance Claims are accounted as and when admitted.
iii. Other income is accounted on accrual basis except when the
realization of such income is uncertain. Dividend income is accounted
when right to receive the same is established.
1.9 Foreign Currency Transactions
Transactions in foreign currency are recorded at monthly exchange rates
as notified by the concerned authorities. Monetary assets and
liabilities denominated in foreign currency are restated at year end
exchange rates. Non monetary Items (Investments) denominated in foreign
currency are stated using the exchange rate on the date of transaction.
Exchange differences arising on settlement of transactions and on
restatement of monetary items are recognized as income or expense in
the year in which they arise, except in respect of the liabilities,
if any for acquisition of Fixed Assets, where such exchange difference
is adjusted in the carrying cost of Fixed Assets.
1.10 Cenvat Credit
Cenvat credit available on the material inputs is adjusted against
consumption. Cenvat credit available on capital goods is adjusted
against cost of Fixed Assets. Cenvat credit remaining unutilized is
shown as receivables in Short Term Loans and Advances.
1.11 Selling/ Marketing Expenses
i. Warranty is extended on products sold. Warranty expenses are
accrued / accounted as and when claim is accepted.
ii. Commission, Discount and other expenses payable on sales are
recognized on determination of amount payable in accordance with
arrangements / contracts with the parties.
1.12 Employee Benefits
A. Short Term Employee Benefits
Short term employee benefits are recognized as an expense at the
undiscounted amounts in the statement of profit and loss of year in
which the related services are rendered.
B. Defined Contribution Plans
Provident Fund & ESIC are defined contribution schemes established
under a State Plan. The contributions to the schemes are charged to the
statement of profit and loss in the year of incurrence.
C. Defined Benefit Plans
The company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service gets a gratuity on post
employment at 15 days salary (last drawn salary) for each completed
year of services as per the rules of the company. The aforesaid
liability is provided for on the basis of an actuarial valuation made
using Projected Unit Credit Method at the end of the financial year.
The scheme is funded with an insurance company in the form of a
qualifying insurance policy. Actuarial gains/losses are recognized in
statement of profit and loss in the year in which they arise.
D. Compensated Absences
Employees are entitled to accumulate leave subject to certain limits
for future encashment. The liability in respect of compensated absences
is provided for on the basis of actuarial valuation made at the end of
the financial year using Projected Unit Credit Method. The said
liability is not funded.
1.13 Research & Development Expenses
i. Revenue expenses pertaining to research activities are charged to
statement of profit and loss under the respective heads of expenses.
ii. Expenditure incurred on fixed assets used for R & D is capitalized
under the head "Fixed Assets'.
iii. Expenditure incurred on development activities which do not
qualify as Intangible Asset is charged to statement of Profit and Loss.
1.14 Borrowing Costs
Borrowing cost that are attributable to the acquisition, construction
or production of qualifying assets are capitalized as a part of cost of
such assets. All other borrowing costs are recognized as expense in the
period in which they are incurred.
1.15 Taxes on Income
i. Provision for current tax is made for the amount of tax payable in
respect of taxable income for the year under Income Tax Act, 1961.
Unutilized MAT credit is recognized.
ii. Deferred tax is recognized on timing differences; being the
difference between taxable income and accounting income that originate
in one period and are capable of reversal in one or more subsequent
periods. Deferred tax assets are recognized only to the extent there
is virtual certainty of its realization.
1.16 Provisions and Contingent Liabilities
i. Provisions in respect of present obligations arising out of past
events are made in the accounts when reliable estimates can be made of
the amount of the obligation.
ii. Contingent liabilities are disclosed by way of a note to the
Financial Statements, after careful evaluation by the management of the
facts and legal aspects of the matter involved.
1.17 Earnings per Share
The earnings considered for ascertaining the Company's Earnings Per
Share (EPS) comprises the net profit after tax. The number of shares
used in computing Basic EPS is the weighted average number of shares
outstanding during the year. The number of shares used in computing
diluted EPS comprises the weighted average shares considered for
deriving basic EPS, and also the weighted average number of equity
shares that would be issued on the conversion of all dilutive potential
equity shares. In case of dilutive potential equity shares, the
difference between the number of shares issuable and the number of
shares that would have been issued at fair value are treated as diluted
potential equity shares. Dilutive potential equity shares are deemed
converted as of the beginning of the period, unless issued at a later
date.
1.18 Employee Stock Option Scheme
Stock options granted to the employees under the stock option scheme
established are evaluated as per the accounting treatment prescribed by
Securities and Exchange Board of India (Employee Stock Option Scheme
and Employee Stock Purchase Scheme) Guidelines, 1999. The Company
follows the intrinsic value method of accounting for the options and
accordingly, the excess of market value of the stock options as on date
of grant over the exercise price of the options, if any, is recognized
as deferred employee compensation and is charged to the statement of
profit and loss on graded vesting basis over the vesting period of the
options. The unamortized portion of the deferred employee compensation
is netted out against "Stock options Outstanding".
1.19 Government Grants
i. Government grant is recognized when there is reasonable assurance
that the grant will be received and all relevant conditions are
complied with.
ii. Grant received by way of investment subsidy in relation to total
investment is credited to capital reserve.
Mar 31, 2014
1.1 General
The Financial Statements are prepared under historical cost convention
[Except for certain fixed assets which are revalued] on accrual basis
and they are in consonance with generally accepted accounting
principles in India and applicable Accounting Standards notified under
the Companies Act , 1956 [which continue to be applicable in respect of
Section 133 of the Companies Act, 2013 in terms of General Circular
15/2013 dated 13th September, 2013 of the Ministry of Corporate
Affairs] & other relevant provisions of the Companies Act, 1956/2013,
as applicable.
1.2 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 and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
period. Although these estimates are based upon management''s best
knowledge of current events and actions actual results could differ
from these estimates.
1.3 Fixed Assets / Intangible Assets
a. Fixed Assets:
Fixed Assets are stated at cost of acquisition/construction except for
land & Buildings which are stated at revalued amounts as at that date
based on external valuers'' report, less accumulated depreciation and
impairment loss, if any. The cost of fixed assets includes directly
attributable expenses incurred for the purpose of acquiring fixed
assets, net of cenvat credit on qualifying assets. Press Tools and such
type of machinery items developed in house are capitalized at direct
cost plus directly attributable overheads.
b. Intangible Assets:
Expenditure (including technical know-how). identifiable and reliably
measurable, incurred on product development yielding future economic
benefits is recognized as internally generated Intangible Asset as per
Accounting Standard 96 on "Intangible Assets". Other Intangible assets
are stated at cost of acquisition net of cenvat credit less accumulated
amortization.
1.4 Depreciation/Amortization
i Depreciation is charged on straight-line method (SLM), at the rates
and in the manner prescribed in Schedule XIV of the Companies Act, 1956
except in case of revalued assets which are depreciated over revised
residual useful life of the assets as determined by the external
valuers or at the rates prescribed in Schedule XIV of the Companies At,
1956, whichever is higher. The additional charge of depreciation on
account of revaluation is withdrawn from revaluation reserve and is
credited to the statement of profit and loss. Depreciation on additions
during the year to fixed assets is charged on pro-rata basis.
ii. Payments for Long Term leasehold land and expenses incurred for the
development of such land are amortised over a period of lease.
iii. Intangible Assets are amortized as follows:
at Product Development: over a period of ten years after commencement
of commercial production of relevant item.
b) Computer Software (including License fees): over a period of three
years.
c) Website Development: over a period of three years.
1.5 Investments
Long Term Investments are stated at cost. Provision for diminution is
made when such diminution is considered other than temporary in nature.
1.6 Inventories
Inventories are valued in accordance with Accounting Standard (A8)-2
"Valuation of Inventories" at lower of cost [exclusive of cenvat
credits availed an inputs] and net realizable value. Raw material,
Spares and Packing material are valued an weighted average cost basis.
Finished Goods and Work-in-Progress are valued at aggregate cost
determined, comprising material cast and manufacturing overheads.
Finished Goods include Excise Duty. Scrap is valued at realizable
value.
1.7 Impairment of Assets
Impairment of assets is recognized when there is an indication of
impairment. On such indication, the recoverable amount of asset is
estimated and if such estimation is less than its bock value, the book
value is reduced to its recoverable amount.
1.8 Revenue Recognition
a) Sales and Services are accounted for on dispatch of products from
the works and which are followed by transfer of risk and reward to the
customers up to the time the financial statements of the Company are
approved by the Board.
b) Insurance Claims are accounted as and when admitted.
c) Other income is accounted on accrual basis except when the
realization of such income is uncertain. Dividend income is accounted
when right to receive is established.
1.9 Foreign Currency Transactions
Transactions in foreign currency are recorded at monthly exchange rates
as notified by the concerned authorities. Monetary assets and
liabilities denominated in foreign currency are restated at year end
exchange rates. Mon monetary Items (Investments) denominated in foreign
currency are stated using the exchange rate on the date of transaction.
Exchange differences arising on settlement of transactions and on
restatement of monetary items are recognized as income or expense in
the year in which they arise, except in respect of the liabilities, if
any for acquisition of fixed assets, where such exchange difference is
adjusted in the carrying cost of fixed assets.
1.10 Cenvat Credit
Cenvat credit available on the material inputs is adjusted against
consumption. Cenvat credit available on capital goods is adjusted
against cost of fixed assets. Cenvat credit remaining unutilized is
shown as receivables in Short Term Loans and Advances.
1.11 Miscellaneous Expenditure
i) Fees for Increese in Authorized Share Capital are charged to the
statement of Profit and Loss.
1.12 Selling/ Marketing Expenses
i. Warranty is extended on products sold. Warranty expenses are
accrued / accounted as and when claim is accepted.
ii. Commission, Discount and other expenses payable an sales are
recognized on determination of amount payable in accordance with
arrangements / contracts with the parties.
1.13 Employee Benefits
i. Short Term Employee Benefits
Short term employee benefits are recognized as an expense at the
undiscounted amounts in the statement of profit and loss of year in
which the related services are rendered
ii. Defined Contribution Plans
Provident Fund & ESIC are defined contribution schemes established
under a State Plan. The contributions to the schemes are charged to the
statement of profit and loss in the year when the contributions become
due.
iii. Defined Benefit Plans
The company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service gets a gratuity on post
employment at 15 days salary [last drawn salary] for each completed
year of services as per the rules of the company The aforesaid
liability is provided for on the basis of an actuarial valuation made
using Projected Unit Credit Method at the end of the financial year The
scheme is funded with an insurance company in the form of a qualifying
insurance policy. Actuarial gains/losses are recognized in statement of
profit and loss in the year in which they arise.
iv. Compensated Absences
Employees are entitled to accumulate leave subject to certain limits
for future encashment. The liability in respect of leave encashment is
provided for on the basis of actuarial valuation made at the end of the
financial year using Projected Unit Credit Method. The said liability
is not funded.
1.14 Research & Development Expenses
a. Revenue expenses pertaining to research activities are charged to
statement of profit and loss under the respective heads of expenses.
b. Expenditure incurred on fixed assets used for R & D is capitalized
under the head "Fixed Assets.
c. Expenditure incurred on development activities which da not qualify
as Intangible Asset is charged to statement of Profit and Loss
1.15 Borrowing Costs
Borrowing cost that are attributable to the acquisition, construction
or production of qualifying assets are capitaiized as a part of cast of
such assets. All other borrowing costs are recognized as expense in the
period in which they are incurred.
1.16 Taxes on Income
i. Provision for current tax is made for the amount of tax payable in
respect of taxable income for the year under Income Tax Act, 1961.
Unutilized MAT credit is recognized.
ii. Deferred tax is recognized on timing differences; being the
difference between taxable, income and accounting income that originate
in one period and are capable of reversal in one or more subsequent
periods. Deferred tax assets are recognized only to the extent there
is virtual certainty of its realization.
1.17 Provisions and Contingent Liabilities
i. Provisions in respect of present obligations arising out of past
events are made in the accounts when reliable estimates can be made of
the amount of the obligation.
ii. Contingent liabilities are disclosed by way of a note to the
Financial Statements, after careful evaluation by the management of the
facts end legal aspects of the matter involved
1.18 Earnings per Share
The earnings considered for ascertaining the Company''s Earnings Per
Share (EPS) comprises the net profit after tax. The number of shares
used in computing Basic EPS is the weighted average number of shares
outstanding during the year The number of shares used in computing
diluted EPS comprises the weighted average shares considered for
deriving basic EPS, and also the weighted average number of equity
shares that would be issued on the conversion of all dilutive potential
equity shares. In case of dilutive potential equity shares, the
difference between the number of shares issuable and the number of
shares that would have been issued at fair value are treated as diluted
potential equity shares. Dilutive potential equity shares are deemed
converted as of the beginning of the period, unless issued at a later
date.
1.19 Employee Stock Option Scheme
Stack options granted to the Employees under the stock option scheme
established are evaluated as per the accounting treatment prescribed by
Securities and Exchange Board of India (Employee Stock Option Scheme
and Employee Stock Purchase Scheme) Guidelines, 1999. The Company
follows the intrinsic value method of accounting for the options and
accordingly, the excess of market value of the stock options as on date
of grant over the exercise price of the options, if any, is recognized
as deferred employee compensation and is charged to the statement of
profit and loss on graded vesting basis over the vesting period of the
options The unamortized portion of the deferred employee compensation
is netted out against "Stock options Outstanding"
1.20 Government Grants
i. Government grant is recognized when there is reasonable assurance
that the grant will be received and all relevant conditions are
complied with.
ii. Grant received by way of investment subsidy in relation to total
investment is credited to capital reserve.
Mar 31, 2013
1.1 General
The Financial Statements are prepared under historical cost convention
(Except for certain fixed assets which are revalued) on accrual basis
and they are in consonance with generally accepted accounting
principles in India and applicable Accounting Standards notified u/s
211 C3C) & other relevant provisions of the Companies Act, 1956.
1.2 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 and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
period. Although these estimates are based upon management''s best
knowledge of current events and actions, actual results could differ
from these estimates.
1.3 Fixed Assets / Intangible Assets
i. Fixed Assets are stated at cost of acquisition/construction except
for Land S. Buildings which are stated at revalued amounts as at that
date based on external valuers'' report, less accumulated depreciation
and impairment loss, if any. The cost of fixed assets includes
direct/indirect apportioned expenses incurred for the purpose of
acquiring fixed assets, net of cenvat credit on qualifying assets.
Press Tools and such type of machinery items developed in house are
capitalized at direct cost plus overheads and standing charges.
ii. Pre-operative expenses, comprising revenue expenses incurred up to
the date of commencement of production are apportioned to fixed assets.
iii. Expenditure [including technical know-how) , identifiable and
reliably measurable, incurred on product development yielding future
economic benefits is recognized as internally generated Intangible
Asset as per Accounting Standard 26 on "Intangible Assets". Other
Intangible Assets are stated at cost of acquisition net of cenvat
credit less accumulated amortization.
1.4 Depreciation/Amortization
i. Depreciation is charged on straight-line method (SLM), at the rates
and in the manner prescribed in Schedule XIV of the Companies Act, 1956
except in case of revalued assets which are depreciated over revised
residual useful life of the assets as determined by the external
valuers. The additional charge of depreciation on account of
revaluation is withdrawn from revaluation reserve and is credited to
the statement of profit and loss. Depreciation on additions during the
year to fixed assets is charged on pro-rata basis.
ii. Payments for Long Term leasehold land and expenses incurred for
the development of such land are amortised over a period of lease.
iii. Intangible Assets are amortized as follows:
a) Product Development: over a period of ten years after commencement
of commercial production of relevant item.
b) Computer Software [including License fees): over a period of three
years.
c) Website Development: over a period of three years.
1.5 Investments
Long Term Investments are stated at cost. Provision for diminution is
made when such diminution is considered other than temporary in nature.
1.6 Inventories
Inventories are valued in accordance with Accounting Standard CAS)-2
"Valuation of Inventories" at lower of cost (exclusive of taxes and
cenvat credits availed on inputs) and net realizable value. Raw
material, Spares and Packing material are valued on weighted average
basis. Finished Goads and Work-in-Progress are valued at aggregate cost
determined, comprising material cost and manufacturing overheads.
Finished Goods include Excise Duty. Scrap is valued at realizable
value.
1.7 Impairment of Assets
Impairment of assets is recognized when there is an indication of
impairment. On such indication, the recoverable amount of asset is
estimated and if such estimation is less than its book value, the book
value is reduced to its recoverable amount.
1.8 Revenue Recognition
a) Sales and Services are accounted for on dispatch of products from
the works and which are followed by transfer of risk and reward to the
customers up to the time the financial statements of the Company are
approved.
b) Insurance Claims are accounted as and when admitted.
c) Other income is accounted on accrual basis except when the
realization of such income is uncertain. Dividend income is accounted
when right to receive is established.
1.9 Foreign Currency Transactions
Transactions in foreign currency are recorded at monthly exchange rates
as notified by the concerned authorities. Monetary assets and
liabilities denominated in foreign currency are restated at year end
exchange rates. Non monetary Items [Investments) denominated in foreign
currency are stated using the exchange rate on the date of transaction.
Exchange differences arising on settlement of transactions and on
restatement of monetary items are recognized as income or expense in
the year in which they arise, except in respect of the liabilities, if
any for acquisition of fixed assets, where such exchange difference is
adjusted in the carrying cost of fixed assets.
1.10 Cenvat Credit
Cenvat credit available on the material inputs is adjusted against
consumption. Cenvat credit available on capital goods is adjusted
against cost of fixed assets. Cenvat credit remaining unutilized is
shown as receivables in Short Term Loans and Advances.
1.11 Miscellaneous Expenditure
i. Fees for Increase in Authorized Share Capital are charged to the
statement of Profit and Loss .
1.12 Selling/Marketing Expenses
i. Warranty is extended on products sold. Warranty expenses are
accrued / accounted as and when claim is accepted.
ii. Commission, Discount and other expenses payable on sales are
recognized on determination of amount payable in accordance with
arrangements / contracts with the parties.
1.13 Employee Benefits
i. Short Term Employee Benefits
Short term employee benefits are recognized as an expense at the
undiscounted amounts in the statement of Profit and Loss of the year in
which the related services are rendered.
ii. Defined Contribution Plans
Provident Fund & ESIC are defined contribution schemes established
under a State Plan. The contributions to the schemes are charged to the
statement of Profit and Loss in the year when the contributions become
due.
iii. Defined Benefit Plans
The Company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service gets a gratuity on post
employment at 15 days salary (last drawn salary) for each completed
year of services as per the rules of the Company. The aforesaid
liability is provided for on the basis of an actuarial valuation made
using Project Unit Credit Method at the end of the financial year. The
scheme is funded with an insurance company in the form of a qualifying
insurance policy. Actuarial gains/losses are recognized in statement of
Profit and Loss in the year in which they arise.
iv. Compensated Absences
Employees are entitled to accumulate leave subject to certain limits
for future encashment. The liability in respect of leave encashment is
provided for on the basis of actuarial valuation made at the end of the
financial year using Project Unit Credit Method. The said liability is
not funded.
1.14 R&D Expenses
a. Revenue expenses pertaining to research activities are charged to
statement of Profit and Loss under the respective heads of expenses.
b. Expenditure incurred on fixed assets used for R & D is capitalized
under the head "Fixed Assets.
c. Expenditure incurred on development activities which do not qualify
as Intangible Asset is charged to statement of Profit and Loss.
1.15 Borrowing Costs
Borrowing cost-that are attributable to the acquisition, construction
or production of qualifying assets are capitalized as a part of cost of
such assets. All other borrowing costs are recognized as expense in the
period in which they are incurred.
1.16 Taxes on Income
i. Provision for current tax is made for the amount of tax payable in
respect of taxable income for the year under Income Tax Act, 1961.
Unutilized MAT credit is recognized.
ii. Deferred tax is recognized on timing differences; being the
difference between taxable income and accounting income that originate
in one period and are capable of reversal in one or more subsequent
periods. Deferred tax assets are recognized only to the extent there
is virtual certainty of its realization.
1.17 Provisions and Contingent Liabilities
i. Provisions in respect of present obligations arising out of past
events are made in the accounts when reliable estimates can be made of
the amount of the obligation.
ii. Contingent liabilities are disclosed by way of a note to the
Financial Statements, after careful evaluation by the management of the
facts and legal aspects of the matter involved.
1.18 Earnings per Share
The earnings considered for ascertaining the Company''s Earnings Per
Share (EPS) comprises the net profit after tax. The number of shares
used in computing Basic EPS is the weighted average number of shares
outstanding during the year. The number of shares used in computing
diluted EPS comprises the weighted average shares considered for
deriving basic EPS, and also the weighted average number of equity
shares that would be issued on the conversion of all dilutive potential
equity shares. In case of dilutive potential equity shares, the
difference between the number of shares issuable and the number of
shares that would have been issued at fair value are treated as diluted
potential equity shares. Dilutive potential equity shares are deemed
converted as of the beginning of the period, unless issued at a later
date.
1.19 Employee Stock Option Scheme
Stock Options granted to the employees under the stock option scheme
established are evaluated as per the accounting treatment prescribed by
Securities and Exchange Board of India (Employee Stock Option Scheme
and Employee Stock Purchase Scheme) Guidelines, 1999. The Company
follows the intrinsic value method of accounting for the options and
accordingly, the excess of market value of the stock options as on date
of grant over the exercise price of the options, if any, is recognized
as deferred employee compensation and is charged to the statement of
profit and loss on graded vesting basis over the vesting period of the
options. The unamortized portion of the deferred employee compensation
is netted out against "Stock Options Outstanding"
1.20 Government Grants
i. Government grant is recognized when there is reasonable assurance
that the grant will be received and all relevant conditions are
complied with.
ii. Grant received by way of investment subsidy in relation to total
investment is credited to capital reserve.
Mar 31, 2012
1.1 General
The Financial Statements are prepared under historical cost convention
on accrual basis and they are in consonance with generally accepted
accounting principles in India and applicable Accounting Standards
notified u/s 211 (3C) & other relevant provisions of the Companies Act,
1956.
1.2 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 and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
period. Although these estimates are based upon management's best
knowledge of current events and actions, actual results could differ
from these estimates.
1.3 Fixed Assets / Intangible Assets
i. Fixed assets are stated at cost of acquisition / construction. The
cost of fixed assets includes direct / indirect apportioned expenses
incurred for the purpose of acquiring fixed assets, net of cenvat
credit on qualifying assets. Press Tools and such type of machinery
items developed in house are capitalized at direct cost plus overheads
and standing charges.
ii. Pre- operative expenses, comprising revenue expenses incurred up
to the date of commencement of production are apportioned to fixed
assets.
iii. Expenditure (including technical know-how) incurred on product
development yielding future economic benefits is recognized as
internally generated Intangible Asset as per Accounting Standard 26 on
"Intangible Assets".
1.4 Depreciation/Amortization
i. Depreciation is charged on straight-line method (SLM), at the rates
and in the manner prescribed in Schedule XIV of the Companies Act,
1956. Depreciation on additions during the year to fixed assets is
charged on pro- rata basis.
ii. Intangible Assets are amortized as follows:
a) Product Development: over a period of ten years after commencement
of commercial production of relevant item.
b) Computer Software (including Licence fees): over a period of three
years.
c) Website Development: over a period of three years.
1.5 Investments
Investments are stated at cost.
1.6 Inventories
Inventories are valued in accordance with Accounting Standard (AS)-2
"Valuation of Inventories" at lower of cost (exclusive of taxes and
cenvat credits availed on inputs) and net realizable value. It is on
weighted average basis. Finished Goods and Work-in-Progress are valued
at aggregate cost determined, comprising material cost and
manufacturing overheads. Finished Goods include Excise Duty. Scrap is
valued at realizable value.
1.7 Impairment of Assets
Impairment of assets is recognized when there is an indication of
impairment. On such indication, the recoverable amount of asset is
estimated and if such estimation is less than its book value, the book
value is reduced to its recoverable amount.
1.8 Revenue Recognition
a) Sales and Services are accounted for on dispatch of products from
the works and which are followed by transfer of risk and reward to the
customer's up to the time the financial statements of the Company are
approved.
b) Insurance claims are accounted as and when admitted.
c) Other income is accounted on accrual basis except when the
realization of such income is uncertain.
1.9 Foreign Currency Transactions
Transactions in foreign currency are recorded at monthly exchange rates
as notified by the concerned authorities. Monetary assets and
liabilities denominated in foreign currency are restated at year end
exchange rates. Non monetary Items (Investments) denominated in foreign
currency are stated using the exchange rate on the date of transaction.
Exchange differences arising on settlement of transactions and on
restatement of monetary items are recognized as income or expense in
the year in which they arise, except in respect of the liabilities, if
any for acquisition of fixed assets, where such exchange difference is
adjusted in the carrying cost of fixed assets.
1.10 Cenvat Credit
Cenvat credit available on the material inputs is adjusted against
consumption. Cenvat credit available on capital goods is adjusted
against cost of fixed assets. Cenvat credit remaining unutilized is
shown as receivables in Short term Loans and Advances.
1.11 Miscellaneous Expenditure
i) Share Issue Expenses are amortized over a period of -5- years.
ii) Fees for Increase in Authorized Share Capital is amortized over a
period of -5- years.
1.12 Selling/ Marketing Expenses
i. Warranty is extended on products sold. Warranty expenses are
accrued / accounted as and when claim is accepted.
ii. Commission, Discount and other expenses payable on sales are
recognized on determination of amount payable in accordance with
arrangements / contracts with the parties.
1.13 Employee Benefits
i. Short Term Employee Benefits
Short term employee benefits are recognized as an expense at the
undiscounted amounts in the statement of profit and loss of year in
which the related services are rendered.
ii. Defined Contribution Plans
Provident Fund & ESIC are defined contribution schemes established
under a State Plan. The contributions to the schemes are charged to the
statement of profit and loss in the year when the contributions become
due.
iii. Defined Benefit Plans
The company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service gets a gratuity on post
employment at 15 days salary (last drawn salary) for each completed
year of services as per the rules of the company. The aforesaid
liability is provided for on the basis of an actuarial valuation made
using Project Unit Credit Method at the end of the financial year. The
scheme is funded with an insurance company in the form of a qualifying
insurance policy. Actuarial gains/losses are recognized in statement of
profit and loss in the year in which they arise.
iv. Compensated Absences
Employees are entitled to accumulate leave subject to certain limits
for future encashment. The liability in respect of leave encashment is
provided for on the basis of actuarial valuation made at the end of the
financial year using Project Unit Credit Method. The said liability is
not funded.
1.14 R & D Expenses
Revenue expenses are charged to statement of profit and loss under the
respective heads of expenses.
1.15 Borrowing Costs
Borrowing cost that are attributable to the acquisition, construction
or production of qualifying assets are capitalized as a part of cost of
such assets. All other borrowing costs are recognized as expense in the
period in which they are incurred.
1.16 Taxes on Income
i. Provision for current tax is made for the amount of tax payable in
respect of taxable income for the year under Income Tax Act, 1961.
Company has started recognizing unutilized MAT credit from current
financial year.
ii. Deferred tax is recognized on timing differences; being the
difference between taxable income and accounting income that originate
in one period and are capable of reversal in one or more subsequent
periods. Deferred tax assets are recognized only to the extent there is
virtual certainty of its realization.
1.17 Provisions and Contingent Liabilities
i. Provisions in respect of present obligations arising out of past
events are made in the accounts when reliable estimates can be made of
the amount of the obligation.
ii. Contingent liabilities are disclosed by way of a note to the
Financial Statements, after careful evaluation by the management of the
facts and legal aspects of the matter involved.
1.18 Earnings per Share
The earnings considered for ascertaining the Company's Earnings Per
Share (EPS) comprises the net profit after tax. The number of shares
used in computing Basic EPS is the weighted average number of shares
outstanding during the period. The number of shares used in computing
diluted EPS comprises the weighted average shares considered for
deriving basic EPS, and also the weighted average number of equity
shares that would be issued on the conversion of all dilutive potential
equity shares. In case of dilutive options, the difference between the
number of shares issuable and the number of shares that would be issued
at fair value are treated as diluted potential equity shares. Dilutive
potential equity shares are deemed converted as of the beginning of the
period, unless issued at a later date.
1.19 Employee Stock Option Scheme
Stock options granted to the employees under the stock option scheme
established are evaluated as per the accounting treatment prescribed by
Securities and Exchange Board of India (Employee Stock Option Scheme
and Employee Stock Purchase Scheme) Guidelines, 1999. The Company
follows the intrinsic value method of accounting for the options and
accordingly, the excess of market value of the stock options as on date
of grant over the exercise price of the options, if any, is recognized
as deferred employee compensation and is charged to the statement of
profit and loss on graded vesting basis over the vesting period of the
options. The unamortized portion of the deferred employee compensation
is netted out against "Stock options Outstanding"
1.20 Government Grants
i. Government grant is recognized when there is reasonable assurance
that the grant will be received and all relevant conditions are
complied with.
ii. Grant received by way of investment subsidy in relation to total
investment is credited to capital reserve.
Mar 31, 2011
1. General
The Financial Statements are prepared under historical cost convention
on accrual basis and they are in consonance with generally accepted
accounting principles in India and applicable Accounting Standards
notified u/s 211 (3C) of the Companies Act, 1956.
2. 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 and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
period. Although these estimates are based upon management's best
knowledge of current events and actions, actual results could differ
from these estimates.
3. Fixed Assets / Intangible Assets
i) Fixed assets are stated at cost of acquisition / construction. The
cost of fixed assets includes direct / indirect apportioned expenses
incurred for the purpose of acquiring fixed assets, net of cenvat
credit on qualifying assets. Press Tools and such type of machinery
items developed in house are capitalized at direct cost plus overheads
and standing charges.
ii) Pre- operative expenses, comprising revenue expenses incurred up to
the date of commencement of production are apportioned to fixed assets.
iii) Expenditure (including technical know-how) incurred on product
development yielding future economic benefits is recognized as
internally generated Intangible Asset as per Accounting Standard 26 on
"Intangible AssetsÃ.
4. Depreciation/Amortization
i) Depreciation is charged on straight-line method (SLM), at the rates
and in the manner prescribed in Schedule XIV of the Companies Act,
1956. Depreciation on additions during the year to fixed assets is
charged on pro-rata basis.
ii) Intangible Assets are amortized as follows:
(a) Product Development: over a period of ten years after commencement
of commercial production of relevant item.
(b) Computer Software (including Licence fees): over a period of three
years from the date it is operationalized.
(c) Website Development: over a period of three years.
5. Investments
Investments are stated at cost.
6. Inventories
Inventories are valued in accordance with Accounting Standard (AS)-2 at
lower of cost (exclusive of taxes and cenvat credits availed on inputs)
and net realizable value. It is on FIFO basis in respect of raw
material stocks at Sitarganj Unit and on weighted average basis in
respect of stocks at other Units. Finished goods and Work-in-Progress
are valued at aggregate cost determined, comprising material cost and
manufacturing overheads. Finished Goods include Excise Duty. Scrap is
valued at realizable value.
7. Impairment of Assets
Impairment of assets is recognized when there is an indication of
impairment. On such indication, the recoverable amount of asset is
estimated and if such estimation is less than its book value, the book
value is reduced to its recoverable amount.
8. Revenue Recognition
(i) Sales and services are accounted for on dispatch of products from
the works and which are followed by transfer of risk and reward to the
customers upto the time the financial statements of the Company are
adopted.
(ii) Insurance Claims are accounted as and when admitted.
(iii) Other income is accounted on accrual basis except when the
realization of such income is uncertain.
9. Foreign Currency Transactions
Transactions in foreign currencies are recorded at monthly exchange
rates as notified by the concerned authorities. Monetary assets and
liabilities denominated in foreign currency are restated at year end
exchange rates. Non monetary Items (Investments) denominated in foreign
currency are stated using the exchange rate on the date of transaction.
Exchange differences arising on settlement of transactions and on
restatement of monetary items are recognized as income or expense in
the year in which they arise, except in respect of the liabilities for
acquisition of fixed assets, where such exchange difference is adjusted
in the carrying cost of fixed assets.
10. Cenvat Credit
Cenvat credit available on the material inputs is adjusted against
consumption. Cenvat credit available on capital goods is adjusted
against cost of fixed assets. Cenvat credit remaining unutilized is
shown as receivables in Loans and Advances.
11. Miscellaneous Expenditure
(i) Company Formation expenses are amortized over a period of -6-
years.
(ii) Share Issue Expenses are amortized over a period of -5- years.
(iii) Fees for Increase in Authorized Share Capital is amortized over a
period of -5- years.
12. R & D Expenses
All expenses with respect to new designs, improvements in designs,
manufacturing processes, quality assurance, product life and efficacies
and associated administrative expenses of Research and Development
Department, etc are grouped under the head "R & D Expensesà & charged
to Profit and Loss account.
13. Selling/ Marketing expenses
(i) Warranty is extended on products sold. Warranty expenses are
accrued / accounted as and when claim is accepted.
(ii) Commission, Discount and other expenses payable on sales are
recognized on determination of amount payable in accordance with
arrangements / contracts with the parties.
14. Employee Benefits
i) Short Term Employee Benefits
Short term employee benefits are recognized as an expense at the
undiscounted amounts in the profit and loss account of year in which
the related services are rendered.
ii) Defined Contribution Plans
Provident Fund & ESIC are defined contribution schemes established
under a State Plan. The contributions to the schemes are charged to the
profit and loss account in the year when the contributions become due.
iii) Defined Benefit Plans
The company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service gets a gratuity on post
employment at 15 days salary (last drawn salary) for each completed
year of services as per the rules of the company. The aforesaid
liability is provided for on the basis of an actuarial valuation made
using Project Unit Credit Method at the end of the financial year. The
scheme is funded with an insurance company in the form of a qualifying
insurance policy.
Actuarial gains/losses are recognized in profit and loss account in the
year in which they arise.
iv) Compensated Absences
Employees are entitled to accumulate leave subject to certain limits
for future encashment. The liability in respect of leave encashment is
provided for on the basis of actuarial valuation made at the end of the
financial year using Project unit credit method. The said liability is
not funded.
15. Borrowing Costs
Borrowing cost that are attributable to the acquisition, construction
or production of qualifying assets are capitalized as a part of cost of
such assets. All other borrowing costs are recognized as expense in the
period in which they are incurred.
16. Taxes on Income
i) Provision for current tax is made for the amount of tax payable in
respect of taxable income for the year under Income Tax Act, 1961.
ii) Deferred tax is recognized on timing differences; being the
difference between taxable income and accounting income that originate
in one period and are capable of reversal in one or more subsequent
periods. Deferred tax assets are recognized only to the extent there is
virtual certainty of its realization.
17. Provisions and Contingent liabilities
i) Provisions in respect of present obligations arising out of past
events are made in the accounts when reliable estimates can be made of
the amount of the obligation.
ii) Contingent liabilities are disclosed by way of a note to the
Financial Statements, after careful evaluation by the management of the
facts and legal aspects of the matter involved.
18. Earnings per Share
The earnings considered for ascertaining the Company's Earnings Per
Share (EPS) comprises the net profit after tax. The number of shares
used in computing Basic EPS is the weighted average number of shares
outstanding during the period. The number of shares used in computing
diluted EPS comprises the weighted average shares considered for
deriving basic EPS, and also the weighted average number of equity
shares that would be issued on the conversion of all dilutive potential
equity shares. In case of dilutive options, the difference between the
number of shares issuable and the number of shares that would be issued
at fair value are treated as diluted potential equity shares. Dilutive
potential equity shares are deemed converted as of the beginning of the
period, unless issued at a later date.
19. Employee Stock Option Scheme
Stock options granted to the employees under the stock option scheme
established are evaluated as per the accounting treatment prescribed by
Securities and Exchange Board of India (Employee Stock Option Scheme
and Employee Stock Purchase Scheme) Guidelines, 1999. The Company
follows the intrinsic value method of accounting for the options and
accordingly, the excess of market value of the stock options as on date
of grant over the exercise price of the options, if any, is recognized
as deferred employee compensation and is charged to the Profit and Loss
Account on graded vesting basis over the vesting period of the options.
The unamortized portion of the deferred employee compensation is netted
out against "Stock options OutstandingÃ
Mar 31, 2010
1. General
The Financial Statements are prepared under historical cost convention
on accrual basis and they are in consonance with generally accepted
accounting principles in India and applicable Accounting Standards
notified u/s 211 (3C) of the Companies Act, 1956. Effect of deviations,
if any from the accounting standards vis-a-vis the treatment
consistently adopted is disclosed in the accounts, wherever relevant
and material.
2. 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 and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
period. Although these estimates are based upon managements best
knowledge of current events and actions, actual results could differ
from these estimates.
3. Fixed Assets / Intangible Assets
i) Fixed assets are stated at cost of acquisition / construction. The
cost of fixed assets includes direct / indirectapportioned expenses
incurred for the purpose of acquiring fixed assets, net of cenvat
credit on qualifying assets.
Press Tools and such type of machinery items developed in house are
capitalized at direct cost plus overheads and standing charges.
ii) Pre- operative expenses, comprising revenue expenses incurred up to
the date of commencement of production are apportioned to fixed assets.
iii) Expenditure (including technical know-how) incurred on product
development yielding future economic benefits is recognized as
internally generated Intangible Asset as per Accounting Standard 26 on
"Intangible Assets".
4. Depreciation/Amortization
i) Depreciation is charged on straight-line method (SLM), at the rates
and in the manner prescribed in Schedule XIV ofthe Companies Act, 1956.
Depreciation on additions during the year to fixed assets is charged on
pro-rata basis.
ii) Intangible Assets are amortized as follows:
(a) Product Development: over a period of ten years after commencement
of commercial production of relevant item.
(b) Computer Software: over a period of three years from the date it is
operationalized.
(c) Website Development: over a period of three years.
5. Investments
Investments are stated at cost.
6. Inventories
Inventories are valued in accordance with Accounting Standard (AS)-2 at
lower of cost (exclusive of taxes and cenvat credits availed on inputs)
and net realizable value. It is on FIFO basis in respect of raw
material stocks at Sitarganj Unit and on weighted average basis in
respect of stocks at other Units. Finished goods and Work-in-Progress
are valued at aggregate cost determined, comprising material cost and
manufacturing overheads. Finished Goods include Excise Duty. Scrap is
valued at realizable value.
7. Impairment of Assets
Impairment of assets is recognized when there is an indication of
impairment. On such indication, the recoverable amount of asset is
estimated and if such estimation is less than its book value, the book
value is reduced to its recoverable amount.
8. Revenue Recognition
(i) Sales and services are accounted for on dispatch of products from
the works and which are followed by transfer of risk and reward to the
customers upto the time the financial statements of the Company are
adopted. (ii) Insurance Claims are accounted as and when admitted.
(iii) Other income is accounted on accrual basis except when the
realization of such income is uncertain.
9. Foreign Currency Transactions
Transactions in foreign currencies are recorded at the exchange rates
prevailing on the date of the transaction. Monetary assets and
liabilities denominated in foreign currency are restated at year end
exchange rates. Non monetary Items (Investments) denominated in foreign
currency are stated using the exchange rate on the date of transaction.
Exchange differences arising on settlement of transactions and on
restatement of monetary items are recognized as income or expense in
the year in which they arise, except in respect of the liabilities for
acquisition of fixed assets, where such exchange difference is adjusted
in the carrying cost of fixed assets.
10. Cenvat Credit
Cenvat credit available on the material inputs is adjusted against
consumption. Cenvat credit available on capital goods is adjusted
against cost of fixed assets. Cenvat credit remaining unutilized is
shown as receivables in Loans and Advances.
11 Miscellaneous Expenditure
(i) Company Formation expenses are amortized over a period of -6-
years.
(ii) Share Issue Expenses are amortized over a period of -5- years.
(iii) Fees for Increase in Authorized Share Capital is amortized over a
period of -5- years.
12. R&D Expenses
All expenses with respect to new designs, improvements in designs,
manufacturing processes, quality assurance, product life and efficacies
and associated administrative expenses of Research and Development
Department, etc are grouped under the head "R & D Expenses" & charged
to Profit and Loss account.
13. Selling/ Marketing expenses
(i) Warranty is extended on products sold. Warranty expenses are
accrued / accounted as and when claim is accepted.
(ii) Commission, Discount and other expenses payable on sales are
recognized on determination of amount payable in accordance with
arrangements / contracts with the parties.
14. Employee Benefits
i) Short Term Employee Benefits
Short term employee benefits are recognized as an expense at the
undiscounted amounts in the profit and loss account of year in which
the related services are rendered.
ii) Defined Contribution Plans Provident Fund & ESIC are defined
contribution schemes established under a State Plan. The contributions
to the schemes are charged to the profit and loss account in the year
when the contributions become due.
iii) Defined Benefit Plans
The company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service gets a gratuity on post
employment at 15 days salary (last drawn salary) for each completed
year of services as per the rules of the company. The aforesaid
liability is provided for on the basis of an actuarial valuation made
using Project Unit Credit Method at the end of the financial year. The
scheme is funded with an insurance company in the form of a qualifying
insurance policy.
Actuarial gains/losses are recognized in profit and loss account in the
year in which they arise.
iv) Compensated Absences
Employees are entitled to accumulate leave subject to certain limits
for future encashment. The liability in respect of leave encashment is
provided for on the basis of actuarial valuation made at the end of the
financial year using Project unit credit method. The said liability is
not funded.
15. Borrowing Costs
Borrowing cost that are attributable to the acquisition, construction
or production of qualifying assets are capitalized as a part of cost of
such assets. All other borrowing costs are recognized as expense in the
period in which they are incurred.
16. Taxes on Income
Deferred tax is recognized on timing differences; beingthe difference
between taxable incomes and accounting income that originate in one
period and are capable of reversal in one or more subsequent periods.
Deferred tax assets are recognized only to the extent there is virtual
certainty of its realization.
17. Provisions and Contingent liabilities
i) Provisions in respect of present obligations arising out of past
events are made in the accounts when reliable estimates can be made of
the amount of the obligation. ii) Contingent liabilities are disclosed
by way of a note to the Financial Statements, after careful evaluation
by the management of the facts and legal aspects of the matter
involved.
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