Accounting Policies of SPEL Semiconductor Ltd. Company

Mar 31, 2016

STATEMENT ON SIGNIFICANT ACCOUNTING POLICIES

1. Corporate information

SPEL is India’s 1^st and only semiconductor IC (Integrated Circuit) Assembly & Test facility. Based in Chennai, SPEL has been servicing the demanding US market for over 12 years now. SPEL’s factory is located in the CMDA Industrial Estate, MM Nagar, near Chennai.

2. Accounting convention

2.1 The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013 and other relevant provisions of the Companies Act, 2013 (“the 2013 Act”) / Companies Act, 1956 (“the 1956 Act”), as applicable. The financial statements have been prepared on accrual basis under the historical cost convention except for categories of fixed assets acquired before 1 Apr, 2008, that are carried at revalued amounts. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.

2.2 All assets and liabilities have been classified as current or non-current as per the Company’s normal operating cycle and other criteria set out in Schedule III to the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has determined its operating cycle as twelve months for the purpose of current-noncurrent classification of assets and liabilities.

3. Use of Estimates

The preparation of the financial statements, in conformity with the generally accepted accounting principles, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities on the date of the financial statements, disclosure of contingent liabilities and reported amounts of revenues and expenses for the year. Estimates are based on historical experience, where applicable and other assumptions that management believes are reasonable under the circumstances. Actual results could vary from these estimates and any such differences are dealt with in the period in which the results are known/ materialize.

4. Tangible and Intangible Fixed assets and depreciation / amortization

4.1 Expenditure which are of a capital nature are capitalized at a cost, which comprises purchase price (net of rebates and discounts), import duties, levies and any directly attributable cost of bringing the assets to its working condition for the intended use. Cost of fixed assets is net of eligible credits under CENVAT / VAT Scheme. Expenditure directly related and incidental to construction / development and borrowing costs in para 5 below are capitalized upto the date the assets are ready for their intended use. Exchange differences are capitalized to the extent dealt with in para 8.3 below.

4.2 Assets are depreciated / amortized, as below, on straight line basis:

a) Buildings, assets in leased premises, plant and machinery (except assets subject to impairment) and other assets, over their estimated useful lives as prescribed in Schedule II to the Companies Act, 2013.

b) Assets subject to impairment, on the asset’s revised carrying amount, over its remaining useful life.

c) Intangible assets are amortized over their estimated useful life.

i) Depreciation / amortization is provided on a pro-rata basis from the month the assets are put to use during the financial year. In respect of assets sold or disposed off during the year, depreciation / amortization is provided up to the month of sale or disposal of the assets.

ii) At each balance sheet date, the carrying values of fixed assets are reviewed to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the said asset is estimated in order to determine the extent of impairment loss (if any).

5. Borrowing Cost

Borrowing cost are capitalized as part of the cost of qualifying asset when it is possible that they will result in future economic benefit. All other borrowing costs are recognized in the Statement of Profit and Loss in the period in which they are incurred.

6. Investments

Long Term Investments are carried at cost. Provision for diminution is however made to recognized a decline, other than temporary in nature, in its value.

7. Inventories

7.1 Inventories are valued at lower of cost and net realizable value; cost being ascertained on the following basis:

- Stores, spares, consumables, raw materials and components; on weighted average basis.

- Work-in-progress (including box stock) under absorption costing method

- Finished / trading goods: under absorption costing method.

7.2 Cost includes taxes and duties and is net of eligible credits under CENVAT / VAT Schemes.

7.3 Surplus / obsolete / slow moving inventories are adequately provided for.

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Contd.,)

8. Foreign Currency Transactions

8.1 Foreign currency transactions are recorded at the exchange rate prevailing on the date of the transaction. Monetary items denominated in foreign currency as at the balance sheet date are translated at the rate of exchange prevailing at the year end. Exchange differences arising on actual payments / realizations and year end restatements are dealt with in the Statement of Profit and Loss.

8.2 Premium or Discount on forward contracts is amortized over the life of such contracts and is recognized as income or expense. Foreign currency contracts are stated at market value as at the year end.

8.3 Exchange difference on translation or settlement of long term foreign currency monetary item (i.e. whose terms of settlement is 12 months from the date of its origination) at rates different from those at which they were originally recorded are reported in the previous financial statements, relating to acquisition of depreciable assets are adjusted to the cost of the assets.

9. Segment Reporting

The Company’s primary segment is identified as business segment based on nature of product, risks, returns and the internal business reporting system and secondary segment is identified based on geographical location of the customers as per Accounting Standard - 17.The Company is principally engaged in a single business segment viz. Integrated Circuits.

10. Revenue Recognition

10.1 Sale of goods:

Revenue from sale of products is recognized on despatch or appropriation of goods in accordance with the terms of sale, when the significant risks and rewards of ownership of goods have been passed to the buyer and is inclusive of excise duty.

10.2 Sale of Services:

Revenue from services is recognized on completion of the service in accordance with the terms of contract.

10.3 Others

Interest income is recognized on time proportion basis.

11. Employee Benefit

11.1 Short term employee benefit obligations are estimated and provided for.

11.2 Post-employment benefits and other long term employee benefits Defined contribution plans:

Company’s contribution to provident fund, superannuation fund, employee state insurance and other funds are determined under the relevant schemes and / or statute and charged to the Statement of Profit and Loss in the period of incurrence.

Defined benefit plans

Company’s liability towards gratuity and compensated absences are actuarially determined at each balance sheet date using the projected unit credit method. Actuarial gains and losses are recognized in the Statement of Profit and Loss in the period of occurrence.

12. Income taxes

Income tax expenses comprise current and deferred taxes. Current tax is determined on the income for the year chargeable to tax in accordance with applicable tax rates and the provisions of Income Tax Act,1961 and other applicable tax laws and after considering credit for Minimum Alternate Tax available under the said Act. MAT paid in accordance with the tax laws which gives future economic benefits in the form of adjustments to future tax liability, is considered as an asset if there is convincing evidence that the future economic benefit associated with it will flow to the Company resulting in payment of normal income tax.

Deferred tax is recognized for all the timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversing in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date.

Deferred tax assets are recognized for timing differences other than unabsorbed depreciation and carry forward losses only to the extent that there is a reasonable certainty that there will be sufficient future taxable income to realize the assets. Deferred tax asset pertaining to unabsorbed depreciation and carry forward of losses are recognized only to the extent there is a virtual certainty of its realization.

13. Provisions and Contingencies

A provision is recognized when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the notes. Contingent assets are neither recognized nor disclosed in the financial statements.

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Mar 31, 2014

1. Accounting convention

1.1 Financial statements are prepared in accordance with the generally accepted accounting principles in India including accounting standards referred to in Section 211 (3C) of the Companies Act 1956, under historical cost convention except so far as they relate to revaluation of certain fixed assets.

1.2 All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in the revised schedule VI to the Companies Act, 1956. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has determined its operating cycle as twelve months for the purpose of current - non current classification of assets and liabilities.

2. Use of Estimates

The preparation of the financial statements, in conformity with the generally accepted accounting principles, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities on the date of the financial statements, disclosure of contingent liabilities and reported amounts of revenues and expenses for the year. Estimates are based on historical experience, where applicable and other assumptions that management believes are reasonable under the circumstances. Actual results could vary from these estimates and any such differences are dealt with in the period in which the results are known/ materialize.

3. Tangible and Intangible Fixed assets and depreciation / amortisation

3.1 Expenditure which are of a capital nature are capitalized at a cost, which comprises purchase price (net of rebates and discounts), import duties, levies and any directly attributable cost of bringing the assets to its working condition for the intended use. Cost of fixed assets is net of eligible credits under CENVAT / VAT Scheme. Expenditure directly related and incidental to construction / development and borrowing costs in para 4 below are capitalised upto the date the assets are ready for their intended use. Exchange differences are capitalised to the extent dealt with in para 7.3 below.

3.2 Assets are depreciated / amortised, as below, on straight line basis:

a) Buildings, assets in leased premises, plant and machinery (except assets subject to impairment) and other assets, over their estimated useful lives or lives derived from the rates prescribed in Schedule XIV to the Companies Act, 1956, whichever is lower;

b) Assets subject to impairment, on the asset''s revised carrying amount, over its remaining useful life.

c) Intangible assets are amortized over their estimated useful life.

3.3 Depreciation / amortisation is provided on a pro-rata basis from the month the assets are put to use during the financial year. In respect of assets sold or disposed off during the year, depreciation / amortisation is provided upto the month of sale or disposal of the assets.

3.4 At each balance sheet date, the carrying values of fixed assets are reviewed to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the said asset is estimated in order to determine the extent of impairment loss (if any).

4. Borrowing Cost

Borrowing cost are capitalized as part of the cost of qualifying asset when it is possible that they will result in future economic benefit. All other borrowing costs are recognised in the Statement of Profit and Loss in the period in which they are incurred.

5. Investments

Long Term Investments are carried at cost. Provision for diminution is however made to recognised a decline, other than temporary in nature, in its value.

6. Inventories

6.1 Inventories are valued at lower of cost and net realisable value; cost being ascertained on the following basis:

- Stores, spares, consumables, raw materials and components and in-line work-in-progress : On weighted average basis.

- Work-in-progress-Box Stock: At cost and under absorption costing method

- Finished / trading goods: under absorption costing method.

6.2 Cost includes taxes and duties and is net of eligible credits under CENVAT / VAT Schemes.

6.3 Surplus / obsolete / slow moving inventories are adequately provided for.

7. Foreign Currency Transactions

7.1 Foreign currency transactions are recorded at the exchange rate prevailing on the date of the transaction. Monetary items denominated in foreign currency as at the balance sheet date are translated at the rate of

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Notes to financial statements for the year ended Mar 31, 2014

exchange prevailing at the year end. Exchange differences arising on actual payments / realizations and year end restatements are dealtwith in the Statement of profit and loss.

7.2 Premium or Discount on forward contracts is amortized over the life of such contracts and is recognized as income or expense. Foreign currency contracts are stated at market value as at the year end.

7.3 Exchange difference on translation or settlement of long term foreign currency monetary item (i.e whose terms of settlement is 12 months from the date of its origination) at rates different from those at which they were originally recorded are reported in the previous financial statements, relating to acquisition of depreciable assets are adjusted to the cost of the assets.

8. Segment Reporting

The company''s primary segment is identified as business segment based on nature of product, risks, returns and the internal business reporting system and secondary segment is identified based on geographical location of the customers as per Accounting Standard - 17.The company is principally engaged in a single business segment viz. Integrated Circuits.

9. Revenue Recognition

9.1) Sale of goods

Revenue from sale of products is recognised on despatch or appropriation of goods in accordance with the terms of sale, when the significant risks and rewards of ownership of goods have been passed to the buyer and is inclusive of excise duty.

9.2) Sale of Services

Revenue from services is recognised on completion of the service in accordance with the terms of contract.

9.3) Others

Interest income is recognised on time proportion basis.

10. Employee Benefit

10.1 Short term employee benefit obligations are estimated and provided for.

10.2 Post-employment benefits and other long term employee benefits -Defined contribution plans:

The Company accounts for Gratuity Liability equivalent to the premium amount payable to Life Insurance Corporation of India based on percentage of annual salary specified by Life Insurance Corporation of India. Company''s contribution to provident fund, superannuation fund, employee state insurance and other funds are determined under the relevant schemes and / or statute and charged to the Statement of Profit and Loss in the period of incurrence.

-Defined benefit plans and compensated absences:

Company''s liability towards retirement benefits and compensated absences are actuarially determined at each balance sheet date using the projected unit credit method. Actuarial gains and losses are recognised in the Statement of Profit and Loss in the period of occurrence.

10.3 Termination benefits

Expenditure on termination benefits is recognised in the Statement of Profit and Loss in the period of incurrence.

11. Taxation

Current tax is determined on the income for the year chargeable to tax in accordance with Income Tax Act, 1961and after considering credit for Minimum Alternate Tax available under the said Act.

Deferred tax is recognized for all the timing differences. Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recognized if there is virtual certainty that there will be sufficient future taxable income available to realize such losses. Other deferred tax assets are recognized if there is reasonable certainty that there will be sufficient future taxable income available to realize such assets.

12. Provision, Contingent Liabilities and Contingent Assets

Provisions are recognized only when there is a present obligation as a result of past events and when a reliable estimate of the amount of obligation can be made. Contingent liability is disclosed for (i) possible obligation which will be confirmed only by future events not wholly within the control of Company or (ii) Present obligation arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.

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Mar 31, 2013

1.1 Basis of accounting

The financial statements have been prepared under the historical cost conversion, except certain fixed assets which are revalued, on accrual basis and in accordance with the generally accepted accounting principles in India (Indian GAAP). The said financial statements comply with the relevant provision of the Companies Act, 1956 and the Accounting Standards notified by the Central Government of India under Companies (Accounting Standards) Rules, 2006 as applicable.

1.2 Use of Estimates

The preparation of financial statements requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities including the disclosure of contingent liabilities as of the date of the financial statements and the reported income and expenses during the reporting period. Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results may vary from these estimates.

1.3 Fixed Assets and Depreciation

Expenditure which are of a capital nature are capitalized at a cost, which comprises purchase price (net of rebates and discounts), import duties, levies and any directly attributable cost of bringing the assets to its working condition for the intended use.

Depreciation is being charged on straight line method on a pro-rata basis in accordance with rates specified under Schedule XIV of the Companies Act, 1956. Asset cost less than Rs 5000/- is depreciate in the year of purchase.

Certain assets have been revalued as on Mar 31, 2005 & Mar 31, 2008 and the resultant surplus has been added to the cost of the assets with the corresponding credit to revaluation reserve account.

1.4 Borrowing Cost

Borrowing cost are capitalized as a part of the cost of qualifying asset when it is possible that they will result in future economic benefit. Other borrowing cost is expensed.

1.5 Impairment of Asset

At each balance sheet date, the carrying values of assets are reviewed to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment loss (if any).

1.6 Investments

Long Term Investments are valued at cost. Provision for diminution in the value of long term investments is made only if such decline is other than temporary in nature

1.7 Inventories

Inventories are valued at the lower of cost or net realizable value. The cost comprises of cost of purchase, cost of conversion and other costs including appropriate production overheads in the case of finished goods and work in process, incurred in bringing such inventories to their present location and condition. Inventories cost are determined on a weighted average basis.

1.8 Foreign Currency Transactions

Foreign currency transactions are recorded at the exchange rate prevailing on the date of the transaction. Monetary items denominated in foreign currency as at the balance sheet date are translated at the rate of exchange prevailing at the year end. Exchange differences arising on actual payments / realizations and year end restatements are dealt with in the profit and loss account.

Premium or Discount on forward contracts is amortized over the life of such contracts and is recognized as income or expense. Foreign currency contracts are stated at market value as at the year end.

1.9 Revenue Recognition

Revenue is recognized when the significant risks and rewards of ownership of goods have been passed to the buyer.

Interest income is recognized on time proportion basis.

Service revenue is recognized on completion of the service and becomes chargeable

1.10 Employee Benefit

The Company accounts for Gratuity Liability equivalent to the premium amount payable to Life Insurance Corporation of India based on percentage of annual salary specified by Life Insurance Corporation of India

In respect of compensated absences, the liability is determined on the actual basis and is provided for.

Contribution to defined contribution schemes such as provident fund, employee pension fund and cost of other benefit are recognized as an expense in the year incurred.

1.11 Taxation

Current tax is determined on the income for the year chargeable to tax in accordance with Income Tax Act, 1961.

Deferred tax is recognized for all the timing differences. Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recognized if there is virtual certainty that there will be sufficient future taxable income available to realize such losses. Other deferred tax assets are recognized if there is reasonable certainty that there will be sufficient future taxable income available to realize such assets.

1.12 Provision, Contingent Liabilities and Contingent Assets

Provisions are recognized only when there is a present obligation as a result of past events and when a reliable estimate of the amount of obligation can be made. Contingent liability is disclosed for (i) possible obligation which will be confirmed only by future events not wholly within the control of Company or (ii) Present obligation arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made. Contingent assets are not recognized in the financial statements.

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Mar 31, 2012

I. Basis of accounting

The financial statements have been prepared under the historical cost conversion, except certain fixed assets which are revalued, on accrual basis and in accordance with the generally accepted accounting principles in India (Indian GAAP). The said financial statements comply with the relevant provision of the Companies Act, 1956 and the Accounting Standards notified by the Central Government of India under Companies (Accounting Standards) Rules, 2006 as applicable.

ii. Use of Estimates

The preparation of financial statements requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities including the disclosure of contingent liabilities as of the date of the financial statements and the reported income and expenses during the reporting period. Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results may vary from these estimates.

iii. Fixed Assets and Depreciation

Expenditure which are of a capital nature are capitalised at a cost, which comprises purchase price (net of rebates and discounts), import duties, levies and any directly attributable cost of bringing the assets to its working condition for the intended use.

Depreciation is being charged on straight line method on a pro-rata basis in accordance with rates specified under Schedule XIV of the Companies Act, 1956. Asset cost less than Rs 5000/- is depreciate in the year of purchase.

Certain assets have been revalued as on Mar 31, 2005 & Mar 31, 2008 and the resultant surplus has been added to the cost of the assets with the corresponding credit to revaluation reserve account.

iv. Borrowing Cost

Borrowing cost are capitalized as a part of the cost of qualifying asset when it is possible that they will result in future economic benefit. Other borrowing cost is expensed.

v. Impairment of Asset

At each balance sheet date, the carrying values of assets are reviewed to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment loss (if any).

vi. Investments

Long Term Investments are valued at cost. Provision for diminution in the value of long term investments is made only if such decline is other than temporary in nature

vii. Inventories

Inventories are valued at the lower of cost or net realizable value. The cost comprises of cost of purchase, cost of conversion and other costs including appropriate production overheads in the case of finished goods and work in process, incurred in bringing such inventories to their present location and condition. Inventories cost are determined on a weighted average basis.

viii. Foreign Currency Transactions

Foreign currency transactions are recorded at the exchange rate prevailing on the date of the transaction. Monetary items denominated in foreign currency as at the balance sheet date are translated at the rate of exchange prevailing at the year end. Exchange differences arising on actual payments / realizations and year end restatements are dealt with in the profit and loss account.

Premium or Discount on forward contracts is amortised over the life of such contracts and is recognized as income or expense. Foreign currency contracts are stated at market value as at the year end.

ix. Revenue Recognition

Revenue is recognized when the significant risks and rewards of ownership of goods have been passed to the buyer.

Interest income is recognized on time proportion basis.

Service revenue is recognised on completion of the service and becomes chargeable

x. Employee Benefit

The Company accounts for Gratuity Liability equivalent to the premium amount payable to Life Insurance Corporation of India based on percentage of annual salary specified by Life Insurance Corporation of India In respect of compensated absences, the liability is determined on the actual basis and is provided for.

Contribution to defined contribution schemes such as provident fund, employee pension fund and cost of other benefit are recognized as an expenses in the year incurred.

xi. Taxation

Current tax is determined on the income for the year chargeable to tax in accordance with Income Tax Act, 1961.

Deferred tax is recognized for all the timing differences. Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recognized if there is virtual certainty that there will be sufficient future taxable income available to realize such losses. Other deferred tax assets are recognized if there is reasonable certainty that there will be sufficient future taxable income available to realize such assets.

xii. Provision, Contingent Liabilities and Contingent Assets

Provisions are recognized only when there is a present obligation as a result of past events and when a reliable estimate of the amount of obligation can be made. Contingent liability is disclosed for (i) possible obligation which will be confirmed only by future events not wholly within the control of Company or (ii) Present obligation arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made. Contingent assets are not recognized in the financial statements.

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Mar 31, 2011

I. Basis of accounting

The fnancial statements have been prepared under the historical cost, except certain fxed assets which are revalued as on March 31, 2005 and March 31, 2008, and in accordance with the generally accepted accounting principles in India (Indian GAAP). The said fnancial statements comply with the relevant provision of the Companies Act, 1956 and the Accounting Standards notifed by the Central Government of India under Companies (Accounting Standards) Rules, 2006 as applicable.

ii. Use of Estimates

The preparation of fnancial statements requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities including the disclosure of contingent liabilities as of the date of the fnancial statements and the reported income and expenses during the reporting period. Management believes that the estimates used in preparation of the fnancial statements are prudent and reasonable. Future results may vary from these estimates.

iii. Fixed Assets and Depreciation

Expenditure which are of a capital nature are capitalized at cost, which comprises purchase price (net of rebates and discounts), import duties, levies and any directly attributable cost of bringing the assets to its working condition for the intended use.

Depreciation is being charged on straight line method on a pro-rata basis in accordance with rates specifed under Schedule XIV of the Companies Act, 1956. Individual assets costing less than Rs 5,000/- are depreciated in full in the year of acquisition.

Certain assets have been revalued as on Mar 31, 2005 & Mar 31, 2008 and the resultant surplus has been added to the cost of the assets with the corresponding credit to revaluation reserve account.

iv. Borrowing Cost

Borrowing cost is capitalized as a part of the cost of qualifying asset when it is possible that they will result in future economic beneft. Other borrowing cost is expensed.

v. Impairment of Asset

At each balance sheet date, the carrying values of assets are reviewed to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment loss (if any).

vi. Investments

Long Term Investments are valued at cost. Provision for diminution in the value of long term investments is made only if such decline is other than temporary in nature

vii. Inventories

Inventories are valued at cost, comprises of cost of purchase, cost of conversion and other costs including appropriate production overheads in the case of fnished goods and work in process, incurred in bringing such inventories to their present location and condition. The methods of valuation for various categories of Inventories are as follows:

a. Raw Material, Stores, Spares and Consumables are valued at weighted average rates.

b. Work in progress is valued at cost or net realizable value whichever is less.

c. Finished goods are valued at lower of cost or net realizable value.

viii. Foreign Currency Transactions

Foreign currency transactions are recorded at the exchange rate prevailing on the date of the transaction. Monetary items denominated in foreign currency as at the balance sheet date are translated at the rate of exchange prevailing at the year end. Exchange differences arising on actual payments / realizations and year end restatements are dealt with in the proft and loss account.

Premium or Discount on forward contracts is amortised over the life of such contracts and is recognized as income or expense. Foreign currency contracts are stated at market value as at the year end.

Gains and losses on certain forward contracts designated as effective cash fow hedges as per Accounting Standard 30 - "Financial Instruments" are recognized in the Hedge Reserve Account till the underlying forecasted transaction occurs.

ix. Revenue Recognition

Revenue is recognized when the signifcant risks and rewards of ownership of goods have been passed to the buyer.

Interest income is recognized on time proportion basis.

x. Employee Beneft

The Company accounts for Gratuity Liability equivalent to the premium amount payable to Life Insurance Corporation of India based on percentage of annual salary specifed by Life Insurance Corporation of India

In respect of compensated absences, the liability is determined on the actual basis and is provided for.

Contribution to defned contribution schemes such as provident fund, employee pension fund and cost of other beneft are recognized as an expenses in the year incurred.

xi. Taxation

Current tax is determined on the income for the year chargeable to tax in accordance with Income Tax Act, 1961.

Deferred tax is recognized for all the timing differences. Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recognized if there is virtual certainty that there will be suffcient future taxable income available to realize such losses. Other deferred tax assets are recognized if there is reasonable certainty that there will be suffcient future taxable income available to realize such assets.

xii. Provision, Contingent Liabilities and Contingent Assets

Provisions are recognized only when there is a present obligation as a result of past events and when a reliable estimate of the amount of obligation can be made. Contingent liability is disclosed for (i) possible obligation which will be confrmed only by future events not wholly within the control of Company or (ii) Present obligation arising from past events where it is not probable that an outfow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made. Contingent assets are not recognized in the fnancial statements.

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Mar 31, 2010

The significant accounting policies followed by the Company are as follows :

i. Fixed Assets and Depreciation

Expenditure which are of a capital nature are capitalised at a cost, which comprises purchase price (net of rebates and discounts), import duties, levies and any directly attributable cost of bringing the assets to its working condition for the intended use.

Depreciation is being charged on straight line method on a pro-rata basis in accordance with rates specified under Schedule XIV of the Companies Act, 1956.

Certain assets have been revalued as on Mar 31, 2005 & Mar 31, 2008 and the resultant surplus has been added to the cost of the assets with the corresponding credit to revaluation reserve account.

ii. Treatment of Foreign Currency Items

Transactions in foreign currency are recorded at the exchange rate prevailing on the date of the transaction. Monetary items are restated at the rates prevailing at the year end and the difference between the year end rate and the exchange rate at the date of the transaction is recognized as income or expense in the profit and loss account.

Premium or Discount on forward contracts is amortised over the life of such contracts and is recognized as income or expense. Foreign currency contracts are stated at market value as at the year end.

iii. investments

Long Term Investments are valued at cost. Provision for diminution in the value of long term investments is made oniy if such decline is other than temporary in nature.

iv. Valuation of Inventories

The method of valuation for various categories of inventories are as follows :

a. Raw Materials, Stores, Spares and Consumables are valued at weighted average rates.

p. Work-in progress is valued at cost or net realisable value whichever is less.

c. Finished goods are valued at lower of cost or net realisable value. v. Revenue Recognition

The income and expenditure are accounted on accrual basis. vi. Treatment of Retirement Benefits

a. Contribution to provident fund is made monthly at a predetermined rate to the provident fund trust and debited to the Profit and Loss account on accrual basis.

b. The Company accounts for Gratuity Liability equivalent to the premium amount payable to Life Insurance Corporation of India based on percentage of annual salary specified by tife Insurance Corporation of India.

c. Liability for leave encashment is provided on actual basis.

vii. Borrowing Costs

Borrowing Costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of that asset.

viii. Deferred iax

Deferred taxes are recognized for the future tax consequences attributable to timing differences, which arise on account of difference between the accounting income and taxable income for the period. The effect on the deferred tax assets & liabilities of change in tax rate is recognized in the statement of Profit and Loss account using the tax rate and tax laws that have been enacted or substantively enacted by the Balance sheet date.

Deferred tax assets are recognized or carried forward only to the extent that there is reasonable certainty that sufficient future taxable income wili be available against which such deferred tax asset can be realized.

ix. Contingent Liabilities

All liabilities have been provided for in the financial statements except liabilities which are contingent in nature, which have been disclosed at their estimated value in the notes on accounts.