SIGNIFICANT ACCOUNTING POLICIES AND NOTES FORMING PART OF ACCOUNTS [A] SIGNIFICANT ACCOUNTING POLICIES 01 . Basis of accounting : The financial statements have been brpared on historical cost convention in accordance with the generally accepted accounting principles, the Accounting Standards issued by the Institute of Chartered Accountants of India to the extent they are applicable to the Company and the provisions of the Companies Act, 2013. 02. Use of estimates : The brsentation of financial statements in conformity with the generally accepted accounting principles requires, the management to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets & liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual result and estimates are recognised in the period in which the results are known/materialised. 03. Fixed assets : Fixed assets are stated at cost net of CENVAT / VAT to the extent applicable, less accumulated debrciation. Direct costs related to acquisition of fixed assets are capitalised when the assets are put to use. These costs include freight, installation cost, duties & taxes and other allocated expenses, including finance cost relating to specific borrowing incurred during the construction period. Moulding boxes, patterns / pattern plates & dies are considered as fixed assets. 04. Debrciation and Amortisation : Debrciation on fixed assets is provided based on the useful life of the assets in the manner brscribed in schedule II to the Companies Act, 2013. 05. Inventories: Inventories are valued at lower of cost or net realisable value on FIFO basis. 06. Employees Retirement benefit : Short term employee benefits (which are payable within 12 months after the end of the period in which the employees render service) are measured at cost. Long term employee benefits (which are payable after the end of 12 months from the end of the period in which the employees render service) and post employment benefits (benefits which are payable after completion of employment) are measured on a discounted basis by the Projected Unit Credit method on the basis of actuarial valuation. Contribution to provident fund - a defined contribution plan are made in accordance with the statute. The cost of providing leave encashment and gratuity defined benefit plans are determined using Projected Unit Credit method on the basis of actuarial valuation. 07. Borrowing cost : Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue. 08. Revenue recognition: Income and Expenditure are recognized and accounted on Accrual Basis. Revenue from sale of goods is recognized on delivery of the goods, when all significant contractual obligations have been satisfied, the property in the goods is transferred for a price, significant risks and rewards of ownership are transferred to customers & no effective ownership is retained However; [a] Revenue in respect of insurance / other claims etc., is recognised only when it is reasonably certain that the ultimate collection will be made. [b] Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable rate of interest. [c] Interest subsidy is accounted for on accrual basis and prima facie when there is no uncertainty of final claim. 09. Research and development: Revenue expenditure on research and development is charged to profit and loss account in the year in which it is incurred. Capital expenditure on assets acquired for research and development is added to the fixed assets. 10. Accounting of CENVAT: CENVAT credit of excise duty is accounted on the basis of materials including capital goods purchased. CENVAT credit on capital goods, spares etc is accounted on the basis of their date of purchase. CENVAT credit of service tax is accounted on the payment basis of services obtained. 11. Excise duty: Excise duty payable on finished goods is being accounted for on the basis of clearance of goods. 12. Earning per share: The earnings considered in ascertaining the Company's EPS comprises the net profit after tax (and includes the post tax effect of extra ordinary items.) The number of shares used in computing basic EPS is the weighted average number of shares outstanding during the year. 1 3 . Taxation: Tax expense for the year, comprising current tax and deferred tax is included in determining the net profit for the year. A Provision is made for the current tax based on tax liability computed in accordance with relevant tax rates and tax laws. A provision is made for deferred tax for all timing differences arising between taxable income and accounting income at currently enacted tax rates. Deferred tax assets are recognised only if there is reasonable certainty that they will be realised and are reviewed for the appropriateness of their respective carrying values at each balance sheet date. 14. Segment reporting: The Company deals in only one product segment i.e. "Manufacturing of castings" and hence requirements of AS-17 " segment reporting " issued by ICAI are not applicable. 15. Contingent liabilities & Provisions: A provision is recognised when the Company has a legal & constructive obligations as results of a past event, for which it is probable that cash outflow will be required and a reliable estimate can be made of the amount of the obligation. A contingent liability is disclosed when the Company has a possible or brsent obligation where it is not possible that an outflow of resources will be required to settle it, contingent assets are neither recognised nor disclosed. 1 6 . Impairment of Assets: The Company on an annual basis make an assessment of any indicator that may lead to impairment of assets. If any such indication exists, the Company estimates recoverable amount of the assets. If such recoverable amount is less than the carrying amount, than the carrying amount is reduced to its recoverable amount by treating the difference between them as impairment loss and is charged to the profit & loss account. 17. Foreign currency transactions: [a] Initial recognition: Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency of the date of the transaction. [b] Conversion: Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate of the date of the transaction; and non-monetary items which are carried of fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined. [c] Exchange differences: Exchange difference arising on the settlement of monetary items or on reporting Company's monetary items of rates different from those of which they were initially recorded during the year, or reported in brvious financial statements, are recognized as income or as expenses in the year in which they arise. [d] Forward Exchange Contracts not intended for trading: The brmium or discount arising of the inception of forward exchange contracts is amortised as expense or income over the life of the contract. Exchange differences on such contracts are recognized in the statement of profit and loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognized as income or as expense for the year. [B] NOTES FORMING PART OF THE ACCOUNTS 1 Previous year's figures have been regrouped/rearranged/recast wherever necessary so as to make them comparable with current year's figures. 2 Letters of balance confirmation have been sent to various parties, and are subject to confirmation and reconciliation if any. 3 In the opinion of the Board, the current assets, loans and advances are approximately of the value stated in the balance sheet, if realised in the ordinary course of the business. Provision for debrciation and all known liabilities have been made in accounts. 4 In terms of Accounting Standard 28 - Impairment of Assets issued by ICAI, the management has reviewed its fixed assets and arrived at the conclusion that impairment loss which is difference between the carrying amount and recoverable value of assets, was not material and hence no provision is required to be made. 5 The Company has received demand for excise duty on sale of patterns & moulding boxes for financial years 2001-02, 2002-03, 200304, 2004-05 & 2005-06 against which the Company has brferred appeals before Commissioner of excise as well as CESTAT and also paid Rs. 1,153,239/- under protest which has been shown as balance with excise department in the accounts. 6 Interest cost for the year is after netting of interest subsidy received / receivable of Rs. 665,741/- (Previous Year Rs. 1,086,426/-) 7 As permitted by CERC & IERC (Regulating authorities), the company has opted for purchase of power through approved Power exchange which has resulted in to gain of Rs. 0.72 Lacs (Previous year Rs. 147.48 Lacs)and power and fuel expenses are reduced to that extent. 10 There are no long-term contracts as on 31.03.2015 including contracts for which there are any material foreseeable loses. During the year the Company has not any unclaimed dividend for the financial year 2006-07. Hence question of transfer to Investor Education and Protection fund does not arise. During the year, Company has provided debrciation on the basis of estimated useful lives as specified in schedule-II of the Companies act 2013. Accordingly, debrciation for the year is higher by Rs. 97.04 lacs as compared to the debrciation hitherto provided on the basis of percentage as brscribed in schedule-XIV of the Companies act, 1956 in earlier years. Pursuant to the enactment of Companies Act 2013, the company has applied the estimated useful lives as specified in Schedule II. Accordingly the unamortised carrying value is being debrciated / amortised over the revised / remaining useful life of perticular assets. The written down value of fixed assets, useful life of which was completed as on 1st April 2014 have been adjusted (net of deferred tax), in the opening balance of Profit and Loss Account amounting to Rs. 11.55 Lacs. As per our separate report of even date attached For Milin J. Jani & Co. Chartered Accountants Firm Regn. No. 106396W Dr. P. N. Bhagwati Chairman & Managing Director (DIN : 00096799) M. N. Shah Director (DIN : 00021194) Milin J Jani Proprietor Membership No. 44077 Reena P. Bhagwati Jt. Managing Director (DIN : 00096280) D. K. Sheth Chief Financial Officer R. J. Shah Director (DIN : 01982424) Akshit Soni Company Secretary Place : Ahmedabad Dated : 22/05/2015 |