1 SIGNIFICANT ACCOUNTING POLICIES 1.1 General The Financial Statements are brpared 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 brparation 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, l essaccumulated debrciation 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 rebrsent the useful lives of these assets based on tehnical advice and is different from the useful lives as brscribed 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 Debrciation / Amortisation i. Debrciation 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 debrciation 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. Debrciation 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 (AS)-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 brsent 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 brscribed 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. 1 During the year, the company has made contribution of Rs. 35,00,000/- to Bhartiya Janta Party (Political Party). 2. Prior Period Expenses of Rs. 51,08,348/- (Rs. 30,70,377/-) has been recognised under relevant heads in Statement of Profit & Loss. 3 Figures in brackets rebrsent brvious year's figures. 4 Previous year's figures have been regrouped/ reclassified wherever necessary to correspond with the current year's classification/ disclosure. As per our report of even date attached For Manesh Mehta & Associates Chartered Accountants (Firm Registration No. : 115832W) Harish Sheth Chairman & Managing Director Arun Arora Director For and on behalf of the Board Udit Sheth Executive Director Ashok Kumar Jha Director Shvetal Vakil Executive Director Bhalchandra Naik Director Pratap Merchant Director Suhasini Sathe Director Urja Shah Additional Director Manesh P. Mehta Partner Membership No. : 036032 Vinay Shahane Vice President - Finance Naveen Manghani Company Secretary Place : Mumbai Date : May 26, 2015 |