Notes Annexed to and Forming Part of the Balance Sheet as at 31st March, 2015 and Statement of Profit and Loss for the year ended on that date. Note 1 - Significant Accounting Policies i) Basis of Preparation of Financial Statements The financial statements are brpared under the historical cost convention on accrual basis of accounting in accordance with the generally accepted accounting principles, Accounting Standards notified under the Companies (Accounting standard) Rules,2014 brscribed by the Central Government of India and relevant brsentational requirement of the Companies Act, 2013 (to the extent applicable) and the relevant provisions thereof. ii) Fixed Assets Fixed Assets are stated at cost less accumulated debrciation. All expenses incidental to the purchase/construction/ installation and commissioning including borrowing costs are added to the cost of the fixed assets. Where any part of the cost of fixed assets is either recovered by way of grant or borne by any other person, the same is deducted from the gross value of relevant fixed assets. iii) Investments Investments in subsidiary and joint venture companies are considered as Long Term Investment and are stated at Cost. Provision for diminution in the value of long term investments is made only if such a decline is other than temporary. iv) Inventories Inventories are valued at lower of cost or net realizable value. Cost is arrived on weighted average basis, and is inclusive of taxes and duties paid/ incurred (other than those recovered/recoverable from the Taxing Authorities). Adequate provision is made in respect of non-standard and obsolete items based on management's estimate. v) Revenue Recognition a) Sales are accounted on dispatch of products against orders of customers and stated net of trade discounts, returns and sales-tax. b) Income from services is recognized as they are rendered, based on agreements/ arrangements with the concerned parties. c) Duty Drawback Income on eligible direct exports and exports through other parties is recognized in the year of export/sale to other parties on the basis of provisional/ estimated tariff rates informed by the appropriate authorities. vi) Provisions, Contingent Liabilities and Contingent Assets The company creates a provision when there is brsent obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a brsent obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a brsent obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer probable that the outflow of resources would be required to settle the obligation, the provision is reversed. Contingent assets are neither recognized nor disclosed in the financial statements. However, contingent assets are assessed continually and if it is virtually certain that an economic benefit will arise, the asset and related income are recognized in the period in which the change occurs. vii) Debrciation a) Leasehold land is amortized over the period of lease. b) Debrciation and Amortisation on following categories of assets are provided on the basis of Useful life of assets as determined through technical evaluation as under:- i. Tangible Assets – Plant and Machinery : Not exceeding 20 Year on WDV Method ii. Intangible Assets – -Technical Knowhow : Not exceeding 10 Years on SLM Method - Product Development: Not exceeding 10 Years on SLM Method - Softwares : Not exceeding 3 Years on SLM Method c) Debrciation on other Tangible Assets is provided on the basis of useful life as brscribed in Schedule II of the Companies Act, 2013 on written down value method. viii) Intangible Assets Intangible assets are recognized if they are separately identifiable and the company controls the future economic benefit arising out of them. All other expenses on intangible items are charged to the Statement of Profit & Loss. Intangible assets are stated at cost less accumulated amortization / impairment. Intangible assets include Software Licenses, Technical Know-how, and Product Development Cost etc. ix) Borrowing Cost Borrowing costs directly attributable to the acquisition or construction of qualifying assets are capitalized till the date on which the asset is ready for its intended use. Qualifying assets are those which take substantial period of time to get ready for its intended use. Other borrowing costs are recognized as an expense in the period in which these are incurred. x) Employee Benefits a) Defined Contribution Plan The Company makes defined contribution to Provident Fund and Superannuation Scheme, which are recognized in the Statement of Profit and Loss on accrual basis. The Company's contribution to State Plan, viz. Employees' State Insurance scheme is recognized in the Statement of Profit and Loss on accrual basis. b) Defined Benefit Plan The Company's liabilities under Payment of Gratuity Act and compensated absences are determined on the basis of actuarial valuation made at the end of each financial year using the projected unit credit method. Actuarial gain and losses are recognized immediately in the Statement of Profit and Loss as income/expenses. Obligation is measured at the brsent value of estimated future cash flows using a discounted rate that is determined by reference to market yields at the Balance Sheet date on Government Bonds. Gratuity obligation is funded with the Life Insurance Corporation of India through a Gratuity Trust. c) Short Term Employee Benefits Amounts paid under Voluntary Retirement and Separation Schemes are charged to the Statement of Profit and Loss in the year of payment. Other short term employee benefit obligations are measured on an undiscounted basis and charged to the Statement of Profit and Loss on accrual basis. xi) Research & Development Revenue expenditure on research and development are charged to the Statement of Profit and Loss in the year in which these are incurred except for certain cost incurred on development of new products e.g. air conditioning systems and related products which are capitalized when it is probable that a development project will be a success. Capital expenditure on research and development are considered as an addition to Fixed Assets. xii) Foreign Currency Translation a. Transactions in foreign currencies are recorded at the exchange rates brvailing on the date of transaction. b. Assets and Liabilities receivable/payable in foreign currencies are translated at the year end exchange rates. c. Any income or expense on account of exchange difference either on settlement or on translation is recognized in the Statement of Profit and Loss. d. In case of forward contracts, difference between forward rates and spot rates on the date of transaction is recognized as income or expense over the life of contract. Exchange difference on such contracts. i.e. difference between the exchange rate at the reporting/settlement date and the exchange rate on the date of inception / the last reporting date, is recognized as income / expenses for the period. xiii) Taxes on Income Provision for current taxis made on the basis of estimated taxable income under the relevant laws of respective countries.Minimum Alternate Tax (MAT) credit asset is recognized where there is convincing evidence that the asset can be realized in future. Deferred tax on account of timing differences between taxable income and accounting income is accounted for by applying tax rates and laws enacted or substantially enacted on the balance sheet date. xiv) Lease asset- Operating lease Lease assets where risk and rewards incidental to ownership of an assets substantially vests with the lessor are recognized as operating lease. Lease Payments are recognized as an Expense in Statement of profit & loss on the straight line basis over the Lease term. However the lease rent pertaining to the period up to the date of the commissioning of the assets are capitalized. 27. Estimated value of contracts on capital account remaining to be executed and not provided for (net of advances) Rs. 2,052.62 Lacs. (Previous Year: Rs. 1,787.17 Lacs). 28. In the opinion of Board, the value on realization of current assets, loans and advances in the ordinary course of business shall not be less than the amount at which they are stated in the balance sheet and provision for all known liabilities has been made and contingent liabilities disclosed properly. 36. There were no reportable lease arrangements as defined in Accounting Standard-19 38. The company has identified that there is no material impairment of assets and as such no provision is required in terms of Accounting Standard-28 on "Impairment of assets". 39. Segment Reporting The Company's business activity falls within a single primary business segment i.e., Automotive Air conditioning Systems and parts thereof. Export sales constitute an insignificant portion of the total business of the company. Hence, there is no geographical segment as well. Therefore, the disclosure requirements of Accounting Standard 17 on 'Segment Reporting' are not applicable. 41. Monthly remuneration has been paid during the year to the Managing Director as minimum remuneration as approved by the Shareholders, but eventually the same has exceeded the limits brscribed u/s 197 read with Schedule V of the Companies Act, 2013 by a small amount of Rs.55.36 Lacs (Previous Year of Rs. 61.15 Lacs). The Company is in the process on filing an application to get the waiver from Central Government. 42. Industrial Promotion Subsidy received/receivable under Packaged Scheme of Incentives, 2007 is accounted for on the basis of approval received from the Government of Maharashtra. 47. Borrowing cost amounting to Rs.1046.18 lacs (Previous Year: 831.38 lacs) has been capitalized with the cost of fixed assets as per Accounting Standard 16. 49. i. The Company does not have pending litigations which would impactits Financial Position. ii. The Company does not have any Long term Contracts including derivative contracts which require any provision for Forceable Losses. iii. The Company has deposited an amount of Rs 6.51 Lacs during the year in Investor Education and Protection Fund. Further, no amount is pending for deposition in Investor Education and Protection Fund. 50. Pursuant to the enactment of the Companies Act 2013, the company has applied the estimated useful lives as specified in schedule II, except in respect of certain assets as disclosed in Accounting Policy on Debrciation. Accordingly unamortised carrying value is being debrciated/ amortised over the revised/remaining useful lives w.e.f. 01st April 2014.This has resulted into debrciation and amortisation expenses for the Year ended 31st March, 2015 being lower by Rs. 483.58 lacs. 51. As informed there was no supplier who was registered under "The Micro, Small and Medium Enterprises (Development) Act, 2006". 52. Balance confirmations have not been received from some of the parties showing debit/credit balances. 53. Previous year figures have been regrouped /rearranged wherever considered necessary. AS PER ATTACHED REPORT OF EVEN DATE FOR V. K. DHINGRA & CO. Chartered Accountants V K DHINGRA Partner For and on behalf of the Board of Directors RAMESH SURI Chairman SHRADHASURI Managing Director D M REDDY Executive Director MANOJ K SETHI Sr VP (Finance) H.K. AGARWAL Dy. Company Secretary & GM (Finance) Place : New Delhi Date : 14th May, 2015 |