Note-1: Statement on Significant Accounting Policies forming part of the Financial Statements for the year ended March 31, 2015 (As extracted from the detailed Financial Statements) 1.1 Basis of brparation of Financial Statements a) The financial statements have been brpared under the historical cost convention in accordance with Generally Accepted Accounting Principles (GAAP), Accounting Standards issued by the Institute of Chartered Accountants of India (ICAI), and the relevant provisions of Companies Act, 2013. b) All income and expenditure having material bearing are recognised on accrual basis except where otherwise stated. 1.2 Use of accounting Estimates a) The brparation of the financial statements in conformity with the Generally Accepted Accounting Principles requires the company's management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to contingent assets and liabilities as at the date of the financial statements and reported amounts of income and expenses during the period. b) Examples of such estimates include provisions for bad and doubtful debts, future obligations under employee retirement benefit plans, income taxes, post sales customer support and useful life of fixed assets and intangible assets. Actual results could differ from those estimates and any such differences are dealt with in the period in which the results are known/materialize. 1.3 Inventories The cost of raw materials includes all taxes and duties, but excludes taxes and duties that are subsequently recoverable from the taxing authorities. Its determined on weighted average basis and includes an appropriate portion of related overhead as per Accounting Standard-2. Inventory is valued at lower of cost or estimated net realizable value. 1.4 Revenue Recognition a) Sales (includes Exports) are recognised when products are dispatched and are recorded at invoice value inclusive of sales tax but exclusive of excise duty. b) Interest income is recognised on a time proportion basis, taking into account the amount outstanding and the rate applicable. c) Revenue, in respect of services is accounted for on the basis of services rendered and bill to clients as per the terms of the specific contracts with clients. 1.5 Fixed Assets and Debrciation a) The Fixed assets have been stated at their acquisition cost, which comprises of freight, installation cost, duties, taxes and other directly attributable costs of bringing the assets to its working condition for the intended use. b) Debrciation in respect of buildings, machinery, tools and fixtures ,electrical installations is provided for on Straight line Method. c) For the assets acquired during the year, debrciation has been charged on a prorated time basis and individual assets costing Rs.5,000 or less are debrciated in full in the year of acquisition. d) The assets as at the balance sheet date are assessed to ascertain for any impairment or loss of value over the values stated in the books and if there be any impairment the Profit & Loss Account is debited/credited for any impairment/ excess provision for impairment created. This is in line with AS 28 - Impairment of Assets. e) Debrciation / amortization are 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,debrciation / amortization are providing up to the month of sale or disposal of the assets. 1.6 Foreign Currency Transactions a) Transactions denominated in foreign currencies are normally recorded at the exchange rate brvailing at the date of the transaction. b) At the balance sheet date, monetary items denominated in foreign currency (such as cash, receivables, payables etc.) are translated at the exchange rate brvailing on the last day of the accounting year. c) Non-monetary items denominated in foreign currency (such as investments, fixed assets, etc) are translated at the exchange rate ruling at the date of the transaction. d) The income or expense on account of exchange difference either on settlement or on translation is recognised in the Profit & Loss Account except those relating to acquisition of fixed assets which are adjusted to the cost of such assets. 1.7 Investments Investments are classified into Current and Non Current Investments. These non current investments are valued at cost and restated only when there is a permanent diminution in the value of investments. Decline in value other than permanent in nature are not recognized. Current investments are stated at cost or market value; whichever is less. 1.8 Employee Benefits a) Company contributes to employees Provident Fund scheme which is a Defined Contribution Plan. Company has no further obligation under the plan beyond its monthly contributions to the Provident Fund Organization. b) Company has Defined Benefit Plan namely, Gratuity and leave encashment. c) Liability for gratuity is provided based on actuarial valuation determined under projected unit credit method. Contributions under gratuity scheme are made to Life Insurance Corporation of India in accordance with the terms of policy under their group gratuity scheme. Shortfall in contributions over the liability determined under an actuarial valuation is expensed to the Profit & Loss Account. 1.9 Borrowing Costs a) Borrowing costs that are attributable to the acquisition or construction of qualifying assets, up to the date when they are ready for their intended use or sale, are capitalized as part of the cost of such assets. b) Other borrowing costs are charged to Profit & Loss Account. 1.10 Accounting for Leases Lease payments are recognized as an expense in the profit and loss account on a straight line basis over the lease term as per the Accounting Standard- 19 "Leases" issued by ICAI. 1.11 Taxation a) Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income Tax Act, 1961. b) Deferred tax resulting from timing difference between accounting and taxable income is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. c) Deferred tax asset pertaining to unabsorbed debrciation and carry forward of losses are recognized only to the extent there is a virtual certainty of its realization. d) Deferred tax assets/liabilities are reviewed at each balance sheet date. 1.12 R & D and Deferred Revenue Expenditure Subsequent to the introduction of AS 26 on intangible assets, the company does not defer expenses incurred on creating intangible assets such expenditures beyond the year in which they are incurred. 1.13 Provisions, Contingent Liabilities and Contingent Assets a) Provisions involving substantial degree of estimation in measurement are recognised when there is a brsent obligation as a result of past events and it is probable that there will be an outflow of resources. b) Contingent liabilities are not recognised but are disclosed in the notes. c) Show cause notices issued by various Government authorities are not considered as contingent liabilities. However, when the demand are raised against such show cause notices after considering the company's views, these demands are either paid or treated as liabilities, if accepted by the company, and are treated as contingent liability, if disputed by the company. d) Contingent assets are neither recognised nor disclosed in the financial statements. Note 24: Contingent Liabilities Not Provided for- Other Money for which the company is contingently liable a. Statutory Claims against Company not acknowledged as debts towards Excise duty liability of Rs.3,91,89,657 (Rs.3,91,89,657) disputed in an appeal lying with CESTAT. The CESTAT had directed for a br-depopsit of Rs.1,00,00,000. The company has against the directions of the CESTAT filed a writ petition with the Madras High Court which had in-turn directed CESTAT to dispose the matter on merits. The company had filed a petition before the Madras High Court for the waiver of the br-deposit of Rs.1,00,00,000. In deciding on the petition the High Court had ordered for a br-deposit of Rs.50,00,000 and disposal of the case on merits. The company has made the br-deposit and the matter is pending before the CESTAT for disposal. b. For the non-redemption of the advance licences as referred to in Note 5.1, the consequent interest and penalty in the event of the appeals of the company by way of writ petitions being decided against the company or the application made with the Grievance Redressal Committee being turned down, is indeterminate. c. The following is the appeals made by / against the company with respect to certain income-tax liablities which are pending as at the reporting date. The consequential income-tax liabilities are indeterminate i) For Assessment Year 2007-08, Department has filed an appeal agaist the CIT(A)'s order directing the deletion of addition made rebrsenting waiver of principal portion of loans from banks and financial institutions and the consequential tax demand is Rs.92,98,960. Note 25: Small & Medium Enterprises There are no overdue payments and there is no interest payable to the micro, small and medium enterprises as per the Micro, Small and Medium Enterprises Development Act, 2006. Note 27: Deferred Taxation The deferred tax asset arising out of the accumulated income tax losses and timing differences has not been recognised considering the prolonged uncertainty in the company earning taxable income in the foreseeable future. This is in line with the policy of prudence recommended in the appropriate accounting standard issued by the ICAI. Note 29: Impairment of Fixed Assets No impairment loss / gain has been considered for the fixed assets of the company as the Net Selling Value as assessed during the brvious period has been considered to be significantly higher than the carrying amount in such assets and the company does not consider appropriate for a valuation as at the current Balance Sheet date. This is considered appropriate and on a conservative basis credit for Net Selling Value has not been recognized. Note 30: Trade Receivables Trade receivables includes an amount of Rs.5,50,62,076, which had been fully provided for during the prior years from S&S Power Corporation, Malaysia for supplies effected in the year 1995 (FY 1994-1995). S&S Power Corporation, Malaysia had been wound up and as a consequence the debt is irrecoverable. The company has made applications to the Reserve Bank of India through the authorized dealers for the write off of the amounts outstanding. The company is yet to obtain the neccesary permission from Reserve Bank of India The Trade Receivables includes amount receivables from Top Rank Corporation, Malaysia Rs.2,58,47,033 which had been fully provided for during the prior years for supplies effected in the past upto the year 1995. The amount rebrsents outstanding amounts after a settlement made and payments received against the settlement. Provisions to the extent of amounts received are reversed.The company has made applications to the Reserve Bank of India through the authorized dealers for the write off the amounts outstanding.The company is yet to obtain the neccesary permission from Reserve Bank of India Note 33: Contravention of Law The company has not fulfilled its export obligation in respect of two Advance Licenses availed in earlier years. Note 34: Exceptional items of current year-nill (Previous year Rs.11,641,234) rebrsents profit on sale of fixed assets. Note 35: The brvious year figures have been reclassified / regrouped wherever necessary to bring it in line with the current year financial brsentation and grouping. As per our report of even date For GSV Associates Chartered Accountants B.Karthikeyan Partner Membership No.224965 Firm No. 006179S For and on behalf of the Board S&S Power Switchgear Limited Ashish Jalan Chairman D. Sadasivam Company Secretary & Compliance Officer Ashok Kumar Viswakarma Managing Director K. Sundaramurthi Chief Financial Officer Date: 04th June 2015 Place: Chennai |