OTHER NOTES TO FINANCIAL STATEMENTS 1.SIGNIFICANT ACCOUNTING POLICIES (Forming part of the Financial Statements for the year ended on 31st March, 2016) (i) Basis for Preparation of Accounts The Financial Statements have been brpared on the historical cost convention in accordance with the Generally Accepted Accounting Principles in India, to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014. (ii) Fixed Assets and Debrciation a. Fixed Assets are Capitalised at acquisition cost, including directly attributable cost of bringing the assets to their working condition for the intended use, less CENVAT and VAT Credits and as reduced by accumulated debrciation. b. Debrciation on tangible fixed assets is charged over the estimated useful life on straight line method, in accordance with Part A of Schedule II to the Companies Act 2013. c. The estimated useful life of the tangible fixed assets followed by the Company is given below: Factory Building and Other Buildings 5 to 60 Plant and Machinery 15 Electrical Equipment 10 Office Equipment 5 Furniture and Fittings 10 Vehicles 8 to 10 Computers and Information Systems 3 to 6 d. Dies and Tools are debrciated at the rate of 11.88 percent. e. In respect of additions/deductions made during the year, debrciation is charged on pro-rata basis from the date of addition/ till the date of disposal. f. Intangible assets in the form of Software are amortised over their useful life of 10 years and in the form of Usage Right of Trade Mark/Trade Mark and Licence are amortised over the period of Usage of 20 - 25 years. (iii) Inventories Inventories are stated at lower of cost (net of CENVAT and VAT credits) or net realisable value. Cost includes all direct costs and other applicable manufacturing overheads and in ascertaining the cost, Moving Weighted Average Method is adopted. In the case of work-in-progress and finished goods, cost rebrsents materials (net of CENVAT and VAT credits) direct labour and appropriate portion of factory overheads. (iv) Revenue recognition Revenue in respect of sale of products is recognised at the point of despatch to customers. Sales also includes products which are manufactured through third party on contract basis, which rebrsents invoiced value of goods including excise duty and are net of sales tax, returns and inter-branch transfers. The excise duty is separately disclosed and deducted from sales. Export sales are accounted at the brvailing rate of exchange as on the date of invoicing. The difference in the rate of exchange, if any, is accounted at the time of realization if it is made within the same financial year. (v) Impairment of Assets As on the Balance sheet date, the Company's assets net of accumulated debrciation/amortization is not less than the recoverable amount of those assets. Hence, there is no impairment loss on the assets of the Company. No impairment loss charged to the profit and loss statement during the year. (vi) Research & Development Expenditure Revenue Expenditure on Research & Development is charged off to the Profit and Loss Statement in the period in which it is incurred. (vii) Staff terminal Benefits a) Accrued Liability for gratuity and superannuation has been provided in the accounts in accordance with the provisions of the Payment of Gratuity Act, 1972, calculated on the basis of Actuarial Valuation in accordance with the guidelines of the Institute of Chartered Accountants of India under Accounting Standard (AS15) for employees who are eligible for gratuity and superannuation funded by Life Insurance Corporation (LIC). For a few employees who are in service even after Superannuation age as per LIC norms, gratuity and superannuation is calculated manually and necessary provision is made in the books of account. The Company contributes to the said Gratuity fund covering specified employees. The contributions are by way of annual brmium payable on such policy issued by the LIC of India, which confers benefits to those specified employees based on policy norms. b) Contribution to Provident fund are accounted at the applicable rates and paid over to the Government authorities. c) Accrued liability for encashment of leave to employees is accounted on calendar year basis, in accordance with the Company's Rules and paid to the employees after the end of calendar year. 2. Excise duty CENVAT credit/Service Tax credit on inputs and other capital goods are accounted fully and to the extent the sum availed is adjusted towards payment of excise duty on despatches leaving the unutilised balance being carried forward to subsequent year and kept under Loans and Advances. 3. Disclosures required under the "Micro, Small and Medium Enterprises Development Act, 2006" 4. Taxes on Income: Current tax is determined as the amount of Tax payable in respect of Taxable income for the year determined in accordance with the provisions of the Income Tax Act, 1961. Deferred tax is recognised, subject to the consideration of prudence, on timing difference, being the difference between the taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets in respect of unabsorbed debrciation and unabsorbed losses are recognized only if there is virtual certainty that there will be sufficient future taxable income available to realise such assets. Other deferred tax assets are recognized if there is reasonable certainty that there will be sufficient future taxable income available to realise such assets. 5. Foreign Currency transactions Transactions in foreign currency are recorded at exchange rate brvailing at the time of the transactions and exchange difference arising from foreign currency transaction are dealt within the Profit and Loss Statement and capitalized where they relate to the Fixed Assets. Current Assets and Liabilities at the year end are being converted at closing rates and exchange gains / losses are dealt within the Profit and Loss Statement, as per AS 11. 6 Segment Information in accordance with AS17 issued by ICAI. The Company operates in only one segment viz. Domestic Appliances. 7. Previous year's figures have been regrouped and reclassified wherever necessary to conform to this year's classification. V.M.LAKSHMINARAYANAN Chairman & Managing Director V.M.SESHADRI Managing Director A.BALASUBRAMANIAN Director D.KRISHNAMURTHY Executive Director-cum-Company Secretary R.NAGARAJAN Chief Financial Officer As per our report attached of even date For Rudhrakumar Associates Chartered Accountants Registration No.007033S (Kanchipuram District) - 600130. R.RUDHRAKUMAR Proprietor Membership No.019444 Place: Navalur Date: 30th May, 2016 |