SIGNIFICANT ACCOUNTING POLICIES Note 1. 1 Convention and Basis of Preparation of Financial Statements (a) Basis of Preperation of Financial Statement These financial statements have been brpared on the accrual basis of accounting as per double entry system, under the historical cost convention. The mandatory applicable accounting standards in India and the provisions of companies Act, 2013 have been followed in brparation and brsentation of these financial statements. (b) Use of Estimates The brparation of financial statements in conformity with Accounting Standards requires, the management to make judgments, estimates and assumptions that affects the reported amounts, at the end of the reporting period. Although these estimated are based on the management's best knowledge of current events and actions, uncertainty about thee assumptions and estimates could result in the outcome requiring a material adjustment to the carrying amounts of assets or liabilities in future periods. Note 1.2 Tangible and Intangible Assets (a) Tangible Assets Cost of fixed assets comprises purchase price, duties levies and any directly attributable cost of bringing the asset to its working conditions for the intended use. Borrowing costs related to the acquisition or construction of the qualifying fixed assets for the period up to completion of their acquisition or construction are included in the book value of the assets.All costs relating to up gradations/enhancements are generally charged off as revenue expenditure unless they bring significant additional benefits of lasting nature. Cenvat claimed on fixed assets is reduced from the cost of respective assets. (b) Intangible Assets An intangible asset, where it is expected to provide future enduring benefits, is capitalized. Capitalization costs include license fees and costs of implementation / system integration services. The costs are capitalized in the year in which the relevant intangible asset is ready for use. (c) Debrciation and Amortisation: Debrciation is being provided on all tangible assets on Straight Line Method as per the rate and in the manner brscribed in Schedule II to the Companies Act, 2013. Intangible assets are recognized when it is probable that the future economics benefits that are attributable to the assets will flow to enterprise and the cost of the assets measure reliably. The intangible assets are recorded at the consideration paid for the acquisition of such assets and are carried at the cost less accumulated and impairment loss if any. (d) Impairment An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value. An impairment loss is charged to statement of profit and loss in the year in which an asset is identified as impaired. A brviously recognized impairment loss is increased or reversed depending on changes in circumstances. However, the carrying value after reversal is not increased beyond the carrying value that would have brvailed by charging usual debrciation if there was no impairment Note 1.3 Revenue Recognition Sales are recorded net of trade discount, rebates and include excise duty. Revenue from sale of products is recognized when the significant risks and rewards of ownership of the goods have passed to the buyer. Incomes from services are recognized based on agreements/ arrangements with the concerned parties. Dividend income is recognized when the right to receive dividends is established. Interest income is recognized on the time proportion method. Note 1.4 Inventory Basis of Valuation Inventories of raw materials and components, work-in-progress and stock-in-trade are valued at the lower of cost and net realizable value. Cost is ascertained on a moving weighted average. The costs of work-in-progress and finished goods is determined on full absorption cost basis. Note 1.5 Investments Investments are recognized and valued as per the period of holding intended by management, further bifurcated as a current and non current. Current Investments are valued at cost and fair value as on balance sheet date, which ever is low. Non current investments are valued at historical cost unless and otherwise there is a significant diminution in the value of investment. Note 1.6 Transactions in Foreign Currency (a) Foreign Currency Transactions Transaction in foreign currency are recorded at the exchange rate brvail on the date of transaction, exchange difference arise on account of difference between transaction date and settlement/period end date are recognized in the statement of profit and loss for the year. All monitory assets and liabilities in the foreign currency are translated at the year end rate of relevant currency. (b) Forward exchange contracts Company generally in the practice to take forward contract to cover its foreign exchange risk related to export and import obligation. All brmium and discount are accounted in statement of profit and loss in the year it pertains. Note 1.7 Employee Benefit (a) Gratuity The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides for a lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 to 30 days salary payable for each completed year of service. Vesting occurs upon completion of five years of service. The Company makes annual contributions to gratuity fund maintained with Life Insurance Corporation of India. The Company accounts for the liability for gratuity benefits payable in future based on an independent actuarial valuation. (b) Provident Fund The eligible employees of the Company are entitled to receive benefits under the provident fund, a defined contribution plan, in which both employees and the company make monthly contribution at a specified percentage of the covered employees' salary. The contributions as specified under the law are paid to the provident fund and pension fund to respective Regional Provident Fund Commissioner and the Central Provident Fund under the State Pension Scheme. (c) Compensated Absences The company provides for the encashment of leave or leave with pay subject to certain rules. The employees are entitled to accumulated leave subject to certain limits, for future encashment. The liability is provided based on the number of days of unutilized leave at each balance sheet date. The Company makes contributions to leave encashment fund maintained with Life Insurance Corporation of India. The Company accounts for the liability for benefits payable in future based on an independent actuarial valuation. Note 1.8 Provision for Taxation Tax expenses comprises of current, and deferred tax. Provision for current tax is made on the basis of estimated taxable income for the current accounting year in accordance with the Income Tax Act, 1961. The deferred tax for timing difference between the book and tax profits for the year is accounted for, using the tax rates and laws that have been substantively enacted as of the Balance Sheet Date. Deferred tax assets arising from timing differences are recognized to the extent there is reasonable certainty that these would be realized in future. Deferred tax assets, in case of unabsorbed losses and unabsorbed debrciation, are recognized only if there is virtual certainty that such deferred tax asset can be realized against future taxable profits. Note 1.9 Provisions and Contingencies Contingent Liabilities are possible but not probable obligation as on the Balance Sheet date, based on the available evidence. Department appeals, in respect of cases won by the Company, are also considered as Contingent Liabilities. Provisions are recognized when there is a brsent obligation as a result of past event; and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are determined based on best estimate required to settle the obligation at the Balance Sheet date. Note 1.10 Borrowing Cost Interest and other cost incurred in connection with the borrowings of the funds are charged to revenue on accrual basis except those borrowing costs which are directly attributable to the acquisition or construction of those fixed assets ,which necessarily take a substantial period of time to get ready to its intended use, such cost are capitalized with fixed assets. 2 Investment in Foreign Subsidiary There is further dimunition in the value of investment in Apollo Maschinenbau, GmbH, Germany to the extent of Rs.2,17,54,346/- (Excluding Rs 2,43,09,000/- Loan written of treated as other income) (PY Rs.1,17,63,681/-), on the basis of annual accounts of this subsidiary as on 31.03.2015, for which no provision has been made since the management is expecting positive turnaround in coming years. 4. Disclosure under Micro, Small and Medium Enterprises Development Act, 2006 No amount is payable to Suppliers' registered under the Micro, Small and Medium Enterprise Development, Act 2006. No interest has been paid / payable by the company during the year to the Suppliers' covered under the Micro, Small and Medium Enterprise Development, Act 2006. The above information takes into account only those suppliers who have responded to inquiries made by the company for this purpose. 5. Disclosures as per AS 15 The disclosure as per the notified AS 15 under the Companies (Accounting Standards) Rules, 2006 on "Employee Benefits", are as follows: The company has a defined benefit gratuity plan. Every employee who has completed 5 years or more of services gets a gratuity on departure at 15 days salary (taking last drawn as a base) for each completed year of service. The scheme is funded with Life Insurance Corporation of India in the form of a qualifying insurance policy. The future contribution payable by the company under the gratuity scheme is currently not ascertainable. As per our report of even date attached For, DJNV & Co. Chartered Accountants Firm Registration Number: 115145W For and on behalf of Board of Directors Vasant Patel Partner Membership No. 044612 Neha Chikani Shah Company Secretary Mem. No.A25420 Bharat Dave Chief Financial Officer Navinchandra V. Shah Director DIN : 03027647 Asit A. Patel Managing Director DIN : 00093332 Place Ahmedabad Date : 30.05.2015 |