ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS 1. Significant accounting policies a) Method of Accounting i) The accounts of the company are brpared under the historical cost convention using the accrual method of accounting unless otherwise stated hereinafter. ii) Accounting policies are consistent with generally accepted accounting principles. b) Fixed Assets Fixed Assets are stated at cost of acquisition, inclusive of inward freight, duties, taxes and incidental expenses related to acquisition and is net of modvat/ cenvat wherever applicable. In respect of projects involving construction, related br-operational expenses are capitalised and form part of the value of the assets capitalised. As per practice and on the basis of technical evaluation/ report, expenses incurred on trial runs/know-how development / relocation / modernisation / debottlenecking / relining / revamping of plant and machinery are capitalised. Fixed assets taken on lease are not reflected in the accounts and the lease rent is charged to profit & loss account as and when accrued. Consideration is given at each balance sheet date to determine whether there is any indication of impairment of the carrying amount of the company's fixed assets. If any indication exists, an asset's recoverable amount is estimated. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. Recoverable amount is the greater of the net selling price and value in use. c) Inventories Inventories are valued at cost or net realisable value, whichever is lower. Cost is determined on first in first out (FIFO) basis. d) Foreign currency transactions All foreign currency liabilities relating to acquisition of fixed assets are restated at the rates ruling at the year end and exchange differences arising on such transactions are adjusted in the cost of assets. Other foreign currency assets and liabilities outstanding at the close of the year are valued at year end exchange rates. The fluctuations are reflected under the appropriate revenue head. e) Debrciation Debrciation is calculated on fixed assets on straight line method in accordance with Schedule II of Companies Act, 2013. Except for machine inbrss section. In brss section the life of the asset has been considered as 8 year instead of 25 years on technical evalution. Debrciation on amount of additions made to fixed assets on account of foreign exchange fluctuation is provided for over the residual life of the fixed assets. f) Research & Development Revenue expenditure on research and development is charged against the profit of the year in which it is incurred. Capital expenditure on research and development is shown as an addition to fixed assets. g) Retirement benefits i) Short Term Employee Benefits All employee benefits payable only within twelve months of rendering the service are classified as short term employee benefits. Benefits such as salaries, wages etc. and the expected cost of bonus, exgratia, and incentives are recognized in the year during which the employee renders the related service. ii) Post Employment Benefits a) State provident fund scheme is a defined contribution plan. The contribution paid /payable under the scheme is recognized in the profit & loss account during the year during which the employee renders the related service b) The company has a separate super annuation fund in respect of certain categories of employees. Contributions paid /payable during the year are recognized in the profit & loss account c) The employee gratuity fund scheme managed by a trust is a defined benefit plan. The brsent value of obligation under such defined benefit plan is determined based on actuarial valuation under the project unit credit method which recognizes each year of service as giving rise to additional unit of employee benefits entitlement each unit separately to build up the final obligation The obligation is measured at the brsent value of future cash flow. The discount rates used for determining the brsent value of the obligation under defined benefit plans is based on the market yields on government securities as at balance sheet date, having maturity years approximated to the returns of related obligations. Actuarial gains and lesser are recognized immediately in the profit& loss account. In case of funded plans the fair value of the planned assets is reduced from the gross obligation under the defined benefit plans to recognize the obligation on net basis. d) Other long term employee's benefits including leave encashment are recognized in the same manner as defined benefit plans. h) Borrowing costs Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized as part of the cost of that asset. Other borrowing costs are recognised as an expense in the year in which they are incurred. Capitalisation of borrowing costs ceases when substantially all activities necessary to brpare the qualifying asset for its intended use or sale are complete. i) Excise & Other Duties Excise duty in respect of finished goods lying in factory brmises and custom duty on goods lying in customs bonded warehouse are provided and included in the valuation of inventory. Modvat benefit is accounted for by reducing the purchase cost of the materials/ fixed assets. j) Claims and benefits Claims receivable and export benefits are accounted on accrual basis to the extent considered receivable. k) Revenue recognition Export sales are accounted on the basis of the date of bill of lading / airway bill. Other sales are accounted for ex-factory on dispatch. Sales are net of returns, excise duty and include export incentives/benefits. l) Income from Investments/Deposits Income is credited to revenue in the year in which it accrues. Income is stated in full with the tax thereon being accounted for under Income tax deducted at source. m) Taxation Provision for taxation is based on assessable profits of the company as determined under Income Tax Act, 1961. Deferred taxation is provided using the liability method in respect of taxation effect arising from all material timing difference between accounting and tax treatment of income and expenditure which are expected with reasonable probability to crystallize in the foreseeable future. Deferred tax benefits are recognized in the financial statements only to the extent of any deferred tax liability or when such benefits are reasonably expected to be realizable in the near future. n) Earnings per share Basic earning per share is calculated by dividing the net profit for the year attributable to equity shareholders (after deducting the redeemable brference share dividend) by the weighted average number of equity shares outstanding during the year. Diluted earning per share is calculated by dividing the net profits attributable to equity shareholders (after deducting dividend on redeemable brference shares) by the weighted average number of equity shares outstanding during the year (adjusted for the effects of dilutive options). o) Contingent Liabilities Contingent Liabilities as defined in Accounting Standard-29 are disclosed by way of notes to accounts Provision is made if it becomes probable that an outflow of future economic benefit will be required for an item brviously dealt with as a contingent liability. 1 Figures for the brvious period have been regrouped / rearranged wherever considered necessary. As per our report of even date annexed For B.K. SHROFF & CO., Chartered Accountants Firm Registeration No.: 302166E Sanjiv Aggarwal Partner Membership No.: 85128 Neha Pawar Ramesh Chand Company Chief Financial Secretary Officer L. D. Sharma Ashok Jaipuria Ambrish Jaipuria Sr. Manager Chairman Director (Finance & DIN DIN Accounts) 00214707 00214687 Place : New Delhi Dated:26 May, 2015 |