SIGNIFICANT ACCOUNTING POLICIES 1. Basis of Preparation These financial statements have been brpared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis. These financial statements have been brpared to comply in all material aspects with the accounting standards notified under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014. 2. Fixed Assets and Debrciation a) Fixed Assets are valued at cost of acquisition inclusive of any other cost attributable to bringing the same to their working condition. b) Fixed Assets manufactured/constructed in-house are valued at actual cost of raw materials, conversion cost and other related costs. c) Cost of leasehold land is amortized over the period of lease. d) Expenditure incurred during construction of capital projects including related br-production expenses is treated as Capital Work-in-Progress and in case of transfer of the project to another body, the accounting is done on the basis of terms of transfer. e) Fixed assets retired from active use and held for disposal are stated at the lower of book value and net realizable value and are shown separately in the financial statements. Loss determined, if any, is recognized in the profit and loss statement. f) Debrciation on tangible assets is provided on pro-rata basis on the straight line method over the estimated useful lives of the asset or over the lives of the assets brscribed under Schedule II of the Companies Act 2013 whichever is lower. Based on review, the lower estimated useful lives of the following assets are found justifiable compared to the lives mentioned in Schedule II of the Companies Act 2013: i. Mobile Phones and Portable Personal Computers over two years ii. Items given to employees under furniture equipment scheme over five years iii. Electrical items like air conditioners, fans, refrigerators, etc over 6.67 years iv. Sofa set, Woollen Carpets, Photocopier, Fax machines, Motor Cars & Machine Spares whose use is irregular over five years In case of Plant & Machinery other than Continuous Process, based on technical review by a Chartered Engineer, life is assumed to be of 25 years. 3. Valuation of Investments The long term investments made by the company appear at cost inclusive of acquisition charges. Provision is made for diminution in value considering the nature and extent of permanent diminution. Current investments appear at lower of cost or fair value. 4. Valuation of Inventories (i) Inventories are valued at lower of cost or net realisable value. For this purpose, the basis of ascertainment of cost of the different types of inventories is as under - a) Raw materials & trading goods, stores & spare parts and materials for turnkey projects on the basis of weighted average cost. b) Work-in-progress on the basis of weighted average cost of raw materials and conversion cost up to the relative stage of completion. c) Finished goods on the basis of weighted average cost of raw materials, conversion cost and other related costs. (ii) Tools, dies, jigs and fixtures are written-off over the economic life except items costing upto Rs..10000 which are charged off in the year of issue. 5. Recognition of Revenue Revenue is recognised in compliance with the following: a) In case of sale of goods : When the property and all significant risks and rewards of ownership are transferred to the buyer and no significant uncertainty exists regarding the amount of consideration that is derived from the sale of goods. Sales are stated exclusive of Sales Tax / VAT. b) In case of services rendered: When performance in full or part as having achieved is recognised by the buyer and no significant uncertainty exists regarding the amount of consideration that is derived from rendering the services. Income from Services are exclusive of Service Tax. c) In case of project activities: As per the percentage of completion method after progress of work to a reasonable extent. d) In case of other income: i) Interest on a time proportion basis taking into account the outstanding principal and the relative rate of interest. ii) Dividend from investments in shares on establishment of the Company's right to receive. 6. Employee Benefits a) Company's contributions to Provident Fund and Superannuation fund are charged to Profit and Loss Account. b) Employee benefits in respect of Gratuity, Leave Encashment, Long Service Awards are charged to Profit & Loss Account on the basis of actuarial valuation made at the year end. c) Post retirement medical benefit is also recognised on the basis of actuarial valuation made at the year end. 7. Treatment of Prior Period and Extraordinary Items a) Prior period items which arise in the current period as a result of error or omission in the brparation of prior period's financial statement are separately disclosed in the current statement of profit & loss . However, differences in actual income/ expenditure arising out of over or under estimation in prior period are not treated as prior period income/expenditure. b) Income/Expenditure up to Rs. 10000 in each case pertaining to prior years is charged to the current year. c) Extraordinary items, i.e., gains or losses which arise from events or transactions which are distinct from the ordinary activities of the Company and which are material are separately disclosed in the statement of accounts. 8. Foreign Currency Translations a) All transactions in foreign currency other than those specified below are converted at the exchange rate brvailing on the respective dates of transactions. b) Monetary items denominated in a foreign currency (such as cash, balance in bank accounts, receivables, payables, etc ) are translated at the exchange rate brvailing on the date of Balance Sheet other than those covered with forward contract. c) Non-monetary assets denominated in foreign currency such as Long Term Investment, Inventories and Fixed Assets are carried at cost . d) In case of foreign branch, translation of the financial statement is made on the following basis i) Revenue items except opening and closing inventories are converted at average rate. Opening and closing inventories are translated at the rate brvailing at the commencement and close respectively. ii) Fixed Assets and debrciation are converted at the exchange rate on the date of the transactions. iii) Other Current Assets and Current Liabilities are converted at the exchange rate as on the date of the Balance Sheet. e) Any income or expense on account of exchange difference either on settlement or on translation is recognised in the Profit & Loss Account except as stated above. f) Premium / discount arising at the inception of the forward exchange contracts entered into to hedge foreign currency risks are amortised as expense or income over the life of the contract. Exchange difference on such contracts are recognized in the Profit & Loss Account. 9. Accounting for Research & Development a) Revenue Expenditure is shown under Primary Head of Accounts with the total of such expenditure being disclosed in the Notes. b) Capital expenditure relating to research & development is treated in the same way as other fixed assets. 10. Treatment of Grant/Subsidy a) Revenue grant/subsidy in respect of research & development expenditure is set off against respective expenditure. b) Capital grant/subsidy against specific fixed assets is set off against the cost of those fixed assets. c) When grant/ subsidy is received as compensation for extra cost associated with the establishment of manufacturing units or cannot be related otherwise to any particular fixed assets the grant/subsidy so received is credited to capital reserve. On expiry of the stipulated period set out in the scheme of grant/subsidy the same is transferred from capital reserve to general reserve. d) Revenue grant in respect of organisation of certain events is shown under Sundry Income and the related expenses there against under normal heads of expenditure. 11. Accounting for Borrowing Cost Borrowing Costs that are directly attributable to the acquisition, construction or production of assets which take substantial period of time to get ready for its intended use are capitalised as part of the cost of those assets. Other Borrowing Costs are recognised as expense in the period in which they are incurred. 12. Impairment of Assets An assessment is made at each Balance Sheet date to determine whether there is any indication of impairment of the carrying amount of the fixed assets. If any indication exists, an asset's recoverable amount is estimated. An impairment loss is recognized whenever the carrying amount of the asset exceeds the recoverable amount. The recoverable amount is the greater of the net selling price and value in use . In assessing value in use, the estimated future cash flows are discounted to their brsent value based on appropriate discount factor. 13. Cash Flow Statement Cash Flow Statement, as per Accounting Standard - 3 issued by The Institute of Chartered Accountants of India, is brpared using the Indirect Method. 14. Segment Reporting Segment Reporting is done as per Accounting Standard - 17 issued by The Institute of Chartered Accountants of India .The Company has identified business segment as its primary reporting segment. 15. Intangible Assets (a) Expenditure incurred for acquiring intangible assets like software of Rs. 5,00,000 and above and license to use software per item of Rs. 25000 and above, from which economic benefits will flow over a period of time, is capitalized and amortized over the estimated useful life of the asset or five years, whichever is earlier, from the time the intangible asset starts providing the economic benefit. (b) Goodwill and Brand Value arising on acquisition are recognized as an asset and are amortised on a straight line basis over 5 years and 10 years respectively. (c) In other cases, the expenditure is charged to revenue in the year in which the expenditure is incurred Provisions, Contingent Liabilities and Capital Commitments (a) Provision is recognized when there is a brsent obligation as a result of a 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. b) Contingent liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confirmed by the occurrence of one or more uncertain future events not wholly within the control of the Company. (c) Capital commitments and Contingent liabilities disclosed are in respect of items which exceed Rs. 1,00,000 in each case. (d) Contingent liabilities are considered only on conversion of show cause notices issued by various Government authorities into demand. As per our report attached For Vidya & Co. Chartered Accountants Firm Registration No. 308022E CA Sarad Jha Partner Membership No. 050138 For and on behalf of the Board of Directors Virendra Sinha Chairman & Managing Director Prabal Basu Director (Finance) & Chief Financial Officer Niraj Gupta Manjusha Bhatnagar D Sothi Selvam Partha S. Das Alok Chandra Directors Kavita Bhavsar Company Secretary Place : Kolkata, date : the 27th May, 2015 |