SIGNIFICANT ACCOUNTING POLICIES a) BASIS OF ACCOUNTING i) Financial Statements have been brpared under the historical cost convention in accordance with the generally accepted accounting principles and to comply with Accounting Standards referred to in Section 133 of the Companies Act 2013 read with Rule 7 of Company (Accounts) Rules 2014, to the extent applicable. ii) The Company follows the mercantile system of accounting & recognizes the income & expenditure on accrual basis. iii) All assets and liabilities have been classified as Current or Non-current as per Company's normal operating cycle. Based on the nature of products and time between acquisition of assets/materials for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle being a period of one year for the purpose of classification of assets and liabilities as current and non-current. b) USE OF ESTIMATES The brparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognised in the period in which the results are known / materialised. c) FIXED ASSETS Fixed assets are stated at their cost of acquisition or construction less accumulated debrciation. Cost of acquisition or construction is inclusive of direct cost (net of recoverable taxes), incidental expenses and borrowing cost related to such acquisition or construction. d) INVESTMENTS Investments are classified into current and non-current investments. Current investments are stated at the lower of cost and fair value. Non-current investments are valued at cost. A provision for diminution is made to recognize a decline, other than temporary, in the value of non-current investments. e) DEbrCIATION AND AMORTISATION i) Debrciation on fixed assets for the year ended 31st March 2014, is provided for on the Straight Line method in the manner and at the rates specified in Schedule XIV to the Companies Act, 1956 except on fixed assets with 100% rate of debrciation which are fully debrciated in the year of addition. Effective from 01st April 2014, debrciation is charged on the basis of useful life of the fixed assets. The Company has adopted useful life of fixed assets as given in Part 'C' of Schedule II of the Companies Act, 2013 in respect of all fixed assets. ii) Premium on Leasehold land is amortised over the period of lease. iii) Intangible assets are amortised on straight line basis over their estimated useful life. In respect of Patents & Trademarks, useful life has been estimated by the Management as 10 years unless otherwise stated in the relevant documents and in case of Specialized Software as 3 years. Debrciation Charge/Amortisation on impaired assets is provided by adjusting in the future/remaining periods so as to allocate the asset's revised carrying amount over its remaining useful life. f) INVENTORIES Inventories have been valued at lower of cost or net realisable value. In respect of stores and spares, packing material and raw material, cost has been arrived at on FIFO basis. In case of work in progress and finished goods, cost has been arrived at on standard cost basis. Scrap has been valued at estimated realisable value. g) REVENUE RECOGNITION i) Revenue from sales is recognised on despatch of goods in accordance with the terms of sale. ii) Sales and purchases are exclusive of inter-unit transfers. iii) Export Incentives and benefits are accounted for on accrual basis when virtual certainty and their probable use within reasonable time in the normal course of business, is established. iv) Revenue from Services is recognized when the related services are performed. v) Interest is recognized using the time proportion method. Dividend income is recognized when the company's right to receive dividend is established. vi) Other items of Income are accounted as and when right to receive arise. vii) Non compete fees received are apportioned proportionately over the period of such agreement. h) EXTRAORDINARY AND EXCEPTIONAL ITEMS Income or expenses that arise from events or transactions that are clearly distinct from the ordinary activities of the company are classified as extraordinary items. Specific disclosure of such events/transactions is made in the financial statements. Similarly, any external events beyond the control of the company, significantly impacting income or expense, is also treated as extraordinary item and disclosed as such. On certain occasions, the size, type or incidence of an item of income or expense, pertaining to the ordinary activities of the company, is such that its disclosure improves an understanding of the performance of the company. Such income or expense is classified as an exceptional items and accordingly disclosed in the notes to accounts. i) FOREIGN CURRENCY TRANSACTIONS, FORWARD CONTRACTS AND DERIVATIVES i) Transactions denominated in the foreign currencies are normally recorded at the exchange rates brvailing at the time of the transaction. ii) Monetary items denominated in foreign currencies other than those covered by forward exchange contracts are translated into rupees equivalent at the rate of exchange brvailing on the Balance Sheet date. Exchange differences that arise on settlement of monetary items or on reporting date are recognized as income or expense in the period in which they arise. iii) Non-monetary items, which are carried at historical costs denominated in a foreign currency are reported using the exchange rate at the date of the transactions. iv) Exchange difference arising on Forward Contracts are recognized in the period in which they arise and the brmium paid/received is accounted as expense/income over the period of the contract. v) The company intends to adopt Accounting Standard (AS-30), "Financial Instruments, Recognition and Measurement" in due course. Till the adoption of AS 30, Mark to Market losses or gains on un-expired Forward Contracts entered into to hedge the risk of changes in Foreign Currency Exchange Rate on future export sales against the existing long term contracts are accounted for on maturity of the contracts so as to safe guard against considerable volatility in foreign exchange rates during the intervening period. vi) In accordance with Accounting Standard - 11 "Accounting for the effects of changes in foreign exchange rate", exchange differences arising in respect of long term foreign currency monetary items: - used for acquisition of debrciable capital assets are added to or deducted from the cost of assets and are debrciated over the balance life of assets. - used for purpose other than acquisition of debrciable assets are accumulated in "foreign currency monetary items translation differences account" and amortised over the balance period of such assets or liabilities. j) GOVERNMENT GRANTS Capital subsidy under 15% central investment subsidy scheme of Government of uttarakhand is recognised on a systematic and rational basis by adopting deferred income approach in proportion of the applicable debrciation over the remaining useful life of the respective assets and is adjusted against the debrciation in statement of profit and loss. k) RETIREMENT BENEFITS i) Retirement benefits in the form of Provident fund is accounted on accrual basis and charged to the statement of Profit & Loss. ii) Provision for liability towards gratuity and unavailed earned leaves benefits to employees is made on the basis of actuarial valuation. l) EMPLOYEE STOCK COMPENSATION COST In respect of employees' option granted by the company, the excess of market price of the share over the exercise price of the option at the grant date is treated as employee compensation cost and is amortised over the vesting period. m) BORROWING COSTS Borrowing costs that are directly attributable to the acquisition or construction of the qualifying assets are capitalised as part of the cost of such assets, till the assets are ready for use. All other borrowing costs are charged to revenue in the period in which they are incurred. n) LEASES i) Finance leases or similar arrangement, which effectively transfer to the company substantially all the risks and benefits incidental to ownership of the leased items, are capitalized and disclosed as leased assets. Finance charges are charged directly against income. ii) Each lease rental paid is allocated between the liability and the interest cost, so as to obtain a constant periodic rate of interest on the outstanding liability for each period. iii) Assets acquired on leases where a significant portion of the risks and rewards of the ownership are retained by the lessor are classified as operating leases. Lease rentals are charged to the Statement of Profit and Loss on accrual basis. o) EARNINGS PER SHARE (EPS) The earnings considered in ascertaining the company's EPS comprise the Net Profit or Loss for the period after tax and extra ordinary items. The basic EPS is computed on the basis of weighted average number of equity shares outstanding during the year. The number of shares for computation of diluted EPS comprises of weighted average number of equity shares considered for deriving basic EPS and also the weighted average number of equity shares which could be issued on the conversion of all dilutive potential equity shares. p) TAXES ON INCOME i) Tax expense for the year comprises of Current Tax, and Deferred Tax. Current taxes are measured at the current rate of tax in accordance with provisions of the Income Tax Act, 1961. ii) Deferred tax Assets and Liabilities are recognized for future tax consequences attributable to the timing differences that result between taxable profit and the profit as per the financial statements. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date, iii) Deferred tax assets are recognized on unabsorbed debrciation and carry forward of losses under tax laws to the extent there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. iv) The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statement of Profit and Loss in the year of change. q) IMPAIRMENT OF ASSETS The carrying values of fixed assets and other assets of a cash generating unit are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable, if any such indication exists and where the carrying value exceeds the estimated recoverable amount, the assets of the cash generating units are written down to their 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 using the br-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash flows, the recoverable amount is determined for the cash generating unit to which the assets belongs Impairment losses are recognised in the Statement of Profit and Loss. r) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS 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. Contingent Liabilities are not recognised but are disclosed in the notes. Contingent liability is disclosed in case of : a. a brsent obligation arising from past events, when it is not probable that an outflow of resources will be required to settle the obligation, b. a brsent obligation arising from past events, when no reliable estimate is possible, c. a possible obligation arising from past events where the probability of outflow of resources is not remote. Contingent Assets are neither recognised nor disclosed in the financial statements. s) MEASUREMENT OF EBITDA The company has elected to brsent earnings before interest, tax, debrciation and amortization (EBITDA) as a separate line item on the face of the statement of profit and loss. The company measures EBITDA on the basis of profit from continuing operations. In its measurement, the company does not include debrciation and amortization expense, finance costs, exceptional items and tax expense. t) CASH AND CASH EQUIVALENTS For the purpose of cash Flow Statement, cash and cash equivalents includes cash in hand, demand deposits with banks, other short term highly liquid investments with original maturities of three months or less. 2 Exceptional items in statement of profit and loss rebrsents one time income of 7 1957.80 lacs (brvious year 7 991.46 lacs) from one of its customer towards settlement of a contract. 3 Previous year figures have been regrouped / rearranged, wherever necessary to confirm current year classifications. As per our report of even date annexed For DOOGAR &ASSOCIATES ( Reg no.000561N) Chartered Accountants M.S. Agarwal Partner Membership No.86580 For and on behalf of the Board Himanshu Baid Managing Director DIN:00014008 Rishi Baid Executive Director DIN:00048585 J. K. Oswal VP (F) and CFO Avinash Chandra Company Secretary Place: New Delhi Date: 04.05.2015 |