Significant accounting policies and notes on accounts 1. Significant accounting policies 1.1 Basis of brparation of financial statements The Financial Statements are brpared as a going-concern under the historical cost convention on an accrual basis and in accordance with the provision of Section 129 and other provisions of the Companies Act, 2013. 1.2 Use of Estimates The brparation of financial statements in accordance with the generally accepted accounting principles, requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Estimates and underlying assumptions are reviewed on an ongoing basis. Revision to accounting estimate is recognised in the period in which the estimates are revised and in any future period affected. 1.3 Fixed assets, intangible assets, leased assets and work-in-progress Fixed assets are stated at historical cost less accumulated debrciation. Costs include expenditure directly attributable to the acquisition of the asset. Borrowing costs directly attributable to the construction or production of qualifying assets are capitalized as part of the cost. Intangible assets are stated at the consideration paid for acquisition less accumulated amortization. Advances paid towards the acquisition of fixed assets outstanding as of each balance sheet date is shown as capital advance and the cost of fixed assets not ready for use as on that date are disclosed as capital work in progress. Leases where the lessor retains substantially all the risks and rewards of ownership are classified as operating leases. Lease rentals in respect of assets taken under operating leases are charged to the Profit and Loss Account on a straight line basis over the lease term. 1.4 Debrciation and amortization Debrciation on fixed assets is provided at the rates brscribed in Schedule II to the Companies Act,2013, or at the rates determined based on the useful life of the asset, as estimated by the management, whichever is higher. Debrciation is provided based on the straight line method. The rates adopted for the debrciation determined on the basis of the estimated useful life of fixed assets are as follows: 1.5 Impairment ofAssets An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. An impairment loss is charged to the Profit and Loss Account in the year in which an asset is identified as impaired. Impairment loss recognised in the brceding accounting period is adjusted if there has been a change in the estimate of recoverable amount. 1.6 Borrowing Costs Borrowing Costs incurred in connection with borrowing of funds for the acquisition, production or construction of an asset that necessarily takes substantial period of time to get ready for its intended use are capitalised as part of that asset. Other borrowing costs are recognised as an expense in the period in which they are incurred. 1.7 Inventories Inventories are valued at lower of cost or net realizable value, including necessary provision for obsolescence. Cost is determined using the weighted average method. 1.8 Contingencies and events occurring after the Balance Sheet date Accounting for contingencies (gain or loss) arising out of contractual obligations are made only on the basis of mutual acceptance. Events occurring after the date of Balance Sheet are considered upto the date of approval of the accounts by the Board of Directors, where material. 1.9 Foreign Currency Transactions Transactions denominated in foreign currencies are recorded at the exchange rate brvailing on the date of the transaction or which approximates the actual rate at the date of the transaction. Monetary items denominated in foreign currencies as at the year end are restated at the year end rates. In case of items which are covered by forward exchange contracts, the difference between the year end rate and rate on the date of the contract is recognised as exchange difference and the brmium paid on forward contracts is recognized over the life of the contract. Non monetary foreign currency items are carried at cost. 1.10 Revenue Recognition Sales of Product/Service are accounted net of Excise duty, Sales Tax /VAT, Service Tax and discounts on accrual basis. 1.5 Impairment ofAssets An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. An impairment loss is charged to the Profit and Loss Account in the year in which an asset is identified as impaired. Impairment loss recognised in the brceding accounting period is adjusted if there has been a change in the estimate of recoverable amount. 1.6 Borrowing Costs Borrowing Costs incurred in connection with borrowing of funds for the acquisition, production or construction of an asset that necessarily takes substantial period of time to get ready for its intended use are capitalised as part of that asset. Other borrowing costs are recognised as an expense in the period in which they are incurred. 1.7 Inventories Inventories are valued at lower of cost or net realizable value, including necessary provision for obsolescence. Cost is determined using the weighted average method. 1.8 Contingencies and events occurring after the Balance Sheet date Accounting for contingencies (gain or loss) arising out of contractual obligations are made only on the basis of mutual acceptance. Events occurring after the date of Balance Sheet are considered upto the date of approval of the accounts by the Board of Directors, where material. 1.9 Foreign Currency Transactions Transactions denominated in foreign currencies are recorded at the exchange rate brvailing on the date of the transaction or which approximates the actual rate at the date of the transaction. Monetary items denominated in foreign currencies as at the year end are restated at the year end rates. In case of items which are covered by forward exchange contracts, the difference between the year end rate and rate on the date of the contract is recognised as exchange difference and the brmium paid on forward contracts is recognized over the life of the contract. Non monetary foreign currency items are carried at cost. 1.10 Revenue Recognition Sales of Product/Service are accounted net of Excise duty, Sales Tax /VAT, Service Tax and discounts on accrual basis. Agency Commission is accrued on shipment of consignment by Principal and Other income is recognised on accrual basis. 1.11 Employee Benefits Gratuity: The Company provides gratuity benefit to the employees which is defined benefit plan and the obligation of the company is calculated on the basis of actuarial valuation. Leave Accrual: The Company allows accumulation/encashment of leave. Such accumulation can be utilized by obtaining leave in the subsequent period of employment or at the time of separation for a specified period. The obligation as on the balance sheet date is provided on the basis of actuarial valuation. 1.12 Tax Expense Current tax on income for the current period is determined on the basis of taxable income and tax credits computed in accordance with the provisions of the Income-tax Act, 1961, and based on expected outcome of assessments/appeals. Deferred tax is recognised on timing difference between taxable and accounting income for the year and quantified using the tax rates and laws that are enacted or substantively enacted as on the balance sheet date. Deferred tax asset relating to unabsorbed debrciation / business losses/ losses under the head " capital gains" are recognised and carried forward to the extent that there is a virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. Other deferred tax assets are recognised and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. 1.13 Provisions and Contingent liabilities Provisions are recognised when the Company has 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, and a reliable estimate can be made of the amount of obligation. A disclosure for a contingent liability is made when there is a possible obligation or a brsent obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a brsent obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. Legal provisions are made as per the requirements of the applicable legislation. Warranty provision is arrived at considering the warranty period and the rate of failures determined from historical information. They rebrsent the best estimate of likely expenses during the unexpired warranty period. 1.14 Research & Development The Company incurs certain expenditure for new product development or upgradation of features in the existing products. Any revenue expenditure incurred is charged off during the period in which it is incurred. Any capital expenditure is shown as addition to fixed assets. 2. Notes on Accounts for the year ended March 31, 2015 All figures are reported in Rupees, except data relating to number of Equity Shares or unless stated otherwise The Previous period figures have been regrouped/reclassified, wherever necessary, to conform to the current period brsentation. 2.1 Change in Accounting Policy for Debrciation In accordance with Schedule II of the Companies Act 2013, the company has reviewed the useful life of all its fixed assets as on April 1, 2014 a) In case of assets where there is a reduction in useful life, the incremental debrciation arising out of the reduced life as calculated upto March 31, 2014 has been adjusted in the retained earnings; the consequent adjustment to the retained earnings(net of deferred tax) is Rs. 94.3Lakhs b) In case of assets where there is an increase in useful life, the written down value of assets as on April 1, 2014 has been charged off over the revised remaining useful life of the assets. Consequently, charge of debrciation to the Profit and Loss account is lower by Rs.50.8 Lakhs for the year ended March 31, 2015 2.2 Contingent Liabilities In Respect of: a) Letters of Credits opened by Banks for purchases of Spares and Consumables Rs. NIL (March 2015), Rs. 2,975,445(March 2014). b) Disputed demand for Excise, Customs, Income Tax, VAT and other matters Rs. 5,091,761 (March 2015), Rs. 5,517,452 (March 2014). 2.3 Disclosures of dues / payments to Micro, Small and Medium enterprises to the extent such enterprises are identified by the company: The Company has not received any intimation from the suppliers regarding the status under the Micro, Small and Medium Enterprises development Act, 2006 (the Act), hence disclosure regarding: a. Amount due an account of suppliers as at the end of the accounting year b. Interest Paid during the year; c. Interest payable at the end of the year; d. Interest accrued and unpaid at the end of the accounting year; has not been provided. The Company is making efforts to get the confirmation from the suppliers regarding their status underthe Act. As per our report attached For N M Raiji & Co Chartered Accountants Firm Reg. No. : 108296W Vinay D Balse Partner Membership No. : 39434 Place: Mumbai Date : May 18, 2015 For and on behalf of the Board of Directors H V Gowthama Director Ram N Agarwal Chairman Sandeep Goyal Chief Financial Officer Sujata LeleCompany Secretary Place: Darjeeling Date : May 18, 2015 |