1. SIGNIFICANT ACCOUNTING POLICIES a) Accounting Convention The financial statements of the Company have been brpared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013 ("the 2013 Act") / Companies Act, 1956 ("the 1956 Act"), as applicable. The financial statements have been brpared on accrual basis under the historical cost convention. The accounting policies adopted in the brparation of the financial statements are consistent with those followed in the brvious year. b) Use of Estimates The brparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in brparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise. c) Fixed Assets i) Tangible Fixed Assets are stated at cost of acquisition or construction less accumulated debrciation. The cost of fixed assets includes non-refundable taxes and levies, freight and other incidental expenses related to acquisition and installation of the respective assets. ii) Certain computer software and technical knowhow costs are capitalised and recognized as intangible assets in terms of Accounting Standard 26 on intangible assets based on materiality, accounting prudence and significant economic benefits expected to flow therefrom for a period longer than 1 year. Capitalised cost include direct cost of implementation and expenses directly attributable to the implementation. iii) At each Balance Sheet date, whether there is any indication that any asset may be impaired. If such assets are considered to be impaired the impairment loss is then recognized for the amount by which the carrying amount of the assets exceeds its recoverable amount, which is the higher of an asset's net selling price and value in use. For the purpose of assessing impairment, assets are grouped at the smallest level for which there are separately identifiable cash flows. d) Debrciation and Amortisation Expense i) Debrciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value. ii) Debrciation on tangible fixed assets is provided on the Straight Line Method as per the useful life brscribed in Schedule II to the Companies Act, 2013 except in respect of the unamortised carrying value of the Plant & machineries as on 1st April 2014 , in whose case the life of the assets has been assessed as 21 years based on taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history ofreplacement, anticipated technological changes, manufacturers warranties and maintenance support,etc. Pursuant to the transition provisions brscribed in Schedule II to the Act, the Company has fully debrciated the carrying value of assets, net of residual value, where the remaining useful life of the asset was determined to be Nil as on 1st April, 2014. iii) Intangible assets are amortised over their estimated useful life on straight line method as follows, as estimated at the time of acquisition: a) Computer software costs capitalized and amortized over estimated useful life of 3 to 5 years. b) Technical Knowhow costs capitalized and amortized over estimated useful life of 10 years. e) Investments Long Term investments are stated at cost and provision is made to recognize any diminution in value, other than that of temporary nature. f) Inventories i) Raw materials, Process stock and Finished Goods are valued at lower of cost or net realisable value after providing for obsolescence and other losses, where considered necessary. Cost includes all charges in bringing the goods to the point of sale, including octroi and other levies, transit insurance and receiving charges. Work-in-progress and finished goods include appropriate proportion of overheads and, where applicable, excise duty. ii) Cost for Raw materials is determined on Weighted Average cost, net of Cenvat credit availed. iii) Cost for Finished Goods and Process Stock is determined taking material cost [Net of Cenvat credit availed] labour and relevant appropriate overheads and Cenvat duty. g) Revenue Recognition In appropriate circumstances, Revenue (Income) is recognized when no significant uncertainty as to determination or realisation exists. h) Other Income Interest income is accounted on accrual basis. Dividend income is accounted for when the right to receive it is established. i) Sales, Contract Revenue and Service Income Sales are accounted on dispatch of goods. Export sales are accounted on the basis of date of Bill of lading. Sales value is inclusive of Cenvat Duty but does not include other recoveries such as insurance charges, transport charges etc. Service income excludes service tax. Contract revenue is recognised on percentage completion method. The stage of completion is determined as a proportion to the contract cost incurred upto the reporting date to the estimated total contract costs. When it is probable that the total contract cost will exceed total contract revenue, the expected loss is recognised as an expense immediately. Total contract cost is determined based on technical and other assessment of cost to be incurred. j) Cenvat credit Cenvat credit is accounted for on accrual basis on purchase of eligible inputs, capital goods and services. k) Foreign Currency Transactions i) Monetary items denominated in foreign currency are translated at the exchange rate brvailing on the last day of the accounting year. Foreign currency transactions are accounted at the rate brvailing on the date of transaction. ii) Non monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of transaction. iii) Gain or loss arising out of translation/conversion is taken credit for or charged to the profit and loss statement. l) Accounting for forward contracts Premium / discount on forward exchange contracts, which are not intended for trading or speculation purposes, are amortised over the period of the contracts if such contracts relate to monetary items as at the balance sheet date. Any profit or loss arising on cancellation or renewal of such a forward exchange contract is recognised as income or as expense in the period in which such cancellation or renewal is made. m) Employees Benefits i) Defined Contribution Plan The Company's contributions paid / payable for the year to Provident Fund are recognized in the profit and loss statement. ii) Defined Benefit Plan The Company's liabilities towards gratuity, and leave encashment are determined using the projected unit credit method which considers each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation. Past services are recognized on a straight line basis over the average period until the amended benefits become vested. Actuarial gain and losses are recognized immediately in the profit and loss account as income or expense. Obligation is measured at the brsent value of estimated future cash flows using a discounted rate that is determined by reference to market yields at the balance sheet date on Government bonds where the currency and terms of the Government bonds are consistent with the currency and estimated terms of the defined benefit obligation. n) Borrowing Cost Borrowing costs include interest, amortisation of ancillary costs incurred and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Costs in connection with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are charged to the Statement of Profit and Loss over the tenure of the loan. Borrowing costs, allocated to and utilised for qualifying assets, pertaining to the period from commencement of activities relating to construction / development of the qualifying asset upto the date of capitalisation of such asset are added to the cost of the assets. Capitalisation of borrowing costs is suspended and charged to the statement of profit and loss during extended periods when active development activity on the qualifying assets is interrupted. o) Taxes on Income Current Tax is the amount of tax payable on the taxable income for the year as determined in accordance with provision of Income Tax Act, 1961. Deferred tax resulting from "timing difference "between book and taxable profit is accounted for using the tax rates and laws that have been enacted or subsequently enacted as on the balance sheet date. The Deferred tax asset is recognized and carried forward only to the extent that there is a reasonable certainty that the assets will be realised in future, however where there is unabsorbed debrciation or carry forward of losses, deferred tax assets are recognised only if there is a virtual certainty of realisation of such assets supported by convincing evidence that there will be sufficient future taxable income available to realise the assets. p) Leases i) Assets acquired under lease where the Company has substantially all risk and rewards incidental to ownership are classified as finance leases. Such assets are capitalised at the inception of lease at the lower of fair value or the brsent value of minimum lease payment and a liability is created for an equivalent amount. 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 of each period. ii) Assets acquired on lease where a significant portion of risk and rewards incidental to ownership is retained by the lessor are classified as operating lease. Lease rentals under operating leases are recognised in the statement of profit and loss on a straight-line basis over the lease term. q) Earnings Per Share Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post-tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit / (loss) after tax (including the post-tax effect of extraordinary items, if any) as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. r) Provisions, Contingent Liabilities and Contingent Assets Aprovision is recognised when the Company has a brsent obligation as a result of past events 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 (excluding retirement benefits) are not discounted to their brsent value and are determined based on the best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the Notes. Contingent assets are not recognised in the financial statements. 2. Estimated amount of contracts remaining to be executed on capital account (net of capital advances) and not provided for Rs. 158.87 Lacs (Previous year Rs. 539.27 Lacs). 2. Tax assessment of the Company under Income Tax Act 1961, has been completed up to financial year 2011-12 and the VAT assessment up to financial year 2010-11. 3. "During the year, the Company has purchased 6,350 nos. Equity shares of Rs.10 each of its associate Company viz M/s. Savas Engineering Company Pvt. Ltd. for an amount of Rs. 12.70 Lacs as a result, M/s. Savas Engineering Company Pvt. Ltd has become a wholly owned subsidiary of the Company. The Company has an investment of Rs. 409.80 Lacs in its subsidiary company "M/s. Savas Engineering Company Pvt. Ltd." by way of equity. The Company has also given an interest bearing loan of Rs. 647.61 Lacs to the said wholly owned subsidiary company. As per the Audited financial statements for the year ended on 31st March, 2015, its net worth is Rs. 145.31 Lacs. In the opinion of the management the aforesaid investment in equity and loan is long term and strategic in nature. The Company has obtained an independent valuation report from Government Approved Valuer as at 1st March, 2015 for the wholly owned subsidiary company's land and office & factory buildings, which value is in excess of the cost of investment and loan given and hence there is no diminution in value of investment and therefore no provision is considered necessary for the current financial year and loan amount is considered good and recoverable." 4. Trade receivables outstanding for more than 6 months include receivables of Rs. 1,254.82 Lacs, which are overdue from a customer whose gas based power plant project is in an advanced stage of completion. The commissioning of the said plant is dependent on the supplies of natural gas. Though the customer is confident of obtaining the requisite gas allocation from the Government of India (GOI), there are uncertainties in respect of timing of getting the gas allocation from the GOI. The customer has confirmed the outstanding balance as on 31st March, 2015, and based on the frequent discussions with the customer, the management of the Company is hopeful of recovering the outstanding amount and hence said amount is considered good and recoverable 5. Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosure. In terms of our report attached For Deloitte Haskins & Sells Chartered Accountants Registration No. 117365W Gaurav J. Shah Partner Membership No. 35701 For and on behalf of the Board of Directors Jitendra U. Mamtora Chairman DIN:00139911 Rahul Shah CFO Satyen J. Mamtora Managing Director DIN: 00139984 Chintan Trivedi Company Secretary Place : Ahmedabad Date : 27th May, 2015 |