Accounting Policies of Galada Power & Telecommunications Ltd. Company

Mar 31, 2024

Material Accounting policies:

a) Significant accounting estimates, assumptions, and judgements;

The preparation of Company''s financial statements requires management to make accounting
estimates, assumptions and judgements that affect the reported amounts of revenues, expenses,
assets and liabilities and the accompanying disclosures of contingencies at the end of the reporting
period. Uncertainty about these assumptions and estimates could result in outcomes that require
v^''T^msjerlal adjustment to the carrying amounts of assets or liabilities in future periods.

Estimates and Assumptions;

The key assumptions concerning the Future and other key sources of estimation of uncertainty at
the reporting date, that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year, are described below. The
assumptions and estimates made by the company are based on parameters avaifablc/prevailing
when the financial statements were prepared. Existing circumstances and assumptions about
future developments, however, may change due to market change or circumstances arising that
are beyond the control of the Company. Such changes are reflected in the assumptions when they
occur.

i. Impairment of non-current assets;

Impairment exists when the carrying value of an asset or cash generating unit exceeds its
recoverable amount, which is the higher of its fair value less costs of disposal and its value
in use. The fair value less costs of disposal is calculated based on available data from binding
sales transactions, conducted at arm''s length, for similar assets or observable market prices
Jess Incremental costs for disposing of the asset. The value in use calculation is based on a
Discounted Cash Flow {"DCF") model. The value in use is sensitive to the discount rate
(generally weighted average cost of capital) used for the DCF model as well as the expected
future cash-inflows and the growth rate used for exploration purposes,
if. Defined Benefit Plans;

The present value of the gratuity obligation is determined using actuarial valuation. An
actuarial valuation involves making various assumptions that may differ from actual
developments in the future. These include the determination of the discount rate, rate of
increment in salaries and mortality rates. Due to complexities involved in the valuation and
its long-term nature, a defined benefit obligation is highly sensitive to changes in these
assumptions. All the assumptions are reviewed at each reporting date.

iii. Fair Value measurement of financial Instruments;

When the fair values of financial assets and financial liabilities on reporting date cannot be
measured based on quoted prices in active markets, their fair value is measured using
valuation techniques Le„ the DCF model. The inputs to these models are taken from
observable markets,

iv. Contingencies:

Management judgement is required forestimaiing the possible infbw/outflow of resources,
if any, in respect of contrngendes/daims/litigations against the company/by the company
as it is not possible to predict the outcome of pending matters with accuracy.

v. Property, Plant and Equipment:

Based on evaluations done by the technical assessment team, the management has adopted
the useful life and residua I value of its Property, Plant and Equipment. Management believes
. - ¦ the assigned useful lives and residual value are reasonable

vl. Income Taxes:

Management judgment is required for the calculation of provision for income raxes and
deferred tax assets/(labilities. The Company reviews at each balance sheet date the carrying
amount of deferred tax assets/llabilities. The factors used in estimates may differ from
actual outcome which could lead to significant adjustment to the amounts reported in the
financial statements,

vii. Lifetime Expected Credit Loss on Trade Receivables and Other Receivables:

Trade and Other Receivables do not carry any interest and are stated at their transaction
value as reduced by lifetime expected credit tosses ("LTECL"). Management has evaluated
LTECL for different class of its debtors as follows:

b] Cu rre nt Vs No n-cu rre nt c lassifi cations

The Company presents assets and liabilities in the balance sheet based on current/ non-current
classification.

An asset is treated as current when it satisfies any of the following criteria:

i, Expected to be realised or intended to be soid or consumed in normal operating cycle;

1i. Held primarily for the purpose of trading;

iii. Expected to be realised within twelve months after the reporting period, or

iv, Cash or cash equivalent unless restricted from being exchanged or used to settle a liability

for at least twelve months after the reporting period. -

Ait other assets are classified as non-current assets.

A liability is classified as current when it satisfies any of the following criteria:

i. Expected to settle the liability in normal operating cycle;

ii. Held primarily for the purpose of trading;

iii. Due to be settled within twelve months after the reporting period, or

Iv. There is no unconditional right to defer the settlement of the liability for at least twelve
months after the reporting period

All other liabilities are classified as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities.

The opera ti ng cycle i s t h e tim e b e twe en the acq uisi t io n of a sse t s Io r proee ss( ng a nd t he i r re a lisation
In cashand cash equivalents, However, a period of 12 months is considered as ultimate operating
cycle.

c) Property, Pfant, and Equipment;

Property, Plant and Equipment are stated at cost net of input credits, less accumulated
depreciation, and Impairment fosses, if any. Cast comprises the purchase price and any attributable
cost of bringing the asset to its working condition for its intended use. Borrowing costs relating to
acquisition of property, plant and equipment which take substantial period of time to get ready for
its intended use are also included to the extent they relate to the period till such assets are ready
to be put to use.

The company adopted cost mode] as its accounting policy in recognition of the property, Plant and
Equipment and recognises the transaction value as the cost

Subsequent expenditure is capitalised to the asset''s carrying amount onby when it is probable that
future economic benefits associated with the expenditure will flow to the company and the cost of

the rtem can be measured reiiabty. Ail other repairs and maintenance costs are expensed when
incurred.

Capital work in progress includes cost of property, plant, and equipment under mstaflation/under
development as at the balance sheet date.

An item of Property, Plant and Equipment is derecognised upon disposal or when no future
economic benefits are expected from its use. Any gain or loss arising from derecognition of the
asset (calculated as the difference between the net disposal proceeds and the carrying amount of
the asset) Is recognised in the Statement of Profit and Loss. Property, Plant and Equipment which
are found to be not usable or retired from active use or when no further benefits a re expected from
their use are removed from the books of account and the carrying value if any is charged to
Statement of Profit and Loss.

Assets costing five thousand rupees or less are fully depreciated in the year of purchase,

Depreciation on Property, Plant and Equipment is provided based on the useful lives of the assets
as estimated by the Management, which are in line with Schedule 11 to the Companies Act, 2013

d) impairment of non-financial assets:

i The carrying aiiinunts of assets are reviewed at each balance sheet date if there IS any
indication ofimpairment based on internal/eaternal factors. An impairment loss Is recognized
wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable
amoubt is the greater of the asset''s net selling price and value in use. In assessing value ,n
use the estimated future cash flews are discounted to their present value at the weighted
average eost of capital. After impairment, depreciation is provided on the revised carrying
a m aunt of th e asse t ove r its re ma i n i ng usefu 111fe-

ii Reversal of impairment losses raised In prior years is recorded when there is an
'' indication that the impairment losses recognised for the asset no longer tf* or have

decreased- The reversal is limited so that the carrying amount of the asset does not exceed
K recoverable amount, nor exceed the carrylnt amount that would have been determined,
net of depredation, had no impairment loss been recognised for the asset in prior years.

e) Leases:

The determination of whether an agreement is (or contains) a lease is based on the substance of
the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilmeni
of the arrangement is dependent on the use of a specific asset or assets and the arrangement
conveys a right to use the asset or assets, even if that right is not explicitly speeded 1ft «•

arrangement.

Classification on inception of lease:

a. Operating lease:

Leases where the lessor effectively retains substantially all the risks and benefits of
ownership of the leased item, are classified as operating leases.

b, Finance Lease:

A lease is classified as a financial lease where the lessor transfers substantially all the risks
and rewards incidental to the ownership of the leased item.

Aceounting of Operating leases:

a Where the Company is the lessee:

At the date of commencement of the lease, the Company recognises a right-of-use asset
PROLT) and a corresponding lease liability for all lease arrangements in which it is a lessee,
except for Cancellable leases and short- term leases having a lease term up to 36
months. For remaining leases, the Company recognises the lease payments as an operating
expense on a straight-line basis over the period of the lease. In case the escalation m
operating lease payments is in line with the expected general inflation rate then the lease
payments are charged to statement of profit and loss instead of straight-line method

b wh e re th e Compa ny is th e iesso r:

Lease income is recognised in the Statement of Profit and Loss on a straight-line basis over
the lease term. Initial direct costs such as legal costs, brokerage costs, etc, are added to tl
. _[arrving .mount of the leased asset and recognised as an expense over the base term.

f) Inventories:

i, Raw Materials, Stores and Spares and Consumables are stated at lower of Cost and Net
realizable value. However, materials and other items held for use in the production of
inventories are not written down below cost in which they will be incorporated and expected
to be sold at or above cost. Cost is determined on FIFO basis.

ii. Work in-progress and finished goods are stated at the lower of cost and net re a li;a hie value.

iti. Cost includes direct materials, labour and a proportion of manufacturing overheads based on
actual production. Cost is determined on FIFO basis,

iv. Net realizable value is the estimated selling price in the ordinary course of business, less
estimated costs of completion and estimated costs necessary to make the sale.

g) Revenue recognition:

Revenue from contracts with customers includes Sale of Goods and Services and is recognised
when control of goods or services are transferred to the customer at an amount that reflects the
consideration entitled In exchange for those goods or services.

Revenue Is measured at the fair value of consideration received or receivable and Is recognized
when the control In all respects, over the Goods or Services is transferred to and accepted by the
customer and the company has not retained any significant risks of ownership and future
obligations with respect to such Goods or Services. Specifically, the following basis is adopted for
various sources of income:

I. sale of goods: Revenue is recognised when the significant risks and rewards of ownership of
the goods have been passed to the buyer and is disclosed net off discounts, taxes collected
and returns,

ii. Income from Services: Revenue is recognized as and when the Services are rendered as per
the terms of the individual Service Contract.

iii. interest: Interest Income is recognised on a time proportion basis taking into account the
amount outstanding and the rate applicable,

Iv. Other Sundry incomes: Insurance claims, conversion escalations are accounted for on accrual
basis.

h) Borrowing Costs:

Borrowing costs directly attributable to the acquisition, construction or production of an asset that
necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised
as part of the cost of the asset. All other borrowing costs are expensed in the period in which they
occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with
the borrowing of funds, Borrowing cost also includes exchange differences to the extent regarded
as an adjustment to the borrowing costs, ^ - ":v

i) Retirement and other employee benefits:

l. Employer''s contribution to Provident Fund/Employee State Insurance, which is in the nature
of defined contribution scheme, is expensed off when the contributions to the respective
funds are due. There are no other obligations other than the contribution payabieto the fund,

li. The company operates a gratuity plan which is in the nature of defined benefit obligation.
The company''s liability is provided based on Independent actuarial valuation on projected
unit credit method made at the end of each financial year as per the requirements of Ind AS
19 on "Employee Benefits".

iii. Gratuity liability is considered as post-employment benefit expense as per Ind AS -19-
Accord ingly, re-measurement gains and losses arising from experience adjustments and
changes in actuarial assumptions are recognised in the period in which they occur, directly in
other comprehensive income. They are included in the retained earnings in the statement of
changes in equity and in the balance sheet.

|v. Accumulated leaves, which are expected to be utilised within the next twelve months, are
treated as short-term employee benefits. The Company measures the expected cost of such
absences as the additional amount that it expects to pay as a result of the unused entitlement
that has accumulated at the reporting date.

The Company treats accumulated leaves expected to be carried forward beyond twelve
months, as long-term employee benefit for measurement purposes. Such long-term
compensated absences are provided for based on the actuarial valuation using the projected
unit credit method at the year-end. Actuarial gaiins/iosses are immediately taken to the
statement of profit and loss and are not deferred,
jj Earnings Per Share:

Basic earnings per share are calculated by dividing the profit for the period attributable to equity
shareholders by the weighted average number of equity shares outstanding during the period.

For the purpose of calculating diluted earnings per share, the profit for the period attributable to
equity shareholders and the weighted average number of shares outstanding during the period
are adjusted for the effects of all dilutive potential equity shares,

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Mar 31, 2015

1. NATURE OF OPERATIONS:

GALADA POWER AND TELECOMMUNICATION LIMITED has been incorporated on 24.06.1972. At present the Company is engaged in the business of manufacturing Aluminum conductors and other allied products.The Company has recorded a net loss of Rs.2,753.92 Lakhs for the year and has accumulated losses of Rs.39,531.67 Lakhs as at March 31, 2014, resulting in substantial erosion of the net worth. Further, there were lower cash inflows from the existing business activities. The Company has defaulted in payment of dues to banks / financial institutions and could not comply with the terms of sanction and / or repayment schedules of the lending institutions and Banks; consequently all the lending institutions recalled the loans and the Bankers of the Company also initiated legal proceedings for the recovery of the debts. The matter was referred to Board for Industrial and Financial Reconstruction (BIFR) and the Company had been declared sick. Later on, BIFR confirmed their opinion for winding up in terms of Section 20(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 vide order dt: 14-09-2007. The Company preferred an appeal before AAIFR which confirmed the BIFR order. The Company further preferred an appeal before the Hon'ble High Court of Andhra Pradesh which has stayed BIFR order and further hearings are in progress. As the Management of the Company is of the view that an acceptable and viable rehabilitation package can be worked out since all term lenders individually have in principle consented for financial restructuring and some of the lenders have already agreed for financial reconstruction , the accompanying financial statements have been prepared on a "going concern" basis.

2. BASIS OF ACCOUNTING:

The financial statements have been prepared to comply in all material respects with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014, and the relevant provisions of the Companies Act,2013 and in accordance with Generally Accepted Accounting Principles in India under the historical cost convention and on accrual basis, except in case of assets for which provision for impairment is made and revaluation is carried out. The accounting policies are consistent with those used in the previous year.

a) Use of estimates:

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the' results of operations during' the reporting period. Although these estimates are based upon management's best knowledge of current events and actions, actual results could differ from these estimates.

b) Fixed Assets:

Fixed assets are stated at cost (or revalued amounts, as the case may be), less accumulated depreciation, amortisation and impairment losses if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use.

Borrowing costs relating to acquisition of fixed assets which take substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use.

c) Depreciation:

I. Depreciation is provided considering the useful lives of respective assets, as provided and prescribed under schedule II of the Companies Act, 2013.

II. Fixed Assets costing rupees Five thousand or less are fully depreciated in the year of acquisition.

d) Impairment:

The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset's net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital. After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life. Reversal of impairment losses recognised in prior years is recorded when there is an indication that the impairment losses recognised for the asset are no longer exist or have decreased.

e) Inventories:

i. Raw materials, components, stores and spares are valued at lower of cost and net realizable value. However, raw materials and other items held for use in the production of inventories are not written down below the cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost is determined on FIFO basis.

ii. Goods in transit are valued at Cost.

iii. Finished goods, Work in progress, Scrap, by-products and loose tools are valued at lower of cost and net realizable value.

iv. Cost includes direct materials, labour and a proportion of manufacturing overheads based on normal operating capacity. Cost is determined on FIFO basis and Cost of finished goods includes excise duty.

v Net realisable value is the estimated selling price in the ordinary course of business, less estimated selling costs.

f) Prior period items:

All items of income/expenditure pertaining to prior period, which are material, are accounted through "prior period adjustments" and the others are shown under respective heads of account in the Profit and Loss Account.

g) Investments:

Investments that are readily realisable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value of each long term investment is made to recognize a decline other than temporary in nature.

h) Revenue Recognition:

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Specifically the following basis is adopted:

i. Sale of Goods: Revenue is recognized when the significant risks and rewards of ownership of goods have passed to the buyer, which generally coincides with delivery. Sales are inclusive of excise duty and value added tax/sales tax and is net of sales returns and discounts. Revenue from export sales is recognised on the date of bill of lading. Revenue on account of price escalations is accounted for on acceptance of such claims by the buyers.

ii. Income from Services: Revenue is recognized as and the Services rendered as per the terms of individual Service Contract. Income from Services is accounted inclusive of service tax.

iii. Interest: Revenue is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

iv. Other Sundry incomes: Insurance claims, conversion escalations are accounted for on accrual basis.

i) Government Grants and Subsidies:

Grants and subsidies from the government are recognized when there is reasonable assurance that the grant/subsidy will be received and all attaching conditions will be complied with.

When the grant or subsidy relates to an expense item, it is recognized as income over the periods necessary to match them on a systematic basis to the costs, which it is intended to compensate. Where the grant or subsidy relates to an asset, its value is deducted from the gross value of the assets concerned in arriving at the carrying amount of the related asset. Government grants in the form of non-monetary assets given at a concessional rate are accounted for on the basis of their acquisition cost.

j) Retirement and Other Employee Benefits:

i. Gratuity liability is a defined benefit obligation and is provided for on the basis of an actuarial valuation on projected unit credit method made at the end of each financial year.

ii. The Provident Fund is a defined contribution scheme and the contributions are charged to the profit and loss account of the year when the contributions to the respective funds are due. There are no other obligations other than the contribution payable to the respective trusts.

iii. Short term compensated absences are provided on an estimated basis. Long term compensated absences are provided for based on actuarial valuation on project unit credit method carried by an actuary as at the end of the year.

iv. Actuarial gains/losses are immediately taken to profit and loss account and are not deferred.

k) Borrowing Costs: Borrowing costs that are directly attributable to the acquisition, construction or production of Fixed Assets, which take substantial period of time to get ready for their intended use, are capitalized. Other Borrowing costs are recognized as an expense in the year in which they are incurred.

I) Leases: Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased assets are classified as operating leases.Where the Company is the lessee:Operating lease payments are recognised as an expense in the profit and loss account on a straight-line basis over the lease term.

Where the Company is the lessor:

Assets subject to operating leases are included in fixed assets. Lease income is recognized in the profit and loss account. Costs, including depreciation are recognised as an expense in the profit and loss account.

m) Earnings per Share (Basic and Diluted):

Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

n) Taxes on Income:

Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act 1961 enacted in India. Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. If the Company has carry forward of unabsorbed depreciation and tax losses, deferred tax assets are recognised only, if there is virtual certainty supported by convincing evidence that such deferred tax assets can be realised against future taxable profits.

o) Cash Flow Statement:Cash flows are reported using indirect method. Cash and cash equivalents in the cash flow statement comprise cash at bank, cash/cheques in hand and Fixed Deposits with Banks.

p) Contingent Liabilities:A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The company does not recognize a contingent liability but discloses its existence in the financial statements.

q) Provisions:A provision is recognised when there is a present obligation as a result of 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. Provisions are not discounted to its present value and are determined based on 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.

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Mar 31, 2014

A) Use of estimates:The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates.

b) Fixed Assets:

Fixed assets are stated at cost (or revalued amounts, as the case may be) less accumulated depreciation, amortisation and impairment losses if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use.

Borrowing costs relating to acquisition of fixed assets which take substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use.

c) Depreciation:

i. Depreciation on Fixed Assets is provided on Written down Value/Straight Line method as per Schedule XIV of the Companies Act, 1956.

ii. Fixed Assets costing rupees Five thousand or less are fully depreciated in the year of acquisition.

d) Impairment:

The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset''s net selling price and value-in-use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital. After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life. Reversal of impairment losses recognised in prior years is recorded when there is an indication that the impairment losses recognised for the asset do no longer exist or have decreased.

e) Inventories:

i. Raw materials, components, stores and spares are valued at lower of cost and net realizable value. However, raw materials and other items held for use in the production of inventories are not written down below the cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost is determined on FIFO basis.

ii. Goods in transit are valued at cost.

iii. Finished goods, work in progress, scrap, by-products and loose tools are valued at lower of cost and net realizable value.

iv. Cost includes direct materials, labour and a proportion of manufacturing overheads based on normal operating capacity. Cost is determined on FIFO basis and cost of finished goods includes excise duty.

v. Net realisable value is the estimated selling price in the ordinary course of business, less estimated selling costs.

f) Prior period items:

All items of income/expenditure pertaining to prior period, which are material, are accounted through "prior period adjustments" and the others are shown under respective heads of account in the Profit and Loss Account.

g) Investments:

Investments that are readily realisable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value of each long term investment is made to recognize a decline other than temporary in nature.

h) Revenue Recognition:

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Specifically the following basis is adopted:

i. Sale of Goods: Revenue is recognized when the significant risks and rewards of ownership of goods have passed to the buyer, which generally coincides with delivery. Sales are inclusive of excise duty and value added tax/sales tax and is net of sales returns and discounts. Revenue from export sales is recognised on the date of bill of lading.

Revenue on account of price escalations is accounted for on acceptance of such claims by the buyers.

ii. Income from Services:

Revenue is recognized as and when the Services are rendered as per the terms of individual Service Contract. Income from Services is accounted inclusive of service tax.

iii. Interest:

Revenue is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

iv. Export Benefits:

Export Entitlements in the form of Duty Drawback and Duty Entitlement Pass Book (DEPB) Schemes are recognized in the Profit and Loss account on realisation.

v. Other Sundry incomes:

Insurance claims, conversion and escalations are accounted for on accrual basis.

i) Government Grants and Subsidies:

Grants and subsidies from the government are recognized when there is reasonable assurance that the grant/subsidy will be received and all attaching conditions will be complied with. When the grant or subsidy relates to an expense item, it is recognized as income over the periods necessary to match them on a systematic basis to the costs, which it is intended to compensate.

Where the grant or subsidy relates to an asset, its value is deducted from the gross value of the assets concerned in arriving at the carrying amount of the related asset. Government grants in the form of non-monetary assets given at a concessional rate are accounted for on the basis of their acquisition cost.

j) Retirement and Other Employee Benefits:

i. Gratuity liability is a defined benefit obligation and is provided for on the basis of actuarial valuation on projected unit credit method made at the end of each financial year.

ii. The Provident Fund is a defined contribution scheme and the contributions are charged to the profit and loss account of the year when the contributions to the respective funds are due. There are no other obligations other than the contribution payable to the respective trusts.

iii. Short term compensated absences are provided on an estimated basis. Long term compensated absences are provided for based on actuarial valuation on project unit credit method carried by an actuary as at the end of the year.

iv. Actuarial gains/losses are immediately taken to profit and loss account and are not deferred.

k) Borrowing Costs:

Borrowing costs, that are directly attributable to the acquisition, construction or production of Fixed Assets which take substantial period of time to get ready for their intended use, are capitalized. Other Borrowing costs are recognized as an expense in the year in which they are incurred.

l) Leases:

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased assets are classified as operating leases.

Where the Company is the lessee:

Operating lease payments are recognised as an expense in the profit and loss account on a straight-line basis over the lease term.

Where the Company is the lessor:

Assets subject to operating leases are included in fixed assets. Lease income is recognized in the profit and loss account. Costs, including depreciation are recognised as an expense in the profit and loss account.

m) Earnings per Share (Basic and Diluted):

Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

n) Taxes on Income:

Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act, 1961 enacted in India. Deferred income tax reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date.

Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. If the Company has carry forward of unabsorbed depreciation and tax losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that such deferred tax assets can be realised against future taxable profits.

o) Cash Flow Statement:

Cash flows are reported using indirect method. Cash and cash equivalents in the cash flow statement comprise cash at bank, cash/cheques in hand and fixed deposits with Banks.

p) Contingent Liabilities:

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The company does not recognize a contingent liability but discloses its existence in the financial statements.

q) Provisions:

A provision is recognised when there is a present obligation as a result of 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. Provisions are not discounted to its present value and are determined based on 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.

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Mar 31, 2013

A) Use of estimates:

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the'' results of operations during'' the reporting period. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates.

b) Fixed Assets:

Fixed assets are stated at cost (or revalued amounts, as the case may be), less accumulated depreciation, amortisation and impairment losses if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use.

Borrowing costs relating to acquisition of fixed assets which take substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use.

c) Depreciation:

i. Depreciation on Fixed Assets is provided on Written down Value/Straight Line method as per Schedule XIV of the Companies Act, 1956.

ii. Fixed Assets costing rupees Five thousand or less are fully depreciated in the year of acquisition.

d) Impairment:

The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset''s net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital. After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.

Reversal of impairment losses recognised in prior years is recorded when there is an indication that the impairment losses recognised for the asset are no longer exist or have decreased.

e) Inventories:

i. Raw materials, components, stores and spares are valued at lower of cost and net realizable value. However, raw materials and other items held for use in the production of inventories are not written down below the cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost is determined on FIFO basis.

ii. Goods in transit are valued at Cost.

iii. Finished goods, Work in progress, Scrap, by-products and loose tools are valued at lower of cost and net realizable value.

iv. Cost includes direct materials, labour and a proportion of manufacturing overheads based on normal operating capacity. Cost is determined on FIFO basis and Cost of finished goods includes excise duty.

v. Net realisable value is the estimated selling price in the ordinary course of business, less estimated selling costs. ^=^^

f) Prior period items:

All items of income/expenditure pertaining to prior period, which are material, are accounted through "prior period adjustments" and the others are shown under respective heads of account in the Profit and Loss Account.

g) Investments:

Investments that are readily realisable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value of each long term investment is made to recognize a decline other than temporary in nature.

h) Revenue Recognition:

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Specifically the following basis is adopted:

i. Sale of Goods:

Revenue is recognized when the significant risks and rewards of ownership of goods have passed to the buyer, which generally coincides with delivery. Sales are inclusive of excise duty and value added tax/sales tax and is net of sales returns and discounts. Revenue from export sales is recognised on the date of bill of lading.

Revenue on account of price escalations is accounted for on acceptance of such claims by the buyers.

ii. Income from Services:

Revenue is recognized as and the Services rendered as per the terms of individual Service Contract. Income from Services is accounted inclusive of service tax.

iii. Interest:

Revenue is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

iv. Export Benefits:

Export Entitlements in the form of Duty Drawback and Duty Entitlement Pass Book (DEPB) Schemes are recognized in the Profit and Loss account on realisation.

v. Other Sundry incomes:

Insurance claims, conversion escalations are accounted for on accrual basis.

i) Government Grants and Subsidies

Grants and subsidies from the government are recognized when there is reasonable assurance that the grant/subsidy will be received and all attaching conditions will be complied with.

When the grant or subsidy relates to an expense item, it is recognized as income over the periods necessary to match them on a systematic basis to the costs, which it is intended to compensate. Where the grant or subsidy relates to an asset, its value is deducted from the gross value of the assets concerned in arriving at the carrying amount of the related asset. Government grants in the form of non-monetary assets given at a concessional rate are accounted for on the basis of their acquisition cost.

j) Retirement and Other Employee Benefits

i. Gratuity liability is a defined benefit obligation and is provided for on the basis of an actuarial valuation on projected unit credit method made at the end of each financial year.

ii. The Provident Fund is a defined contribution scheme and the contributions are charged to the profit and loss account of the year when the contributions to the respective funds are due. There are no other obligations other than the contribution payable to the respective trusts.

iii. Short term compensated absences are provided on an estimated basis. Long term compensated absences are provided for based on actuarial valuation on project unit credit method carried by an actuary as at the end of the year.

iv. Actuarial gains/losses are immediately taken to profit and loss account and are not deferred.

k) Borrowing Costs

Borrowing costs that are directly attributable to the acquisition, construction or production of Fixed Assets, which take substantial period of time to get ready for their intended use, are capitalized. Other Borrowing costs are recognized as an expense in the year in which they are incurred.

I) Leases

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased assets are classified as operating leases.

Where the Company is the lessee:

Operating lease payments are recognised as an expense in the profit and loss account on a straight-line basis over the lease term.

Where the Company is the lessor:

Assets subject to operating leases are included in fixed assets. Lease income is recognized in the profit and loss account. Costs, including depreciation are recognised as an expense in the profit and loss account. x^f^T?^

m) Earnings per Share (Basic and Diluted)

Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

n) Taxes on Income

Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act 1961 enacted in India. Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years.

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. If the Company has carry forward of unabsorbed depreciation and tax losses, deferred tax assets are recognised only, if there is virtual certainty supported by convincing evidence that such deferred tax assets can be realised against future taxable profits.

o) Cash Flow Statement

Cash flows are reported using indirect method. Cash and cash equivalents in the cash flow statement comprise cash at bank, cash/cheques in hand and Fixed Deposits with Banks.

p) Contingent Liabilities

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The company does not recognize a contingent liability but discloses its existence in the financial statements.

q) Provisions

A provision is recognised when there is a present obligation as a result of 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. Provisions are not discounted to its present value and are determined based on 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.

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Mar 31, 2012

A) Change in accounting policy: Presentation and disclosure of financial statements

During the year ended 31 March 2012. the revised Schedule VI notified under the Companies Act. 1956 has become applicable to the company for preparation and presentation of its financial statements The adoption Of revised Schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However, It has significant impact on presentation and disclosures made in the financial statements. The company has also reclassified the previous year figures in accordance with the requirements applicable in the current year

b) Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount, of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the' results of operations during the reporting period. Although these estimates are based upon managements best knowledge of current events and actions, actual results could differ from these estimates

c) Fixed Assets

Fixed assets are stated at cost (or revalued amounts, as the case may be), less accumulated depreciation, amortisation end impairment losses if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use

Borrowing costs relating to acquisition of fixed assets which take substantial period of time to get ready for its intended use are also included to the extent they relate to the period such assets are ready to be put to use.

d) Depreciation

i. Depreciation on Fixed Assets is provided on Written down Value/Straight Line method as per Schedule XIV of the Companies Act. 1956.

ii. Fixed Assets coating rupees Five thousand or less are fully depreciated in the year of acquisition.

e) Impairment

The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount The recoverable amount is the greater of the asset's net selling price and value in use In assessing value in use, the estimated future cash Rows are discounted to their present value at the weighted average cost of capital After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life

Reversal of impairment losses recognised in prior years is recorded when there is an indication that the impairment losses recognised for the asset are no longer exist or have decreased.

f) Inventories

i. Raw materials, components, Stores and Spares are valued at lower of cost and net realizable value However, raw materials and other items held for use in the production of inventories are not written down below the cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost is determined on FIFO basis.

ii. Goods in transit are valued at Cost.

iii. Finished goods, Work in progress, Scrap, by-products and loose tools are valued at lower of cost and net realizable value.

iv. Cost includes direct materials, labour and a proportion of manufacturing overheads based on normal operating capacity. Cost is determined on FIFO basis and Cost of finished goods includes excise duty.

v. Net realisable value is the estimated selling price in the ordinary course of business, less estimated selling costs.

g) Prior period items

All items of Income/expenditure pertaining to prior period, which are material, are accounted through "prior period adjustments" and the others are shown under respective heads of account in the Profit and Loss Account

h) Investments

investments that are readily realisable and Intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments Current investments are carried at lower of cost and fair value determined on an individual Investment basis Long-term investments are carried at cost However. provision for diminution in value of each long term investment is made to recognize a decline other than temporary in nature Revenue Recognition Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Specifically the following basis is adopted:

i. Sale of Goods

Revenue is recognized when the significant risks and rewards of ownership of goods have passed to (he buyer, which generally coincides with delivery. Sales are inclusive of excise duty and value added tax/sales tax and is not of sales returns and discounts Revenue from export sales is recognised on the date of bill of lading Revenue on account of price escalations is accounted for on acceptance of such claims by the buyers.

ii. Income from Services

Revenue is recognized as and the Services rendered as per the terms of individual Service Contract Income from Services is accounted inclusive of service tax.

iii. Interest:

Revenue is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable

iv. Export Benefits:

Export Entitlements in the form of Duty Drawback and Duty Entitlement Pass Book (DEPB) Schemes are recognized in the Profit and Loss account on realisation.

v. Other Sundry incomes.

Insurance claims, conversion escalations are accounted for on accrual basis.

j) Government Grants and Subsidies

Grants and subsidies from the government are recognized when there is reasonable assurance that the grant/Subsidy will be received and all attaching conditions will be complied with.

When the grant or subsidy relates to an expense item, it is recognized as income over the periods necessary to match them on a systematic basis to the costs, which it is intended to compensate. Where the grant or subsidy relates to an asset, its value is deducted from the gross value of the assets concerned in arriving at the carrying amount of the related asset Government grants in the form of non-monetary assets given at a concessional rate are accounted for on the basis of their acquisition cost.

k) Retirement and Other Employee Benefits

i. Gratuity liability is a defined benefit obligation and is provided for on the basis of an actuarial valuation on projected unit credit method made at the end of each financial year.

ii. The Provident Fund is a defined contribution scheme and the contributions are changed to the profit and loss account of the year when the contributions to the respective funds are due There are no other obligations other than the contribution payable to the respective trusts

iii. Short term compensated absences are provided an estimated basis Long term compensated absences are provided for based on actuarial valuation on project unit credit method carried by an actuary as at the end of the year.

iv. Actuarial gains/losses are immediately taken to profit and loss account and are not deferred.

l) Borrowing Costs

Borrowing costs that are directly attributable to the acquisition, construction or production of Fixed Assets, which take substantial period of time to get ready for their intended use, are capitalized Other Borrowing costs are recognized as an expense in the year in which they are incurred.

m) Leases

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased assets are classified as operating leases.

Where the Company is the lessee:

Operating Lease payments are recognised as an expense in the profit and loss account on a straight-line basis over the lease term.

Where the Company is the lessor:

Assets subject to operating leases are included in fixed assets. Lease income is recognized in the profit and loss account. Costs, including depreciation are recognised as an expense in the profit and loss account.

n) Earnings per Share (Basic and Diluted)

Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

o) Taxes on Income

Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act 1961 enacted in India. Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting Income for the year and reversal of timing differences of earlier years Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised if the Company has carry forward of unabsorbed depreciation and tax losses, deferred tax assets are recognised only, if there is virtual certainty supported by convincing evidence that such deferred tax assets can be realised against future taxable profits.

p) Cash Flow Statement

Cash flows are reported using indirect method Cash and cash equivalents in me cash flow statement comprise cash at bank, cash/cheques in hand and Fixed Deposit with Banks.

q) Contingent Liabilities

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the company or a present obligation that is not recognized because it is not probable that an outflow or resources win be required to settle the obligation A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably The company does not recognize a contingent liability but discloses its existence in the financial statements.

r) Provisions

A provision is recognised when there is a present obligation as a result of 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. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date These are reviewed at each balance sheet dale and adjusted to reflect the current best estimates.