Accounting Policies of S S Forging & Engineering Ltd. Company

Mar 31, 2013

1. BASIS FOR PREPARATION OF ACCOUNTS

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956.

2. SYSTEM OF ACCOUNTING

The company generally, follows the mercantile system of accounting and recognizes income and expenditure on accrual basis except those with significant uncertainties. Financial Statements are based on historical cost. Those cost are not adjusted to reflect the impact of the changing value in the purchasing power of money

3. USE OF ESTIMATES:-

The preparation 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 preparation 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 / materialize.

4. REVENUE RECOGNITION

a) Domestic sales are recognized on transfer of significant risks and rewards to the customer which takes place on dispatch of goods from the stockyard / storage area.

b) Sales are disclosed net of Sales Tax, Discount and Returns as applicable.

5. TANGIBLE FIXED ASSETS

Fixed assets, except Land and Leasehold Land, are carried at cost less accumulated depreciation and impairment losses, if any. The cost of fixed assets includes interest on borrowings attributable to acquisition of qualifying fixed assets up to the date the asset is ready for its intended use and other incidental expenses incurred up to that date. Exchange differences arising on restatement / settlement of long-term foreign currency borrowings relating to acquisition of depreciable fixed assets are adjusted to the cost of the respective assets and depreciated over the remaining useful life of such assets. Machinery spares which can be used only in connection with an item of fixed asset and whose use is expected to be irregular are capitalised and depreciated over the useful life of the principal item of the relevant assets. Subsequent expenditure relating to fixed assets is capitalised only if such expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance.

6. BORROWING COSTS

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. 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 is added to the cost of the assets.

7. DEPRECIATION

a) Fixed assets except land, leasehold land and miscellaneous fixed assets are depreciated on straight line method on a pro-rata basis from the month in which each assets is put to use. Depreciation has been provided at the rates prescribed in Schedule XIV to the Companies Act, 1956.

b) Plant and machinery, the written down value of which at the beginning of the year is Rs. 5,000 or less, and other assets, the written down value of which at the beginning of the year is Rs. 1,000 or less, are depreciated at the rate of 100%. Assets purchased during the year costing Rs 5000 or less are depreciated at the rate of 100%.

8. INVENTORIES

a) Inventories are valued at the lower of cost, determined on the weighted average basis, and net realizable value

b) Obsolete and Non-Moving Inventory of Raw Material, Stores and Spares is provided for on identification by the Management.

9. INVESTMENTS

Current investments are valued at the lower of cost and fair value. Long-term investments are valued at cost except in the case of a permanent diminution in their value, in which case the necessary provision is made.

10. EMPLOYEES BENEFITS

As per information and Explanation given to us, No Provision made for the Employees Benefits Plan.

11. TAXES ON INCOME

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961.

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company.

Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantially enacted as at the reporting date. Deferred tax liabilities are recognised for all timing differences. Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recognised only if there is virtual certainty that there will be sufficient future taxable income available to realise such assets. Deferred tax assets are recognised for timing differences of other items only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realised. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each Balance Sheet date for their readability.

12. Segmental Reporting

The reporting requirements of Segmental Reporting (AS-17) are not applicable on the company.

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Mar 31, 2012

1. BASIS FOR PREPARATION OF ACCOUNTS

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956.

2. SYSTEM OF ACCOUNTING

The company generally, follows the mercantile system of accounting and recognizes income and expenditure on accrual basis except those with significant uncertainties. Financial Statements are based on historical cost. Those cost are not adjusted to reflect the impact of the changing value in the purchasing power of money

3. USE OF ESTIMATES:- The preparation 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 preparation 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 / materialize.

4. REVENUE RECOGNITION

a) Domestic sales are recognized on transfer of significant risks and rewards to the customer which takes place on dispatch of goods from the stockyard / storage area.

b) Sales are disclosed net of Sales Tax, Discount and Returns as applicable.

5. TANGIBLE FIXED ASSETS

Fixed assets, except Land, Leasehold Land and Misc. Fixed Assets, are carried at cost less accumulated depreciation and impairment losses, if any. The cost of fixed assets includes interest on borrowings attributable to acquisition of qualifying fixed assets up to the date the asset is ready for its intended use and other incidental expenses incurred up to that date. Exchange differences arising on restatement / settlement of long-term foreign currency borrowings relating to acquisition of depreciable fixed assets are adjusted to the cost of the respective assets and depreciated over the remaining useful life of such assets. Machinery spares which can be used only in connection with an item of fixed asset and whose use is expected to be irregular are capitalised and depreciated over the useful life of the principal item of the relevant assets. Subsequent expenditure relating to fixed assets is capitalised only if such expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance.

6. BORROWING COSTS

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. 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 up to the date of capitalisation of such asset is added to the cost of the assets.

7. DEPRECIATION

a) Fixed assets except land, leasehold land, Misc. Fixed Assets are depreciated on straight line method on a pro-rata basis from the month in which each assets is put to use. Depreciation has been provided at the rates prescribed in Schedule XIV to the Companies Act, 1956.

b) Plant and machinery, the written down value of which at the beginning of the year is Rs. 5,000 or less, and other assets, the written down value of which at the beginning of the year is Rs. 1,000 or less, are depreciated at the rate of 100%. Assets purchased during the year costing Rs 5000 or less are depreciated at the rate of 100%.

8. INVENTORIES

a) Inventories are valued at the lower of cost, determined on the weighted average basis, and net realizable value

b) Obsolete and Non-Moving Inventory of Raw Material, Stores and Spares is provided for on identification by the Management.

9. INVESTMENTS

Current investments are valued at the lower of cost and fair value. Long-term investments are valued at cost except in the case of a permanent diminution in their value, in which case the necessary provision is made.

10. EMPLOYEES BENEFITS

As per information and Explanation given to us, No Provision made for the Employees Benefits Plan.

11. TAXES ON INCOME

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961.

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company.

Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantially enacted as at the reporting date. Deferred tax liabilities are recognised for all timing differences. Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recognised only if there is virtual certainty that there will be sufficient future taxable income available to realise such assets. Deferred tax assets are recognised for timing differences of other items only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realised. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each Balance Sheet date for their realisability.

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Mar 31, 2010

1. BASIS FOR PREPARATION OF ACCOUNTS

These financial statements have been prepared to comply in all material respects with all the applicable accounting principles in India, the applicable accounting standard notified under section 211(3C) of the Companies Act, 1956 and the relevant provisions of the Companies Act, 1956.

2. SYSTEM OF ACCOUNTING

The company generally, follows the mercantile system of accounting and recognizes income and expenditure on accrual basis except those with significant uncertainties. Financial Statements are based on historical cost. Those cost are not adjusted to reflect the impact of the changing value in the purchasing power of money

3. REVENUE RECOGNITION

a) Domestic sales are recognized on transfer of significant risks and rewards to the customer which takes place on dispatch of goods from the stockyard / storage area.

b) Sales are disclosed net of Sates Tax, Discount and Returns as applicable.

4. FIXED ASSETS

Fixed assets are carried at cost of acquisition or construction or at manufacturing cost in the year of capitalization less accumulated depreciation. The Capital WIP would be capitalized once the asset is completed.

5. BORROWING COSTS

Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are capitalized till the month in which each asset is put to use as part of the cost of that asset

6. DEPRECIATION

a) Fixed assets except leasehold land and vehicles are depreciated on straight line method on a pro-rata basis from the month in which each assets is put to use. Depreciation has been provided at the rates prescribed in Schedule XIV to the Companies Act, 1956.

b) Plant and machinery, the written down value of which at the beginning of the year is Rs. 5,000 or less, and other assets, the written down value of which at the beginning of the year is Rs. 1,000 or less, are depreciated at the rate of 100%. Assets purchased during the year costing Rs 5000 or less are depreciated at the rate of 100%.

c) No Depreciation has been charged in the books except for Computer hardware and Software purchased and capitalized during the current financial year.

7. INVENTORIES

a) Inventories are valued at the lower of cost, determined on the weighted average basis, and net realizable value

b) Obsolete and Non-Moving Inventory of Raw Material, Stores and Spares is provided for on identification by the Management

8. INVESTMENTS

Current investments are valued at the lower of cost and fair value. Long-term investments are valued at cost except in the case of a permanent diminution in their value, in which case the necessary provision is made.

9. DEFERRED TAXES

Tax expense for the period, comprising current tax and deferred tax, is included in determining the net profit/(loss) for the year. Current tax is recognized based on assessable profit computed in accordance with the Income Tax Act and at the prevailing tax rate.

Deferred tax is recognized for all timing differences. Deferred tax assets are carried forward to the extent it is reasonably / virtually certain that future taxable profit will be available against which such deferred tax assets can be realized. Deferred tax assets are reviewed at each balance sheet date and written down/ written up to reflect the amount that is reasonably/ virtually certain (as the case may be) to be realized.

Deferred tax assets and liabilities are measured at the tax rates that have been enacted or substantively enacted at the balance sheet date.

10. SEGMENT ACCOUNTING AND REPORTING

In addition to the significant accounting policies applicable to the business segment as set out in Point No 9 to Notes to Accounts, the accounting policies relating to segment accounting are as unden-

a. Segment Revenue and Expenses

Segment Revenue and Expenses those are directly attributable to the segment are considered for respective segments. For rest allocation has been done between segments & where there it is not possible to allocate, the same has been considered as unallocable revenue and expenses.

b. Segment Assets and Liabilities

All segment assets and liabilities are directly attributable to the segment. Segment assets include all operating assets used by the segment and consist principally of fixed assets, inventories, sundry debtors, loans and advances.