Accounting Policies of Satellite Engineering Ltd. Company

Mar 31, 2012

(a) Basis of Preparation

The financial statements of the company have been prepared in accordance with Generally Accepted Accounting Principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all material respects with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on an accrual basis and under the historical cost convention. The accounting policies adopted in the preparation of financial statements are consistent with those of previous year.

(b) Use of Estimates

The preparation of financial statements in conformity with Indian GAAP requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the management's best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets and liabilities in future periods.

(c) Tangible Fixed Assets

Fixed assets are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises Purchase Price, Borrowing Costs if capitalization criteria are met and any other directly attributable cost of bringing the asset to its working condition for the intended use, net off of any trade discounts and rebates. Subsequent expenditure related to an item of fixed asset is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance. All other expenses on existing fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts, are changed to the Statement of Profit and Loss for the period during which such expenses are incurred.Gains or losses arising from derecognition of fixed assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the Statement of Profit and Loss when the asset is derecognized.Capital assets under erection/installation are stated in the Balance Sheet as "Capital Work-in-Progress”.

(d) Research and Development Costs

Capital expenditure on Research and Development is reported as Tangible/Intangible Assets under relevant head. Revenue expenditure incurred is charged to revenue in the year in which it is incurred and the same is grouped under the respective head of expenses in the Statement of Profit and Loss.

(e) Intangible Assets

Intangible Assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Intangible Assets are amortized on a Straight-line basis over the estimated useful economic life. The Company uses a rebuttable presumption that the useful life of an Intangible Asset will not exceed 10 years from the date when the asset is available for use.

(f) Intangible Assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Intangible Assets are amortized on a Straight-line basis over the estimated useful economic life. The Company uses a rebuttable presumption that the useful life of an Intangible Asset will not exceed 10 years from the date when the asset is available for use.

(i) Depreciation is provided using the Straight Line Method as per the useful lives of the assets estimated by the management, or at the rates prescribed under schedule XIV of the Companies Act, 1956 whichever is higher, except for leasehold land and Intangible Assets.

(ii) Depreciation on assets acquired / sold during the year has been provided on pro-rata basis.

(iii) Leasehold Land is amortised over the period of the lease.

(iv) Assets costing individually Rs 5,000 or less are depreciated fully in the year of acquisition.

(g) Impairment of Assets

(i) The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset's recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. An assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased.

(ii) After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.

(h) Leases

Where the Company is the lessee

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognized as an expense in the Statement of Profit and Loss on a straight-line basis over the lease term. All leases are cancellable in nature and subject to renewal each year.

Where the Company is the lessor

Assets subject to operating leases are included in fixed assets. Lease income is recognised in the Statement of Profit and Loss on a straight-line basis over the lease term. Costs, including depreciation are recognised as an expense in the Statement of Profit and Loss. Initial direct costs such as legal costs, brokerage costs, etc. are recognised immediately in the Statement of Profit and Loss.

(i) Investments

Investments, which are readily realisable and intended to be held for not more than a year from the date on which such investments are made, are classified as current investments. All other investments are classified as long-term investments. Current investments are carried in the financial statements at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. Investments in share of foreign subsidiaries are reported in Indian Currency at the rate of exchange prevailing on the date of transaction. However, provision for diminution in value is made to recognise a decline other than temporary in the value of the investments.

(j) Inventories

(i) Raw materials, Packing materials, fuel, stores and spares are valued at lower of cost and net realizable value. Cost includes Purchase Price and other directly attributable costs incidental thereto. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost is determined on a weighted average basis.

(ii) Work-in-progress and finished goods are valued at lower of cost and net realizable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity. Cost of finished goods includes excise duty. Cost is determined on a weighted average basis.

(iii) 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.

(iv) Provision for diminision in value of inventories has been made for expired, obsolete, non-moving and slow- moving inventories as per the management's estimate.

(k) 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.

(i) Sale of Goods

Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on delivery of goods. Excise Duty deducted from turnover (gross) are the amount that is included in the amount of turnover (gross) and not the entire amount of liability arised during the year. Excise duty is accounted on the basis of both, payments made in respect of goods cleared and also provision made for goods lying in bonded warehouse. VAT and Sales Tax are charged to Revenue.

(ii) Interest

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

(iii) Export Incentives

Export Incentives are recognized as income when right to receive credit as per the terms of the scheme is established in respect of the exports made and when there is no significant uncertainty regarding the ultimate collection of the relevant export proceeds.

(l) Miscellaneous Expenditure Not Written-off

Miscellaneous Expenditure represents the expenses incurred on Initial Public Offer and the same need to be adjusted against Securities Premium Account as permitted under Section 78 of the Companies Act, 1956.

(m) Foreign Currency Translation

(i) Transactions in the foreign currencies are recorded at the exchange rate in force on the date of transactions.

(ii) Loans denominated in foreign currencies are translated at the rates prevailing on the date of the Balance Sheet; the resultant exchange gains/losses are dealt with in the Statement of Profit and Loss.

(iii) Monetary items denominated in foreign currencies at the year end are restated at the year end rates.

(iv) Exchange differences that arise on settlement in respect of liabilities incurred for the purpose of acquiring fixed assets are recognized in the Statement of Profit and Loss.

(v) The difference in translation of monetary assets and liabilities, and realized gains and losses on foreign exchange transactions are recognized in the Statement of Profit and Loss.

(vi) Non monetary items other than fixed assets are carried in terms of historical cost denominated in a foreign currency using the exchange rate at the date of transactions.

(n) Retirement and Other Employee Benefits

(i) Defined Contribution Plan

Company's contribution paid/payable during the year to retirement benefit in the form of Provident Fund, Employees state Insurance Corporation and Labour Welfare Fund are recognized in the Statement of Profit and Loss. The Company has no obligation, other than the contribution paid/payable.

(ii) Defined Benefit Plan

The Company operates two defined benefit plans for its employees, viz., Gratuity and Leave Encashment. The costs of providing benefits under these plans are determined on the basis of Actuarial Valuation at each year- end. Separate actuarial valuation is carried out for each plan using the projected unit credit method. Actuarial gains and losses for both defined benefit plans are recognized in full in the period in which they occur in the Statement of Profit and Loss.

(o) Income Taxes

Tax Expense comprises of Current and Deferred Tax. Current Income Tax is measured at the amount expected to be paid to the tax authorities in accordance with the 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 Income Taxes reflect the impact of Timing Differences between Taxable Income and Accounting Income originating during the Current Year and reversal of timing differences for the earlier years. Deferred Tax is measured using the tax rates and the tax laws enacted or substantively enacted at the reporting date. Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized for deductible timing differences 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 realized. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.

At each reporting date, the Company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax asset to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realized.

The carrying amount of deferred tax assets are reviewed at each reporting date. The Company writes-down the carrying amount of deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.

(p) Earnings Per Share

The Company reports basic Earning Per Share (EPS) in accordance with Accounting Standard 20 on Earning Per Share.

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting preference dividends and attributable taxes) by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period are adjusted for events of bonus and preferential issue.

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.

(q) Cash and Cash Equivalents

Cash and cash equivalents in the cash flow statement comprise cash on hand, cash at bank, short-term investments with an original maturity of three months or less and remittances in transit.

(r) Derivative Instruments

(i) The premium or discount arising at the inception of forward exchange contracts is amortised as expense or income during the same period in which transaction occurs. Exchange differences on such contracts are recognised in the Statement of Profit and Loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognised as income or as expense for the year. The Company does not enter into forward contracts for trading or speculation purpose.

(ii) As per the ICAI Announcement, derivative contracts, other than foreign currency forward contracts covered under AS-11, are marked to market on a portfolio basis, and the net loss, if any, after considering the offsetting effect of gain on the underlying hedge item, is charged to the Statement of Profit and Loss. Net gain, if any, after considering the offsetting effect of loss on the underlying hedged item, is ignored. The Company does not enter into derivative contracts for trading or speculation purpose.

(s) Provisions

A provision is recognized when an enterprise has a present obligation as a result of past event; 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.

(t) 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.

(u) Segment Reporting

Identification of Segment

The Company's operating businesses are organized and managed separately according to the nature of products and activities, with each segment representing a strategic business unit that has different products and activities through similar market operations. The analysis of geographical segments is based on the geographical segments is based on the geographical location of the customers.

(v) Measurement of EBITDA

As permitted by the Guidance Note on the Revised Schedule VI to the Companies Act, 1956, the Company has elected to present Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) as a separate line item on the face of the Statement of Profit and Loss. The Company measures EBITDA on the basis of Profit / (Loss) from continuing operations. In its measurement, the Company does not include Depreciation and Amortization expense, Finance Costs and Tax expenses.

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Mar 31, 2011

A. Basis of Accounting

The Financial statements have been prepared on accrual basis of accounting under the Historical cost convention and in accordance with the Companies Act, 1956 and the applicable Accounting Standards issued under the Companies (Accounting Standards) Rules, 2006.

B. Revenue Recognition

Income and Expenditure are recognized on accrual basis.

C. Fixed Assets.

Fixed assets are stated at cost of acquisition or construction less accumulated depreciation

D. Depreciation

The Company is providing depreciation on Fixed Assets on Written Down Value basis in accordance with the rates laid down in schedule XIV of the Companies Act, 1956.

E. Investments

Long-term investments are stated at cost.

F. Foreign Currency Transaction.

Transactions in the foreign currency are recorded at the rate of exchange in force at the time of occurrence of transaction. Exchange difference arising on realization of Export proceeds are accounted for in the year of actual realization of foreign exchange. Exchange difference arising at the time of payment of any other FOREX obligation is charged to revenue.

G. Inventories

Raw Materials At lower of Cost and Net Realizable Value

Stores At lower of Cost and Net Realizable Value

Work in Process At lower of Cost and Net Realizable Value

Finished Goods At Cost or Market value whichever is lower

Trading Goods At Cost or Market value whichever is lower

H. Retirement Benefits.

Leave Encashment and Gratuity payable to the employees are accounted for as and when payable on retirement/resignation.

I. Contingent Liabilities.

Contingent Liabilities are disclosed by way of notes to the Accounts and are not provided in the accounts.

J. Taxes on Income

In accordance with Accounting standards-22 (AS-22) on 'Accounting for taxes on Income' issued under the Companies (Accounting Standards) Rules, 2006, the Company has provided for the current year's tax, if any, at the current tax rates based on assessable income and for the deferred tax at the tax rates that have been enacted or substantively enacted by Balance Sheet date based on the tax effect on timing differences resulting from the recognition of the items in the financial statements and in estimating its current tax provision. However, as there is no reasonable certainty of realization, deferred tax assets have not been recognized.

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Mar 31, 2009

A. Basis of Accounting

The Financial statements have been prepared on accrual basis of accounting under the Historical cost convention and in accordance with the Companies Act, 1956 and the applicable Accounting Standards issued under the Companies (Accounting Standards) Rules, 2006.

B. Revenue Recognition

Income and Expenditure are recognized on accrual basis.

C. Fixed Assets.

Fixed assets are stated at cost of acquisition or construction.

D. Depreciation

The Company is providing depreciation on Fixed Assets on Written Down Value basis in accordance with the rates laid down in schedule XIV of the Companies Act, 1956.

E. Investments

Long-term investments are stated at cost.

F. Foreign Currency Transaction.

Transactions in the foreign currency are recorded at the rate of exchange in force at the time of occurrence of transaction. Exchange difference arising on realization of Export proceeds are accounted for in the year of actual realization of foreign exchange. Exchange difference arising at the time of payment of any other FOREX obligation is charged to revenue.

G. Inventories

Raw Materials At lower of Cost and Net Realizable Value

Stores At lower of Cost and Net Realizable Value Work in Process At lower of Cost and Net Realizable Value

Finished Goods At Cost or Market value whichever is lower Trading Goods At Cost or Market value whichever is lower

H. Retirement Benefits.

Leave Encashment and Gratuity payable to the employees are accounted for as and when payable on retirement/resignation.

I. Contingent Liabilities.

Contingent Liabilities are disclosed by way of notes to the Accounts and are not provided in the accounts.

J. Income Taxes

In accordance with Accounting standards-22 (AS-22) on "Accounting for taxes on Income issued under the Companies (Accounting Standards) Rules, 2006, the Company has provided for the current years tax, if, any at the current tax rates based on assessable income and for the deferred tax at the tax rates that have been enacted or substantively enacted by Balance Sheet date based on the tax effect on timing differences resulting from the recognition of the items in the financial statements and in estimating its current tax provision. However, as there is no reasonable certainty of realization, deferred tax assets have not been recognized.