Accounting Policies of SPEL Semiconductor Ltd. Company

Mar 31, 2025

Note 3: Significant Accounting Policies
Inventories: (Ind AS 2)

Inventories are valued in accordance with the method of valuation prescribed by The Institute of Chartered
Accountants of India at lower of cost or net realizable value.

Cost of raw materials, stores, spares, consumable tools and traded goods comprises cost of purchases and
includes taxes and duties and is net of eligible credits under GST scheme. Cost of work-in-progress, work-
made components and finished goods comprise direct materials, direct labour and an appropriate proportion
of variable and fixed overheads, which is allocated on a systematic basis. Cost of inventories also includes
all other related costs incurred in bringing the inventories to their present location and condition

Net realizable value represents the estimated selling price for inventories less all estimated costs of
completion and costs necessary to make the sale.

Cost of inventories are determined as follows:

•Raw materials, stores, spares, consumable tools, traded goods: on moving weighted average basis; and

•Work-in-progress and finished goods: on moving weighted average basis plus appropriate share of
overheads.

Cost of obsolete / non-moving inventories is provided based on policy adopted from transition date (Apr
1, 2016) which is as under:

Raw Materials, Consumables and spare parts non-moving over two years are provided in statement of
profit and loss. Work-in-progress and finished goods non-moving over considerable period of time are
provided in statement of profit and loss.

Cash Flow Statement: (Ind AS 7)

Cash flows are reported using the indirect method, where by profit for the period is adjusted for the effects
of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or
payments and item of income or expenses associated with investing or financing cash flows. The cash
flows from operating, investing and financing activities of the Company are segregated The Company
considers all highly liquid investments that are readily convertible to known amounts of cash to be cash
equivalents.

Taxes on Income: (Ind AS 12)

Income tax expense comprises current and deferred income tax Income tax expense is recognized in net
profit in the Statement of Profit and Loss except to the extent that it relates to items recognize directly in
equity, in which case it is recognized in other comprehensive income. Current income tax for current and

prior periods is recognized at the amount expected to be paid to or recovered from the tax authorities, using
the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date.

Deferred income tax assets and liabilities are recognized for all temporary differences arising between the
tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets
are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the
related tax benefit will be realized.

Property, Plant & Equipment: (Ind AS 16)

Property, plant and equipment are stated at acquisition cost net of accumulated depreciation and
accumulated impairment losses, if any. Subsequent costs are included in the asset’s carrying amount or
recognized as a separate asset, as appropriate, only when it is probable that future economic benefits
associated with the item will flow to the Company and the cost of the item can be measured reliably. All
other repairs and maintenance are charged to the Statement of Profit and Loss during the period in which
they are incurred.

Gains or losses arising on retirement or disposal of property, plant and equipment are recognized in the
Statement of Profit and Loss.

Depreciation is provided on a pro-rata basis on the straight-line method based on estimated useful life
prescribed under Schedule II to the Companies Act, 2013.

Freehold land is not depreciable, hence no depreciation charged to statement of profit and loss.

The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed
at each financial year end and adjusted prospectively, if appropriate.

Revenue Recognition: (Ind AS 18)

Sale of goods:

Revenue from sale of products is recognized at the point in time when control of the asset is transferred to
the Customer, generally when the product is shipped to the Customer and accepted by the Customer.

Revenue is measured at the fair value of the consideration received or receivable.

Sale of services:

Revenue from services is recognized on completion of the service in accordance with the terms of contract
and upon Customer acceptance.

Other income is comprised primarily of interest income and Rental Income from lease of property. Interest
income is accrued on a time basis, by reference to the principal outstanding and at the effective interest
rate applicable (provided that it is probable that the economic benefits will flow to the Company and the
amount of income can be measured reliably).

Employee Benefits: (Ind AS 19)

Retirement benefit costs and termination benefits:

Payments to defined contribution plans i.e., Company’s contribution to provident fund, superannuation fund,
employee state insurance and other funds are determined under the relevant schemes and/ or statute and
charged to the Statement of Profit and Loss in the period of incurrence when the services are rendered by
the Employees.

For defined benefit plans i.e. Company''s liability towards gratuity (partly funded), other retirement/
terminations benefits and compensated absences, the cost of providing benefits is determined using the
projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting
period. Defined benefit costs are comprised of:

• Service cost (including current service cost, past service cost, as well as gains and losses on
curtailments and settlements);

• Net interest expense or income; and

• Re-measurement.

The Company presents the first two components of defined benefit costs in profit or loss in the line item ‘
Employee benefits expense’. Curtailment gains and losses are accounted for as past service costs.

Re-measurement of net defined benefit liability/ asset pertaining to gratuity comprise of actuarial gains/
losses (i.e.changes in the present value resulting from experience adjustments and effects of changes in
actuarial assumptions) is reflected immediately in the balance sheet with a charge or credit recognised in
other comprehensive income in the period in which they occur. Re-measurement recognised in other
comprehensive income is reflected immediately in retained earnings and is not reclassified to profit or loss.

Shortterm Employee Benefits:

Short-term employee benefits are recognized as an expense at the undiscounted amount in the Statement
of Profit and Loss of the year in which the related services are rendered.

In respect of Gratuity, the Company offers a non-contributory defined benefit plan to its Employees. The
liability for the same, as at the year end, is provided for on the basis of Actuarial Valuation. The entity is
operating through SPIC Electronic & System Limited Gratuity fund for all payments related to gratuity and
the trust accounts are subjected to Audit.

In respect of Provident fund, the employees and the Company make fixed monthly contributions to the
SPEL Semiconductor Limited Provident Fund equal to a specified percentage of the covered employee’s
salary. The interest rate payable by the Trust to the beneficiaries is being notified by the aforesaid Trust
every year which is not less than the interest rate notified by the Government of India under the Employees
Provident Fund Scheme. The Company has an obligation to make good the shortfall, if any, in the fund.

a) Transactions in foreign currencies are initially recorded by the Company at the functional currency spot
rates at the date at which the transaction first qualifies for recognition. However, for practical reasons, the
Company uses an average rate, if the average approximates the actual rate at the date of the transaction.

b) Monetary assets and liabilities denominated in foreign currencies are translated at the functional
currency spot rates of exchange at the reporting date. Exchange differences arising on settlement or
translation of monetary items are recognised in profit or loss.

c) Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using
the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a
foreign currency are translated using the exchange rates at the date when the fair value is determined. The
gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the
recognition of the gain or loss on the change in fair value of the item (i.e., translation differences on items
whose fair value gain or loss is recognized in OCI or profit or loss are also recognised in OCI or profit or loss,
respectively).

d) Gain on Foreign exchange (recognized in P&L a7c) : (8.53) Lakhs

e) Earnings in Foreign Currency : 8,28.83 Lakhs

f) Expenditure in foreign currency : 7.51 Lakhs

g) Value of Imports (on C.I.F basis) : 404.55 Lakhs

Borrowing Costs: (Ind AS 23)

Borrowing cost include interest computed using effective interest rate method, amortization of ancillary costs
incurred and exchange differences from foreign currency borrowings to the extent they are regarded as an
adjustment to the interest cost.

Borrowing costs that are directly attributable to the acquisition, construction, production of a qualifying asset
is capitalized as part of the cost of that asset which takes substantial period of time to get ready for its
intended use. The Company determines the amount of borrowing cost eligible for capitalization by applying
capitalisation rate to the expenditure incurred on such cost. The capitalisation rate is determined based on
the weighted average rate of borrowing cost applicable to the borrowings of the Company which are
outstanding during the period, other than borrowings made specifically towards purchase of the qualifying
asset. The amount of borrowing cost that the Company capitalises during the period does not exceed the
amount of borrowing cost incurred during that period. All other borrowings costs are expensed in the period
in which they occur.

Interest income earned on the temporary investment of specific borrowings pending their expenditure on
qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in the statement of profit and loss in the period in which they are
incurred.

Related Party Disclosure: (Ind AS 24)

a) List of parties having significant influence

Ultimate Holding Company : Natronix Semiconductor Technology PTE LTD (Singapore)

Fellow Subsidiaries : Natronix Semiconductor Technology Private Limited

The basic earnings per share are computed by dividing the net profit for the period attributable to equity
shareholders by the weighted average number of equity shares outstanding during the period.

Diluted EPS is computed by dividing the net profit aftertax by the weighted average number of equity shares
considered for deriving basic EPS and also weighted average number of equity shares that could have been
issued upon conversion of all dilutive potential equity shares. Dilutive potential equity shares are deemed
converted as of the beginning of the period, unless issued at a later date. Dilutive potential equity shares are
determined independently for each period presented. The number of equity shares and potentially dilutive
equity shares are adjusted for bonus shares, as appropriate.

At the end of each reporting period, the Company determines whether there is any indication that its assets
(property, plant and equipment, intangible assets) have suffered an impairment loss with reference to their
carrying amounts If any indication of impairment exists, the recoverable amount (i.e. higher of the fair value
less costs of disposal and value in use) of such assets is estimated and impairment is recognised, if the
carrying amount exceeds the recoverable amount. In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax discount rate that reflects current market assessments
of the time value of money and the risks specific to the asset for which the estimates of future cash flows
have not been adjusted.

When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates
the recoverable amount of the cash-generating unit to which the asset belongs.

When an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit)
is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount
does not exceed the carrying amount that would have been determined had no impairment loss been
recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is
recognised immediately in profit or loss.

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Mar 31, 2024

Note 1: Corporate Information

SPEL Semiconductor Limited (“the Company”) is a public limited Company incorporated and domiciled in India and governed by the Companies Act, 2013 (“Act”). The Company’s registered office and factory is situated at 5, CMDA Industrial Estate, MM Nagar, Chennai, Tamil Nadu, India. SPEL is India’s 1^st and only semiconductor IC (Integrated Circuit) Assembly & Test facility based in Chennai. SPEL has been servicing the demanding US market for over 20 years now.

Note 2: Basis of preparation of financial statementsA) Basis of preparation and presentation

These financial statements are prepared in accordance with Indian Accounting Standards (Ind AS) under the historical cost convention on the accrual basis except for certain financial instruments which are measured at fair values, the provisions of the Companies Act, 2013 (‘the Act’) (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). The Ind AS are prescribed under Section 133 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016.

Accounting policies have been consistently applied

B) Use of Estimates

The preparation of the financial statements in conformity with Ind AS requires the Management to make estimates, judgments and assumptions. These estimates, judgments and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period

The estimates and assumptions used in these Ind AS financial statements are based on Management''s evaluation of the relevant facts and circumstances as of the date of the Ind AS financial statements. The actual amounts may differ from the estimates used in the preparation of the Ind AS financial statements and the difference between actual results and the estimates are recognised in the period in which the results are known/materialise.

C) Functional and presentation currency

These financial statements are presented in Indian Rupees in Lakhs, which is the Company’s functional currency.

D) Current and Non-Current Classification:

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

An asset is treated as current when it is:

• Expected to be realized or intended to be sold or consumed in normal operating cycle.

• Held primarily for the purpose of trading.

• Expected to be realized within twelve months after the reporting period, or

• Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period,

All other assets are classified as non-current.

A liability is current when:

• It is expected to be settled in normal operating cycle.

• It is held primarily for the purpose of trading.

• It is due to be settled within twelve months after the reporting period, or

• 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 operating cycle is the time between the acquisition of assets for processing and their realization in cash and cash equivalents. The Company has identified 1 month as its operating cycle.

Note 3: Significant Accounting PoliciesInventories: (Ind AS 2)

Inventories are valued in accordance with the method of valuation prescribed by The Institute of Chartered Accountants of India at lower of cost or net realizable value.

Cost of raw materials, stores, spares, consumable tools and traded goods comprises cost of purchases and includes taxes and duties and is net of eligible credits under GST scheme. Cost of work-in-progress, work-made components and finished goods comprise direct materials, direct labour and an appropriate proportion of variable and fixed overheads, which is allocated on a systematic basis. Cost of inventories also includes all other related costs incurred in bringing the inventories to their present location and condition

Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale.

Cost of inventories are determined as follows:

•Raw materials, stores, spares, consumable tools, traded goods: on moving weighted average basis; and

•Work-in-progress and finished goods: on moving weighted average basis plus appropriate share of overheads.

Cost of obsolete / non-moving inventories is provided based on policy adopted from transition date (April 1, 2016) which is as under:

Raw Materials, Consumables and spare parts non-moving over two years are provided in statement of profit and loss.Work-in-progress and finished goods non-moving over considerable period of time are provided in statement of profit and loss.

Cash Flow Statement: (Ind AS 7)

Cash flows are reported using the indirect method, where by profit for the period is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated. The Company considers all highly liquid investments that are readily convertible to known amounts of cash to be cash equivalents.

Taxes on Income: (Ind AS 12)

Income tax expense comprises current and deferred income tax. Income tax expense is recognized in net profit in the Statement of Profit and Loss except to the extent that it relates to items recognize directly in equity, in which case it is recognized in other comprehensive income. Current income tax for current and prior periods is recognized at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date.

Deferred income tax assets and liabilities are recognized for all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

Property, Plant & Equipment: (Ind AS 16)

Property, plant and equipment are stated at acquisition cost net of accumulated depreciation and accumulated impairment losses, if any. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the Statement of Profit and Loss during the period in which they are incurred.

Gains or losses arising on retirement or disposal of property, plant and equipment are recognized in the Statement of Profit and Loss.

Depreciation is provided on a pro-rata basis on the straight-line method based on estimated useful life prescribed under Schedule II to the Companies Act, 2013.

Freehold land is not depreciable, hence no depreciation charged to statement of profit and loss.

The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.

Type of Assets	Period
Building	30 Years
Computer & Peripherals	3 Years
Plant & Machinery	15 Years
Office Equipment	5 Years
Furniture & Fittings	8 Years

Revenue Recognition: (Ind AS 18)Sale of goods:

Revenue from sale of products is recognized at the point in time when control of the asset is transferred to the customer, generally when the product is shipped to the customer and accepted by the customer.

Revenue is measured at the fair value of the consideration received or receivable.

Sale of services:

Revenue from services is recognized on completion of the service in accordance with the terms of contract and upon customer acceptance.

Other income:

Other income is comprised primarily of interest income and Rental Income from lease of property. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable (provided that it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably).

Employee Benefits: (Ind AS 19)Retirement benefit costs and termination benefits:

Payments to defined contribution plans i.e., Company’s contribution to provident fund, superannuation fund, employee state insurance and other funds are determined under the relevant schemes and/ or statute and charged to the Statement of Profit and Loss in the period of incurrence when the services are rendered by the employees.

For defined benefit plans i.e.Company’s liability towards gratuity (partly funded), other retirement/ terminations benefits and compensated absences, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. Defined benefit costs are comprised of:

• service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);

• net interest expense or income; and

• re-measurement.

The Company presents the first two components of defined benefit costs in profit or loss in the line item ‘Employee benefits expense’. Curtailment gains and losses are accounted for as past service costs.

Re-measurement of net defined benefit liability/ asset pertaining to gratuity comprise of actuarial gains/ losses (i.e.changes in the present value resulting from experience adjustments and effects of changes in actuarial assumptions) is reflected immediately in the balance sheet with a charge or credit recognised in other comprehensive income in the period in which they occur. Re-measurement recognised in other comprehensive income is reflected immediately in retained earnings and is not reclassified to profit or loss.

Short term Employee Benefits:

Short-term employee benefits are recognized as an expense at the undiscounted amount in the Statement of Profit and Loss of the year in which the related services are rendered.

In respect of Gratuity, the Company offers a non-contributory defined benefit plan to its Employees. The liability for the same, as at the year end, is provided for on the basis of Actuarial Valuation. The entity is operating through SPIC Electronic & System Limited Gratuity fund for all payments related to gratuity and the trust accounts are subjected to Audit.

In respect of Provident fund, the employees and the Company make fixed monthly contributions to the SPEL Semiconductor Limited Provident Fund equal to a specified percentage of the covered employee’s salary. The interest rate payable by the Trust to the beneficiaries is being notified by the aforesaid Trust every year which is not less than the interest rate notified by the Government of India under the Employees Provident Fund Scheme. The Company has an obligation to make good the shortfall, if any, in the fund.

Foreign Currency Transactions: (Ind AS 21)

a) Transactions in foreign currencies are initially recorded by the Company at the functional currency spot rates at the date at which the transaction first qualifies for recognition. However, for practical reasons, the Company uses an average rate, if the average approximates the actual rate at the date of the transaction.

b) Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date. Exchange differences arising on settlement or translation of monetary items are recognised in profit or loss.

c) Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognized in OCI or profit or loss are also recognised in OCI or profit or loss, respectively).

d) Gain on Foreign exchange (recognized in P&L a/c) -9.92 Lakhs

e) Earnings in Foreign Currency - 1,082.31 Lakhs ($ 13,09,715.05)

f) Expenditure in foreign currency - 5.23 Lakhs ($ 6,270.55)

g) Value of Imports (on C.I.F basis) - 488.76 Lakhs ($ 5,91,005.39)

Borrowing Costs: (Ind AS 23)

Borrowing cost include interest computed using effective interest rate method, amortisation of ancillary costs incurred and exchange differences from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost.

Borrowing costs that are directly attributable to the acquisition, construction, production of a qualifying asset is capitalised as part of the cost of that asset which takes substantial period of time to get ready for its intended use. The Company determines the amount of borrowing cost eligible for capitalisation by applying capitalisation rate to the expenditure incurred on such cost. The capitalisation rate is determined based on the weighted average rate of borrowing cost applicable to the borrowings of the Company which are outstanding during the period, other than borrowings made specifically towards purchase of the qualifying asset. The amount of borrowing cost that the Company capitalises during the period does not exceed the amount of borrowing cost incurred during that period. All other borrowings costs are expensed in the period in which they occur.

Interest income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in the statement of profit and loss in the period in which they are incurred. Related Party Disclosure: (Ind AS 24)

a) List of parties having significant influence

Ultimate Holding Company : Natronix Semiconductor Technology PTE LTD (Singapore)

Fellow Subsidiaries : Natronix Semiconductor Technology Private Limited

Key Managerial Personnel : i) P Balamurugan - Whole time Director

ii) G Venkatesan - Chief Financial Officer

iii) S Sivaraman - Company Secretary

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Mar 31, 2016

STATEMENT ON SIGNIFICANT ACCOUNTING POLICIES

1. Corporate information

SPEL is India’s 1^st and only semiconductor IC (Integrated Circuit) Assembly & Test facility. Based in Chennai, SPEL has been servicing the demanding US market for over 12 years now. SPEL’s factory is located in the CMDA Industrial Estate, MM Nagar, near Chennai.

2. Accounting convention

2.1 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 specified under Section 133 of the Companies Act, 2013 and other relevant provisions of the Companies Act, 2013 (“the 2013 Act”) / Companies Act, 1956 (“the 1956 Act”), as applicable. The financial statements have been prepared on accrual basis under the historical cost convention except for categories of fixed assets acquired before 1 Apr, 2008, that are carried at revalued amounts. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.

2.2 All assets and liabilities have been classified as current or non-current as per the Company’s normal operating cycle and other criteria set out in Schedule III to the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has determined its operating cycle as twelve months for the purpose of current-noncurrent classification of assets and liabilities.

3. Use of Estimates

The preparation of the financial statements, in conformity with the generally accepted accounting principles, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities on the date of the financial statements, disclosure of contingent liabilities and reported amounts of revenues and expenses for the year. Estimates are based on historical experience, where applicable and other assumptions that management believes are reasonable under the circumstances. Actual results could vary from these estimates and any such differences are dealt with in the period in which the results are known/ materialize.

4. Tangible and Intangible Fixed assets and depreciation / amortization

4.1 Expenditure which are of a capital nature are capitalized at a cost, which comprises purchase price (net of rebates and discounts), import duties, levies and any directly attributable cost of bringing the assets to its working condition for the intended use. Cost of fixed assets is net of eligible credits under CENVAT / VAT Scheme. Expenditure directly related and incidental to construction / development and borrowing costs in para 5 below are capitalized upto the date the assets are ready for their intended use. Exchange differences are capitalized to the extent dealt with in para 8.3 below.

4.2 Assets are depreciated / amortized, as below, on straight line basis:

a) Buildings, assets in leased premises, plant and machinery (except assets subject to impairment) and other assets, over their estimated useful lives as prescribed in Schedule II to the Companies Act, 2013.

b) Assets subject to impairment, on the asset’s revised carrying amount, over its remaining useful life.

c) Intangible assets are amortized over their estimated useful life.

i) Depreciation / amortization is provided on a pro-rata basis from the month the assets are put to use during the financial year. In respect of assets sold or disposed off during the year, depreciation / amortization is provided up to the month of sale or disposal of the assets.

ii) At each balance sheet date, the carrying values of fixed assets are reviewed to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the said asset is estimated in order to determine the extent of impairment loss (if any).

5. Borrowing Cost

Borrowing cost are capitalized as part of the cost of qualifying asset when it is possible that they will result in future economic benefit. All other borrowing costs are recognized in the Statement of Profit and Loss in the period in which they are incurred.

6. Investments

Long Term Investments are carried at cost. Provision for diminution is however made to recognized a decline, other than temporary in nature, in its value.

7. Inventories

7.1 Inventories are valued at lower of cost and net realizable value; cost being ascertained on the following basis:

- Stores, spares, consumables, raw materials and components; on weighted average basis.

- Work-in-progress (including box stock) under absorption costing method

- Finished / trading goods: under absorption costing method.

7.2 Cost includes taxes and duties and is net of eligible credits under CENVAT / VAT Schemes.

7.3 Surplus / obsolete / slow moving inventories are adequately provided for.

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Contd.,)

8. Foreign Currency Transactions

8.1 Foreign currency transactions are recorded at the exchange rate prevailing on the date of the transaction. Monetary items denominated in foreign currency as at the balance sheet date are translated at the rate of exchange prevailing at the year end. Exchange differences arising on actual payments / realizations and year end restatements are dealt with in the Statement of Profit and Loss.

8.2 Premium or Discount on forward contracts is amortized over the life of such contracts and is recognized as income or expense. Foreign currency contracts are stated at market value as at the year end.

8.3 Exchange difference on translation or settlement of long term foreign currency monetary item (i.e. whose terms of settlement is 12 months from the date of its origination) at rates different from those at which they were originally recorded are reported in the previous financial statements, relating to acquisition of depreciable assets are adjusted to the cost of the assets.

9. Segment Reporting

The Company’s primary segment is identified as business segment based on nature of product, risks, returns and the internal business reporting system and secondary segment is identified based on geographical location of the customers as per Accounting Standard - 17.The Company is principally engaged in a single business segment viz. Integrated Circuits.

10. Revenue Recognition

10.1 Sale of goods:

Revenue from sale of products is recognized on despatch or appropriation of goods in accordance with the terms of sale, when the significant risks and rewards of ownership of goods have been passed to the buyer and is inclusive of excise duty.

10.2 Sale of Services:

Revenue from services is recognized on completion of the service in accordance with the terms of contract.

10.3 Others

Interest income is recognized on time proportion basis.

11. Employee Benefit

11.1 Short term employee benefit obligations are estimated and provided for.

11.2 Post-employment benefits and other long term employee benefits Defined contribution plans:

Company’s contribution to provident fund, superannuation fund, employee state insurance and other funds are determined under the relevant schemes and / or statute and charged to the Statement of Profit and Loss in the period of incurrence.

Defined benefit plans

Company’s liability towards gratuity and compensated absences are actuarially determined at each balance sheet date using the projected unit credit method. Actuarial gains and losses are recognized in the Statement of Profit and Loss in the period of occurrence.

12. Income taxes

Income tax expenses comprise current and deferred taxes. Current tax is determined on the income for the year chargeable to tax in accordance with applicable tax rates and the provisions of Income Tax Act,1961 and other applicable tax laws and after considering credit for Minimum Alternate Tax available under the said Act. MAT paid in accordance with the tax laws which gives future economic benefits in the form of adjustments to future tax liability, is considered as an asset if there is convincing evidence that the future economic benefit associated with it will flow to the Company resulting in payment of normal income tax.

Deferred tax is recognized for all the timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversing in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date.

Deferred tax assets are recognized for timing differences other than unabsorbed depreciation and carry forward losses only to the extent that there is a reasonable certainty that there will be sufficient future taxable income to realize the assets. Deferred tax asset pertaining to unabsorbed depreciation and carry forward of losses are recognized only to the extent there is a virtual certainty of its realization.

13. Provisions and Contingencies

A provision is recognized when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the notes. Contingent assets are neither recognized nor disclosed in the financial statements.

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Mar 31, 2014

1. Accounting convention

1.1 Financial statements are prepared in accordance with the generally accepted accounting principles in India including accounting standards referred to in Section 211 (3C) of the Companies Act 1956, under historical cost convention except so far as they relate to revaluation of certain fixed assets.

1.2 All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in the revised schedule VI to the Companies Act, 1956. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has determined its operating cycle as twelve months for the purpose of current - non current classification of assets and liabilities.

2. Use of Estimates

The preparation of the financial statements, in conformity with the generally accepted accounting principles, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities on the date of the financial statements, disclosure of contingent liabilities and reported amounts of revenues and expenses for the year. Estimates are based on historical experience, where applicable and other assumptions that management believes are reasonable under the circumstances. Actual results could vary from these estimates and any such differences are dealt with in the period in which the results are known/ materialize.

3. Tangible and Intangible Fixed assets and depreciation / amortisation

3.1 Expenditure which are of a capital nature are capitalized at a cost, which comprises purchase price (net of rebates and discounts), import duties, levies and any directly attributable cost of bringing the assets to its working condition for the intended use. Cost of fixed assets is net of eligible credits under CENVAT / VAT Scheme. Expenditure directly related and incidental to construction / development and borrowing costs in para 4 below are capitalised upto the date the assets are ready for their intended use. Exchange differences are capitalised to the extent dealt with in para 7.3 below.

3.2 Assets are depreciated / amortised, as below, on straight line basis:

a) Buildings, assets in leased premises, plant and machinery (except assets subject to impairment) and other assets, over their estimated useful lives or lives derived from the rates prescribed in Schedule XIV to the Companies Act, 1956, whichever is lower;

b) Assets subject to impairment, on the asset''s revised carrying amount, over its remaining useful life.

c) Intangible assets are amortized over their estimated useful life.

3.3 Depreciation / amortisation is provided on a pro-rata basis from the month the assets are put to use during the financial year. In respect of assets sold or disposed off during the year, depreciation / amortisation is provided upto the month of sale or disposal of the assets.

3.4 At each balance sheet date, the carrying values of fixed assets are reviewed to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the said asset is estimated in order to determine the extent of impairment loss (if any).

4. Borrowing Cost

Borrowing cost are capitalized as part of the cost of qualifying asset when it is possible that they will result in future economic benefit. All other borrowing costs are recognised in the Statement of Profit and Loss in the period in which they are incurred.

5. Investments

Long Term Investments are carried at cost. Provision for diminution is however made to recognised a decline, other than temporary in nature, in its value.

6. Inventories

6.1 Inventories are valued at lower of cost and net realisable value; cost being ascertained on the following basis:

- Stores, spares, consumables, raw materials and components and in-line work-in-progress : On weighted average basis.

- Work-in-progress-Box Stock: At cost and under absorption costing method

- Finished / trading goods: under absorption costing method.

6.2 Cost includes taxes and duties and is net of eligible credits under CENVAT / VAT Schemes.

6.3 Surplus / obsolete / slow moving inventories are adequately provided for.

7. Foreign Currency Transactions

7.1 Foreign currency transactions are recorded at the exchange rate prevailing on the date of the transaction. Monetary items denominated in foreign currency as at the balance sheet date are translated at the rate of

36

Notes to financial statements for the year ended Mar 31, 2014

exchange prevailing at the year end. Exchange differences arising on actual payments / realizations and year end restatements are dealtwith in the Statement of profit and loss.

7.2 Premium or Discount on forward contracts is amortized over the life of such contracts and is recognized as income or expense. Foreign currency contracts are stated at market value as at the year end.

7.3 Exchange difference on translation or settlement of long term foreign currency monetary item (i.e whose terms of settlement is 12 months from the date of its origination) at rates different from those at which they were originally recorded are reported in the previous financial statements, relating to acquisition of depreciable assets are adjusted to the cost of the assets.

8. Segment Reporting

The company''s primary segment is identified as business segment based on nature of product, risks, returns and the internal business reporting system and secondary segment is identified based on geographical location of the customers as per Accounting Standard - 17.The company is principally engaged in a single business segment viz. Integrated Circuits.

9. Revenue Recognition

9.1) Sale of goods

Revenue from sale of products is recognised on despatch or appropriation of goods in accordance with the terms of sale, when the significant risks and rewards of ownership of goods have been passed to the buyer and is inclusive of excise duty.

9.2) Sale of Services

Revenue from services is recognised on completion of the service in accordance with the terms of contract.

9.3) Others

Interest income is recognised on time proportion basis.

10. Employee Benefit

10.1 Short term employee benefit obligations are estimated and provided for.

10.2 Post-employment benefits and other long term employee benefits -Defined contribution plans:

The Company accounts for Gratuity Liability equivalent to the premium amount payable to Life Insurance Corporation of India based on percentage of annual salary specified by Life Insurance Corporation of India. Company''s contribution to provident fund, superannuation fund, employee state insurance and other funds are determined under the relevant schemes and / or statute and charged to the Statement of Profit and Loss in the period of incurrence.

-Defined benefit plans and compensated absences:

Company''s liability towards retirement benefits and compensated absences are actuarially determined at each balance sheet date using the projected unit credit method. Actuarial gains and losses are recognised in the Statement of Profit and Loss in the period of occurrence.

10.3 Termination benefits

Expenditure on termination benefits is recognised in the Statement of Profit and Loss in the period of incurrence.

11. Taxation

Current tax is determined on the income for the year chargeable to tax in accordance with Income Tax Act, 1961and after considering credit for Minimum Alternate Tax available under the said Act.

Deferred tax is recognized for all the timing differences. Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recognized if there is virtual certainty that there will be sufficient future taxable income available to realize such losses. Other deferred tax assets are recognized if there is reasonable certainty that there will be sufficient future taxable income available to realize such assets.

12. Provision, Contingent Liabilities and Contingent Assets

Provisions are recognized only when there is a present obligation as a result of past events and when a reliable estimate of the amount of obligation can be made. Contingent liability is disclosed for (i) possible obligation which will be confirmed only by future events not wholly within the control of Company or (ii) Present obligation arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.

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Mar 31, 2013

1.1 Basis of accounting

The financial statements have been prepared under the historical cost conversion, except certain fixed assets which are revalued, on accrual basis and in accordance with the generally accepted accounting principles in India (Indian GAAP). The said financial statements comply with the relevant provision of the Companies Act, 1956 and the Accounting Standards notified by the Central Government of India under Companies (Accounting Standards) Rules, 2006 as applicable.

1.2 Use of Estimates

The preparation of financial statements requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities including the disclosure of contingent liabilities as of the date of the financial statements and the reported income and expenses during the reporting period. Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results may vary from these estimates.

1.3 Fixed Assets and Depreciation

Expenditure which are of a capital nature are capitalized at a cost, which comprises purchase price (net of rebates and discounts), import duties, levies and any directly attributable cost of bringing the assets to its working condition for the intended use.

Depreciation is being charged on straight line method on a pro-rata basis in accordance with rates specified under Schedule XIV of the Companies Act, 1956. Asset cost less than Rs 5000/- is depreciate in the year of purchase.

Certain assets have been revalued as on Mar 31, 2005 & Mar 31, 2008 and the resultant surplus has been added to the cost of the assets with the corresponding credit to revaluation reserve account.

1.4 Borrowing Cost

Borrowing cost are capitalized as a part of the cost of qualifying asset when it is possible that they will result in future economic benefit. Other borrowing cost is expensed.

1.5 Impairment of Asset

At each balance sheet date, the carrying values of assets are reviewed to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment loss (if any).

1.6 Investments

Long Term Investments are valued at cost. Provision for diminution in the value of long term investments is made only if such decline is other than temporary in nature

1.7 Inventories

Inventories are valued at the lower of cost or net realizable value. The cost comprises of cost of purchase, cost of conversion and other costs including appropriate production overheads in the case of finished goods and work in process, incurred in bringing such inventories to their present location and condition. Inventories cost are determined on a weighted average basis.

1.8 Foreign Currency Transactions

Foreign currency transactions are recorded at the exchange rate prevailing on the date of the transaction. Monetary items denominated in foreign currency as at the balance sheet date are translated at the rate of exchange prevailing at the year end. Exchange differences arising on actual payments / realizations and year end restatements are dealt with in the profit and loss account.

Premium or Discount on forward contracts is amortized over the life of such contracts and is recognized as income or expense. Foreign currency contracts are stated at market value as at the year end.

1.9 Revenue Recognition

Revenue is recognized when the significant risks and rewards of ownership of goods have been passed to the buyer.

Interest income is recognized on time proportion basis.

Service revenue is recognized on completion of the service and becomes chargeable

1.10 Employee Benefit

The Company accounts for Gratuity Liability equivalent to the premium amount payable to Life Insurance Corporation of India based on percentage of annual salary specified by Life Insurance Corporation of India

In respect of compensated absences, the liability is determined on the actual basis and is provided for.

Contribution to defined contribution schemes such as provident fund, employee pension fund and cost of other benefit are recognized as an expense in the year incurred.

1.11 Taxation

Current tax is determined on the income for the year chargeable to tax in accordance with Income Tax Act, 1961.

Deferred tax is recognized for all the timing differences. Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recognized if there is virtual certainty that there will be sufficient future taxable income available to realize such losses. Other deferred tax assets are recognized if there is reasonable certainty that there will be sufficient future taxable income available to realize such assets.

1.12 Provision, Contingent Liabilities and Contingent Assets

Provisions are recognized only when there is a present obligation as a result of past events and when a reliable estimate of the amount of obligation can be made. Contingent liability is disclosed for (i) possible obligation which will be confirmed only by future events not wholly within the control of Company or (ii) Present obligation arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made. Contingent assets are not recognized in the financial statements.

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Mar 31, 2012

I. Basis of accounting

The financial statements have been prepared under the historical cost conversion, except certain fixed assets which are revalued, on accrual basis and in accordance with the generally accepted accounting principles in India (Indian GAAP). The said financial statements comply with the relevant provision of the Companies Act, 1956 and the Accounting Standards notified by the Central Government of India under Companies (Accounting Standards) Rules, 2006 as applicable.

ii. Use of Estimates

The preparation of financial statements requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities including the disclosure of contingent liabilities as of the date of the financial statements and the reported income and expenses during the reporting period. Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results may vary from these estimates.

iii. Fixed Assets and Depreciation

Expenditure which are of a capital nature are capitalised at a cost, which comprises purchase price (net of rebates and discounts), import duties, levies and any directly attributable cost of bringing the assets to its working condition for the intended use.

Depreciation is being charged on straight line method on a pro-rata basis in accordance with rates specified under Schedule XIV of the Companies Act, 1956. Asset cost less than Rs 5000/- is depreciate in the year of purchase.

Certain assets have been revalued as on Mar 31, 2005 & Mar 31, 2008 and the resultant surplus has been added to the cost of the assets with the corresponding credit to revaluation reserve account.

iv. Borrowing Cost

Borrowing cost are capitalized as a part of the cost of qualifying asset when it is possible that they will result in future economic benefit. Other borrowing cost is expensed.

v. Impairment of Asset

At each balance sheet date, the carrying values of assets are reviewed to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment loss (if any).

vi. Investments

Long Term Investments are valued at cost. Provision for diminution in the value of long term investments is made only if such decline is other than temporary in nature

vii. Inventories

Inventories are valued at the lower of cost or net realizable value. The cost comprises of cost of purchase, cost of conversion and other costs including appropriate production overheads in the case of finished goods and work in process, incurred in bringing such inventories to their present location and condition. Inventories cost are determined on a weighted average basis.

viii. Foreign Currency Transactions

Foreign currency transactions are recorded at the exchange rate prevailing on the date of the transaction. Monetary items denominated in foreign currency as at the balance sheet date are translated at the rate of exchange prevailing at the year end. Exchange differences arising on actual payments / realizations and year end restatements are dealt with in the profit and loss account.

Premium or Discount on forward contracts is amortised over the life of such contracts and is recognized as income or expense. Foreign currency contracts are stated at market value as at the year end.

ix. Revenue Recognition

Revenue is recognized when the significant risks and rewards of ownership of goods have been passed to the buyer.

Interest income is recognized on time proportion basis.

Service revenue is recognised on completion of the service and becomes chargeable

x. Employee Benefit

The Company accounts for Gratuity Liability equivalent to the premium amount payable to Life Insurance Corporation of India based on percentage of annual salary specified by Life Insurance Corporation of India In respect of compensated absences, the liability is determined on the actual basis and is provided for.

Contribution to defined contribution schemes such as provident fund, employee pension fund and cost of other benefit are recognized as an expenses in the year incurred.

xi. Taxation

Current tax is determined on the income for the year chargeable to tax in accordance with Income Tax Act, 1961.

Deferred tax is recognized for all the timing differences. Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recognized if there is virtual certainty that there will be sufficient future taxable income available to realize such losses. Other deferred tax assets are recognized if there is reasonable certainty that there will be sufficient future taxable income available to realize such assets.

xii. Provision, Contingent Liabilities and Contingent Assets

Provisions are recognized only when there is a present obligation as a result of past events and when a reliable estimate of the amount of obligation can be made. Contingent liability is disclosed for (i) possible obligation which will be confirmed only by future events not wholly within the control of Company or (ii) Present obligation arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made. Contingent assets are not recognized in the financial statements.

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Mar 31, 2011

I. Basis of accounting

The fnancial statements have been prepared under the historical cost, except certain fxed assets which are revalued as on March 31, 2005 and March 31, 2008, and in accordance with the generally accepted accounting principles in India (Indian GAAP). The said fnancial statements comply with the relevant provision of the Companies Act, 1956 and the Accounting Standards notifed by the Central Government of India under Companies (Accounting Standards) Rules, 2006 as applicable.

ii. Use of Estimates

The preparation of fnancial statements requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities including the disclosure of contingent liabilities as of the date of the fnancial statements and the reported income and expenses during the reporting period. Management believes that the estimates used in preparation of the fnancial statements are prudent and reasonable. Future results may vary from these estimates.

iii. Fixed Assets and Depreciation

Expenditure which are of a capital nature are capitalized at cost, which comprises purchase price (net of rebates and discounts), import duties, levies and any directly attributable cost of bringing the assets to its working condition for the intended use.

Depreciation is being charged on straight line method on a pro-rata basis in accordance with rates specifed under Schedule XIV of the Companies Act, 1956. Individual assets costing less than Rs 5,000/- are depreciated in full in the year of acquisition.

Certain assets have been revalued as on Mar 31, 2005 & Mar 31, 2008 and the resultant surplus has been added to the cost of the assets with the corresponding credit to revaluation reserve account.

iv. Borrowing Cost

Borrowing cost is capitalized as a part of the cost of qualifying asset when it is possible that they will result in future economic beneft. Other borrowing cost is expensed.

v. Impairment of Asset

At each balance sheet date, the carrying values of assets are reviewed to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment loss (if any).

vi. Investments

Long Term Investments are valued at cost. Provision for diminution in the value of long term investments is made only if such decline is other than temporary in nature

vii. Inventories

Inventories are valued at cost, comprises of cost of purchase, cost of conversion and other costs including appropriate production overheads in the case of fnished goods and work in process, incurred in bringing such inventories to their present location and condition. The methods of valuation for various categories of Inventories are as follows:

a. Raw Material, Stores, Spares and Consumables are valued at weighted average rates.

b. Work in progress is valued at cost or net realizable value whichever is less.

c. Finished goods are valued at lower of cost or net realizable value.

viii. Foreign Currency Transactions

Foreign currency transactions are recorded at the exchange rate prevailing on the date of the transaction. Monetary items denominated in foreign currency as at the balance sheet date are translated at the rate of exchange prevailing at the year end. Exchange differences arising on actual payments / realizations and year end restatements are dealt with in the proft and loss account.

Premium or Discount on forward contracts is amortised over the life of such contracts and is recognized as income or expense. Foreign currency contracts are stated at market value as at the year end.

Gains and losses on certain forward contracts designated as effective cash fow hedges as per Accounting Standard 30 - "Financial Instruments" are recognized in the Hedge Reserve Account till the underlying forecasted transaction occurs.

ix. Revenue Recognition

Revenue is recognized when the signifcant risks and rewards of ownership of goods have been passed to the buyer.

Interest income is recognized on time proportion basis.

x. Employee Beneft

The Company accounts for Gratuity Liability equivalent to the premium amount payable to Life Insurance Corporation of India based on percentage of annual salary specifed by Life Insurance Corporation of India

In respect of compensated absences, the liability is determined on the actual basis and is provided for.

Contribution to defned contribution schemes such as provident fund, employee pension fund and cost of other beneft are recognized as an expenses in the year incurred.

xi. Taxation

Current tax is determined on the income for the year chargeable to tax in accordance with Income Tax Act, 1961.

Deferred tax is recognized for all the timing differences. Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recognized if there is virtual certainty that there will be suffcient future taxable income available to realize such losses. Other deferred tax assets are recognized if there is reasonable certainty that there will be suffcient future taxable income available to realize such assets.

xii. Provision, Contingent Liabilities and Contingent Assets

Provisions are recognized only when there is a present obligation as a result of past events and when a reliable estimate of the amount of obligation can be made. Contingent liability is disclosed for (i) possible obligation which will be confrmed only by future events not wholly within the control of Company or (ii) Present obligation arising from past events where it is not probable that an outfow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made. Contingent assets are not recognized in the fnancial statements.

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Mar 31, 2010

The significant accounting policies followed by the Company are as follows :

i. Fixed Assets and Depreciation

Expenditure which are of a capital nature are capitalised at a cost, which comprises purchase price (net of rebates and discounts), import duties, levies and any directly attributable cost of bringing the assets to its working condition for the intended use.

Depreciation is being charged on straight line method on a pro-rata basis in accordance with rates specified under Schedule XIV of the Companies Act, 1956.

Certain assets have been revalued as on Mar 31, 2005 & Mar 31, 2008 and the resultant surplus has been added to the cost of the assets with the corresponding credit to revaluation reserve account.

ii. Treatment of Foreign Currency Items

Transactions in foreign currency are recorded at the exchange rate prevailing on the date of the transaction. Monetary items are restated at the rates prevailing at the year end and the difference between the year end rate and the exchange rate at the date of the transaction is recognized as income or expense in the profit and loss account.

Premium or Discount on forward contracts is amortised over the life of such contracts and is recognized as income or expense. Foreign currency contracts are stated at market value as at the year end.

iii. investments

Long Term Investments are valued at cost. Provision for diminution in the value of long term investments is made oniy if such decline is other than temporary in nature.

iv. Valuation of Inventories

The method of valuation for various categories of inventories are as follows :

a. Raw Materials, Stores, Spares and Consumables are valued at weighted average rates.

p. Work-in progress is valued at cost or net realisable value whichever is less.

c. Finished goods are valued at lower of cost or net realisable value. v. Revenue Recognition

The income and expenditure are accounted on accrual basis. vi. Treatment of Retirement Benefits

a. Contribution to provident fund is made monthly at a predetermined rate to the provident fund trust and debited to the Profit and Loss account on accrual basis.

b. The Company accounts for Gratuity Liability equivalent to the premium amount payable to Life Insurance Corporation of India based on percentage of annual salary specified by tife Insurance Corporation of India.

c. Liability for leave encashment is provided on actual basis.

vii. Borrowing Costs

Borrowing Costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of that asset.

viii. Deferred iax

Deferred taxes are recognized for the future tax consequences attributable to timing differences, which arise on account of difference between the accounting income and taxable income for the period. The effect on the deferred tax assets & liabilities of change in tax rate is recognized in the statement of Profit and Loss account using the tax rate and tax laws that have been enacted or substantively enacted by the Balance sheet date.

Deferred tax assets are recognized or carried forward only to the extent that there is reasonable certainty that sufficient future taxable income wili be available against which such deferred tax asset can be realized.

ix. Contingent Liabilities

All liabilities have been provided for in the financial statements except liabilities which are contingent in nature, which have been disclosed at their estimated value in the notes on accounts.