Summary of Significant Accounting Policies:
1.1 Basis of Preparation:
These financial statements have been prepared in accordance with the Generally Accepted
Accounting Principles in India ('Indian GAAP') to comply in all respects with the Accounting
Standards specified under section 133 of the Companies Act 2013, read with Rule 7 of the
Companies (Accounts) Rules,2014 and the relevant provisions of the Companies Act, 2013. The
financial statements have been prepared under the historical cost convention on an accrual basis,
except for certain financial instruments which are measured at Fair Value.
1.2 Use of Estimates:
The preparation of financial statements in conformity with Accounting Standards requires
management of the Company to make estimates and assumptions that affect the reported
balances amounts of assets and liabilities and disclosures relating to the contingent assets and
liabilities as at the date of the financial statements and reported amounts of Revenue and
Expenses during the reporting year.
1.3 Revenue Recognition:
a) Sale of Goods & Services :
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, regardless of when the payment is being
made. Revenue is measured at the fair value of the consideration received or receivable,
considering contractually defined terms of payment.
Goods and Services Tax ("GST") is not received by the Company on its own account. Rather, it is tax
collected on value added to the commodity/service rendered by the seller on behalf of the
government. Accordingly, it is excluded from revenue.
All Incomes and Expenditures are accounted for on an accrual basis.
b) Interest:
Interest income is recognized on a time proportion basis considering the amount outstanding and
the applicable interest rate.
c) Dividend:
Dividend income is recognized when the Company's right to receive dividends is established by the
reporting date.
1.4 Employee Benefits:
(a) Provident Fund
Provident Fund is a defined contribution scheme, and the contributions are charged to the Profit &
Loss Account of the year when the contributions are due. The company has no obligations other
than the contributions payable to the Fund / Statutory Authority.
(b) Gratuity
AMIC FORGING LIMITED have an obligation towards gratuity, a defined benefit retirement plan
covering eligible employees. The plan provides for a lump-sum payment to vested employees at
retirement, death while in employment or on termination of employment of an amount
equivalent to 15 days salary payable for each completed year of service. Vesting occurs upon
completion of five years of service. Liabilities with regard to these defined benefit plans are
determined by actuarial valuation at each Balance Sheet date using the projected unit credit
method.
1.5 Property, Plant and Equipment:
a) Property, Plant and Equipment, except land are stated at cost net of accumulated
depreciation/amortization and impairment if any. Cost comprises the purchase price
inclusive of duties, taxes, incidental expenses, erection/commissioning expenses, interest, if
eligible etc. up to the date the Property, Plant and Equipment is put to use.
All direct capital expenditure on expansion are capitalized. Both the direct and indirect
expenditure are capitalized only if they increase the value of the Property, Plant and
Equipment beyond its original standard of performance.
Land is stated at cost of acquisition.
b) Capital work-in-progress includes material, labour and other directly attributable costs
incurred on assets, which are yet to be commissioned.
1.6 Depreciation:
Depreciation on Property, Plant and Equipment is provided using written down value on
depreciable amount. Depreciation is provided on useful life of assets as prescribed in Schedule II of
Companies Act, 2013.
1.7 Foreign Currency Transaction:
Accounting of Import purchases are done on exchange rate prevailing on the date of payment. All
outstanding documents which have been recorded at the rates of exchange prevailing on the date
of transactions, are converted at the rate of exchange prevailing on the date of Balance Sheet.
Exchange Gain / Loss of on such conversion is accounted for in the Statement of Profit & Loss.
1.8 Investments:
Investments that are readily realizable and intended to be held for not more than a year are
classified as current investments. All other investments are classified as long-term investments.
Long term investments are carried at cost.
1.9 Inventories:
Inventories are valued at the lower of cost and net realizable value. Net realizable value is the
estimated selling price for inventories less all estimated costs of completion necessary to make
sale. Costs incurred in bringing the products to its present location and condition are accounted for
as follows:
Raw Materials, stores, and spare parts: Cost includes cost of purchase freight inwards and other
expenditures incurred in bringing such inventories to their present location and condition.
Finished goods and work in progress: Cost of finished goods is determined by average cost method
which constitutes direct material cost, conversion cost and other costs incurred for producing the
same.
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