j) Corporate Information
RMC Switchgears Limited is a public company domiciled in India. The company is primarily
engaged in the business of "Switchgear Engineering', "ECI contracts for power distribution/
transmission sector1.
ii) Basis of Accounting
The financial statements have been prepared to comply in all material respects with the
Generally AcceptedAccounting Principles (GAAP) in India under the historical cost convention on
an accrual basis pursuant to Section 133 of the Companies Act, 2013 ("the Act") read with the
Accounting Standards issued by the National Advisory Committee on Accounting Standards
(NACAS) and The Institute of Chartered Accountants of India (ICAI). Accounting policies have
been consistently applied by the company except where a newly issued Accounting Standard is
initially adopted or a revision to an existing Standard required a change in accounting policy
hitherto in use.
The preparation of financial statementsin conformity with GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent liabilities at the date of the financial statements and the results of
operations during the reporting period. Although these estimates are based upon management's
best knowledge of current events and actions, actual results could differ from these estimates.
The company's financial statements are presented in Indian Rupees, which is its functional
currency and all values are rounded to the nearest lakhs, except when otherwise indicated.
Classification of assets and liabilities into Current / Non-current.
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 III to the Act.
iii) Changes in Accounting Policies
The Company has reclassified/regrouped/rearranged the previous year figures,
wherevernecessary, to make them comparable with revised schedule III to the act applicable for
current year's figures & groups.
iv) Assets and Depreciation
a) Property Plant & Equipment are stated at cost including attributable cost (net of GST
Creditavailed) of bringing the assets to its working condition for the intended use.
b) Depreciation on the assets has been provided as under:
1) Depreciation has been provided on the basis of useful lives of the tangible assets as
prescribed in Schedule II to the Companies Act, 2013byusing Straight-line method (SLM) of
depreciation.
2) Depreciation on intangible assets is provided in accordance with AS-26 over the period of 5
years.
3) Premium paid on Leasehold Landis amortized over the Lease term which is of 99 years.
4) Impairment of Tangible & Intangible Assets
The carrying amounts of assets are reviewed at each reporting date if there is any indication of
impairment based on internal / external factors. An impairment loss is recognized wherever the
carrying amount of asset exceeds its recoverable amount. The recoverable amount is the greater
of the assets' net selling price and its value in use. In assessing value in use, the estimated future
cash flows are discounted to their present value using weighted average cost of capital.
Post impairment, depreciation is provided on the revised carrying amount of the asset over its
remaining useful life.
v) Valuation of Inventory
Inventory of raw material, stores, spares, semi-finished goods and finished goods are valued at
lower of cost and net realizable value. Cost is determined on the basis of FIFO/Weighted
Average Method. Inventory of rejected material is valued at cost or net realizable value
whichever is lower. Work in process generally includes cost of direct material, labour cost and
other manufacturing overheads. Goods-in-Transit is valued at cost.
(vi) Income Tax
Current tax is the amount of tax payable on the taxable income for the year as determined in
accordance with the provisions of the Income Tax Act, 1961 (the "Income Tax Act").The Company
has opted to exercise the option permitted under section 115BAA of the Income-tax Act, 1961 as
introduced by the Taxation Laws (Amendment) Ordinance, 2019, for the financial year 2024-25.
Accordingly, the Company has recognised provision for income tax and computed deferred tax
based on the rate i.e. @ 25.17 % (Tax Rate 22% Plus Surcharge Plus cess) prescribed in the said
section.
Deferred tax is recognised on timing differences, being the differences between the taxable
income and the accounting income that originate in one period and are capable of reversal in
one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws
enacted or substantively enacted as at the reporting date. Deferred tax assets are recognised for
timing differences of items other than unabsorbed depreciation and carry forward losses only to
the extent that reasonable certainty exists that sufficient future taxable income will be available
against which these can be realised. However, if there are unabsorbed depreciation and carry
forward of losses, deferred tax assets are recognised only if there is virtual certainty that there
will be sufficient future taxable income available to realise the assets. Deferred tax assets and
liabilities are offset if such items relate to taxes on income levied by the same governing tax laws
and the Company has a legally enforceable right for such set-off. Deferred tax assets are
reviewed at each balance sheet date for theirreliability.
vil) Liquidated Damages:
Liquidated damages are provided based on contractual terms when thedelivery/commissioning
dates of an individual project have exceeded or are likely to exceed the delivery/commissioning
dates as per the respective contract. This expenditure is expected to be incurred over the
respective contractual terms upto closure of the contract.
viii) Foreign Currency:
a) Transactions in Foreign Currency entered into by the Company are accounted at the Exchange
Rates prevailing the date of the transaction. Foreign Currency monetary items ofthecompany,
outstanding on the Balance Sheet date are restated at the year-end rates. Non- monetary items
of the company are carried at historical costs.
b) Exchange Difference arising on settlement / restatement of short term foreign currencymonetary
assets & liabilities of the company are recognized as expense in the statement ofProfit& Loss or
capitalized if such differences pertain to creation of Fixed Assets.
|