2.2 Provisions for probable liability are created when the company has an obligation
as a result of an event already taken place. They axe not adjusted for their present
value except where specifically stated that they are on an actuarial basis.
2.3 Contingent liabilities:
a) Claims and demands, raised on the company, which have not been acknowledged
as liability and /or pending disputed in appeals /arbitration etc., -which in the
opinion of the management are not likely to be paid are depicted as contingent
liabilities.
b) The company has imported Capital Good (Plant & Machinery) with FOB value of Rs
8,08,68,765,00 (US$ 9,63,870.85) with exemption of Custom duty on import to the
extent of Rs 1,34,78,128 in accordance to Foreign Trade Policy 2023,
There is an Export Obligation attached to the availing of Duty exemption that it will
export goods which is equal to 6 times of the duty saved ofRs 1,34,78,128 -i.e. Rs
8,08,68,768 within a period of 6 years (Block Years: 1st to 4th year (1st Block) - 50%
and 5th to 6th year (2nd Block)- 50%) reckoned from the date of issue of this
Authorization -that is 26-12-2024. The exports will be considered after the
installation of the imported Plant & Machinery.
3 Investments:
The Company has no investments at present.
4 Stock in trade /Inventories:
The inventories are valued on exclusive method, in accordance to the Accounting
Standards-which is as under:
a) Raw Materials: Lower of cost (weighted average) or market value.
b) Finished goods: at lower of estimated cost of production or realizable value.
Cost of production is at the Raw materials cost plus average cost of production/
conversion.
c) Work in process: The WIP is valued at cost of Raw materials plus average cost
of production -restricted to the extent of work done.
The Raw materials issued for production but not yet put into process is treated
as Raw Materials.
d) Other Items: Lower of cost (FIFO basis) or market value.
5 Property, Plant Sc Equipment, Depreciation & Amortization
i) All items of Property, Plant & Equipment (tangible and intangible) are
capitalized and stated at cost, inclusive of incidentals and borrowing costs if
any, up to the date of putting them to use. The Expenses incurred during
construction are allocated and apportioned to the assets constructed / acquired
and installed during the period
ii) Specific Government grants or subsidies if any received towards purchase of
fixed assets is reduced from the cost of acquisition of the asset capitalized in
books.
Input Credits available on account Excise Duty, Service Tax, Sales Tax /VAT till
30aJune 2017 and Goods and Services Tax legislations from l3tJuly 2017 which
are eligible for set off against Output liabilities under the applicable provisions
Ý on the purchase value of fixed assets, it is reduced from the cost of acquisition
of the asset capitalized in books.
iii) Present realizable market values of assets as on the Balance Sheet date is
reviewed with their corresponding book values, to consider if there exists any
indication of an impairment of value. In case of a permanent impairment of the
value of assets, on the basis of the review by the management, it is dealt in
accounts as per Accounting Standards.
iv) . Depreciation on asset is charged only when the asset has been put to use
v) . Depreciation is to be charged in accordance to the useful life of the assets
prescribed in Schedule II to the Companies Act 2013, by taking the residual /
scrap value to 5% of their original cost, unless stated otherwise.
Depreciation on Plant & Machinery and electrical installations- is being charged
on Straight Line Method (SLM)
Depreciation on all other assets except the above is being charged on the
Written Down Method (WD V). .
vi) . No depreciation is charged on Land acquired whether on free hold or on lease¬
hold basis (perpetual or long term), with a right to transfer, even with pre¬
condition.
vii) Assets taken on short-term leases, if any are not treated as Fixed Assets. The
yearly lease premium is charged off to the Statement of Profit and Loss. Non¬
refundable / adjustable Lease premium if any is amortized and charged off to
the Statement of Profit and Loss in accordance to the terms and conditions of
Lease
ix) Gains or Losses arising on account of disposal or discarding of assets is
determined on the basis of difference between the book value and the value
realized on disposal / discarding of the asset, which is dealt with in the
Statement of Profit and Loss
Input Credits availed on account Excise Duty, Service Tax, Sales Tax J VAT (till
30th June 2017) and Goods and Services Tax legislations (w.e.f. 1st July 2017) on
fixed assets which are reversible / payable, if any on sale of fixed assets is
accounted on actual basis at the time of sale of assets only.
x) Computer Software is treated as a part of the intangible fixed assets, if got
custom prepared or are acquired for a period in excess of 12 months only.
Computer Software, taken on a license basis for. a period not exceeding 12
months or which are renewable on a yearly basis are charged off the Statement
of Profit and Loss
xi) Financial Costs on borrowings include LC charges, Guarantee Charges,
Processing & inspection charges, and other incidental costs ancillary to
borrowings besides interest. Borrowing costs pertaining to acquisition of assets
are allocated to them, from the date of commencement of construction /erection
to the date of capitalization of asset / putting the asset to use, Exchange
fluctuations on borrowings in foreign currencies till the date of putting to use
are also dealt with on a similar basis
5.2 Amortization
Preliminary and pre-operative expenses (not allocated to assets and capitalized
expenses) as well as any other expense, which is Deferred Revenue in nature is
amortized in 5 yearly installments.
6. Foreign Exchange Transactions: '
a) Export Sales in and Expenses incurred, if any in foreign exchange are
converted (io Rupees) at the exchange rates prevailing at the time of
. transaction, or at the rate at the close of the year, whichever is earlier.
b) Exchange rate differences, if any arising during the year on account of
Revenue Transactions in foreign exchange is dealt with, in the Statement of
Profit and Loss.
c) Exchange rate differences, if any arising during the year on account of Capital
Transactions in foreign exchange, is given an effect to the related asset and
liability. In the case of Depreciable Assets, the depreciation is charged on the
enhance value
d) Difference in Assets and liabilities held outside India, on translation into Indian
Rupees are dealt with in the financial statements of each year
However, from the year ended on 31st March 2022 onwards, differences
relating to operations outside India, on such translation into Indian Rupees are
depicted as “Other Equity” under the classification of "Exchange differences on
translating the financial statements of foreign operations" in the Balance sheet
as prescribed in Schedule III to Companies Act 2013 as amended by
Notification dated 24-3-2021.
7 Income Tax Provisions & Payments:
a) Income tax liability is provided in Financial Statements on the basis of
estimates made on tentative computation of taxable income, which in the
opinion of the management is adequate, Shortfall or excess provision if any is
adjusted on completion of assessments.
b) The Prepaid taxes are shown as a set-off against the Tax Provision. They are
adjusted in books on final settlement of the assessments.
c) The company has opted to be taxed as per the provisions of section 115BAA
of the Income Tax Act 1961, inserted in October 2019, from Assessment year
2020-21 onwards. Accordingly, the company is not liable to pay Minimum
Alternate Tax (MAT) in terms of Section 11SJB of the Income Tax Act 1961
d) In case where the pre-paid taxes are larger than the tax liability, there is a net
refund / recovery of taxes. In view of the changed guidelines for depiction in
the Schedule III to the Companies Act 2013, such tax refunds due / recoverable
are shown as a negative amount on the Liabilities side of the Balance sheet.
e) Income Tax Assessments till AY 2022-23 have been completed. There is no
material disputed tax demands or other tax demands pending payment as per
records made available
f) There is a deferred tax liability as at the end of this year, in accordance to
Accounting Standard AS 22, and it has been created account books-which is
subject to changes if any in the rates of tax or changes in law.
Details of the Deferred Tax asset (Liability) are given in. the relevant Note to
the Balance Sheet.
8 Terminal Benefits to Employees
a) Contributions made by the company as per the Provident Fund & Misc.
Provisions Act 1952 and to Employees State Insurance are charged off to the
Statement of Profit & loss.
b) The Gratuity Liability for those employees who completed 5 years of
services is provided on an actual basis as per Accounting Standard AS 15
and it is treated as a Long-Term Provision.
c) Privilege / Earned Leave not availed, is eligible to be accumulated, which is
encashable at the time of retirement/ termination of services. The
employees are also eligible to encash leave during the currency of service
subject to the consent of the Management. Actual liability for leave not
availed is provided in the Accounts as per Accounting Standard AS 15- and
it is treated as a Short-Term Provision.
It is informed by the management that most of the employees have either
utilized their earned leave or have encashed it -and thus there is only a small
liability for un-availed leave which has been provided on actual liability
basis -which is an accepted basis for un-availed leave liability in
accordance to Accounting Standard AS 15
d) Other Terminal and service benefits if any of the employees are accounted
on payment.
9 Segment Reporting
• The company is engaged in the manufacture and sale of Components made of steel •
and other metals which constitute a Single Segment. Therefore, in the opinion of the
management Accounting Standards regarding Segment reporting is not applicable
10 Earnings per Share
Basic earnings per share are calculated by dividing the net profit (after tax) for the
year attributable to Equity shareholders after reducing preference dividends, if any
(There are no Preference shares at present), on the number of shares held through¬
out the year. Partly paid equity shares, if any, are treated as a fraction of an equity
share in proportion to the rate at which they are eligible to receive the dividends,
Diluted earnings per share are calculated similarly but after adjusting the number
of shares issued during the year on weighted average number of shares, for the
effect of all dilutive potential equity shares .
11. The management has certified that the current assets, loans and advances, in the
ordinary course of business, have a realizable value at least equal to the value at
which they have been stated, except where stated to the contrary.
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