(i) Basis of accounting
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 notified under
the companies (Accounting standards) Rules, 2006 (as amended) and the
relevant provisions of the companies Act, I956. The financial
statements have been prepared on accrual basis under the historical
cost convention. The accounting policies adopted in the preparation of
the financial statements are consistent with those followed in the
(ii) use of estimates
The preparation of the financial statements in conformity with indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognised in the periods in which
the results are known/ materialise.
inventories are valued at the lower of cost and moving weighted average
price and the net realisable value after providing for obsolescence and
other losses, where considered necessary. cost includes all charges in
bringing the goods to the point of sale, including octroi and other
levies, transit insurance and receiving charges. Work-in-progress and
finished goods include appropriate proportion of overheads and, where
applicable, excise duty.
(iv) Depreciation and amortisation
Depreciation has been provided on the straight-line method as per the
rates prescribed in schedule XiV to the companies Act, I956.
Assets costing less than Rs. 5,000 each are fully depreciated in the
year of capitalisation.
Depreciation on addition to fixed assets is provided on pro-rata basis
from the month the assets are put to use. Depreciation on
sale/deduction from fixed assets is provided for up to the previous
month of sale, deduction, discardment as the case may be.
intangible assets comprising of product design, prototypes, etc.,
either acquired or internally developed are amortised over a period of
ten years, the estimated minimum useful life of the related products.
cost of software is amortised over a period of 5 years or less
depending on the estimated useful life of asset.
The estimated useful life of the intangible assets and the amortisation
period are reviewed at the end of each financial year and the
amortisation method is revised to reflect the changed pattern.
(v) Revenue recognition
sales are recognised, net of returns and trade discounts, on transfer
of significant risks and rewards of ownership to the buyer, which
generally coincides with the dispatch of goods to customers. sales
include excise duty but exclude sales tax and value added tax. Revenues
from maintenance contracts are recognised pro-rata over the period of
interest income is recognised on a time proportionate basis taking into
account the amount invested and rate applicable. Dividend income is
accounted for when the right to receive it is established.
(vi) Tangible fixed assets
Fixed assets are carried at cost less accumulated depreciation and
impairment losses, if any. The cost of fixed assets includes interest
on borrowings attributable to acquisition of qualifying fixed assets up
to the date the asset is ready for its intended use and other
incidental expenses incurred up to that date. subsequent expenditure
relating to fixed assets is capitalised only if such expenditure
results in an increase in the future benefits from such asset beyond
its previously assessed standard of performance.
Fixed assets acquired and put to use for project purpose are
capitalised and depreciation thereon is included in the project cost
till commissioning of the project.
Projects under which assets are not ready for their intended use and
other capital work-in-progress are carried at cost, comprising direct
cost, related incidental expenses and attributable interest.
Pre-operative expenditure (pending allocation):
Expenses directly related to construction activity or incidental
thereto, are allocated to fixed assets at the time of completion of the
(vii) intangible assets
intangible assets are carried at cost less accumulated amortisation and
impairment losses, if any. The cost of an intangible asset comprises
its purchase price, including any import duties and other taxes (other
than those subsequently recoverable from the taxing authorities), and
any directly attributable expenditure on making the asset ready for its
intended use and net of any trade discounts and rebates. subsequent
expenditure on an intangible asset after its purchase/completion is
recognised as an expense when incurred unless it is probable that such
expenditure will enable the asset to generate future economic benefits
in excess of its originally assessed standards of performance and such
expenditure can be measured and attributed to the asset reliably, in
which case such expenditure is added to the cost of the asset.
(viii) Foreign currency transactions
Transactions denominated in foreign currencies are recorded at the
exchange rates prevailing on the date of the transaction.
Monetary items denominated in foreign currencies at the year-end are
translated at the exchange rates prevailing on the Balance sheet date.
Non-monetary items denominated in foreign currencies are carried at
Any income or expense on account of exchange differences either on
settlement or on translation of transactions are charged to the
statement of Profit and Loss.
Long term investments are carried individually at cost, less provision
for diminution, other than temporary, in the value of such investments.
current investments are carried individually, at the lower of cost and
fair value. cost of investments includes acquisition charges such as
brokerage, fees and duties.
(x) Employee benefits
Employee benefits includes gratuity, compensated absences and
contribution to provident fund, employees'' state insurance,
Defined contribution plans
The company''s contribution to provident fund, employees'' state
insurance, superannuation fund are considered as defined contribution
plans and are charged as an expense as they fall due based on the
amount of contribution required to be made. in respect of certain
employees, provident fund contributions are made to a Trust where the
interest rate payable to the members of such Trust shall not be lower
than the statutory rate of interest declared by the central Government
under the Employees Provident Funds and Miscellaneous Provisions Act,
I952 and shortfall, if any, shall be made good by the company. The
remaining contributions are made to a government administered provident
fund towards which the company has no further obligations beyond its
Defined benefit plans
For defined benefit plans in the form of gratuity, the cost of
providing benefits is determined using the Projected Unit credit
method, with actuarial valuations being carried out at each Balance
sheet date. Actuarial gains and losses are recognised in the statement
of Profit and Loss in the period in which they occur. Past service cost
is recognised immediately to the extent that the benefits are already
vested. The retirement benefit obligation recognised in the Balance
sheet represents the present value of the defined benefit obligation as
adjusted for unrecognised past service cost.
Long-term employee benefits
compensated absences which are not expected to occur within twelve
months after the end of the period in which the employee renders the
related service are recognised as a liability at the present value of
the defined benefit obligation as at the Balance sheet date. The cost
of providing benefits is determined using the Projected Unit credit
method, with actuarial valuations being carried out at each Balance
sheet date and actuarial gains and losses are recognised in the
statement of Profit and Loss in the period in which they occur.
Short-term employee benefits
The undiscounted amount of short-term employee benefits expected to be
paid in exchange for the services rendered by employees are recognised
during the year when the employees render the service.
Lease rentals in respect of assets that are in the nature of operating
leases are expensed with reference to lease terms.
(xii) Borrowing costs
Borrowing costs include interest, amortisation of ancillary costs
incurred and exchange differences arising from foreign currency
borrowings to the extent they are regarded as an adjustment to the
interest cost. costs in connection with the borrowing of funds to the
extent not directly related to the acquisition of qualifying assets are
charged to the statement of Profit and Loss over the tenure of the
loan. Borrowing costs, allocated to and utilised for qualifying assets,
pertaining to the period from commencement of activities relating to
construction/development of the qualifying asset upto the date of
capitalisation of such asset is added to the cost of the assets.
capitalisation of borrowing costs is suspended and charged to the
statement of Profit and Loss during extended periods when active
development activity on the qualifying assets is interrupted.
(xiii) Earnings per share
Basic earnings per share is computed by dividing the profit after tax
by the weighted average number of equity shares outstanding during the
Diluted earnings per share is computed by dividing the profit after tax
as adjusted for dividend, interest and other charges to expense or
income relating to the dilutive potential equity shares, by the
weighted average number of equity shares considered for deriving basic
earnings per share and the weighted average number of equity shares
which could have been issued on the conversion of all dilutive
potential equity shares.
(xiv) income taxes
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, I96I. The provision for taxation for the year ended December 3I,
20I2 comprises the residual tax liability for the assessment year
20I2-I3 relevant to the year April I, 20II to March 3I, 20I2 and the
liability, which has accrued on the profit for the period April I, 20I2
to December 3I, 20I2, under the provisions of the income-tax Act, I96I.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which
gives future economic benefits in the form of adjustment to future
income tax liability, is considered as an asset if there is convincing
evidence that the company will pay normal income tax. Accordingly, MAT
is recognised as an asset in the Balance sheet when it is probable that
future economic benefit associated with it will flow to the company.
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 substantially enacted as at the reporting date. Deferred tax
liabilities are recognised for all timing differences. Deferred tax
assets in respect of unabsorbed depreciation and carry forward of
losses are recognised only if there is virtual certainty that there
will be sufficient future taxable income available to realise such
assets. Deferred tax assets are recognised for timing differences of
other items only to the extent that reasonable certainty exists that
sufficient future taxable income will be available against which these
can be realised.
(xv) Research and development expenses
Revenue expenditure pertaining to research is charged to the statement
of Profit and Loss. Development costs of products are also charged to
the statement of Profit and Loss unless a product''s technological
feasibility has been established, in which case such expenditure is
capitalised. The amount capitalised comprises expenditure that can be
directly attributed or allocated on a reasonable and consistent basis
to creating, producing and making the asset ready for its intended use.
Fixed assets utilised for research and development are capitalised and
depreciated in accordance with the policies stated for Tangible Fixed
Assets and intangible Assets.
(xvi) Impairment of assets
The carrying values of assets/cash generating units at each Balance
sheet date are reviewed for impairment. if any indication of impairment
exists, the recoverable amount of such assets is estimated and
impairment is recognised, if the carrying amount of these assets
exceeds their recoverable amount. The recoverable amount is the greater
of the net selling price and their value in use. Value in use is
arrived at by discounting the future cash flows to their present value
based on an appropriate discount factor. When there is indication that
an impairment loss recognised for an asset in earlier accounting
periods no longer exists or may have decreased, such reversal of
impairment loss is recognised in the statement of Profit and Loss.
(xvii) Provisions and contingencies
A provision is recognised 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 (excluding retirement
benefits) are not discounted to their present value and are determined
based on the 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. contingent liabilities
are disclosed in the Notes.
(xviii) Employee share based payments
The company has formulated Employee stock Option scheme (EsOs) in
accordance with the sEBi (Employee stock Option scheme and Employee
stock Purchase scheme) Guidelines, I999. The scheme provides for grant
of options to employees of the company and its subsidiaries to acquire
equity shares of the company that vest in a graded manner and that are
to be exercised within a specified period. in accordance with the sEBi
Guidelines, the company has constituted an Employee stock Option Plan -
2006. Employee stock Options granted by the company are accounted under
the ''instrinsic Value Method'' stated in the Guidance Note on Employee
share Based Payments issued by the institute of chartered Accountants
(xix) Provision for warranty
The estimated liability for product warranties is recorded when
products are sold. These estimates are established using historical
information on the nature, frequency and average cost of warranty
claims and management estimates regarding possible future incidence
based on corrective actions on product failures. The timing of outflows
will vary as and when warranty claim will arise.
As per the terms of the contracts, the company provides post-contract
services/warranty support to some of its customers. The company
accounts for the post-contract support/provision for warranty on the
basis of the information available with the Management duly taking into
account the current and past technical estimates.