During the year ended 31st March, 2012, the revised schedule VI
notified under the Companies Act, 1956 has become applicable to the
company, for preparation and presentation of its financial statement.
The adoption of revised schedule VI does not impact recognition and
measurement principles followed for preparation of financial statement.
However it has significant impact on presentation and disclosures made
in the financial statements. Assets and liabilities have been
classified as current and non - current as per the Company''s normal
operating cycle and other criteria set out in the Revised Schedule VI
of the Companies Act, 1956. Based on the nature of activity carried out
by the company and the period between the procurement of materials and
realisation in cash and cash equivalents, the Company has ascertained
its operating cycle as 12 months for the purpose of current, non -
current classification of assets & liabilities. The Company has also
reclassified / regrouped the previous year figures in accordance with
the requirements applicable in the current year.
a) Basis of Accounting
The Financial statements have been prepared to comply in all material
aspects with all the applicable accounting principles in India, the
applicable accounting standards notified under Section 211(3C) of the
Companies Act, 1956 and the relevant provisions of the Companies Act,
b) Fixed Assets and Depreciation
a) Fixed Assets are stated at their original cost (net of MODVAT where
applicable) including freight, duties, customs and other incidental
expenses relating to acquisition and installation. Interest and other
finance charges paid on loans for the acquisition of fixed assets are
apportioned to the cost of fixed assets till they are ready for use.
b) Expenditure incurred during the period of construction is carried as
capital work-in-progress and on completion the costs are allocated to
the respective fixed assets.
c) Foreign exchange fluctuation on payment / restatement of long term
liabilities related to fixed assets are charged to profit and loss
d) Depreciation has been provided on straight-line method at the rates
and in the manner specified under Schedule XIV of the Companies Act,
1956, except for the following:
i. Computer hardware and software are being depreciated over a period
of three years.
ii. The leasehold land is amortised over the lease period.
iii. Buildings on leasehold land are amortised over the lease period or
useful life of the building whichever is shorter.
iv. Technical know-how fee is amortised over a period of 6 years or
period of agreement, whichever is shorter.
v. Tools and dies are depreciated over a period, upto eight years,
determined based on technical evaluation.
vi. VSAT communication equipment is depreciated over a period of 5
Long term investments are stated at cost. Provision is made for any
permanent diminution in the value of investments.
Current investments are stated at cost or fair value, whichever is
Inventories are stated at lower of cost or net realizable value. Cost
of inventories comprises of cost of purchase, cost of conversion and
other cost incurred in bringing them to their respective location and
condition. Cost of raw materials, stores and spares and packing
materials are determined on weighted average basis.
e) Capital Grants
Grants received from the Government are retained as Capital Reserve
until the conditions stipulated in the respective schemes are complied
with. However, the grants related to specific assets are deducted from
the gross value of such assets.
f) Revenue and Expense Recognition
Revenue from sale of goods is accounted for on dispatch of goods which
represents transfer of significant risks and rewards to the customers.
Sales are inclusive of excise duty and net of sales return and trade
Expenses are accounted for on an accrual basis.
Tax expense (credit) is the aggregate of current tax and deferred tax.
a) Current Tax
Provision for current income tax is made on the assessable income at
the tax rate applicable to the relevant assessment year.
b) Deferred Tax
Deferred tax for timing differences between the book profits and tax
profits is accounted for using the tax rates and laws that have been
enacted or substantively enacted as of the Balance Sheet date.
Deferred tax assets for tax losses and unabsorbed depreciation are
recognized to the extent that the realisation of the related tax
benefit through the future taxable profits is virtually certain.
Deferred tax assets arising from other timing differences are
recognised to the extent there is reasonable certainty that sufficient
future taxable income will be available against which such deferred tax
assets can be realised.
h) Foreign Currency Transactions
Foreign Currency transactions are recorded at the exchange rates
prevailing on the date of such transactions. Foreign currency monetary
assets and liabilities as at the Balance Sheet date are translated at
the rates of exchange prevailing on the Balance Sheet date. Gains and
losses arising on account of differences in foreign exchange rates on
settlement/ translation of foreign currency monetary assets and
liabilities are recognised in the Profit and Loss Account. Non-monetary
foreign currency items are carried at cost.
The premium or discount arising at the inception of forward exchange
contract to hedge an underlying asset or liability of the Company is
amortised as expense or income over the life of the contract. Exchange
differences on such contracts are recognised in the Profit and Loss
Account in the reporting period in which the exchange rates change. Any
profit or loss arising on cancellation or renewal of such forward
exchange contracts is recognised as income or expense during the year.
Pursuant to The Institute of Chartered Accountants of India''s
announcement ''Accounting for Derivatives'', the Company marks-to-market
all other derivative contracts (forward contracts in respect of firm
commitments and highly probable forecast transactions, swaps and
currency options) outstanding at the end of the year and the resultant
mark-to-market losses, if any, are recognised in the Profit and Loss
Account. Any profit or loss arising on settlement or cancellation of
such derivative contracts is recognised as income or expense for the
i) Research and Development
Equipment purchased for research and development is capitalised when
commissioned and included in the fixed assets. Revenue expenditure on
research and development is charged in the period in which it is
j) Retirement Benefits
The Company has Defined Contribution plans for post employment
benefits'' namely Provident Fund and Superannuation Fund. Contributions
payable to Provident Fund and the Superannuation Fund maintained by the
LIC are charged to the Profit and Loss Account.
The Company has Defined Benefit plans, namely compensated absences and
gratuity for employees, the liability for which is determined on the
basis of actuarial valuation at the end of the year. The Gratuity Fund
is recognised by the income tax authorities and is administered through
Gains and losses arising out of actuarial valuations are recognised
immediately in the Profit and Loss Account. k) Borrowing Cost
Borrowing Costs directly attributable to the acquisition, construction
or production of qualifying assets are capitalised as part of the cost
of the asset till the asset is ready for use. Interest on other
borrowings is charged to Profit and Loss Account.
Lease arrangement where the risks and rewards incidental to the
ownership of an asset substantially vest with the lessor are recognised
as operating leases. Lease rent under operating leases are recognised
in the Profit and Loss Account on straight line basis.
Assets acquired under finance leases are recognised at the lower of the
fair value of the leased assets at inception and the present value of
minimum lease payments. Lease payments are apportioned between the
finance charge and the reduction of the outstanding liability. The
finance charge is allocated to periods during the lease term at a
constant periodic rate of interest on the remaining balance of the
m) Warranty Provision
The estimated liability for product warranties is recorded at the time
of the sale of the products. The provision is based on management''s
estimate of the future cost of corrective action on product failure
established using historical information regarding frequency and
average cost of servicing the warranty claims.
n) Provisions and Contingencies
The Company creates a provision when there is a present obligation as a
result of past event that probably requires an outflow of resources and
a reliable estimate can be made of the amount of obligation. A
disclosure of contingent liability is made when there is a possible
obligation or a present obligation that will probably not require
outflow of resources or where a reliable estimate of the obligation
cannot be made.
The management periodically assesses, using external and internal
sources, whether there is an indication that an asset may be impaired.
If an asset is impaired, the company recognises an impairment loss as
the excess of the carrying amount of the asset over the recoverable