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LGB Forge
BSE: 533007|NSE: LGBFORGE|ISIN: INE201J01017|SECTOR: Castings & Forgings
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Mar 12
Accounting Policy Year : Mar '13
i.  Accounting Convention
 
 The financial statements have been prepared under Historical Cost
 Convention on the basis of going concern and in accordance with the
 accounting standards referred to in Section 211 (3C) of the Companies
 Act, 1956, wherever applicable.
 
 ii.  Fixed Assets & Depreciation
 
 a) Fixed Assets are stated at original cost net of tax / duty credits
 availed, if any, less accumulated depreciation, accumulated
 amortization and cumulative impairment. Costs include pre-operative
 expenses and all expenses related to acquisition and installation of
 the assets concerned.
 
 b) Own manufactured assets are capitalized at cost including an
 appropriate share of overheads.
 
 c) Depreciation on Plant and Machinery, Motor Cars, Trucks and Vans has
 been provided on straight-line method at the rates specified in the
 Schedule XIV of the Companies Act, 1956.  Tools and dies are
 depreciated at 20% p.a. based on the estimated useful life as
 determined by the Company. Depreciation in respect of other assets has
 been calculated on written down value method as per the rates specified
 in Schedule XIV of the Companies Act, 1956.
 
 Based on technical opinion, windmill is considered as a continuous
 process plant and depreciation is provided at the rate applicable
 thereto, on straight line method.
 
 d) As at each Balance Sheet date, the carrying amount of assets is
 tested for impairment so as to determine;
 
 i) the provision for impairment loss, if any, required or;
 
 ii) the reversal, if any, required for impairment loss recognised in
 previous periods.  Impairment loss is recognised when the carrying
 amount of an asset exceeds its recoverable amount.
 
 iii.  Valuation of Inventories
 
 a) Inventories are valued at lower of cost and estimated net realizable
 value. Cost is arrived at on weighted average basis.
 
 b) Excise Duty is added in the Closing Inventory of Finished Goods.
 
 c) The basis of determining cost for various categories of inventories
 are as follows:
 
 i) Raw Materials, Packing Materials and Stores and spares : Weighted
 Average basis.
 
 ii) Finished Goods and Work-in-Progress :Cost of Direct, Material,
 Labour and other ManufActuring overheads.
 
 iv.  Revenue Recognition
 
 a) The Company generally follows the mercantile system of accounting
 and recognizes income and expenditure on an accrual basis except those
 with significant uncertainties.
 
 b) Sale of goods is recognized when the risk and rewards of ownership
 are passed on to the customers, which is generally on despatch of
 goods.
 
 c) Claims made by the Company and those made on the Company are
 recognized in the Statement of Profit and Loss as and when the claims
 are accepted.
 
 v.  Foreign Currency TransActions
 
 a) Foreign currency transactions are recorded at exchange rates
 prevailing on the date of such transaction.
 
 b) Foreign currency assets and liabilities at the year end are
 realigned at the exchange rate prevailing at the year end and
 difference on realignment is recognized in the Statement of Profit and
 Loss.
 
 vi.  Research and Development
 
 Revenue expenditure on Research and Development is charged under
 respective heads of account.  Capital expenditure on Research and
 Development
 
 is included as part of fixed assets and depreciated on the same basis
 as other fixed assets.
 
 vii.  Employee Benefits
 
 a) Short term employee benefits are recognized as an expense at the
 undiscounted amount in the Statement of Profit and Loss of the year in
 which the related service is rendered.
 
 b) Post employment and other long term benefits which are defined
 benefit plans are recognized as an expense in the Statement of Profit
 and Loss for the year in which the employee has rendered service. The
 expense is recognized based on the present value of the obligation
 determined in accordance with Revised Accounting Standard 15 on
 Employee Benefits.  Actuarial gains & losses are charged to the
 Statement of Profit and Loss
 
 c) Payments to defined contribution schemes are charged as expense as
 and when incurred.
 
 d) Termination benefits are recognized as an expense as and when
 incurred.
 
 viii.  Borrowing Costs
 
 Borrowing costs attributable to the acquisition or construction of
 qualifying assets are capitalized as part of such assets. All other
 borrowing costs are charged to revenue. A qualifying asset is an asset
 that necessarily requires substantial period of time to get ready for
 its intended use or sale.  ix.  Taxes on Income
 
 Current tax on income for the period is determined on the basis of
 taxable income and tax credits computed in accordance with the
 provisions of the Income Tax Act, 1961 and based on the expected
 outcome of assessment / appeals. Deferred tax is recognized on timing
 differences between the accounting income and the taxable income for
 the year and quantified using the tax rates and laws enacted or
 substantively enacted as on the Balance Sheet date.
 
 Deferred tax assets are recognized and carried forward to the extent
 that there is a reasonable certainty that sufficient future income will
 be available against which such deferred tax assets can be realised.
 x.  Cash Flow Statement
 
 Cash Flow Statement has been prepared in accordance with the indirect
 method prescribed in
 
 Accounting Standard 3 issued by the Institute of Chartered Accountants
 of India.
 
 xi.  Leases
 
 Leases are classified as finance or operating leases depending upon the
 terms of the lease agreements.  Assets held under finance leases are
 recognised as assets of the Company on the date of acquisition and
 depreciated over their estimated useful lives.  Finance costs are
 treated as period cost using effective interest rate method and are
 expensed accordingly. Rentals payable under operating leases are
 expense as incurred.
 
 xii.  CENVAT/Service Tax
 
 CENVAT credit on materials purchased / services availed for production
 / input services are taken into account at the time of purchase. CENVAT
 credit on purchase of capital items wherever applicable are taken into
 account as and when the assets are acquired. The CENVAT credits so
 taken are utilized for payment of excise duty on goods manufactured /
 Service tax on Output services. The unutilized CENVAT credit is carried
 forward in the books.
 
 xiii. Provisions, Contingent Liabilities and Contingent Assets
 
 Provisions are recognised only when there is a present obligation as a
 result of past events and when a reliable estimate of the amount of
 obligation can be made. Contingent liability is disclosed for
 
 (i) Possible obligation which will be confirmed only by future events
 not wholly within the control of the Company or
 
 (ii) Present obligations arising from past events where it is not
 probable that an outflow of resources will be required to settle the
 obligation or a reliable estimate of the amount of the obligation
 cannot be made. Contingent assets are not recognised in the financial
 statements since this may result in the recognition of income that may
 never be realized.
 
 xiv.  Accounting Standards
 
 Accounting Standards prescribed under Section 211(3c) of the Companies
 Act, 1956, have been followed wherever applicable.
Source : Dion Global Solutions Limited
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