(a) Basis of preparation of financial statements
The financial statements are prepared under the historical cost
conception, on the accrual basis of accounting, and comply with the
Accounting Standards prescribed by the Central Government, in
consultation with National Advisory Committee on Accounting Standards,
under the Companies (Accounting Standards) Rules, 2006 and the relevant
provisions of the Companies Act, 1956, (''the Act'') to the extent
applicable. The financial statements are presented in Indian rupees
rounded off to the nearest rupee.
(b)Presentation and disclosure of financial statements:
During the year ended 31 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 statements. The adoption
of revised Schedule VI does not impact recognition and measurement
principles followed for preparation of financial statements. The
company has also reclassified the previous year figures in accordance
with the requirements applicable in the current year.
(c) Use of estimates
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles (GAAP) requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and the disclosures of contingent liabilities as at the
date of the financial statements and reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
these estimates. Any revision of accounting estimates is recognized
prospectively in current and future period.
(d) Fixed assets
Fixed assets are stated at historical cost less accumulated
depreciation and impairment losses if any and net of Cenvat / Value
Added Tax. Cost includes all attributable expenses in bringing the
assets to its working condition. Net changes on foreign exchange
contracts and adjustments arising from exchange rate variations
attributable to the fixed assets are capitalized.
The carrying amount of asset is reviewed at each balance sheet date if
there is any indication of impairment based on internal/ external
factors, an impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount.
Depreciation on fixed assets other than Wind Mill is provided on
straight-line method in accordance with Schedule XIV of the Companies
Act, 1956. Depreciation on Wind Mills are provided on WDV method at
the rate specified in Schedule XIV. In respect of additions made during
the year, depreciation is charged on pro-rata basis from the month of
Long term investments are stated at cost, less provision for other than
temporary diminution in value. Current investments, except for current
maturities of long term investments are stated at the lower of cost and
The investments made in M/s.Salzer Global Services LLC, USA (SGS) is
strategically made to keep the furtherance of market share in the
international markets particularly USA and Canada, and the management
feels that the company''s investments in SGS will provide returns on the
long run and hence the investment has been stated at cost.
(i) Raw materials including consumables and stores & spares are valued
at cost. The cost is determined on the basis of FIFO method.
(ii) Work-in-process is valued at cost of materials and labour together
with relevant factory overheads. The cost of work in progress is
determined on the basis of weighted average method.
(iii) The finished goods are valued at cost inclusive of excise duty
(or) net realizable value whichever is less.
(i) Research and Development
Revenue expenditure on Research and Development is charged to the
Profit and Loss Account and Capital Expenditure is added to the cost of
(j) Foreign Currency Transactions
a) Transactions in foreign currency are recorded on initial recognition
at the exchange rate prevailing at the time of the transaction.
b) Monetary items (i.e. receivables, payables, loans, etc.) denominated
in foreign currency are reported using the closing exchange rate on
each balance sheet date.
c) The exchange difference arising on the settlement of monetary items
on reporting these items at rates different from rates at which these
were initially recorded / reported in previous financial statements are
recognized as income/expense in the period in which they arise.
1. Current Tax
Provision for taxation has been made on assessable profits of the
Company as determined Under the Income Tax Act, 1961.
2. Deferred Tax
In terms of AS.22, the deferred tax for timing differences between the
book and tax profit arising out of capital expenditure on research and
development, depreciation and provisions for the year is accounted by
using the tax rates and laws that have been in force as of the Balance
(l) Revenue Recognition
i. Revenue in respect of sale of products is recognized at the point
of despatch to customers.
ii. Sales comprise of value of sale of goods (Net of returns)
excluding Sales Tax and Excise Duty.
iii. Revenue in respect of investments is recognized as and when these
incomes are ascertained and quantified.
iv. Income from Services is recognized as and when the services are
v. Export benefits are recognized in the profit and loss account when
the right to receive credit as per the terms of the entitlement is
established in respect of exports made.
vi. Dividend income is recognized when the right to receive dividend
vii. Lease income under operating lease is recognized in Profit and
Loss Account on the basis of accrual of income as per terms of the
(m) Employees Benefits
1. Defined contribution plans
The Company makes contribution towards employees'' provident fund and
employees'' state insurance plan scheme.
2. Defined benefit plan (gratuity)
The employees'' gratuity scheme is a defined benefit plan. The Company
has taken Group Gratuity Policies with the Life Insurance Corporation
of India (''LIC'') for future payment of gratuities. The present value of
the obligation under such defined benefit plan is determined at each
Balance Sheet date based on an actuarial valuation carried out by an
independent actuary using the projected unit credit method. Actuarial
gains and losses and past service costs are recognized immediately in
the Profit and Loss account.
3. Pension & Leave Salaries
The scheme is discretionary in nature. The Company operates a funded
pension defined benefit scheme for qualifying employees. The scheme is
funded with LIC of India - Pension and Group scheme.
No provision has been made for leave salaries as the Company does not
have any leave encashment scheme and the same is at the discretion of
(n) Earnings Per Share (EPS)
The basic EPS is computed by dividing the net profit attributable to
the equity shareholders for the year by the weighted average number of
equity shares outstanding during the year.
Diluted EPS is computed using the weighted average number of equity and
dilutive equity equivalent shares outstanding during the year except
where the results would be anti dilutive.
(o) Borrowing Costs
Borrowing costs, which are directly attributable to the acquisition /
constructions of fixed assets, till the time such assets are ready for
intended use, are capitalized as part of the assets. Other borrowing
costs are recognized as an expense in the year in which they are
Lease income is treated as operating lease in accordance with AS 19 of
ICAI and the income is recognized on accrual basis as per the terms of
agreement with Municipal Corporation.
Since the income has the character of fluctuations and not pre
determined, straight line basis of adopting the income is not possible.
(q) Provisions, contingent liabilities and contingent assets
A provision is recognized when the Company has a present obligation as
a result of past event; 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 are not discounted to its
present value and are determined based on 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
A disclosure for a contingent liability is made when there is a
possible or present obligation that may, but probably will not require
an outflow of resources. When there is a possible obligation in
respect of which the likelihood of outflow of resources is remote, no
provision or disclosure is made.
( r) Segment Reporting
Based on the guiding principles given in Accounting Standards on
Segment Reporting (AS-17) issued by the ICAI and on the basis of
Management Certification, the Company''s primary business segment is
Electrical installation products. As the Company''s business activity
falls within a single primary business segment, the disclosure
requirements of AS-17 in this regard does not arise.
(s) Consolidation of accounts (AS23)
The company has made investments in three other bodies corporate. The
management feels, as these investments are being strategic in nature
and the company has no control or significant influence in the
financial / operating policies and in decisions of these investee
companies, the disclosure requirements of AS23 in this regard does not
(t) Cash and Cash Equivalents
Cash and cash equivalents in the cash flow statement comprise cash at
bank and in hand and short-term investments with an original maturity
of three months or less.