1 Corporate information:
SNL Bearings Limited, established in 1983, is engaged in the
manufacture and marketing of antifriction bearing products. The
holding company NRB Bearings Limited acquired the company on
June 01, 2000.
2.1 Basis of accounting and preparation of financial statements:
The financial statements are prepared under historical cost convention
on an accrual basis and are in accordance with the requirements of the
Companies Act, 1956, and comply with the Accounting Standards referred
to in sub-section (3C) of section 211 of the said Act.
2.2 Use of Estimates:
The preparation of financial statements in conformity with the
generally accepted accounting principles requires estimates and
assumptions to be made that affect the reported amounts of assets and
liabilities on the date of the financial statements and the reported
amounts of revenues and expenses during the reported period. The
estimates and assumptions used in the accompanying financial statements
are based upon Management''s evaluation of the relevant facts and
circumstances as on the date of financial statements. Actual results
may differ from the estimates used in preparing the accompanying
financial statements. Differences between the actual results and
estimates are recognized in the period in which the results are known/
2.3 Fixed assets, depreciation and amortization:
(a) Tangible assets are stated at their original cost including
incidental expenses related to acquisition and installation, less
accumulated depreciation and impairment loss, if any. Cost comprises
of the purchase price and any other attributable cost of bringing the
assets to its working condition for its intended use.
(b) Intangible assets - Computer software acquired is amortised over a
period of three years on a straight line basis.
(c) Depreciation is provided on the straight line method at the rates
prescribed in Schedule XIV to the Companies Act, 1956.
2.4 Foreign currency transactions and translations:
Transactions in foreign currency are recorded at the original rates of
exchange in force at the time the transactions are effected. At the
year end, monetary items denominated in foreign currency are reported
using the closing rate of exchange. Exchange differences arising
thereon and on realization/payment of foreign exchange are accounted
for in the relevant year as income or expense.
Inventories comprising of raw materials, stores and spare parts, tools,
bought out components & packing materials, manufactured components,
work-in-progress and finished goods are valued at the lower of cost
and net realizable value. Material costs included in the valuation of
inventories are determined on the basis of weighted average method.
Costs of conversion and other costs are determined on the basis of
standard cost method adjusted for variances between standard costs
and actual costs, unless such costs are specifically identifiable, in
which case they are included in the valuation at actuals.
2.6 Employee benefits:
(a) Short term employee benefits are recognised as an expense at the
undiscounted amount in the profit and loss account of the year in which
the related service is rendered.
(b) Long term benefits:
(i) Defined Contribution Plan :
Provident and Family Pension Fund
The eligible employees of the Company are entitled to receive post
employment benefits in respect of provident and family pension fund, in
which both employees and the Company make monthly contributions at a
specified percentage of the employees'' eligible salary (currently 12%
of employees'' eligible salary). The contributions are made to Regional
Provident Fund Commissioner or provident fund trust and the Central
Provident Fund under the State Pension Scheme. Provident Fund and
Family Pension Fund are classified as Defined Contribution Plans as the
Company has no further obligations beyond making the contribution. The
Company''s contributions to Defined Contribution Plan are charged to
profit and loss account as incurred.
(ii) Defined Benefit Plan :
The Company has an obligation towards gratuity, a defined benefit
retirement plan covering eligible employees. The plan provides a lump
sum payment to vested employees at retirement, death while in
employment or on termination of employment of an amount equivalent to
15 days salary payable for each completed year of service. Vesting
occurs upon completion of five years of service. The Company has
obtained insurance policies with the Life Insurance Corporation of
India (LIC) and makes an annual contribution to LIC. The Company makes
provision for gratuity based on an actuarial valuation by actuary.
2 Compensated absences
The Company provides for the encashment of leave or leave with pay
subject to certain rules. The employees are entitled to accumulate
leave subject to certain limits for future encashment/availment. The
Company makes provision for compensated absences based on an actuarial
valuation by actuary.
3. Actuarial gains and losses are recognised in the profit and loss
2.7 Impairment of assets:
An asset is treated as impaired when the carrying cost of asset exceeds
its recoverable value. Recoverable amount is the higher of an asset''s
net selling price and its value in use. Value in use is the present
value of estimated future cash flows expected to arise from the
continuing use of the asset and from its disposal at the end of its
useful life. Net selling price is the amount obtainable from sale of
the asset in an arm''s length transaction between knowledgeable, willing
parties, less the costs of disposal. An impairment loss is charged to
the Profit & Loss in the year in which as asset is identified as
impaired. The impaired loss recognized in prior accounting periods is
reversed if there has been a change in the estimate of the recoverable
2.8 Revenue / Sales:
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the company. Revenue is recognized only
when no significant uncertainties exist regarding the amount of
consideration and it is reasonably certain that ultimate collection
will be made.
Net Sales excludes amounts recovered towards excise duty, sales tax,
octroi and freight and are net of sales returns.
(a) Income taxes are accounted for in accordance with Accounting
Standard (AS)-22 Accounting for taxes on income. Income tax comprises
both current and deferred tax.
(b) Current tax is measured on the basis of estimated taxable income
and tax credits computed in accordance with the provisions of the
Income Tax Act, 1961.
(c) The tax effect of the timing differences that result between
taxable income and accounting income and are capable of reversal in one
or more subsequent periods are recorded as a deferred tax asset or
deferred tax liability. They are measured using substantially enacted
tax rates and tax regulations as at the Balance Sheet date.
(d) Deferred tax assets on account of other timing differences are
recognized only to the extent there is a reasonable certainty of its
Lease arrangements where the risks and rewards incidental to ownership
of an asset substantially vest with the lessor are recognised as
operating leases. Lease rentals under operating leases are recognised
in the Statement of Profit and Loss on a straight-line basis.
2.11 Provisions and contingencies:
(a) 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.
(b) Contingent liabilities are disclosed as notes when the Company has
a possible of present obligation where it is not probable that an
outflow of resources will be required to settle it. Contingent assets
are neither recognized nor disclosed.
2.12 Segment Reporting:
In accordance with Accounting Standard 17 on Segment reporting, the
company has manufacturing of bearings and special purpose machines as
the reportable business Segments and is geographically located
primarily in India.