A COMPANY OVERVIEW
Wendt (India) Limited was incorporated on August 21,1983 under the provisions of the erstwhile Companies
Act,1956, and is a joint venture between Wendt GmbH Germany and Carborundum Universal Limited, India. Wendt
(India) Limited is a leading manufacturer of Super Abrasives, High precision Grinding, Honing and Special
Purpose Machines and High Precision components. The Company''s registered office is in Bangalore and factory
is situated in Hosur, Tamilnadu.
B SIGNIFICANT ACCOUNTING POLICIES
1 BASIS OF ACCOUNTING AND PREPARATION OF FINANCIAL STATEMENTS:
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 specified under Section
133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules 2014 and the relevant
provisions of the Companies Act, 2013 (the 2013 Act) / Companies Act, 1956 (the 1956 Act), as applicable. 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
2 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
recognized in the periods in which the results are known/ materialize.
a) Finished Goods and work-in-progress are valued at lower of cost and net realizable value. Cost
comprises of materials, labour, and an appropriate proportion of production overheads and excise duty,
wherever applicable and excludes interest, selling and distribution expenses. Cost is computed on weighted
b) Raw materials, stores and spares are valued at lower of cost and net realizable value. Cost
computed on weighted average basis includes freight, taxes and duties net of CENVAT/VAT credit, wherever
4 CASH FLOW STATEMENT:
The cash flows from operating, investing and financing activities of the Company are segregated based on
the available information. Cash flows from operating activities are reported using the indirect method,
whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of
non-cash nature and any deferrals or accruals of past or future cash receipts or payments.
5 FIXED ASSETS, DEPRECIATION AND AMORTIZATION:
Fixed assets are carried at cost less accumulated depreciation / amortization and impairment losses, if
any. The cost of fixed assets comprises its purchase price net of any trade discounts and rebates, any import
duties and other taxes (other than those subsequently recoverable from the tax authorities), any directly
attributable expenditure on making the asset ready for its intended use, other incidental expenses and
interest on borrowings attributable to acquisition of qualifying fixed assets up to the date the asset is
ready for its intended use. Machinery spares which can be used only in connection with an item of fixed asset
and whose use is expected to be irregular are capitalized and depreciated over the useful life of the
principal item of the relevant assets. Subsequent expenditure on fixed assets after its purchase / completion
is capitalized 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 capitalized and depreciation thereon is
included in the project cost till the project is ready for its intended use. Individual assets costing less
than Rs.5,000 each are depreciated in full in the year of acquisition.
Fixed assets acquired in full or part exchange for another asset are recorded at the fair market value or
the net book value of the asset given up, adjusted for any balancing cash consideration. Fair market value is
determined either for the assets acquired or asset given up, whichever is more clearly evident. Fixed assets
acquired in exchange for securities of the Company are recorded at the fair market value of the assets or the
fair market value of the securities issued, whichever is more clearly evident.
Fixed assets retired from active use and held for sale are stated at the lower of their net book value
and net realizable value and are disclosed separately.
Projects under which tangible fixed assets are not yet ready for their intended use are carried at cost,
comprising direct cost, related incidental expenses and attributable interest.
Capital Subsidy relating to projects in backward area is credited to capital subsidy reserve on receipt
and Government grants relating to specific assets are deducted from the cost of such assets.
Intangible Assets are amortized over a period of 5 years or based on the period of usage / license,
whichever is lower. The estimated useful life of intangible assets and the amortization period are reviewed
at the end of each financial year and the amortization method is revised to reflect the changed pattern.
Depreciation and amortization
Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its
estimated residual value.
Depreciation on tangible fixed assets has been provided on the straight-line method as per the useful
life prescribed in Schedule II to the Companies Act, 2013 except in respect of the used / Second hand
machines & process bath equipments, in whose case the life of the assets has been assessed based on technical
advice, taking into account the nature of the asset, the estimated usage of the asset, the operating
conditions of the asset, past history of replacement, anticipated technological changes, manufacturers
warranties and maintenance support, etc.
Depreciation on assets added / disposed off during the year is provided on pro-rata basis from the month
of addition or up to the month prior to the month of disposal, as applicable.
6 REVENUE RECOGNITION:
a) Revenues are recognized and expenses are accounted on their accrual with necessary provisions for
all known liabilities and losses. Revenue from Sale of goods is recognized on dispatch of goods. Sales
includes excise duty but excludes sales tax / VAT, discounts and returns as applicable.
b) Revenue from rendering of services priced on a time and material basis is recognized on rendering
of services as per the terms of contracts with customers.
c) Export Benefits under Advance license scheme are recognized on accrual basis on completion of
d) Dividend income on investments is accounted for when the right to receive the payment is
established. Interest income is recognized on a time proportion basis considering the underlying interest
7 FOREIGN CURRENCY TRANSACTIONS AND TRANSLATION :
Foreign currency transactions are recorded at the rates of exchange prevailing on the date of the
transactions. Monetary assets and liabilities outstanding at the year end are translated at the rate of
exchange prevailing at the year end and the gain or loss is recognized in the Statement of Profit and
Exchange differences arising on actual payments/ realizations and year end restatements are also
recognized in the Statement of Profit and Loss.
Investments that are intended to be held for more than a year, from the date of acquisition, are
classified as long-term investments and are carried at cost. However, provision for diminution is made in the
value of investments, if such diminution is other than of temporary nature.
Current investments are stated at lower of cost or fair value.
9 EMPLOYEE BENEFITS: SHORT-TERM EMPLOYEE BENEFITS
Short term employee benefits including performance incentive and compensated absences which are expected
to occur within 12 months after the end of the period in which the employee renders related service are
determined as per Company''s policy and recognized as expense based on expected obligation on undiscounted
LONG -TERM EMPLOYEE BENEFITS - COMPENSATED ABSENCES
Accumulated Compensated absences which fall due beyond 12 months is provided for in the books on
actuarial valuation basis at the year end using projected unit credit method.
DEFINED CONTRIBUTION PLANS
Superannuation fund. Provident fund and Pension fund are defined contribution plans towards which the
company makes contribution at predetermined rates to the Superannuation Trust, and the Regional Provident
Fund Commissioner respectively. The same is debited to the Statement of Profit and Loss based on the amount
of contribution required to be made and when services are rendered by the employees.
The Company also makes contributions to state plans namely Employee''s State Insurance Fund and
Employee''s Pension Scheme 1995 and has no further obligation beyond making the payment to them.
DEFINED BENEFIT PLAN
The liability for gratuity to employees as at the Balance sheet date is determined on the basis of
actuarial valuation using Projected Unit Credit method. The amount is funded to a Gratuity fund administered
by the trustees and managed by Life Insurance Corporation of India. The liability thereof is paid and
absorbed in the statement of profit and loss at the year end. Actuarial Gains and losses arising during the
year are recognized in the Statement of Profit and Loss immediately.
Termination benefits are recognized as an expense as and when incurred.
10 SEGMENT REPORTING:
The accounting policies adopted for segment reporting are in line with the accounting policies of the
Company with the following additional policies:
a) Inter-segment revenues for this purpose are reported on the basis of prices charged to external
b) Revenue and expenses are identified to segments on the basis of their relationship to the operating
activities of the segment. Revenue and expenses, which relate to the enterprise as a whole and not allocable
to segments on a reasonable basis are included under Other un-allocable Expenditure net of unallowable
11 EARNINGS/(LOSS) PER SHARE:
The basic earnings/ (loss) per share is computed by dividing the net profit attributable to equity
shareholders for the year by the weighted average number of equity shares outstanding during the year. The
number of shares used in computing diluted earnings per share comprises the weighted average shares
considered for deriving basic earnings per share, and also the weighted average number of equity shares that
could have been issued on the conversion of all dilutive potential equity shares.
12 TAXES ON INCOME:
Current tax is the amount of tax payable on the taxable income for the year as determined in accordance
with the applicable tax rates and the provisions of the Income Tax Act, 1961 and other applicable tax
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 recognized as an asset in the
Balance Sheet when it is highly probable that future economic benefit associated with it will flow to the
Deferred tax is recognized 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 substantively enacted as at
the reporting date. Deferred tax liabilities are recognized for all timing differences. Deferred tax assets
are recognized for timing differences of items other than unabsorbed depreciation and carry forward losses
only to the extent that reasonable certainty exists that sufficient future taxable income will be available
against which these can be realized. However, if there are unabsorbed depreciation and carry forward of
losses and items relating to capital losses, deferred tax assets are recognized only if there is virtual
certainty supported by convincing evidence that there will be sufficient future taxable income available to
realize the assets. Deferred tax assets and liabilities are offset if such items relate to taxes on income
levied by the same governing tax laws and the Company has a legally enforceable right for such set off.
Deferred tax assets are reviewed at each balance sheet date for their realisability.
13 RESEARCH AND DEVELOPMENT:
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 technical
feasibility has been established, in which case such expenditure is capitalized. The amount capitalized
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 utilized for research and
development are capitalized and depreciated in accordance with the policies stated for Fixed Assets.
14 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 intangible assets are tested for impairment each
financial year even if there is no indication that the asset is impaired.
If the carrying amount of the assets exceed the estimated recoverable amount, an impairment is recognized
for such excess amount. The impairment loss is recognized as an expense in the Statement of Profit and Loss,
unless the asset is carried at revalued amount, in which case any impairment loss of the revalued asset is
treated as a revaluation decrease to the extent a revaluation reserve is available for that asset.
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
When there is indication that an impairment loss recognized for an asset (other than a revalued asset) in
earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is
recognized in the Statement of Profit and Loss, to the extent the amount was previously charged to the
Statement of Profit and Loss. In case of revalued assets such reversal is not recognized.
15 PROVISIONS AND CONTINGENCIES:
A provision is recognized when an enterprise has a present obligation as a result of past event, that can
be estimated reliably 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 are not discounted to its present
value and are determined based on best estimate required to settle the obligation at the balance sheet
These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. When no
reliable estimate can be made, a disclosure is made as contingent liability and is disclosed by way of notes.
Contingent assets are not recognized in the financial statements.
16 OPERATING CYCLE:
All assets and liabilities are classified as current or non-current as per the Company''s normal
operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Normal operating
cycle is based on the time between the acquisition of assets for processing and their realization into cash
and cash equivalents.