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Wendt (India)
BSE: 505412|NSE: WENDT|ISIN: INE274C01019|SECTOR: Abrasives
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« Mar 12
Accounting Policy Year : Mar '13
1 BASIS OF ACCOUNTING AND PREPARATION OF FINANCIAL STATEMENTS:
 
 The Financial Statements are prepared under the historical cost
 convention on accrual basis and in accordance with Generally Accepted
 Accounting Principles in India (Indian GAAP). The said financial
 statements comply with the relevant provisions of the Companies Act
 ,1956 (the Act) and the mandatory Accounting Standards notified by
 the Central Government of India under the Companies (Accounting
 Standards) Rules 2006 (as amended), to the extent applicable.
 
 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 recognised in the periods in which
 the results are known/ materialise.
 
 3 INVENTORIES:
 
 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 average basis.
 
 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
 applicable.
 
 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 AMORTISATION:
 
 a) Fixed assets are stated at original cost (net of CENVAT/VAT wherever
 applicable) including expenses related to acquisition and installation.
 Borrowing costs are capitalized as part of qualifying fixed assets when
 it is possible that they will result in future economic benefits. Other
 borrowing costs are expensed.
 
 b) Capita! work in progress is stated at the amount expended up to the
 balance sheet date and includes direct cost and related incidental
 expenses.
 
 c) 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.
 
 d) Depreciation is provided, on all depreciable assets, except
 intangible assets (refer (e) below), on a straight line basis at the
 rates prescribed under Schedule XIV of the Companies Act, 1956.
 
 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.
 
 e) Intangible Assets are amortized over a period of 5 years or based on
 the period of usage/ licence, whichever is lower. The estimated useful
 life of intangible assets and the amortisation period are reviewed at
 the end of each financial year and the amortisation method is revised
 to reflect the changed pattern.
 
 f) Individual assets costing less than Rs. 5,000 each are depreciated
 in full in the year of acquisition.
 
 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 recognised on despatch of goods. Sales includes
 exicise 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 recognised on rendering of services as per the terms of
 contracts with customers.
 
 c) Export Benefits under Advance licence scheme are recognized on
 accrual basis on completion of export obligation.
 
 d) Dividend income on investments is accounted for when the right to
 receive the payment is established.  Interest income is recognised on a
 time proportion basis considering the underlying interest rate.
 
 7 FOREIGN CURRENCYTRANSACTIONS 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 Loss.
 
 Exchange differences arising on actual payments/ realizations and year
 end restatements are also recognised in the statement of prof it and
 loss.
 
 8 INVESTMENTS:
 
 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 otherthan 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 basis.
 
 LONG -TERM EMPLOYEE BENEFITS - COMPENSATED ABSENCES
 
 Accumulated Compensated absences which fall due beyond 12 months is
 provided for in the books on actuarial 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 on an accrual basis.
 
 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 recognised in the Statement of Prof it 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 customers.
 
 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 un- allocable income.
 
 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:
 
 Income tax comprises the current tax provision and the net change in
 the deferred tax asset or liability during the year. Deferred tax
 assets and liabilities are recognized for the future tax consequences
 of timing differences between the carrying values of the assets and
 liabilities and their respective tax bases. Deferred tax assets are
 recognized subject to management''s judgment that realization is more
 likely than not. Deferred tax assets and liabilities are measured using
 enacted tax rates or substantively enacted tax rates expected to apply
 to taxable income in the years in which the timing differences are
 expected to be received or settled.
 
 13 RESEARCH AND DEVELOPMENT:
 
 Revenue expenditure on research and development is charged as an
 expense in the year in which it is incurred.  Capital expenditure on
 Research and Development is included in fixed assets and depreciated in
 accordance
 
 with the depreciation policy of the Company.
 
 14 IMPAIRMENT OF ASSETS:
 
 At each balance sheet date, the carrying values of the tangible and
 intangible assets are reviewed to determine whether there is any
 indication that those assets have suffered an impairment loss. If any
 such indication exists, the recoverable amount of the asset is
 estimated in order to determine the extent of the impairment loss (if
 any).  Where there is an indication that there is a likely impairment
 loss for a group of assets, the Company estimates the recoverable
 amount of the group of assets as a whole, and the impairment loss is
 recognised.
 
 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 date.
 
 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 recognised 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 revised Schedule VI to the Companies Act, 1956. Normal operating
 cycle is based on the time between the acquisition of assets for
 processing and their realisation into cash and cash equivalents.
Source : Dion Global Solutions Limited
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