A COMPANY OVERVIEW
Wendt (India) Limited was incorporated on August 21st 1983 under the
provisions of the 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 Companys registered office is in Bangalore
and factory is situated in Hosur, Tamilnadu.
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 notified under
Section 211(3C) of the Companies Act, 1956 (the 1956 Act) (which
continue to be applicable in respect of Section 133 of the Companies
Act, 2013 (the 2013 Act) in terms of General Circular 15/2013 dated
13 September, 2013 of the Ministry of Corporate Affairs) and the
relevant provisions of the 1956 Act/ 2013 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 previous year.
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.
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
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) Capital work in progress is stated at the amount expended up to the
balance sheet date and includes direct cost and related incidental
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
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 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 Loss .
Exchange differences arising on actual payments / realizations and year
end restatements are also recognised in the statement of profit and
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 recognised 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
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
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
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
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
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.
Note 2 (iii)
Rights, Preferences and Restrictions attached to shares
The Company has only one class of equity shares with voting rights (one
vote per share). The dividends proposed by the Board of directors is
subject to approval of the shareholders in the ensuing Annual General
Meeting. In the event of liquidation of the Company, the equity
shareholders are entitled to receive only the residual assets of the
Company. The distribution of dividend is in the proportion to the
number of equity shares held by the shareholders.
(a) Principal amount payable to Micro and Small Enterprises ( to the
extent identified by the Company from available information and relied
upon by the auditors) as at 31st March, 2014 is Rs.43.22 lacs (Previous
year - Rs 32.94 lacs)
(b) There are no dues to Micro and Small Enterprises as per The Micro,
Small and Medium Enterprises Development Act 2006, which are
outstanding for more than 45 days during the year and as at the Balance
Sheet date. The above information has been determined to the extent such
parties have been identified on the basis of information available with
the Company. This has been relied upon by the auditors.