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GS Auto International

BSE: 513059|ISIN: INE736H01024|SECTOR: Fasteners
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GS Auto International is not listed on NSE
Mar 13
Accounting Policy Year : Mar '15
1.  Corporate Information:
 
 G.S. Auto International Limited (GS or the Company) is a public
 company domiciled in India and incorporated as Gurmukh Singh & Sons
 Auto Parts Private Limited on 29th June, 1973 under the provisions of
 the Companies Act, 1956 & later on changed its name to G.S. Auto
 International Limited, having its registered office at G.S.  Estate,
 G.T Road, Dhandari Kalan, Ludhiana-141010. Its shares is listed on
 Bombay Stock Exchange Limited.
 
 The Company is engaged in the manufacturing of wide range of auto
 components such as Ferrous & Non Ferrous Casting Components, Machined
 Components, Forged parts and Assembly of heavy duty trailer axles for
 Commercial vehicles. The Company''s CIN is L34300PB1973PLC003301
 
 The Company is operating in all the three verticals of auto components
 industry by supplying its components to Original Equipment
 Manufacturers, After Sales Market (Replacement Market) & Export Market.
 
 2.  Basis for Preparation of Financial Statements:
 
 The financial statements of the Company have been prepared under the
 historical cost convention on an accrual basis and comply with notified
 accounting standards referred to in section 133 read with the General
 Circular 15/2013 dated September 13, 2013 of Ministry of Corporate
 Affairs and other relevant provision of the Companies Act, 2013.
 
 3.  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 &
 liabilities on the date of financial statements and the reported
 amounts of revenues and expenses during the reported period and
 disclosures of contingent inabilities at the end of the reporting
 period. Although these estimates and assumptions used in the
 accompanying financial statements are based upon management''s best
 knowledge of current events and actions, uncertainty about these
 assumptions and estimates could result in the outcomes requiring a
 material adjustment to the carrying amounts of assets or liabilities in
 future periods.
 
 4.  Summary of Significant accounting policies:
 
 a) Fixed Assets (Tangible & Intangible) and Depreciation:
 
 (i) Fixed Assets-Tangible & Intangible Assets:
 
 Tangible Fixed assets are stated at their original cost of acquisition
 or construction (net of refundable taxes or levies), less accumulated
 depreciation (except freehold land). Historical cost includes all
 incidental costs related to the acquisition, installation,
 erection/commissioning of the concerned assets, including interest and
 financial charges on borrowings, if capitalization criteria is met,
 attributable to the concerned Asset, up to the date of the assets are
 put into use/assets is ready for its intended use. Any trade discounts
 and rebates are deducted in arriving at the purchase price. All other
 expenses on existing fixed assets, including day to day repair and
 maintenance expenditure and cost of replacing parts, are charged to the
 statement of profit and loss for the period during which such expenses
 are incurred. Also refer para 4(d).
 
 The Tangible Fixed Assets manufactured by the Company are stated at its
 manufacturing cost plus all the incidental expenses related thereto up
 to date of the assets are put into use/assets is ready for its intend
 use along with the interest cost.
 
 Machinery Specific spares other than those required for regular
 maintenance are capitalized as a part of the tangible fixed assets.
 
 Expenditure on New Projects and Expenditure during Construction etc.:
 
 In case of new project and in the case of substantial modernization or
 expansion at the existing units of the Company, specific expenditure
 incurred including specific interest on borrowings and financing cost,
 prior to the commencement of commercial production is capitalized to
 the cost of specific assets. All the other expenses/indirect expenses,
 up to the date of start of commercial production of the second phase,
 not specific to any particular assets, if any, is being debited to the
 pre-operative expenses/expenses pending capitalization account & will
 be capitalized, to all the relevant tangible assets, on the date of
 commencement of commercial production, of the second phase of the new
 project. Trial Run expenditure is also capitalized.
 
 Intangible Assets are stated at cost less accumulated amount of
 amortization.
 
 Expenditure incurred on acquisition or development of software, video
 Advertisement, and such other Intangible Assets are recognized as
 Intangible Assets, if it is expected that such assets will generate
 sufficient future economic benefits.
 
 Leasehold land, acquired on thirty years lease basis, from Adityapur
 Industrial Development Authority (AIDA) for setting up of new
 manufacturing unit at Jamshedpur and all the related expenses &
 incidental to the acquisition of the leasehold land, up to the date of
 the commencement of the first phase of the Commercial production was
 capitalized.
 
 Fixed Assets are reviewed for impairment on each Balance Sheet date.
 
 (ii) Depreciation and Amortization:
 
 Cost incurred on Leasehold land is amortized over the period of lease.
 Depreciation on all tangible fixed assets is provided under the
 Straight line Method basis using the rates prescribed in the Schedule
 II of the Companies Act, 2013.
 
 Intangible Assets are amortized on straight line method over the
 estimated useful life of such assets. An asset''s useful life is
 estimated based on an evaluation of the future economic benefits
 expected of such assets.
 
 Depreciation on the additions to the particular assets, during the
 year, is being provided on a pro- rata basis, from the date of
 acquisition/installation/on which the particular asset is put to use.
 
 Depreciation on assets sold, discarded or demolished during the year,
 is being provided at their respective rates on pro-rata basis up to the
 date on which such assets are sold, discarded or demolished.
 
 Depreciation on additions on account of increase or decrease in rupee
 value due to revalorization of foreign currency loans is being provided
 at rates of depreciation over the remaining useful life of the said
 assets.
 
 
 b) Impairment of Assets:
 
 Carrying amount of cash generating assets is reviewed at Balance Sheet
 date to determine whether there are any indications of impairment.
 Provisions for impairment Loss, if any, are recognized to the extent to
 which the carrying amount of an asset exceeds its recoverable amount.
 Recoverable amount is the higher of an asset''s net selling price and
 its value in use. Value in use is determined on the basis of the
 discounted present value of estimated future cash flows expected to
 arise from the continuing use of an asset and from its disposal at the
 end of its useful life.
 
 c) Inventories:
 
 Cost of Inventories have been computed to include all cost of
 purchases, Cost of Conversion and other costs incurred in bringing the
 inventories to their present location and condition:
 
 a) Raw material & Components are valued at lower of cost or estimated
 net realizable value.
 
 b) Work-in-Progress is valued at raw material cost-plus conversion cost
 depending upon the stage of completion.
 
 c) Finished Goods are valued at raw material cost-plus conversion cost
 & other overheads incurred in bringing the goods to their present
 condition & location.
 
 d) Consumable Stores are valued at cost plus expenses.
 
 e) Scrap is valued at estimated realizable value.
 
 d) Foreign Currency Transactions:
 
 Foreign currency transactions are recorded on initial recognition at
 the rate prevailing on the respective dates of the transactions. Where
 export bills are negotiated with the bank, the export sales are
 recorded at the rate on the date of negotiation as the said rate
 approximates the actual rate at the date of the transaction. Gains &
 Losses resulting from the settlement of such transactions are
 recognized in the statement of profit & loss account.
 
 Monetary Assets & Liabilities denominated in foreign currency at the
 balance sheet date are translated into rupees at the closing exchange
 rate prevailing on that date. All monetary Assets and Liabilities
 denominated in foreign currency are restated at the relevant year-end
 rates. Gains or Losses arising on restatement are recognized to the
 statement of profit & loss account.
 
 The Company accounts for exchange differences arising on
 translation/settlement of foreign currency monetary items as below:
 
 Exchange differences arising on long-term foreign currency monetary
 items related to acquisition of a fixed asset are capitalized and
 depreciated over the remaining useful life of the asset. The foreign
 exchange variances resulting on account of loan used to acquire fixed
 assets are accounted as part of fixed assets.
 
 e) Revenue Recognition:
 
 i) Sales of goods:
 
 Sales comprise Sale of goods and Export Incentives. Revenue from sale
 of goods is recognized When all the significant risks and rewards of
 ownership are transferred to the buyer and the Company retains no
 effective control of the goods transferred to a degree usually
 associated with ownership, which generally coincides with the dispatch
 of goods to the customers.; and
 
 a) The Company collects sales taxes and value added taxes (VAT) on
 behalf of the government and therefore, these are not economic benefits
 flowing to the Company.
 
 c) No significant uncertainty exists regarding the amount of the
 consideration that will be derived from the sale of goods.
 
 d) Export Sales are accounted on the basis of dates of Bill of Lading.
 
 e) Price escalation claims from customers are accounted in the year
 under audit, only if they are settled with the customers up to the date
 of finalization of accounts.
 
 ii) Interest:
 
 Interest income is recognized on a time proportion basis taking into
 account the amount outstanding and the rate applicable.
 
 iii) Export Incentives:
 
 Revenue in respect of the above benefit is recognized on post export
 basis. Export Incentives are accounted for on accrual basis at the time
 of Export of Goods if the entitlements can be estimated with reasonable
 accuracy and conditions precedent to claim is fulfilled.
 
 iv) Insurance and other claims:
 
 Revenue in respect of claims is recognized when no significant
 uncertainty exists with regard to the amount to be realized and the
 ultimate collection thereof.
 
 v) Dividend:
 
 Dividend income from investments is recognized when the Company''s right
 to receive the payment is established.
 
 vi) Profit/Loss on sale of Investment is recognized when all the
 significant risk and rewards of ownership in Investment is transferred.
 
 f) Investments:
 
 Investments that are readily realizable and intended to be held for not
 more than a year are classified as Current Investments. All other
 investments are classified as Long Term Investments.
 
 Current Investments are valued at cost of acquisition less provision
 for diminution, as necessary, if any, determined on an individual
 investment basis. Long-term investments are valued at their acquisition
 cost. However, provision for diminution is made to recognize a decline
 other than temporary in nature, in the carrying amount of such long
 term Investments. On disposal of an investment, the difference between
 its carrying amount and net disposal proceeds is charged or credited to
 the statement of profit and loss.
 
 g) Hedge Accounting:
 
 The Company till date is not using the booking of forward contract as
 hedging instrument for covering its risk against currency fluctuations
 for it''s all the import and export business carried on during the year,
 further the Company has not booked any forward or hedged its foreign
 currency exposure for the foreign exchange term loan, outstanding as at
 the balance sheet date, availed for the setting up of new manufacturing
 unit at Jamshedpur. In terms of risk management strategy, the Company
 does not use forward cover contracts for trading & speculative
 purposes.
 
 h) Research & Development Expenditure:
 
 Revenue expenses incurred for Research and Development for its existing
 products are charged to the statement of profit & loss account of the
 year. However Capital Expenditure for Research and Development is
 treated in the same way as other fixed assets and is capitalized in the
 year of acquisition/installation and are accounted for in the manner
 stated in Note No. 4 (a) above.
 
 i) Cenvat Credit:
 
 Cenvat credit of excise duty paid on inputs, capital assets and input
 services is recognized in accordance with the Cenvat Credit Rules,
 2004.
 
 j) Employee Benefits:
 
 Provident Fund:
 
 Benefits in the form of Provident Fund and Pension Schemes whether in
 pursuance of any law or otherwise, which are defined contributions is
 made in accordance with the provisions of the Employee Provident Fund
 and Miscellaneous Provision Act 1952, is accounted for on accrual basis
 and charged to the statement of profit and loss account, on the basis
 of actual liability calculated as a percentage of salary.
 
 Gratuity:
 
 Payment for present liability of future payment of gratuity is being
 made to approved gratuity funds, which fully covers the same under cash
 accumulation policy of the Life Insurance Corporation of India. The
 employees'' gratuity is a defined benefit funded plan. The present value
 of the obligation under such defined benefit plan is determined based
 on the actuarial valuation using the Projected Unit Credit Method as at
 the date of the Balance Sheet and the shortfall in the fair value of
 the plan Assets is recognized as an obligation.
 
 Leave Encashment:
 
 The Company provides for the encashment of leave with pay subject to
 certain rules. The employees are entitled to accumulate leave, for
 future encashment/availment. The liability is provided based on the
 number of days of unutilized leave at each balance sheet date.
 Privilege leave benefits or compensated absences are considered as long
 term & short term unfunded benefits and is recognized on the basis of
 an independent actuarial valuation using the projected unit credit
 method determined by an appointed Actuary.
 
 The Actuarial gain/loss is recognized in statement of profit and loss
 account.
 
 
 Termination benefits such as compensation under voluntary retirement
 scheme are recognized as a liability in the year of termination.
 
 k) Events subsequent to Balance Sheet Date:
 
 Events occurring after the balance sheet date, which have a material
 impact on the financial affairs of the Company, are taken into
 cognizance.
 
 l) Borrowing cost:
 
 Interest on borrowings is recognized in the statement of profit & loss
 Account except interest incurred on borrowings, specially raised for
 acquisition/construction of tangible fixed assets, for the new project,
 are capitalized to the cost of the specific assets until such time that
 the asset is ready to be put to use for its intended purpose except
 where installation is extended beyond reasonable/normal time limits.
 
 Further, borrowings costs attributable to the acquisition or
 construction/manufacture of tangible fixed assets, are capitalized till
 the date of substantial completion or such time that the asset is ready
 to be put to use for its intended purposes.
 
 Borrowing cost specific related to the setting of new manufacturing
 unit at Jamshedpur (second phase), if any, is debited to the
 pre-operative expenses account and apportioned/will be apportioned to
 the respective assets at the time of commencement of the commercial
 production of the second phase of that unit.
 
 m) Taxation:
 
 Income tax comprises the current tax provision, net changes in the
 deferred tax assets or liability in the year. Provision for taxation,
 is made on the basis of the taxable profits computed for the current
 accounting period in accordance with the Income Tax Act 1961.
 
 Deferred tax is recognized, subject to the consideration of prudence,
 in respect of deferred tax assets, on timing differences, being the
 differences between taxable incomes and accounting income that
 originate in one period and are capable of reversal in one or more
 subsequent periods, using the tax rates and laws enacted or
 substantively enacted as on the balance sheet date.
 
 Deferred tax assets are recognized and carried forward to the extent
 that there is a virtual certainty that sufficient future taxable income
 will be available against which such deferred tax assets can be
 realized.
 
 n) Earnings Per Share:
 
 Annualized Earning per Share (Basic) is computed by dividing the net
 profit or loss (after taxation) for the period, attributable to equity
 shareholders, by the weighted average number of Equity Shares,
 outstanding during the period. Diluted earnings per share is computed
 by taking into account weighted average number of Equity Share
 outstanding during the period and weighted average number of Equity
 Share which would be issued on conversion of all the dilutive potential
 equity shares into equity shares.
 
 o) Provision:
 
 A provision is recognized (for liabilities that can be measured by
 using a substantial degree of estimation) when the Company has a
 present obligation as a result of past event; it is probable that an
 outflow of resources embodying economic benefits is expected to settle
 the obligation, in respect of which a reliable estimate can be made.
 Necessary provisions are made for present obligations that arise of
 past events prior to the balance sheet date entailing future outflow of
 economic resources. Such provisions reflect best estimates based on
 available information.
 
 p) Contingencies:
 
 Loss contingencies arising from claims, litigations, assessments,
 fines, penalties etc., are recorded when it is probable that a
 liability will be incurred and the amount can be reasonably estimated.
 Further, contingent liabilities are disclosed by way of note to the
 financial statements, after careful evaluation by the management of the
 facts and legal aspects of the matter involved.
 
 q) Expenses:
 
 Goods received are accounted as purchases on satisfactory completion of
 inspection. Discount to customers and price escalation to suppliers, if
 any, to the extent not settled at the Balance Sheet date are accounted
 on the basis of reasonable estimates made after considering
 negotiations with vendors/customers. Tools, jigs and fixtures costing
 less than Rs.5,000/- each, are written off in the year of purchase.
 
 r) Operating Leases:
 
 Assets acquired on leases wherein a significant portion of the risk and
 rewards of the ownership are retained by the lessor are classified as
 operating lease. Lease rental paid, if any, for such a leases, are
 recognized as an expense on systematic basis over the term of lease, in
 the Statement of profit and loss.
 
 s) Cash and cash equivalents:
 
 Cash and cash equivalents for the purposes of cash flow statement
 comprise cash at bank and in hand and other bank balances.
 
 t) Others:
 
 Liability for Liquidated damages is recognized when it is deducted/
 claimed by the customer or when a reasonable estimate of the likely
 obligation can be made.
Source : Dion Global Solutions Limited
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