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Schneider Electric President Systems

BSE: 590033|ISIN: INE155D01018|SECTOR: Miscellaneous
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Schneider Electric President Systems is not traded in the last 30 days
Schneider Electric President Systems is not listed on NSE
Mar 14
Accounting Policy Year : Mar '15
1.  Corporate Information
 
 Schneider Electric President Systems Limited (''SEPSL'' or ''the Company'')
 is a designer, manufacturer and supplier of standard and customized
 enclosure systems for over 30 years in 19-inch enclosures for IT and
 Telecom infrastructure, systems management and operations.
 
 The Company''s operations predominantly relate to manufacture of
 enclosures, card frames, components and accessories and trading of
 electrical equipments. SEPSL is a manufacturer in India offering
 standard and customized enclosure solutions, including card frames and
 components, with a focus on the IT/Networking and ITES, Telecom,
 General and Industrial Electronics sectors.
 
 SEPSL also has a nationwide network of sales offices, representatives
 and distributors to support customer wherever they may need assistance
 for installation, commissioning and on-going services.
 
 2.  Basis of preparation
 
 The financial statements of the Company have been prepared in accordance
 with the generally accepted accounting principles in India (Indian
 GAAP). The Company has prepared these financial statements to comply in
 all material respects with the accounting standards notified under
 section 133 of the Companies Act 2013, read together with paragraph 7
 of the Companies (Accounts) Rules 2014. The financial statements have
 been prepared on an accrual basis and under the historical cost
 convention unless stated otherwise. The accounting policies adopted in
 the preparation of financial statements are consistent with those of the
 previous year.
 
 Going concern uncertainty
 
 The Company incurred a net loss of Rs.37,182,769 for the financial year
 ended 31st March, 2015. Further, the Company incurred a net loss of
 Rs.48,192,526 and Rs.33,295,488 for the year ended 31st March, 2014 and
 2013, respectively. While these factors would normally indicate the
 existence of a material uncertainty which may cast significant doubt
 about the Company''s ability to continue as a going concern, the receipt
 of financial and operating support from the parent company, including
 increased borrowing limits and extension to repay the borrowing on 31st
 October, 2018 from a group company in India, mitigates this
 uncertainty. Consequently, no adjustments have been made to the
 carrying value, or classification of the balance sheet amounts.
 
 2.1.  Summary of significant accounting policies
 
 a.  Change in accounting estimate
 
 Depreciation / amortization on tangible and intangible assets
 
 Due to application of Schedule II to the Act with effect from April 01,
 2014, the management has re-established useful lives and residual
 values of all its fixed assets and determined separate useful life for
 each major component of the fixed assets, if they have useful life that
 is materially different from that of the remaining asset. The
 management believes that depreciation rates currently used fairly
 refect its estimate of the useful lives and residual values of fixed
 assets, though these rates in certain cases are different from lives
 prescribed under schedule II.
 
 The carrying amount of other components, i.e. components whose
 remaining useful life is not nil on April 01, 2014, is depreciated over
 their remaining useful life. Accordingly, depreciation of Rs.11,131,797
 (net of tax impact) has been adjusted to the opening balance of surplus
 in the Statement of profit and loss, with corresponding adjustment to
 net book value of fixed assets, in accordance with the transitional
 provision of Schedule II of the Act.
 
 Further, basis such change the depreciation / amortization expenses for
 the year ended 31st March, 2015 are higher by Rs.4,947,555 (net of tax).
 
 b.  Use of estimates
 
 The preparation of financial statements in conformity with Indian GAAP
 requires the management to make judgments, estimates and assumptions
 that affect the reported amounts of revenues, expenses, assets and
 liabilities and the disclosure of contingent liabilities, at the end of
 the reporting period. Although these estimates are based on the
 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.
 
 c.  Tangible fixed assets
 
 Fixed assets are stated at cost, net of accumulated depreciation and
 accumulated impairment losses, if any. The cost comprises purchase
 price, borrowing costs if capitalization criteria are met and directly
 attributable cost of bringing the asset to its working condition for
 the intended use. Any trade discounts and rebates are deducted in
 arriving at the purchase price.
 
 Subsequent expenditure related to an item of fixed asset is added to its
 book value only if it increases the future benefits from the existing
 asset beyond its previously assessed standard of performance. 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.
 
 Gains or losses arising from derecognition of fixed assets are measured
 as the difference between the net disposal proceeds and the carrying
 amount of the asset and are recognized in the statement of profit and
 loss when the asset is derecognized.
 
 Advances paid towards the acquisition of fixed assets are disclosed as
 Capital advances under Loans and Advances and the cost of assets not
 ready to be put to use as at the balance sheet date are disclosed as
 ''Capital work-in-progress''.
 
 d.  Depreciation on tangible fixed assets
 
 Depreciation on fixed assets is calculated on a straight-line basis
 using the rates arrived at based on the useful lives estimated by the
 management. The Company has used the following rates to provide
 depreciation on its fixed assets.
 
 *For these classes of assets, where the estimated useful lives are
 different from lives prescribed under Schedule II, management has
 estimated these useful lives after taking into consideration technical
 assessment, prior asset usage experience and the risk of technological
 obsolescence.
 
 Leasehold land is amortised on a straight line basis over the period of
 lease.
 
 Depreciation is provided on pro-rata basis from/up to the date of
 purchase or disposal, for asset purchased or sold during the year.
 
 e.  Intangible assets
 
 Intangible assets acquired separately are measured on initial
 recognition at cost. Following initial recognition, intangible assets
 are carried at cost less accumulated amortization and accumulated
 impairment losses, if any.
 
 Intangible assets are amortized on a straight line basis over the
 estimated useful economic life. Patents and trademarks, computer
 software and designs and copyrights are amortised over a period of nine
 years, six years and five years respectively, from the date available
 for use.
 
 Gains or losses arising from derecognition of an intangible asset are
 measured as the difference between the net disposal proceeds and the
 carrying amount of the asset and are recognized in the statement of
 profit and loss when the asset is derecognized.
 
 f.  Leases
 
 Finance leases, which effectively transfer to the company substantially
 all the risks and benefits incidental to ownership of the leased item,
 are capitalized at the inception of the lease term at the lower of the
 fair value of the leased property and present value of minimum lease
 payments. Lease payments are apportioned between the finance charges and
 reduction of the lease liability so as to achieve a constant rate of
 interest on the remaining balance of the liability. Finance charges are
 recognized as finance costs in the statement of profit and loss. Lease
 management fees, legal charges and other initial direct costs of lease
 are capitalized.
 
 A leased asset is depreciated on a straight-line basis over the useful
 life of the asset. However, if there is no reasonable certainty that
 the Company will obtain the ownership by the end of the lease term, the
 capitalized asset is depreciated on a straight-line basis over the
 shorter of the estimated useful life of the asset or the lease term.
 
 Leases, where the lessor effectively retains substantially all the
 risks and benefits of ownership of the leased item, are classified as
 operating leases. Operating lease payments are recognized as an expense
 in the statement of profit and loss on a straight-line basis over the
 lease term.
 
 g.  Borrowing costs
 
 Borrowing cost includes interest, amortization of ancillary costs
 incurred in connection with the arrangement of borrowings and exchange
 differences arising from foreign currency borrowings to the extent they
 are regarded as an adjustment to the interest cost.
 
 Borrowing costs directly attributable to the acquisition, construction
 or production of an asset that necessarily takes a substantial period
 of time to get ready for its intended use or sale are capitalized as
 part of the cost of the respective asset. All other borrowing costs are
 expensed in the period they occur.
 
 h.  Impairment of tangible and intangible assets
 
 The Company assesses at each reporting date whether there is an
 indication that an asset may be impaired. If any indication exists, or
 when annual impairment testing for an asset is required, the Company
 estimates the asset''s recoverable amount. An asset''s recoverable amount
 is the higher of an asset''s or cash-generating unit''s (CGU) net selling
 price and its value in use. The recoverable amount is determined for an
 individual asset, unless the asset does not generate cash inflows that
 are largely independent of those from other assets or groups of assets.
 Where the carrying amount of an asset or CGU exceeds its recoverable
 amount, the asset is considered impaired and is written down to its
 recoverable amount. In assessing value in use, the estimated future
 cash flows are discounted to their present value using a pre-tax
 discount rate that reflects current market assessments of the time value
 of money and the risks specific to the asset. In determining net selling
 price, recent market transactions are taken into account, if available.
 If no such transactions can be identified, an appropriate valuation
 model is used.
 
 The Company bases its impairment calculation on detailed budgets and
 forecast calculations which are prepared separately for each of the
 Company''s cash-generating units to which the individual assets are
 allocated. These budgets and forecast calculations are generally
 covering a period of five years. For longer periods, a long term growth
 rate is calculated and applied to project future cash flows after the
 ffth year.
 
 Impairment losses of continuing operations, including impairment on
 inventories, are recognized in the statement of profit and loss.
 
 After impairment, depreciation is provided on the revised carrying
 amount of the asset over its remaining useful life.
 
 i.  Inventories
 
 Raw materials, components, stores and spares are valued at lower of
 cost and net realizable value. However, materials and other items held
 for use in the production of inventories are not written down below
 cost if the finished products in which they will be incorporated are
 expected to be sold at or above cost. Cost of raw materials, components
 and stores and spares is determined on first-in-first-out basis.
 
 Work-in-progress and finished goods are valued at lower of cost and net
 realizable value. Cost includes direct materials and labour and a
 proportion of manufacturing overheads based on normal operating
 capacity. Cost of work in progress and finished goods (including excise
 duty) is determined on first-in-first-out basis.
 
 Traded goods are valued at lower of cost and net realizable value. Cost
 includes cost of purchase and other costs incurred in bringing the
 inventories to their present location and condition. Cost is determined
 on first-in-first-out basis.
 
 Net realizable value is the estimated selling price in the ordinary
 course of business, less estimated costs of completion and estimated
 costs necessary to make the sale.
 
 Provision for inventory obsolescence is assessed and adjusted from the
 gross value of the inventory.
 
 j.  Revenue recognition
 
 Revenue is recognized to the extent that it is probable that the
 economic benefits will flow to the Company and the revenue can be
 reliably measured. The following specific recognition criteria must also
 be met before revenue is recognized:
 
 Sale of goods
 
 Revenue from sale of goods is recognized when all the significant risks
 and rewards of ownership of the goods have been passed to the buyer,
 usually on delivery of the goods. The Company collects sales taxes and
 value added taxes (VAT) on behalf of the government and, therefore,
 these are not economic benefits following to the Company. Hence, they are
 excluded from revenue. Excise duty deducted from revenue (gross) is the
 amount that is included in the revenue (gross) and not the entire
 amount of liability arising during the year.
 
 The amount recognised as sale is exclusive of trade discounts.
 
 Income from services
 
 Service income primarily comprises income from commissioning and
 installation, service charges, processing charges and commission income
 and is recognized on accrual basis as per the terms and over the period
 of the contract with the customers, as and when the services are
 rendered. The Company collects service tax on behalf of the government
 and therefore, it is not an economic benefit following to the Company.
 Hence it is excluded from revenue.
 
 Interest Income
 
 Interest income is recognized on a time proportion basis taking into
 account the amount outstanding and the applicable interest rate.
 
 Other Income
 
 Export incentives are recognised as income when the right to receive
 credit as per the terms of the scheme is established in respect of the
 exports made and where there is no significant uncertainty regarding the
 ultimate collection of the relevant export proceeds.
 
 k.  Foreign currency translation
 
 Foreign currency transactions and balances
 
 Initial recognition
 
 Foreign currency transactions are recorded in the reporting currency,
 by applying to the foreign currency amount the exchange rate between
 the reporting currency and the foreign currency at the date of the
 transaction.
 
 Conversion
 
 Foreign currency monetary items are retranslated using the exchange
 rate prevailing at the reporting date. Non-monetary items, measured in
 terms of historical cost denominated in a foreign currency, are
 reported using the exchange rate at the date of the transaction.
 
 Exchange differences
 
 The Company accounts for exchange differences arising on
 translation/settlement of foreign currency monetary items as income or
 as expenses in the period in which they arise.
 
 l.  Retirement and other employee benefits
 
 Retirement benefit in the form of provident fund is a defined
 contribution scheme. The contributions to the provident fund are
 charged to the statement of profit and loss for the year as an
 expenditure, when an employee renders the related service. The Company
 has no obligation, other than the contribution payable to the provident
 fund.
 
 The Company operates defined benefit plan for its employees, viz.
 gratuity. The costs of providing benefits under the plan are determined
 on the basis of actuarial valuation at each year-end. Actuarial
 valuation is carried out for the plan using the projected unit credit
 method. Actuarial gains and losses for defined benefit plan are
 recognized in full in the period in which they occur in the statement
 of profit and loss.
 
 Accumulated leave, which is expected to be utilized within the next 12
 months, is treated as short-term employee benefit. The Company measures
 the expected cost of such absences as the additional amount that it
 expects to pay as a result of the unused entitlement that has
 accumulated at the reporting date.
 
 The Company treats accumulated leave expected to be carried forward
 beyond twelve months, as long-term employee benefit for measurement
 purposes. Such long-term compensated absences are provided for based on
 the actuarial valuation using the projected unit credit method at the
 year-end. Actuarial gains/losses are immediately taken to the statement
 of profit and loss and are not deferred. The Company presents the entire
 leave as a current liability in the balance sheet, since it does not
 have an unconditional right to defer its settlement for 12 months after
 the reporting date.
 
 The Company recognizes termination benefit as a liability and an expense
 when the Company has a present obligation as a result of past event, it
 is probable that an outflow of resources embodying economic benefits will
 be required to settle the obligation and a reliable estimate can be
 made of the amount of the obligation. If the termination benefits fall
 due more than 12 months after the balance sheet date, they are measured
 at present value of future cash flows using the discount rate determined
 by reference to market yields at the balance sheet date on government
 bonds.
 
 m.  Income taxes
 
 Tax expense comprises current and deferred tax. Current income-tax is
 measured at the amount expected to be paid to the tax authorities in
 accordance with the Income-tax Act, 1961 enacted in India and tax laws
 prevailing in the respective tax jurisdictions where the Company
 operates. The tax rates and tax laws used to compute the amount are
 those that are enacted or substantively enacted, at the reporting date.
 Current income tax relating to items recognized directly in equity is
 recognized in equity and not in the statement of profit and loss.
 
 Deferred income taxes refect the impact of timing differences between
 taxable income and accounting income originating during the current
 year and reversal of timing differences for the earlier years. Deferred
 tax is measured using the tax rates and the tax laws enacted or
 substantively enacted at the reporting date. Deferred income tax
 relating to items recognized directly in equity is recognized in equity
 and not in the statement of profit and loss.
 
 Deferred tax liabilities are recognized for all taxable timing
 differences. Deferred tax assets are recognized for deductible timing
 differences only to the extent that there is reasonable certainty that
 suffcient future taxable income will be available against which such
 deferred tax assets can be realized. In situations where the Company
 has unabsorbed depreciation or carry forward tax losses, all deferred
 tax assets are recognized only if there is virtual certainty supported
 by convincing evidence that they can be realized against future taxable
 profts.
 
 At each reporting date, the Company re-assesses unrecognized deferred
 tax assets. It recognizes unrecognized deferred tax asset to the extent
 that it has become reasonably certain or virtually certain, as the case
 may be, that suffcient future taxable income will be available against
 which such deferred tax assets can be realized.
 
 The carrying amount of deferred tax assets are reviewed at each
 reporting date. The Company writes-down the carrying amount of deferred
 tax asset to the extent that it is no longer reasonably certain or
 virtually certain, as the case may be, that suffcient future taxable
 income will be available against which deferred tax asset can be
 realized. Any such write-down is reversed to the extent that it becomes
 reasonably certain or virtually certain, as the case may be, that
 suffcient future taxable income will be available.
 
 Deferred tax assets and deferred tax liabilities are offset, if a
 legally enforceable right exists to set-off current tax assets against
 current tax liabilities and the deferred tax assets and deferred taxes
 relate to the same taxable entity and the same taxation authority.
 
 Minimum Alternate Tax (MAT) paid in a year is charged to the statement
 of profit and loss as current tax. The Company recognizes MAT credit
 available as an asset only to the extent that there is convincing
 evidence that the company will pay normal income tax during the
 specified period, i.e., the period for which MAT credit is allowed to be
 carried forward. In the year in which the company recognizes MAT credit
 as an asset in accordance with the Guidance Note on Accounting for
 Credit Available in respect of Minimum Alternative Tax under the
 Income-tax Act, 1961, the said asset is created by way of credit to the
 statement of profit and loss and shown as MAT Credit Entitlement. The
 Company reviews the MAT credit entitlement asset at each reporting
 date and writes down the asset to the extent the Company does not have
 convincing evidence that it will pay normal tax during the specified
 period.
 
 n.  Segment reporting
 
 Identification of segments
 
 The Company''s operating businesses are organized and managed separately
 according to the nature of products and services provided; with each
 segment representing a strategic business unit that offers different
 products and serves different markets. The analysis of geographical
 segments is based on the areas in which major operating divisions of
 the Company operate.
 
 Inter-segment transfers
 
 The Company generally accounts for intersegment sales and transfers at
 cost plus appropriate margins.
 
 Allocation of common costs
 
 Common allocable costs are allocated to each segment according to the
 relative contribution of each segment to the total common costs.
 
 Unallocated items
 
 Unallocated items include general corporate income and expense items
 which are not allocated to any business segment.
 
 Segment accounting policies
 
 The Company prepares its segment information in conformity with the
 accounting policies adopted for preparing and presenting the financial
 statements of the Company as a whole.
 
 o.  Earnings Per Share
 
 Basic earnings per share are calculated by dividing the net profit or
 loss for the period attributable to equity shareholders by the weighted
 average number of equity shares outstanding during the period.
 
 For the purpose of calculating diluted earnings per share, the net
 profit or loss for the period attributable to equity shareholders and
 the weighted average number of shares outstanding during the period are
 adjusted for the effects of all dilutive potential equity shares. The
 effects of anti-dilutive potential equity shares are not considered in
 calculating dilutive earnings per share.
 
 As at the balance sheet date, the Company does not have any dilutive
 potential equity shares.
 
 p.  Provisions
 
 A provision is recognized when the Company has a present obligation as
 a result of past event, it is probable that an outflow of resources
 embodying economic benefits will be required to settle the obligation
 and a reliable estimate can be made of the amount of the obligation.
 Provisions are not discounted to their present value and are determined
 based on the best estimate required to settle the obligation at the
 reporting date. These estimates are reviewed at each reporting date and
 adjusted to refect the current best estimates.
 
 Where the Company expects some or all of a provision to be reimbursed,
 for example under an insurance contract, the reimbursement is
 recognized as a separate asset but only when the reimbursement is
 virtually certain. The expense relating to any provision is presented
 in the statement of profit and loss net of any reimbursement.
 
 q.  Contingent liabilities
 
 A contingent liability is a possible obligation that arises from past
 events whose existence will be confirmed by the occurrence or non-
 occurrence of one or more uncertain future events beyond the control of
 the Company or a present obligation that is not recognized because it
 is not probable that an outflow of resources will be required to settle
 the obligation. A contingent liability also arises in extremely rare
 cases where there is a liability that cannot be recognized because it
 cannot be measured reliably. The Company does not recognize a
 contingent liability but discloses its existence in the financial
 statements.
 
 r.  Cash and cash equivalents
 
 Cash and cash equivalents for the purposes of cash flow statement
 comprise cash at bank and on hand, demand deposits and short- term
 investments with an original maturity of three months or less.
 
 s.  Measurement of EBITDA
 
 The Company has elected to present earnings/ (losses) before interest,
 tax, depreciation and amortization (EBITDA) as a separate line item on
 the face of the statement of profit and loss. In its measurement, the
 Company does not include depreciation and amortization expense, fnance
 costs, interest income and tax expense..
Source : Dion Global Solutions Limited
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