The Company maintains its accounts under the historical cost
convention, except for certain fixed assets which are revalued, on an
accrual basis and complies in all material respects with Generally
Accepted Accounting Principles in India. The Company has prepared these
financial statements to comply in all material respects with Accounting
Standards notified under the Companies (Accounting Standards) Rules,
2006 (as amended) and relevant provisions of the Companies Act, 1956.
1.2 USE OF ESTIMATES
The presentation of the financial statements, in conformity with the
Generally Accepted Accounting Principles, requires the management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities, revenues and expenses and disclosure of
contingent liabilities. Such estimates and assumptions are based on
management''s evaluation of relevant facts and circumstances as on the
date of the financial statements. The actual outcome may diverge from
1.3 REVENUE RECOGNITION A - Product Sales
(a) Domestic sales of manufactured items are recognized on dispatch and
are stated net of returns, discounts and rebates. Sales are recorded
exclusive of sales tax.
(b) Export sales are recognized on date of bill of lading/ airway bill
and/ or passing of rights to the customer, whichever is earlier and
initially recorded at the relevant exchange rates prevailing on the
date of transaction;
(c) Income on items delivered directly by suppliers/sub-contractors to
the client is recognized on dispatch and receipt of
(d) Income on account of price variation is recognized on the
acceptance of the claim by the client and on certainty of its
B - Contract Revenue
(a) In case of certain long term contracts, revenue is recognized on
''Percentage of Completion Method.'' Percentage of completion is
determined as a proportion of costs incurred to date to the total
estimated contract costs. Contract costs include costs that relate
directly to the specific contract and costs that are attributable to
contract activity and allocable to the contract. Costs that cannot be
attributed or allocable to contract activity are expensed as and when
(b) When the final outcome of a contract cannot be reliably estimated,
contract revenue is recognized only to the extent of costs incurred
that are expected to be recoverable. Expected loss is recognized
immediately when it is probable that the total estimated contract costs
will exceed total contract revenue.
(c) Variations and claims for escalation are recognized as a part of
contract revenue to the extent it is probable that they will result in
revenue and are capable of being reliably measured.
(d) Difference between costs incurred plus recognized profit/less
recognized losses and the amount of invoiced sales is disclosed as
C - Service Revenue
Revenue from services are recognized as and when the services are
D - Interest and Dividend Income
(a) Interest Income on deployment of surplus funds is recognized using
the time proportion method, based on the underlying interest rates.
(b) Dividend is accrued in the year in which it is declared whereby the
right to receive is established.
E - Export Benefits
Export benefits in the form of Duty Drawback (All Industry Rate) and
DEPB are recognized on accrual basis.
1.4 TANGIBLE FIXED ASSETS
Fixed Assets are stated at cost, net of tax/duty credits availed less
depreciation/amortization to date and impairment, if any, except in the
case of certain items of land, buildings, plant and machinery and
roads, water works and drainage, which are stated on the basis of the
revalued cost less depreciation/ amortization to date and impairment,
1.5 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.
(a) Depreciation is computed on Straight Line Method on certain
Buildings and Plant and Machinery, of Heavy Engineering Division and
Foundry Division and all the fixed assets of Instrumentation Division,
in the manner prescribed in Schedule xIV to the Companies Act, 1956.
Depreciation on the value written-up on revaluation, is calculated on
straight line method over the residual technical life assessed by the
valuer. Premium on leasehold land is amortized over the period of
lease. Depreciation on all other fixed assets is computed on Written
Down Value method in the manner prescribed in Schedule xIV to the
Companies Act, 1956.
In respect of sites, which are integral foreign operations,
depreciation is provided in the manner prescribed by local laws so as
to write off the assets over their useful life.
(b) Intangible assets are amortized on a Straight Line Method over the
estimated useful economic life and in particular:
i) Patents are amortized on the basis of life of Patents as specified
in the Patent Documents;
ii) Technical Know-how is amortized in over a period of six years; and
iii) Computer Software, included in intangible assets, is amortized
over a period of three years.
(c) Depreciation on additions to/ deletions from the fixed assets
during the year is calculated on pro-rata basis from/ to the date of
1.7 CAPITAL WORK-IN-PROGRESS (INCLUDING INTANGIBLE ASSETS UNDER
Projects under commissioning and other Capital Work-in-Progress
(Including Intangible Assets under Development) are carried at cost,
comprising direct costs and related incidental expenses.
1.8 IMPAIRMENT OF ASSETS
Impairment is ascertained at each balance sheet date in respect of Cash
Generating Units. An impairment loss is recognized whenever the
carrying amount of an asset exceeds its recoverable amount. The
recoverable amount is the greater of the net selling price and value in
use. In assessing value in use, the estimated future cash flows are
discounted to their present value based on an appropriate discounting
Investments of long term nature are stated at cost less provision for
diminution in value, if such decline is other than temporary. Current
investments are stated at lower of cost or fair value.
1.10 EMPLOYEE BENEFITS
(a) Short term employee benefits are those which are payable within
twelve months of rendering service and are recognized as expense in the
period in which the employee renders the related service. (b)
Contributions to Provident Fund and Superannuation Fund, ESIC and
Labour Welfare Fund which are defined contribution schemes are
recognized as an expense in the Statement of Profit and Loss in the
period in which the contribution is due.
(c) Gratuity liability is a defined benefit obligation and is provided
for on the basis of actuarial valuation using the projected unit credit
method at the end of each financial year. Actuarial gains and losses
are recognized immediately in the Statement of Profit and Loss.
(d) Long term compensated absences including leave encashment are
provided for on the basis of actuarial valuation. Accumulated leave,
which is expected to be utilized within next twelve months, is treated
as short term employee benefits. 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
1.11 taxes ON INCOME
Tax expenses comprise of current and deferred tax.
Tax on income for the current period is determined on the basis of
taxable income and tax credits computed in accordance with the
provisions of the Income Tax Act, 1961. The tax rates and tax laws used
to compute the amounts are those that are enacted or substantively
Deferred tax is recognized on timing differences between the accounting
income and taxable income that originate in one period and are capable
of reversal in one or more subsequent periods and is quantified using
the tax rates and tax laws enacted or substantively enacted as on the
Balance Sheet date. Deferred tax assets (representing unabsorbed
depreciation or carried forward losses) are recognized to the extent
that there is a virtual certainty supported by convincing evidence that
sufficient future taxable income will be available against which such
deferred tax assets can be realized.
1.12 BORROWING COSTS
Borrowing costs attributable to the acquisition, construction or
production of qualifying assets are capitalized as part of such asset
till the time the asset is ready for its intended use or sale. All
other borrowing costs are recognized as an expense in the Statement of
Profit and Loss in the period in which they are incurred.
Inventories are valued after providing for obsolescence, if any, as
(a) Raw materials, Components, Stores and Spares are valued at lower of
cost or net realizable value. The cost includes freight inward, direct
expenses, duties and taxes, other than those subsequently recoverable.
In case of Heavy Engineering Division, it is arrived at on "FIFO
Method" and other divisions on "Weighted Average Method".
(b) Costs of Dies, Jigs, Tools and Patterns purchased/ manufactured are
charged off in relevant year, at lower of cost or net realizable value,
arrived at after providing for suitable diminution/ amortization.
(c) Goods-in-transit are valued at costs incurred till the Balance
(d) Work-in-progress is valued at lower of cost or net realizable
value. The cost includes direct material, direct labour, and
appropriate overheads booked on normal level of activity. The
expenditure on uncompleted contracts is amortized over the period of
the contract on the basis of sales booked.
(e) Finished goods are valued at lower of cost or net realizable value.
Cost includes related overheads and wherever applicable, excise duty.
1.14 FOREIGN CURRENCY TRANSLATION
(a) Initial recognition
Foreign currency transactions are reported in the reporting currency by
applying to the foreign currency amount, the exchange rate between
reporting currency and the foreign currency at the date of the
Foreign currency monetary items are re-instated using the exchange rate
prevailing at the reporting date. Non-monetary items which are measured
in terms of historical costs denominated in a foreign currency are
reported using the exchange rate at the date of transaction.
Non-monetary items which are measured at fair value or other similar
valuation denominated in a foreign currency, are translated using the
exchange rate at the date when such value was determined.
The financial statements of overseas sites of the company which are
integral foreign operations are translated as if the transactions of
the foreign operations have been those of the company itself.
(c) Exchange differences
The Company has opted to avail the option provided under Paragraph 46A
of Accounting Standard 11 - The Effects of Changes in Foreign Exchange
Rates, inserted vide Notification dated December 29, 2011. Accordingly,
exchange differences on long term foreign currency monetary items are
being dealt with in the following manner:
Foreign exchange difference on account of a depreciable asset is
adjusted in the cost of the depreciable asset, which would be
depreciated over the balance life of the asset. In other cases, the
foreign exchange difference is accumulated in Foreign Currency Monetary
Item Translation Difference Account and amortized over the balance
period of such long term asset/ liability.
All other exchange differences are recognized as income or as expense
in the period to which they relate.
(d) Premium or discount on forward exchange contracts for hedging an
underlying asset/ liability, is recognized in the Statement of Profit
and Loss over the period of the contract.
1.15 PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Provisions are recognized for liabilities that can be measured by using
a substantial degree of estimation, if:
(a) the Company has a present obligation as a result of past event;
(b) a probable outflow of resources is expected to settle the
(c) the amount of the obligation can be reliably estimated
Contingent Assets are neither recognized nor disclosed. Contingent
Liabilities are not recognized, but are disclosed in Notes to Accounts.
Provisions, Contingent Liabilities and Contingent Assets are reviewed
at each balance sheet date.
Assets acquired under leases where the significant portion of the risks
and rewards of ownership are retained by the lessor are classified as
operating leases and lease rentals are charged to the Statement of
Profit and Loss on accrual basis.
1.17 SEGMENT REPORTING
The accounting policies adopted for segment reporting are in line with
the accounting policies of the company. Segment revenue, segment
expenses, segment assets and segment liabilities have been identified
to segments on the basis of their relationship to the operating
activities of the segment. Revenue expenses, assets and liabilities
which relate to the company as a whole and are not allocable to
segments on reasonable basis have been included under unallocated
Information given, is in accordance with the requirements of Accounting
Standard 17 on Segment Reporting, notified under the Companies
(Accounting Standards) Rules, 2006 (as amended). The Company has
identified business segments as the primary segment and geographical
segment as secondary segment. Segments have been identified after
taking into account the nature of the products, differential risk and
returns, organizational structure and internal reporting system.
The Company''s Primary business segments are organized on product lines
(i) Heavy Engineering (also known as Industrial Machinery Division) -
engaged in engineering, fabrication and manufacturing of Machinery for
Sugar Plants, Cement Plants, Boilers and Power Plants, Industrial and
Marine Gears, Mineral Processing and EPC, Petro-chemicals and Space,
Defense and Nuclear Power Business;
(ii) Foundry and Machine Shop - Manufacturing of Grey and Ductile Iron
Castings required by various industries and machining of components;
(iii) Others - Non Reportable Segment includes units manufacturing
Precision Instruments such as pressure and temperature gauges.
1.18 EARNINGS PER SHARE
The company reports basic and diluted earnings per share in accordance
with Accounting Standard 20 - Earnings Per Share notified under the
Companies (Accounting Standards) Rules, 2006 (as amended). Basic
earnings per share are computed by dividing the net profit after tax by
the weighted average number of equity shares outstanding during the
For the purpose of calculating Diluted Earnings per share, the net
profit or loss for the period attributable to equity share holders and
weighted average number of equity shares outstanding during the period
is adjusted for the effects of all dilutive potential equity shares.
(b) TERMS AND RIGHTS ATTACHED TO EQUITY SHARES:
The Company has only one class of equity shares having par value of Rs. 2
per share. Each shareholder of equity share is entitled to one vote per
share. The company declares and pays dividends in Indian Rupees. The
dividend 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 holders of equity
shares will be entitled to receive remaining assets of the company,
after distribution of all preferential amounts. The distribution will
be in proportion to the number of equity shares held by the
4 (ii) Corporate Loan of Rs. 7500 Lakhs (Rs. 4000 Lakhs from State Bank of
India and Rs. 3500 Lakhs from Bank of India) at an interest rate of 12.50
% is secured by:
(a) First pari passu charge on specified demarcated fixed assets of the
company''s Heavy Engineering Division.
(b) Mortgage of two specified immovable properties at Pune city.
(c) 2nd pari passu charge on current assets of the Company.
Foot Note- The non current trade receivables considered good of Rs.
1154.07 Lakhs includes Rs. 921.27 Lakhs ( Previous year Rs. 921.27 Lakhs)
from parties against whom the company has initiated legal/ arbitration