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182Schedule forming part of the Accounts for the year ended 31st March, 2011SCHEDULE ‘P’Significant Accounting Policies and Notes to the Accounts1. Accounting PoliciesA. Accounting Convention:The financial statements are prepared under the historical cost convention in accordance with the relevant Indian/International Accounting Standardsas applicable.B. Fixed Assets:Fixed assets are stated at cost and are inclusive of all expenses to the date of commissioning/ putting the assets to use. Borrowing cost till the dateit comes into use is capitalized as part of expenses.Assets under construction are shown as Capital work-in-progress.C. Depreciation:Depreciation is provided for as prescribed in Schedule XIV of the Indian Companies Act 1956 as amended on straight – line method at the ratesmentioned below. Depreciation on addition is provided from the succeeding month of the purchases of fixed assets.Plant & Machineries 4.75%Computer & Accessories 16.21%Furniture 6.33%Building on leased land 20%Vehicle 20%Fixed Assets under construction is shown under Capital work-in-progress.D. Sales and other incomeRevenue from sales and services is recognized on accrual basis on issuing the tax invoice and stated net of VAT. Commission income is recognizedon the settlement basis after confirmation.E. Deferred Revenue Expenses:Deferred revenue expenses are written off over the period of five years from the year of operation/expensed.F. Inventories:(i) Stock of spares and consumable store is valued at cost on weighted average cost basis and stated net of write-off.(ii) Work-in-Progress is valued on the percentage of completion basis.G. Tax ProvisionIncome tax provision is based on the Nepalese Income Tax Laws which is 25% on taxable income as computed on the taxable Profit.H. Employee Benefits1. Short term employee benefits (i.e. benefits payable within one year) are recognized in the period in which employee services are rendered.2. Contributions towards provident funds are recognized as expenses.3. Provisions for Gratuity for eligible employees are made on the basis of local labour laws.Notes to the AccountsA. Contingent liabilities1. One of our past customer, Hetauda Cements Factory Limited had filed a case against our Company relating to wrong parts supply made by TIL fora value of Nrs. 920,415.71, for which the appellate court has decided in favor of the customer. The Company has filed the case at Supreme Courtagainst the above decision for which no provision in the accounts has been made as the case is still pending.2. Inland Revenue Office has carried out full audit for the three fiscal year upto July 16, 2008 demanding Nrs. 5.01 million for VAT and income taxesagainst which we have appealed to Director General for administrative review by depositing Nrs. 1.655 million. DG of IRD has decided the case onVAT in our favour but the letter of refund of our deposit is yet to receive by us.B. Commission incomeCommission income amounting to Nrs. 10, 988,467.73 as accrued but not yet received calculated on the difference between customer invoice and dealerinvoice is subject to confirmation with CAT Singapore.
Overview Performance Reviews Governance Financials183Annual Report 2010-11Cash Flow Statement for the year ended 31st March, 2011NR ` NR `Year EndedYear Ended31st March, 2011 31st March, 2010Year Ended31st March, 2011Year Ended31st March, 2010A. CASH FLOW FROM OPERATINGACTIVITIESNet Profit Before Tax and5,184,222 3,240,139 21,935,130 13,709,456Extra-ordinary ItemsAdjustments for :Depreciation 774,725 484,203 159,629 99,768Profit/Loss on Sale of Fixed Assets (167,500) (104,688) - -Provision for Employee Benefits 99,625 62,266 - -706,850 441,781 159,629 99,768Operating Profit before Working5,891,072 3,681,920 22,094,759 13,809,224Capital ChangesAdjustments for :Trade and Other Receivables 766,566 479,104 (6,575,034) (4,109,396)Inventories 3,049,746 1,906,091 (5,734,848) (3,584,280)Loans and Advances (5,738,500) (3,586,563) (788,491) (492,807)Trade Payable 1,050,286 656,429 170,188 106,368(871,902) (544,939) (12,928,185) (8,080,116)Cash Generated from Operations 5,019,170 3,136,981 9,166,574 5,729,109Direct Taxes Paid (2,971,919) (1,857,449) (3,847,434) (2,404,645)Cash Flow before Extra-ordinary2,047,251 1,279,532 5,319,140 3,324,464ItemsNet Cash from Operating2,047,251 1,279,532 5,319,140 3,324,464ActivitiesB. CASH FLOW FROM INVESTINGACTIVITIESPurchase of Fixed Assets (8,162,759) (5,101,725) (93,200) (58,250)Capital Work-In-Progress (14,662,268) (9,163,917)Proceeds from Sale of Fixed Assets 200,000 125,000 -Net Cash Used in InvestingActivities(22,625,027) (14,140,642) (93,200) (58,250)
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