SIGNIFICANT ACCOUNTING POLICIES

A.     Basis of Preparation of Financial Statements:

These Financial Statements have been brpared on the accrual basis of accounting and under the historical cost convention in accordance with The Companies Act, 2013 and the Generally Accepted Accounting Principles - GAAP in India and comply in all material respects with accounting standards notified under the Companies (Accounts) Rules, 2014 and other relevant provisions of the Companies Act, 2013, to the extent applicable. The accounting policies have been consistently applied by the Company.

B.     Use of Estimates:

The brparation of Financial Statements in conformity with Generally Accepted Accounting Principles requires management to make judgements, estimates and assumptions that affect the reported amount of Assets and Liabilities (including Contingent Liabilities) on the date of the Financial Statements and the reported amount of Revenues and Expenses during the reporting period.

Estimates and Assumptions used in the brparation of the Financial Statements are based upon management's evaluation of the relevant facts and circumstances as of the date of the Financial Statements, which may differ from the actual results at a subsequent date.

Difference between the actual results and estimates are recognized in the period in which the results are known / materialized.

JYOTI CNC AUTOMATION LIMITED

SIGNIFICANT ACCOUNTING POLICIES

C.     Fixed Assets:

Property, Plant and Equipments

Property, Plant and Equipment (including Assets acquired under Lease and Intangible Assets but other than Leasehold Land where no debrciation is charged) are stated at cost net of CENVAT/ Value Added Tax, Rebates, discounts, accumulated debrciation and impairment loss, if any.

Cost comprises purchase price, including duties and other non-refundable taxes or levies, labour cost and any directly attributable costs for self constructed assets and other direct costs incurred for bringing the assets to its working condition. Borrowing cost incurred for qualifying assets is capitalized up to the date the asset is ready for intended use. The cost of acquisition is further adjusted for exchange differences relating to long term foreign currency borrowings attributable to the acquisition of debrciable asset.

In respect of revalued assets, the value as determined by valuers and as reduced by accumulated debrciation/cumulative impairment is taken as cost.

D.     Debrciation/Amortisation:

Debrciation / Amortisation on fixed assets other than on freehold land and capital work in progress is charged so as to write-off the cost of the assets.

Debrciation on tangible assets is provided on "straight line method" based on the useful lives as brscribed under Schedule II of the Companies Act, 2013 which may be different for foreign entities. The management believes that these estimated useful lives are realistic and reflect fair approximation of the period over which the assets are likely to be used. However, management reviews the residual values, useful lives and methods of debrciation of Property, Plant and Equipment at each reporting period end and any revision to these is recognised prospectively in current and future periods.

Debrciation has been provided on pro-rata basis from the date the assets are put to use during the financial year.

In respect of asset sold or disposed off during the year, debrciation is provided till the date of sale/disposal/adjustment of the assets.

E.      Impairment of Assets:

The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/ external factors. An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged for when the asset is identified as impaired. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.

F.      Intangible Assets:

Intangible assets are stated at cost less accumulated amortization and net of impairments, if any. An intangible asset is recognised if it is probable that the expected future economic benefits that are attributable to the assets will flow to the Group and its cost can be measured reliably.

Intangible assets have been amortized over their respective estimated useful life on Straight Line Basis.

JYOTI CNC AUTOMATION LIMITED

SIGNIFICANT ACCOUNTING POLICIES

G.     Inventories:

Inventories of Raw Materials, Work - In - Progress, Manufactured Finished Goods and Stores and Spares are stated "at cost or net realizable value, whichever is lower". Cost of Inventories comprise of all cost of purchase, conversion and other cost incurred in bringing the inventories to their brsent location and condition.

The Excise Duty in respect of Closing Inventories of Manufactured Finished Goods is included as part of Manufactured Finished Goods.

Cost of Inventories is generally ascertained on weighted average basis.

H.     Revenue Recognition:

Revenues / Incomes and Costs / Expenditure are generally accounted on accrual, as they are earned or incurred.

The Company recognizes Revenue on Sale of Products, when the products are dispatched to the dealer / customer or when the significant risks and rewards of ownership are passed to the dealer / customer.

Interest Income is recognized on time proportion basis depending upon the amount outstanding and the rate applicable.

Annual Maintenance Contract Income (AMC) is recognized on time proportion basis.

Income from Services rendered is recognized when services are rendered.

I.      Foreign Currency Transactions, Translation and Accounting Of Forward Contracts:

(i)      Foreign Exchange Transactions:

(a)     All transactions in foreign currency are initially recorded at the exchange rates brvailing on the dates when relevant transactions take place.

(b)    Monetary Items in the forms of Assets or Liabilities, outstanding at the close of the year, are restated in Indian Currency at the appropriate rates of exchange brvailing on the date of Balance Sheet.

(c)     Exchange differences arising on settlement of transactions and translation of monetary items other than those covered by (d) below are recognized in the Statement of Profit and Loss as Gain or Loss in the year in which they arise.

(d)    Exchange Differences relating to long term borrowings attributable to the acquisition of the debrciable capital asset are added to / deducted from the cost of such capital assets.

JYOTI CNC AUTOMATION LIMITED

SIGNIFICANT ACCOUNTING POLICIES

(ii)    Translation of non-integral foreign operations:

In translating the financial statements of a non integral foreign operation for incorporation in Consolidated Financial Statements, the assets and liabilities, both monetary and non-monetary, of the non-integral foreign operation are translated at the closing rate; income and expense items of the non- integral foreign operations are translated at yearly average exchange rates; and all resulting exchange differences are accumulated in a Foreign Currency Translation Reserve until the disposal of net investment. On the disposal of a non-integral foreign operation, the cumulative amount of the exchange differences which have been deferred and which relate to that operation are recognized as income or as expenses in the same period in which the gain or loss on disposal is recognized.

(iii)   Forward Contract:

Any Premium or discount arising at the inception of forward exchange contract is recognized as an income or expense over the life of the contract.

J.      Borrowing Cost:

Interest and Other Borrowing Cost attributable to qualifying assets, which are incurred on borrowings specifically raised for qualifying assets, are capitalized to the cost of the assets until it is ready for intended use except where installation is extended beyond reasonable/normal time lines.

Other Interest and Borrowings Costs are charged to the revenue in the Statement of Profit and Loss.

K.     Employee Benefits:

Jyoti CNC Automation Limited

1.        Provident Fund:

Company's Contribution towards the Employees Provident fund is charged to the Statement of Profit and Loss at actual Cost in the year of accrual.

2.        Gratuity:

The Present Value of the Defined Benefits Obligation under such Plan is determined based on an Actuarial Valuation Techniques by using the Projected Unit Credit Method. Actuarial Gains  and Losses arising on such valuation are recognized and charged immediately to the Statement Of Profit and Loss in the year in which employee has rendered service.

In case of Funded Defined Benefits Plan, the Fair Value of Plan Assets is reduced from the Gross Defined Benefits Obligation under the Defined Benefits Plans, to recognize the Obligation on the Net Basis.

3.        Compensated Absences:

The liability on account of accumulated leaves as on last day of the accounting year is recognized at brsent value of the defined obligation at the balance sheet date based on the actuarial valuation carried out by an independent actuary using projected unit credit method.          

JYOTI CNC AUTOMATION LIMITED

SIGNIFICANT ACCOUNTING POLICIES

Huron Graffenstaden SAS

1.        Retirement Pension Commitments:

                          Commitments regarding retirement gratuities payable under collective labour agreements to the employees of HURON-Graffenstaden and HURON Frasmaschinen are entered as provisions determined according to a method integrating the number of years' service, the likelihood of the persons' brsence in the company at retirement age (turnover and mortality), an annual salary adjustment rate of 1.47 %, a discount rate of 1.47 % for retirement at the employee's own initiative at the age of 67.

L.      Government Grants And Subsidies:

Grants and subsidies from the government are recognized when there is reasonable assurance that

(i) The Company will comply with the conditions attached to them, and

(ii) The grant/subsidy will be received

When the grant or subsidy relates to an expense item, it is recognized as income over the periods necessary to match them on a systematic basis to the costs, which it is intended to compensate.

Where the grant or subsidy relates to an asset, its value is deducted from the gross value of the asset concerned in arriving at the carrying amount of related asset.   

M.    Prior Period Items:

Material items of prior period expenses, non-recurring and extra-ordinary items are disclosed separately, if any.

N.     Leases:

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All the other leases are classified as operating leases.

Assets held as finance leases are initially recognised as the assets of the group at their fair value at the inception of the lease or, if lower at the brsent value of the minimum lease payments. The corresponding liability to the lessor is included in the consolidated balance sheet as a finance lease obligation. Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are recognised immediately in Profit and loss, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the group's general policy on borrowing costs.

O.     Exceptional items:

Exceptional items are those items that in management's judgement are material items which derive from events or transactions that fall within the ordinary activities of the group and which individually or, if of a similar type, in aggregate, need to be disclosed by virtue of their size or incidence.

JYOTI CNC AUTOMATION LIMITED

SIGNIFICANT ACCOUNTING POLICIES

P.     Taxes on Income :

Current Tax:

Tax expense comprises of current and deferred tax. Current income tax expense comprises of taxes on income from operations in India and in foreign jurisdictions. Income tax payable in India is determined in accordance with the provisions of the Income Tax Act, 1961. Tax expense relating to overseas operations is determined in accordance with tax laws applicable in countries where such operations are domiciled.

Deferred Tax:

Deferred Tax resulting from "Timing Difference" between taxable and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted as on the Balance Sheet date. The deferred tax assets is recognized and carried forward only to the extent that there is virtual certainty that there will be sufficient future taxable income available.

Minimum Alternate Tax:

Minimum Alternate Tax credit is recognized as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognized as an assets in accordance with the recommendations contained in Guidance Note issued by the Institute of Chartered Accountants of India, the said assets is created by way of a credit to the Statement of Profit and Loss and shown as MAT Credit Receivable under head of "Long Term Loans and Advances". The Company reviews the same at each Balance Sheet date and writes down the carrying amount of MAT Credit Receivable to the extent of there is no longer convincing evidence to the effect that company will pay normal Income Tax during the specified period.

Q.     Provisions, Contingent Liabilities and Contingent Assets:

1.    A provision is recognized when an enterprise has a brsent obligating as a result of past event; 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 brsent value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

Huron Graffenstaden SAS

Provision for Warranty and Commissioning:

Each time a new machine is sold, a provision is made on the basis of a standard amount defined for each family of machines to cover any warranty costs and an amount is determined machine by machine for the costs of bringing into line with standards known at the end of the financial year.

The costs of commissioning machines are provisioned each time a machine is sold on the basis of a standard amount defined for each family of machines.

JYOTI CNC AUTOMATION LIMITED

SIGNIFICANT ACCOUNTING POLICIES

The standard amounts of the provision for warranty and commissioning are re-evaluated at the end of each year in view of the costs actually incurred (hours of labour, cost of parts and work entrusted to subcontractors, minus any reimbursements obtained from suppliers of components or their insurers) during the warranty period and exclusively for work carried out under the warranty or for commissioning machines. This revision is determined overall for all the machine stock.

These provisions are followed machine by machine, the net costs incurred giving rise to a write-back of the provision originally constituted. At the end of the warranty period or on completion of the commissioning, the remainder of the provision is written back in full.

A provision is set aside for the risks and disputes identified according to the estimated amount on the day of closing in view of information and estimates of the likely outflows of resources.

2.    Contingent Liabilities are not recognized but disclosed in the Notes forming part of the Financial Statements.

3.    Contingent Assets are neither recognized nor disclosed in the Notes forming part of the Financial Statements.

R.     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. Earnings considered in ascertaining the Company's Earnings per Share are the

Net Profit after Tax for the Year. The Weighted Average Numbers of Equity Shares outstanding during the period are adjusted for events of Bonus Issue and Sub-division of Shares.

Diluted earnings per share is computed 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 year as adjusted for the effects of all dilutive potential equity shares.

S.     Research and Development Costs:

Expenditure on research and development is charged to the Statement of Profit and Loss of the year in which it is incurred.

Capital expenditure on research and development is given the same treatment as Property, Plant and Equipment.

T.      Cash and cash equivalents

Cash and cash equivalents for the purpose of cash flow statement on balance sheet date comprise cash at bank and in hand and short-term investments with an original maturity of three months or less.

U.     Goodwill / capital reserve

Goodwill / capital reserve rebrsents the cost to the parent of its investment in subsidiaries over / under the parent's portion of equity of the subsidiary, at the date on which the investment in the subsidiaries is made