a. Basis of preparation of financial statements
The financial statements are prepared in accordance with Indian
Generally Accepted Accounting Principles (GAAP) under the historical
cost convention on an accrual basis and are in conformity with
mandatory accounting standards, as prescribed by the Companies
(Accounting Standards) Rules, 2006, the provisions of the Companies
Act, 1956 and guidelines issued by the Securities and Exchange Board of
b. Use of Estimates
The preparation of the financial statements in conformity with GAAP
requires Management to make estimates and assumptions that affect the
reported balances of assets and liabilities and disclosure relating to
contingent liabilities as at the date of the financial statements and
reported amounts of income and expenses during the period. Examples of
such estimates include provision for doubtful debts, future obligations
under employee retirement benefit plans, income taxes and the useful
lives of fixed assets and intangible assets. Management believes that
the estimates used in the preparation of financial statements are
prudent and reasonable. Future results could differ from these
c. Fixed Assets and Intangible Assets
Fixed assets and intangible assets are stated at cost of acquisition
less accumulated depreciation and impairment Cost includes taxes,
duties, freight and other incidental expense related to acquisition and
installation. Expenditure for additional improvements is capitalized.
When assets are sold or discarded, their cost and accumulated
depreciation are included in the profit & loss account
d. Depreciation and Amortization
Depreciation on fixed asset has been provided on the straight-line
method as per the rates prescribed under schedule XIV of the Companies
Act, 1956. However assets costing less than Rs. 5,000 each are fully
depreciated in the year of purchase. For Assets acquired on 31.03.2011,
depreciation will be provided from next financial year 2011-12.
e. Foreign exchange transactions
Transactions in foreign currencies are recorded at the prevailing
exchange rates on the transaction dates.
Realized gains and losses on settlement of foreign currency
transactions are recognized in the profit and loss account.
Foreign currency monetary assets and liabilities at the year end are
translated at the year end exchange rates and resultant exchange
differences are recognised in the profit and loss account.
Inventories are valued at cost or net realizable value whichever is
The liability for Gratuity has not been provided, since there were no
eligible employees for Gratuity as at the end of financial year.
h. Leave Encashment
Payment on account of leave encashment is not accruable at the end of
the financial year as leave get lapsed on the last day of the fiscal
year as per company''s circular issued to its employees.
i. Miscellaneous Expenditure (To the extent written off)
Goodwill on arising on amalgamation being written off over a period
Preliminary expenses and capital issue expenses are being written off
over a period of five and ten years respectively.
Long-term investments are valued at cost Provision for diminution, If
any, in the value of investments is made to recognise a decline, other
k. Revenue Recognition
Revenue from the sale of goods is recognized upon passage of title to
the customer, which generally coincides with their delivery. Sales are
recorded net of trade discounts, rebates, and sales taxes but includes
excise duty, where applicable.
I. Income Tax
Deferred tax on timing differences between taxable income and
accounting income is accounted for, using the tax rates and the tax
laws enacted or substantially enacted as on the balance sheet date.
Deferred tax assets on unabsorbed tax losses and unabsorbed tax
depreciation are recognised only when there is a virtual certainty of
their realisation. Other deferred tax assets are recognised only when
there is a reasonable certainty of their realisation.
The Company reviews the carrying value of tangible and intangible
assets for any possible impairment at each balance sheet date. An
impairment loss is recognized when the carrying amount of an asset
exceeds its recoverable amount In assessing the recoverable amount the
estimated future cash flows are discounted to their present value at
appropriate discount rates.
n. Contingent liabilities
Contingent liabilities are disclosed in respect of possible obligations
that arise from past events but their existence will be confirmed by
the occurrence or non -occurrence of one or more uncertain future
events not whotty within control of the Company. A provision is made
based on a reliable estimate when it is probable that an outflow of
resources embodying economic benefits will be required to settle an
obligation at the year end date. Contingent assets are not recognized
or disclosed in the financial statements.
0. Segment Reporting
Segments have been identified having regard to the dominant source and
nature of risks and returns and the internal organisation and
management structure. Inter-segment revenue is accounted on the basis
of market price. Unallocated corporate expenses include revenue and
expenses which relate to the enterprise as a whole and are not
attributable to segments.