1. BASIS OF ACCOUNTING AND PREPARATION OF FINANCIAL STATEMENTS
The financial statements of the company have been prepared on accrual
basis under the historical cost convention in accordance with the
Generally Accepted Accounting Principles in India (Indian GAAP) to
comply with the Accounting Standards notified under section 211 (3C) of
the Companies Act, 1956 and the relevant provisions thereof.
2. USE OF ESTIMATES
The preparation of financial statements requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. Difference
between the actual results and estimates, if any, are recognized in the
period in which the results are known/materialized.
3. REVENUE RECOGNITION
i. Sales Revenues are recognized when goods are invoiced and
dispatched to customers, and are recorded inclusive of Excise Duty, but
are net of Sales Returns, Trade Discounts and Sales Tax.
ii. Dividend Income is recognized when the company''s right to
receive dividend is established. Interest Income is recognized on a
time proportion basis based on the amount outstanding and the rate
iii. Other Incomes are generally accounted on accrual basis as they are
4. FIXED ASSETS
Tangible and intangible fixed assets are stated at cost of acquisition
(net of CENVAT, wherever applicable), less accumulated depreciation.
Cost is inclusive of freight, duties, levies and any directly
attributable cost of bringing the assets to their working condition for
intended use. Direct costs are capitalized till the assets are ready to
be put to use. Interest on borrowings, wherever applicable,
attributable to new projects is capitalized and included in the cost of
fixed assets as appropriate.
5. DEPRECIATION AND AMORTIZATION
Depreciation in respect of Fixed Assets, is provided adopting Straight
Line Method over the useful life of the Assets as estimated by the
Depreciation for assets purchased/sold during the period is
i. Raw Materials are valued at cost comprising purchase price, freight
and handling, non refundable taxes and duties and other directly
ii. Finished Products are valued at lower of cost and net realizable
iii. Scrap & By Products are valued at net realizable value.
iv. Stores and Spares are valued at cost comprising of purchase price,
freight and handling, non refundable taxes and duties and other
directly attributable costs.
7. EMPLOYEE BENEFITS
i. Short Term Employee Benefits ; Benefits payable to employees within
12 months of rendering services such as wages, salaries, bonus, paid
annual leave, etc are classified as Short Term Employee Benefits and
are recognized in the period in which the employee renders related
ii. Long Term/Post Employment/Termination Benefits:The Company has
taken an Employees Group Gratuity of LIC for meeting out the liability
of Gratuity. Premium paid is debited as and when due. Actuarial
Valuation is also kept in view for determining the liabilities, if any.
Leave Encashment, if any, is accounted for on accrual basis.
iii. Provident Fund : On the basis of payments/contributions made to
the concerned Provident Fund authorities.
Current investments are carried at lower of cost and quoted/fair value.
Long Term Investments are stated at cost. Provision for diminution in
the value of long-term investments is made only if such a decline is
other than temporary.
9. CASH AND CASH EQUIVALENTS
''Cash'' comprises of cash on hand and demand deposits with Bank.
''Cash Equivalents'' are short term, highly liquid investment, that are
readily convertible into known amounts of cash and which are subject to
insignificant risk of changes in value.
Expenses are accounted on the accrual basis and provisions are made for
all known losses and liabilities.
Deferred Tax is recognized, subject to the consideration of prudence,
in respect of deferred tax assets or liabilities, on timing
differences, being the difference between taxable income and accounting
income that originate in one period, and is reversible in one or more
Deferred tax assets are recognized only to the extent there is
reasonable certainty that the assets can be realized in the future;
however where there is unabsorbed depreciation or carry forward of
losses, deferred tax assets are recognized only if there is a virtual
certainty of realization of such assets and are reviewed for the
appropriateness of their respective carrying values at each reporting
Income Taxes are accrued in the same period the related revenue and
expenses arise. A provision is made for income tax annually, based on
the tax liability computed, after considering tax allowances and
exemptions. Provisions are recorded when it is estimated that a
liability due to disallowances or other matters is probable. Minimum
Alternate Tax (MAT) paid in accordance with the tax laws, which gives
rise to future economic benefits in the form of tax credit against
future income tax liability, is recognized as an asset in the Balance
Sheet if there is convincing evidence that the company will pay normal
tax in future and the resultant asset can be measured reliably.
Whether events or changes in circumstances indicate that the carrying
value of fixed assets may be impaired, the company subjects such assets
to a test of recoverability, based on discounted cash flows expected
from use or disposal of such assets. If the assets are impaired, the
company recognizes an impairment loss as the difference between the
carrying value and value in use.
13. BORROWING COSTS
Borrowing costs that are attributable to the acquisition, construction
of qualifying assets are capitalized as part of the cost of such assets
till such time the asset is ready for its intended use or sale. A
qualifying asset is an asset that necessarily takes a substantial
period of time to get ready for its intended use. All other borrowing
costs are recognized as an expense in the statement of profit and loss
in the period in which they are incurred.
14. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
A provision is recognized when the Company has a present obligation as
a result of past events; 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.
Contingent Liability is disclosed in case of a present obligation
arising from past events when it is not probable that an outflow of
resources will be required to settle the obligation, or a present
obligation when no reliable estimate is possible, or a possible
obligation arising from past events where the probability of outflow of
resources is remote.
Contingent Assets are neither recognized nor disclosed.
15. EVENTS OCCURRING AFTER THE DATE OF BALANCE SHEET
Material events occurring after date of Balance Sheet are taken into
16. CASH FLOW STATEMENT
Cash Flows are reported using the indirect method, whereby profit
before tax is adjusted for the effects of transactions of a non-cash
nature and any deferrals or accruals of past or future cash receipts or
payments. The Cash Flows from regular revenue generating; financing and
investing activities of the company are segregated.
17. EARNING PER SHARE
The company reports basic and diluted earnings per share in accordance
with Accounting Standard (AS-20) - Earnings per Share. Basic earnings
per equity share have been computed by dividing net profit after tax
attributable to equity share holders by the weighted average numbers of
equity shares outstanding during the year. Diluted earnings during the
year adjusted for the effects of all dilutive potential equity shares
per share is computed using the weighted average number of equity
shares and dilutive potential equity shares outstanding during the
18. SEGMENT INFORMATION
The company is engaged primarily in the business of Rigid PVC Pipes.
The production facility is located at one place and the business is
fully concentrated in India. As the basic of nature of these activities
are governed by the same set of risks and returns, these have been
grouped as a single business segment. Accordingly, segment reporting
disclosure as envisaged in Accounting Standard (AS-17) Segment
Reporting, issued by the Institute of Chartered Accountants of India,
is not applicable to the Company.