1. Basis of accounting and preparation of financial statements
The financial statements are prepared and presented under the
historical cost convention, on the accrual basis of accounting and in
accordance with the provisions of the Companies Act, 1956 (''the Act''),
and'' the accounting principles generally accepted in India and comply
with the accounting standards prescribed in the Companies (Accounting
Standards) Rules, 2006 issued by the Central Government, in
consultation with the National Advisory Committee on Accounting
Standards, to the extent applicable.
The Revised Schedule VI has become effective from 1 April, 2011 for the
preparation of financial statements. This has significantly impacted
the disclosure and presentation made in the financial statements.
Previous year''s figures have been regrouped / reclassified wherever
necessary to correspond with the current year''s classification /
2. Use of estimates
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognized in the periods in which
the results are known / materialize.
Inventories are valued at cost as per FIFO basis.
4. Cash and cash equivalents
Cash comprises cash on hand and demand deposits with banks. Cash
equivalents are short-term balances (with an original maturity of three
months or less from the date of acquisition), highly liquid investments
that are readily convertible into known amounts of cash and which are
subject to insignificant risk of changes in value.
5. Cash flow statement
Cash flows are reported using the indirect method, whereby profit /
(loss) before extraordinary items and tax is adjusted for the effects
of transactions of non-cash nature and any deferrals or accruals of
past or future cash receipts or payments. The cash flows from
operating, investing and financing activities of the Company are
segregated based on the available information. For the purpose of Cash
Flow Statement, cash and cash equivalents includes fixed deposits which
are freely remissible but excludes interest accrued on fixed deposits.
6. Depreciation and; amortization
Depreciation has been provided on die straight-line method as per the
rates prescribed in Schedule XTV to the Companies Act, 1956.
Depreciation on addition to fixed assets is provided on a pro-rata
basis from the date of addition.
7. Revenue recognition
Revenue and cost are generally accounted on accrual basis as they are
earned/incurred, except in case of , significant uncertainties.
- Dividend is accounted when the right to receive payment is
- Interest and other income is accounted on accrual basis.
8. Fixed assets
Fixed assets are carried at cost less accumulated depreciation and
impairment losses, if any. The cost of fixed, assets,
includes-in treason borrowings attributable-to acquisition of qualifying
fixed assets up to the date the asset is ready for its intended use and
otber incidental expenses incurred up to that date.
Long-term investments (excluding investment properties), are carried
individually at cost less provision for diminution, other than
temporary, in the value of such investments. Current investments are
carried individually, at the lower of cost and fair value. Cost of
investments include acquisition charges such as brokerage, fees and
10. Employee benefits
Employee benefits of short term nature are recognized as expenses as
and when it accrues. Gratuity liability is a defined obligation. The
company pays gratuity to employees who retire or resign after a minimum
period of five years of continuous service.
11. Earnings per share
Basic earnings per share is computed by dividing the profit / (loss)
after tax (including the post tax effect of extraordinary items, if
any) by the weighted average number of equity shares outstanding during
the year. Diluted earnings per share is computed by dividing the
profit / (loss) tax (including the post tax . effect of extraordinary
items, if any) as adjusted for dividend, interest and other charges to
expense or income relating to the dilutive potential equity shares, by
the weighted average number of equity shares considered for deriving
basic earnings per share and the weighted average number of equity
shares which- could: have been issued on the conversion of all dilutive
potential equity shares.
Potential equity shares are deemed to be dilutive only if their
conversion to equity shares would decrease the net profit per share
from continuing ordinary operations. Potential dilutive equity shares
are deemed to be converted as at the beginning of the period, unless
they have been issued at a later AtE-
12. Taxes on income
Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the provisions of the Income Tax
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which
gives future economic benefits in the form of adjustment to future
income tax liability, is considered as an asset if there is convincing
evidence that the Company will pay normal income tax. Accordingly, MAT
is recognized as an asset in the. Balance Sheet when it is probable
that future economic benefit associated with it will flow to the
Company- Deferred tax is recognized on timing differences, being the
differences between the taxable income and the accounting income that
originate in one period and are capable of reversal in one or more
subsequent periods. Deferred tax is measured using the tax rates and
the tax laws enacted or substantially enacted as. at the reporting
date. Deferred tax liabilities are recognized for all timing
differences. Deferred tax assets r –in Respect of –un aborted
Depreoiatiorr and carry forward of losses are recognized only if
there is virtual certainty that there will be sufficient future
taxable income available to realize such assets. Deferred tax assets
are recognized for timing differences of other items only to the extent
that reasonable certainty exists that sufficient future taxable income
will be available against which these can be realized. Deferred tax
assets and liabilities are offset if such items relate to taxes on
income levied by the same governing tax laws and the Company has a
legally enforceable right for such set off. Deferred tax assets are
reviewed at each Balance Sheet date for their readability.
13. Impairment of assets
The carrying values of assets / cash generating units at each Balance
Sheet date are reviewed for impairment. If any indication of impairment
exists, the recoverable amount of such assets is estimated and
impairment is recognized, if the carrying amount of these assets
exceeds their recoverable amount.- The recoverable amount is the
greater of the net selling price and their value in use. Value in use
is arrived at by discounting the future cash flows to their present
value based on an appropriate discount factor. When there is indication
that an impairment loss recognized for an asset in earlier accounting
periods no longer exists or may have decreased, such reversal of
impairment loss is recognized in the Statement of Profit and Loss,
except in case of revalued assets.
14. Provision and Contingencies
A provision is recognized when the Company has a present obligation as
a result of past events and 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 (excluding retirement
benefits) are not discounted to their present value and are determined
based on the 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. Contingent liabilities
are disclosed in the Notes.
15. Miscellaneous Expenditure
The Company has changed Its policy of amortizing preliminary
expenditures. Earlier it had been amortizing preliminary expenditure
over a period of ten years, and continued such policy till 4th year.
Now it has been amortizing such expenditure over a period of five years
and accordingly the rest of the unamortized amount has been amortized
in the current financial year i.e., 5th year.