a. Accounting Convention: The accompanying financial statements are
prepared under the historical cost convention on the accrual basis of
accounting in accordance with generally accepted accounting principles
to reflect the financial position & results of operation. These
financial statements have been prepared on a going concern basis, which
assumes the realization of assets and satisfaction of liabilities in
the normal course of business.
For the year under consideration, the revised Schedule VI notified
under the Companies Act, 1956 has become applicable to the Company for
presentation of its financial statements. The revised Schedule VI has a
significant impact on the presentation and disclosures made in the
financial statements. The Company has also reclassified the previous
year figures in accordance with the requirements applicable in the
All assets and liabilities have been classified as current or
non-current as per the Company''s normal operating cycle and other
criteria set out in the revised Schedule VI to the Companies Act, 1956.
Based on the nature of products and the time between the acquisition of
assets for processing and their realization in cash and cash
equivalents, the company has ascertained its operating cycle as 12
months for the purpose of current - non current classification of
assets and liabilities.
b. Fixed Assets: Fixed Assets are stated at their original cost net of
cenvat, comprising of purchase price and other attributable cost of
bringing assets to working condition for their intended use less
accumulated depreciation and impairment loss, if any.
c. Depreciation: Depreciation on Fixed Assets is provided on straight
line method at the rates and in the manner as prescribed in Schedule
XIV of the Companies Act, 1956 on prorata basis.
d. Impairment of Assets: The carrying amount of assets are reviewed at
each balance sheet date to determine if there is any indication of
impairment based on internal/external factors. An asset is treated as
impaired when the carrying cost of the asset exceeds its recoverable
value i.e. net selling price or value in use, whichever is higher. An
impairment loss, if any, is charged to profit & loss account in the
year in which an asset is identified as impaired.
i. Raw Materials, Stores & Spares, Finished Goods and Work-in-process
are valued at cost or net realisable value, whichever is lower. Closing
Stock of Finished goods is inclusive of Excise Duty. Cost is
determined using FIFO method.
ii. Scrap is valued at estimated Realisable value.
f. Sales: Sales are net of Sales Tax.
g. Cenvat: Cenvat claimed on Capital Goods is reduced from the cost of
Plant & Machinery. Cenvat claimed on purchase of raw material is
reduced from the cost of such material.
h. Employee Benefits :
Defined Contribution Plans : Provident Fund & E.S.I: Contribution to
Provident Fund and E.S.I to appropriate authorities is made
periodically and is charged to Profit & Loss statement on accrual
basis. Defined Benefit Plan: Gratuity is a defined benefit scheme and
is accounted based on actuarial valuation at the balance sheet date,
carried out once in three years by an independent actuary. Short Term
Employee Benefits: All employee benefits which are wholly due within
twelve months of rendering the services are recognised in the period in
which the employee rendered the related services.
i. Provisions, Contingent Liabilities and Contingent Assets : The
Company creates a provision when there is a present obligation as a
result of past events and it is probable that there will be outflow of
resources and a reliable estimate of the obligation can be made of the
amount of the obligation. Contingent liabilities are not recognised
but are disclosed in the notes to the financial statements. A
disclosure for a contingent liability is made when there is a possible
obligation or a present obligation that may, but probably will not,
require an outflow of resources.
Provisions are reviewed at each balance sheet date and adjusted to
reflect the current best estimate. If it is no longer probable that the
outflow of resources would be required to settle the obligation, the
provision is reversed.
Contingent assets are neither recognised nor disclosed in the financial