1. BASIS OF ACCOUNTING
i) Financial Statements have been prepared under the historical cost
convention in accordance with the generally accepted accounting
principles, the mandatory Accounting Standards issued by the Institute
of Chartered Accountants of India and relevant provisions of the
Companies Act, 1956.
ii) The company follows the mercantile system of accounting &
recognizes income & expenditure on accrual basis except those with
2. FIXED ASSETS
Fixed assets are stated at their cost of acquisition or construction
less accumulated depreciation. Cost of acquisition or construction is
inclusive of freight, duties, taxes, incidental expenses and borrowing
costs related to such acquisition or construction.
Depreciation on fixed assets is provided for on the Straight Line
method in the manner and at the rates specified in Schedule XIV to the
Companies Act, 1956. In respect of additions or deletions made during
the year, depreciation has been calculated on actual basis from the
date of such additions or up to the date on which the asset has been
discarded, as the case may be.
Inventories have been valued at lower of cost or net realizable value.
In respect of stores and spares, cost has been arrived at on FIFO
basis. Scrap has been valued at estimated net realizable value.
5. REVENUE RECOGNITION
i) Revenue from sales is recognized on dispatch of goods from the
factory. Sales are inclusive of excise duty but exclusive of sales tax.
ii) Interest income is recognized on a time proportion basis taking
into account the amount outstanding and the rate applicable.
6. FOREIGN CURRENCY TRANSACTIONS
i) Trans a ctions denominated in the foreign currencies are normally
recorded at the exchange rate prevailing at the time of the
ii) Monetary items denominated in foreign currencies other than those
covered by forward exchange contracts are translated in to rupee
equivalent at the rates of exchange prevailing on the Balance Sheet
date. In the case of forward contract the difference between the
forward rate and the exchange rate on the date of transaction is
recognized as income or expense over the life of the contract.
iii) All exchange differences arising on settlement / conversion of
foreign currency transactions, are recognized as income or expenses in
the Profit & Loss account, except in cases where they relate to the
acquisition of fixed assets, in which case they are adjusted in the
carrying cost of the asset.
Investments are classified in to current and long term investments.
Current investments are stated at the lower of cost and fair value.
Long term investments are valued at cost. A provision for diminution is
made to recognize a decline, other than temporary, in the value of long
8. EMPLOYEE BENEFITS
i) Defined Contribution Plan: the Company’s contribution paid/payable
for the year to defined contribution retirement benefit schemes are
charged to Profit and Loss Account.
ii) Defined Benefit Plan: The Company’s liabilities towards defined
benefits schemes are determined using the Projected Unit Credit Method.
Actuarial valuations under the Projected Unit Credit Method are carried
out at the balance sheet date. Actuarial gains and losses are
recognised in the Profit and Loss Account in the period of occurrence
of such gains and losses.
iii) Short Te r m Employee Benefits: Short-term employee benefits
expected to be paid in exchange for the services rendered by employees
are recognized undiscounted during the period employee renders
9. SEGMENT REPORTING
The business of the company consists of manufacturing of single product
i.e. Gases. Therefore the Accounting Standard (AS-17) on Segment
Reporting is not applicable.
Finance leases or similar arrangement, which effectively transfer to
the company substantially all the risks and benefits incidental to
ownership of the leased items, are capitalized and disclosed as leased
assets. Finance charges are charged directly against income.
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased items are classified as
operating leases. Operating lease payments are recognized as an expense
in the Profit and Loss Account on a basis, which reflect the time
pattern of such payment appropriately.
11. EARNINGS PER SHARE
The earnings considered in ascertaining the company’s Earnings per
Share (EPS) comprises the Net Profit or Loss for the period after tax
and extra ordinary items. The basic EPS is computed on the basis of
weighted average number of equity shares outstanding during the year.
The number of shares for computation of diluted EPS comprises of
weighted average number of equity shares considered for deriving basic
EPS and also the weighted average number of equity shares which could
be issued on the conversion of all dilutive potential equity shares.
Dilutive potential equity shares are deemed converted as of the
beginning of the year unless they are issued at a later date. The
diluted potential equity shares are adjusted for the proceeds
receivable assuming that the shares are actually issued at fair value.
The number of shares and potentially dilutive shares are adjusted for
shares splits/reverse share splits (consolidation of shares) and bonus
shares, as appropriate.
12. TAXES ON INCOME
Tax expense for the year comprises of current tax and deferred tax.
Current taxes are computed at the current rate of tax in accordance
with provisions of the Income Ta x Act, 1961
Deferred tax assets and liabilities are recognized for future tax
consequences attributable to the timing differences that result between
taxable profit and the profit as per the financial statements.
Deferred tax assets and liabilities are measured using the tax rates
and tax laws that have been enacted or substantively enacted by the
Balance Sheet date.
Deferred tax assets are recognized on unabsorbed depreciation and carry
forward of losses under tax laws to the extent there is virtual
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realized. The effect on
deferred tax assets and liabilities of a change in tax rates is
recognized in the Profit & Loss Account in the year of change.
The carrying values of assets of the cash-generating units at each
balance sheet date are reviewed for impairment. If any indication of
such impairment exists, the recoverable amounts of those assets are
estimated and impairment loss is recognised, if the carrying amount of
those 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 estimated future cash flows to
their present value based on appropriate discount factor.
14. CONTINGENT LIABILITIES
Contingent liabilities are determined on the basis of available
information and are disclosed by way of note to accounts.