The financial statements have been prepared in accordance with Generally
Accepted Accounting Principles in India (GAAP) to comply in all
material respects with the notifed accounting standards by Companies
(Accounting Standards) Rules, 2006 and the relevant provisions of the
Companies Act, 1956. The financial statements have been prepared under
the historical cost convention on an accrual basis. The accounting
policies have been consistently applied by the Company and are
consistent with those used in the previous year. The management has
made certain estimates and assumptions in conformity with the GAAP in
preparing these financial statements.
The significant accounting policies are as follows:
(a) Fixed assets and depreciation
Fixed assets are stated at cost less accumulated depreciation. The
Company capitalizes all costs relating to the acquisition and
installation of fixed assets.
Depreciation is provided, using the straight line method, pro rata to
the period of use of assets, at the rates specifed in Schedule XIV of
the Companies Act, 1956 or based on the useful life of the assets
whichever is higher. The rates used by the Company are as follows:
Leasehold land over the period of lease
Buildings 1.63 – 3.34
Plant & Machinery 4.75 – 5.88
Furniture & Fixtures 6.33
Offce Equipments 4.75 – 25
Information Technology Equipments 33.33
Fixed assets whose aggregate cost is Rs 5,000 or less are depreciated
fully in the year of acquisition.
(b) Foreign currency transactions
Foreign currency transactions during the year are recorded at rates of
exchange prevailing on the date of the transaction. Foreign currency
denominated assets and liabilities are translated into rupees at the
rates of exchange prevailing on the date of the balance sheet. All
exchange differences are dealt with in the statement of profit and
In respect of transactions covered by forward exchange contracts, the
difference between the contract rate and the spot rate on the date of
the transaction is charged to the profit and loss account over the
period of the contract.
Long term investments are stated at cost. Provision is made to
recognise a diminution, other than temporary, in the value of
investments. Current investments are stated at lower of cost and fair
Inventories of stores and spare parts are valued at cost.
(e) Employee benefits
The liability on account of gratuity and leave encashment are provided
based on valuation by an independent actuary. Contributions to
provident fund and family pension fund are charged to the profit and
loss account as incurred.
(f) Revenue recognition
The Company recognises revenues on dispatch of goods to customers.
Revenues are recorded at invoice value net of sales tax, excise,
returns and trade discounts.
Revenue from services are recognized on completion of such services.
Provision for current income-taxes is made on the assessable income at
the tax rate applicable to the relevant assessment year.
Deferred income taxes are recognised for the future tax consequences
attributable to timing differences between the financial statement
determination of income and their recognition for tax purposes. The
effect on deferred tax assets and liabilities of a change in tax rates
is recognised in the statement of profit and Loss using the tax rates
and tax laws that have been enacted or substantively enacted by the
balance sheet date.
Deferred tax assets are recognised and carried forward only to the
extent that there is a reasonable certainty that suffcient future
taxable income will be available against which such deferred tax assets
can be realised.
Lease payments for operating leases are recognised as expense over the
lease term. Lease income from operating leases is recognised as income
over the lease term. Initial direct costs are recognised immediately as
(i) Financing/Borrowing cost
Financing/Borrowing costs attributable to acquisition and/or
construction of qualifying assets are capitalised as a part of the cost
of such assets, up to the date such assets are ready for their intended
use. Other financing/borrowing costs are charged to profit & Loss
Account. Initial direct costs are recognised immediately as an expense.
Expenses incurred in connection with raising of funds are amortised
over the tenure of the borrowing.
(j) Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the year attributable to equity shareholders (after deducting
preference dividends and attributable taxes) by the weighted average
number of equity shares outstanding during the year. The weighted
average number of equity shares outstanding during the year are
adjusted for events of bonus issue to existing shareholders and share
For the purpose of calculating diluted earnings per share, the net
profit for the period attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares from
the exercise of options on unissued share capital. The number of equity
shares is the aggregate of the weighted average number of equity shares
and the weighted average number of equity shares, which would be issued
on the conversion of all the dilutive potential equity shares into
equity shares. Options on unissued equity share capital are deemed to
have been converted into equity shares.