- Basis of preparation of Financial Statements
The Financial Statements have been prepared to comply in all material
respects with the mandatory Accounting Standards issued by the ICAI and
the relevant provisions of the Companies Act, 1956. The financial
statements have been prepared under historical cost convention on
accrual basis and on the assumption of going concern basis. The
accounting policies have been consistently followed by the company and
are consistent with those applied in the previous year.
The value of various categories of inventories is arrived at as
- Raw material, consumables and stores and spares are valued at the
lower of cost or net realizable value.
- Work in progress is valued by taking cost of material used and labor
charges incurred up to the stage of constructions and other related cost
wherever applicable subject to their estimated net realizable value.
- Finished goods is valued at the lower of cost or net realizable
- Company has followed FIFO basis of valuation of its stock sold.
- Contingencies and Provisions
A provision is recognized when there is a present obligation as a
result of past event 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 are not discounted to its
present value and are determined based on best estimate required to
settle the obligation at the balance date. These are reviewed at each
balance sheet date and adjusted to reflect the current management
- Prior Period Items
Prior period items arisen in the current year as a result of errors or
omission in the preparation of the financial statements of prior
period(s) are separately disclosed in the profit & loss account.
- Revenue Recognition
- Revenues / Incomes and Cost / Expenditures are generally accounted on
accrual basis, as they are earned or incurred.
- Revenues from sales are recognized on transfer of significant risk
- Fixed Assets
Fixed assets are stated at cost less accumulated depreciation and
impairment losses. Cost comprises purchase price, duties, levies and
any other cost relating to the acquisition and installation of the
asset. Fixed assets under construction are treated as soon the assets
become operational and ready for use. Borrowing cost, if any, directly
attributable to the acquisition and / or construction of fixed asset,
until the date assets are ready for its intended use, are capitalized
as a part of the cost of that asset subject to the provisions of
impairment of the assets.
Depreciation on fixed assets is charged, on pro-rata, on the Written
Down Value Method in accordance with those specified in Schedule XIV of
The Companies Act, 1956.
- Foreign Currency Transaction
Foreign currency transaction is recorded at the rates of exchange
prevailing on the date of the transactions. Exchange differences
arising on foreign currency transactions are recognized as income or as
expenses and accordingly debited or credited to profit and loss
a) The cost of an investment includes incidental expenses like
brokerage, fees, and duties incurred prior to acquisition.
b) Long term investments are shown at cost. Provision for diminution is
made only if, in opinion of the management such a decline other than
c) Investment which are intended to be held for less than one year are
classified as current investments and are carried at lower of cost and
fair value determined on an individual investment basis.
d) Advance for share application money are classified under the head
- Retirement and other Employees'' Benefits
Contribution to the P.F. / E.S.I, are made at a pre-determined rate and
charged to profit and loss account. Gratuity is accounted for on
- Borrowing Cost
Borrowing costs that are directly attributable to the acquisition,
construction or production of a qualifying asset are capitalized as a
part of the cost of that asset subject to the provisions of impairment
of the assets and other borrowing cost are recognized as an expenses in
the period in which they are incurred.
- Related Party Transaction
In related party transactions all the material information as required
by the Accounting Standards (AS) - 18 are given to disclose the effect
on the financial position and operating results of the Company.
- Earnings Per Share
Basic Earnings Per Share is calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares during the period. To calculate Diluted
Earnings Per Share, share application money pending allotment as at the
balance sheet date, which is not kept separately and is being utilized
in the business is treated as dilutive equity shares.
Tax expense comprises of Current Tax, Deferred Tax and FBT. Provision
for current tax is made on the assessable income at the tax rate
applicable to the relevant assessment year.
Deferred Taxes are recognized for the future tax consequences
attributable to timing differences and their recognition for tax
purpose .The effect of a change in tax rates on Deferred Tax Assets /
Liabilities is recognized in income using the tax rates and tax laws
that have been enacted or substantively enacted by balance sheet date.
Deferred Tax Assets are recognized and carried forward only to the
extent that there is a reasonable certainty that sufficient future
taxable income will be available against which such Deferred Tax can be
realized. However, Deferred Tax Assets arising from brought forward and
depreciation are recognized only when there is virtual certainty
supported by convincing evidence that such assets will be realized in
- Research and Development
All expenses pertaining to research are charged to the profit and loss
account in the year in which they are incurred. All expenses pertaining
to development are recognized if, and only if, future economic benefits
from the asset are probable otherwise these expenses are charged to the
profit and loss account in the year in which they are incurred.
- Joint Ventures
i) Interest in Jointly Controlled Operations
Assets that it controls and the liabilities that it incurs, expenses
that it incurs and its share of income that it earns from the joint
ventures is recognized in its Separate Financial Statements; and
- Interest in Jointly Controlled Entities
Interest in such entity is accounted for as an investment in accordance
with Accounting Standard (AS) - 13, Accounting for Investment.
- Impairment of Assets
The carrying amount of assets is reviewed at each balance sheet date if
there is any indication of impairment of the carrying amount of the
company''s assets. If any indication exists, then recoverable amount /
fair market value of such asset is estimated. An impairment loss is
recognized wherever the carrying amount of the assets exceeds its
recoverable amount / fair market value. After impairment, depreciation
is provided on the revised carrying amount of the assets over its
remaining useful life. A previously recognized impairment loss is
increased or reversed depending on changes in circumstances. However
the carrying amount after reversal is not increased beyond the carrying
value that would have prevailed by charging usual depreciation as if
there was no impairment.