1. Financial statements are prepared under accrual method as per
historical cost convention in accordance with applicable accounting
standards except as otherwise stated. However, the accounts have been
prepared on going concern basis, despite the company being a sick
industrial company and incurring operational losses continuously.
2. Fixed assets and depreciation:
2.1 Fixed assets are stated at historical cost less accumulated
depreciation, if any.
2.2 The original cost of fixed assets acquired through foreign currency
loan is adjusted at the end of each financial year by any change in
liability arising out of expressing the outstanding foreign loan at the
rate of exchange prevailing at the date of Balance Sheet.
2.3 Depreciation is provided on Straight Line method at the rates
specified in Schedule XIV of the Companies Act, 1956 on pro-rata basis
from the date of acquisition/commissioning.
2.4 Assets costing up to value of Rs. 5000/- are written off in the
first year of purchase.
2.5 Consideration is given at each balance sheet date to determine
whether there is any indication of impairment of the carrying amount of
the companys fixed assets. If any indication exists, an assets
recoverable amount is estimated. An impairment loss is recognized
whenever the carrying amount of an asset exceeds its recoverable
amount. The recoverable amount is greater of the net selling price arid
value in use. In assessing the value in use, the estimated future cash
flows are discounted to their present value based on an appropriate
Inventories are stated at lower of cost and net realizable value. The
Cost for Raw Materials and work in progress is the purchase cost of raw
material arrived at on first in first out basis.The cost of finished
goods is arrived on weighted average basis of the material consumed,
direct production expenses and depreciation.
4 Preliminary expenses and Public issue expenses are amortized over 10
years and 60 Months respectively.
5 Retirement Benefits:
The provision for gratuity payable under the Payment of Gratuity Act
1972, and the liability for amount payable to the employees in respect
of accumulated earned leave, are being provided in the accounts on the
assumption that such benefits are payable to all employees at the end
of the accounting year.
6 Accounting For Taxation
Provision for current tax is made on the basis of taxable income for
the current accounting year in accordance with the Income Tax Act, 1961
The deferred tax on account of timing differences between the book and
the tax profits/loss for the year is accounted for using the tax
rates and laws that have been substantially enacted as on the balance
sheet date. Deferred tax assets arising from the timing differences are
recognized to the extent there is virtual certainty that these would be
realized in future.
7 Foreign Currency Transactions:
7.1 Foreign currency transactions are recorded at the exchange rates
prevailing at the date of the transaction.
7.2 Gains/losses arising out of fluctuation in the exchange rates are
recognized in the period in which they arise except in respect of Fixed
Assets where exchange variance is adjusted in the carrying amount of
the respective Fixed Assets.
7.3 Foreign Currency receivables/payables are translated at the
relevant rates of exchange prevailing at the year end.
8 The Company has made the provision, for its liability towards the
diamond accumulation plan matured during the year but against which
the members have not bought the Jewellery by year end. This provision
has been made equivalent to the difference of maturity value and the
amount paid by the members.