A. Basis of Preparation of Financial Statement:
a) The financial statements have been prepared in compliance with all
material aspects of the mandatory Accounting Standards issued by the
Institute of Chartered Accountants of India (ICAI) and relevant
provision ofthe Companies Act, 1956 and in accordance with the
generally accepted accounting principles in India.
b) The financial statements are based on historical cost and are
prepared on accrual basis
B. Revenue Recognition :
a) Sale of goods is recognized when they are invoiced to customers and
are net of excise duty, Commercial Tax (UP VAT).
b) Insurance, duty drawback and other claims are accounted for on
receipt basis or as acknowledged by the appropriate authorities.
C. Fixed Assets:
a) Fixed Assets are stated at their original cost of
acquisition/installation less accumulated depreciation and net off
subsidies duties and taxes. The cost of assets comprises of purchase
price and directly attributable cost of bringing the assets to working
condition for its intended use.
b) Capital work in progress :
All expenses incurred for acquiring, erecting and commissioning of the
fixed assets including interest on loan utilized for meeting capital
expenditure are shown under capital work in progress. The advance given
for acquiring fixed assets is also shown along with capital work in
D. Depreciation :
Depreciation on fixed assets has been provided on straight line method
(SLM) except in case of assets of Power Plant on which depreciation has
been provided on Written Down Value method (WDV) at the rates and
manner prescribed under Schedule XIV to the Companies Act, 1956 of
Intangible Assets are stated at cost of acquisition less accumulated
Amortization is provided on the Straight Line Method @ 16.21%
E. Preliminary Expenses:
Preliminary expenses are amortized over a period of 5 years
a) Long Term Investments are carried at cost after deducting provision,
if any, for diminution in value considered to be other than temporary
b) Current Investments are stated at lower of cost and fair value.
An asset is treated as impaired when the carrying cost of assets
exceeds its recoverable value being higher of value in use and net
selling price. An impairment loss is recognized as an expense in the
Statement of Profit and Loss in the year in which an asset is impaired.
The impairment loss recognized in prior accounting period is reversed
if there has been an improvement in recoverable amount.
H. Earnings per share:
Basic and Diluted Earnings per shares are calculated by dividing the
net profit attributable to the ordinary shareholders by the weighted
average number of ordinary shares outstanding during the year.
I. Borrowing Cost:
Borrowing Costs that are directly attributable to the acquisition or
construction of Qualifying Assets are capitalized as part of cost of
such assets. Other Borrowing Costs are charged as expense in the year
in which these are incurred.
J. Valuation of Inventories :
a) Raw materials, Stores & Spares and packing material are valued at
cost. Costs of Inventories are ascertained on FIFO basis.
b) Work-in-progress is valued at cost which includes cost of inputs and
other overheads up to the stage of completion.
c) Finished Goods are valued at lower of cost and net realizable value.
K. Excise Duty, Commercial Tax (UP VAT) & Custom Duty :
a) The CENVAT credit available on purchase of raw materials and other
eligible inputs is adjusted against excise duty payable on clearance of
goods produced. The unadjusted CENVAT credit is shown under the head
Loans and Advances.
b) The company is eligible for interest free loan from State Government
of Uttar Pradesh of the equivalent amount of the VAT liability paid for
15 years which shall be repayable after 15 years.
a) Provision for current income tax is determined on the basis of the
amount of tax payable on taxable Income for the year.
b) In accordance with Accounting Standard 22 on Accounting for Taxes
on Income issued by the Institute of Chartered Accountants of India,
deferred tax liabilities and assets are recognized at substantively
enacted tax rate, subject to the consideration of prudence, on timing
difference, being the difference between the taxable income and
accounting income that originate in one period and are capable of
reversal in one or more subsequent periods. At each balance sheet date
the Company re-assesses unrecognized deferred tax assets.
M. Foreign Currency Transaction :
Transactions in foreign currency are recorded at the rate of exchange
prevailing on the date of transaction. Yearend balance of foreign
currency transaction is translated at the yearend rates. Exchange
differences arising on settlement / conversion of monetary items are
recognized as income or expense in the year in which they arise except
in cases where they relate to acquisition of fixed assets in which case
they are adjusted to the carrying cost of such assets.
N. Employee Benefits:
The company contributes to the employee''s provident fund maintained
under the Employees Provident Fund Scheme of the Central Government and
the same is charged to the Statement of Profit & Loss. Provision for
gratuity is made on the basis of actuarial valuation at the year end in
conformity with the Accounting Standard -15.
O. Prior Period Items :
Prior period items, if any, are included in respective heads of accounts
and material items are disclosed by way of notes on accounts.
P. Contingent Liabilities:
Contingent Liabilities are determined on the basis of available
information and which are not provided for is disclosed by way of notes
to the Accounts.