1.1 BASIS OFACCOUNTINGAND PREPARATION OF FINANCIAL STATEMENTS
The financial statements are prepared under the historical cost
convention, in accordance with applicable accounting standards notified
by the companies (Accounting Standards) Rules, 2006 and the relevant
provisions of the Companies Act,1956.
1.2 FIXED ASSETS
Fixed Assets are stated at cost less accumulated depreciation. Cost is
inclusive of freight, duties, levies and any directly attributable cost
of bringing the assets to their working condition for intended use.
Depreciation is provided on Straight Line Method at the rates and in
the manner specified in Schedule XIV of the Companies Act, 1956, except
for Wind Mills, which is provided on Written Down Value Method.
Leasehold land is amortized over the period of lease.
Long-term Investments are stated at cost. Provision for diminution in
the value of long-term investments is made only if such a decline is
other than temporary in the opinion of the management. Current
investments are valued at lower of cost and fair value.
Inventories are valued at lower of cost and net realisable value. The
cost is determined on the basis of FIFO Method. For the purpose of
finished goods and work-in-process, cost comprises of material cost
plus appropriate share of production overheads and excise duty,
1.6 EMPLOYEE BENEFITS
Defined Contribution Plan:
a) In accordance with the provisions of Employees Provident Funds and
Miscellaneous Provisions Act,1952, eligible employees of the Company
are entitled to receive benefits with respect to provident fund, a
defined contribution plan in which both the Company and the employee
contribute monthly at a determined rate (currently 12% of employee''s
basic salary). Company''s contribution to PF is charged to Profit & Loss
b) The Company has taken a Policy with Life Insurance Corporation of
India for the payment of gratuity, a defined contribution plan and
premium paid on the policy has been charged to Profit & Loss Account in
the year of payment.
Defined Benefit Plan:
a) Gratuity to the Managing Director and Joint Managing Director, who
are not covered under the policy with LIC has been provided for on the
basis of Actuarial valuation, which is based on their contractual
b) Liability for Managing Director and Joint Managing Director leave
encashment benefits is accounted on cash basis.
1.7 FOREIGN CURRENCYTRANSACTIONS
Transactions in foreign currency are recorded at the exchange rate
prevailing on the date of the transaction. In case of liabilities
incurred for the acquisition of fixed assets, the loss or gain on
conversion (at the rate prevailing at the year end) is recognized as
income or expenses in the profit & loss account. Current Assets and
Liabilities (Other than those relating to fixed assets) are restated at
the rate prevailing at the year end. The difference between the year
end rate and the exchange rate at the date of the transaction is
recognized as income or expense in the profit and loss account.
1.8 REVENUE RECOGNITION
Sale of goods is recognized at the point of despatch to the customer.
Income from Wind Power is recognized at the point of generation. Sales
includes excise duty but excludes Sales Tax and discounts. Other
Income are accounted on accrual basis.
Current tax is determined as the amount of tax payable in respect of
taxable income for the year. Deferred tax is recognised, subject to
the consideration of prudence in respect of deferred tax assets, on
timing difference, being the differences between taxable income and
accounting income that originate in one period and are capable of
reversal in one or more subsequent periods except for carried forward
losses, which are recognized only if there is virtual certainty of
An asset is treated as Impaired when the carrying cost of assets
exceeds its recoverable value. An impairment loss is charged to the
Profit & Loss Account in the year in which an asset is identified as
impaired. The impairment loss recognised in prior accounting periods
is reversed if there has been a change in the estimate of recoverable
1.11 PROVISIONS AND CONTINGENT LIABILITIES
A provision is recognized when there is a present obligation as a
result of past events for which it is probable that an outflow of
resources will be required to settle the obligation and in respect of
which a reliable estimate can be made. These are reviewed at each
balance sheet date and adjusted to reflect the current best estimates.
Contingent liabilities are disclosed after an evaluation of the facts and
legal aspects of the matters involved.