a Basis of accounting and preparation of financial statements
The financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards notified under
the Companies (Accounting Standards) Rules, 2006 (as amended) and the
relevant provisions of the Companies Act, 1956. The financial
statements have been prepared on accrual basis under the historical
cost convention . The accounting policies adopted in the preparation
of the financial statements are consistent with those followed in the
b Use of estimates
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognised in the periods in which
the results are known / materialise.
c Depreciation and amortisation
Depreciation has been provided on the written down value method as per
the rates prescribed in Schedule XIV to the Companies Act, 1956.
Pro-rata Depreciation is provided on additions/disposal of fixed assets
during the year.
Sale of units
Sales are recognised, net of returns and trade discounts, on transfer
of significant risks and rewards of ownership to the buyer, which
generally coincides with the delivery of units to customers.Net sales
exclude excise duty, sales tax and value added tax.
Income from services
Revenues from contracts priced on a time and material basis are
recognised when services are rendered and related costs are incurred.
Revenues from turnkey contracts, which are generally time bound fixed
price contracts, are recognised over the life of the contract using the
proportionate completion method, with contract costs determining the
degree of completion. Foreseeable losses on such contracts are
recognised when probable.
Revenues from maintenance contracts are recognised pro-rata over the
period of the contract.
e. Other income
Interest income is accounted on accrual basis. Dividend income is
accounted on receipt basis.
g Tangible fixed assets
Fixed assets are carried at cost less accumulated depreciation. The
cost of fixed assets include other incidental expenses incurred up to
that date. Subsequent expenditure relating to fixed assets is
capitalised only if such expenditure results in an increase in the
future benefits from such asset beyond its previously assessed standard
Fixed assets acquired in full or part exchange for another asset are
recorded at the fair market value or the net book value of the asset
given up, adjusted for any balancing cash consideration. Fair market
value is determined either for the assets acquired or asset given up,
whichever is more clearly evident.
g. Foreign currency transactions and translations
Transactions in foreign currencies entered into by the Company and its
integral foreign operations are accounted at the exchange rates
prevailing on the date of the transaction or at rates that closely
approximate the rate at the date of the transaction, Measurement of
foreign currency monetary items at the Balance Sheet date Foreign
currency monetary items (other than derivative contracts) of the
Company and its net investment in non-integral foreign operations
outstanding at the Balance Sheet date are restated at the year-end
In the case of integral operations, assets and liabilities (other than
non-monetary items), are translated at the exchange rate prevailing on
the Balance Sheet date. Non-monetary items are carried at historical
cost. Revenue and expenses are translated at the average exchange rates
prevailing during the year. Exchange differences arising out of these
translations are charged to the Statement of Profit and Loss.
Treatment of exchange differences
Exchange differences arising on settlement / restatement of short-term
foreign currency monetary assets and liabilities of the Company and its
integral foreign operations are recognised as income or expense in the
Statement of Profit and Loss.
The exchange differences arising on restatement / settlement of
long-term foreign currency monetary items are capitalised as part of
the depreciable fixed assets to which the monetary item relates and
depreciated over the remaining useful life of such assets or amortised
on settlement / over the maturity period of such items if such items do
not relate to acquisition of depreciable fixed assets. The unamortised
balance is carried in the Balance Sheet as Foreign currency monetary
item translation difference account net of the lax effect thereon.
h. Government grants, subsidies and export incentives
Government grants and subsidies are recognised when there is reasonable
assurance that the Company will comply with the conditions attached to
them and the grants / subsidy will be received. Government grants whose
primary condition is that the Company should purchase, construct or
otherwise acquire capital assets are presented by deducting them from
the carrying value of the assets. The grant is recognised as income
over the life of a depreciable asset by way of a reduced depreciation
Long-term investments (excluding investment properties), are carried
individually at cost less provision for diminution, other than
temporary, in the value of such investments. Current investments are
carried individually, at the lower of cost and fair value. Cost of
investments include acquisition charges such as brokerage, fees and
Investment properties are carried individually at cost less accumulated
depreciation and impairment, if any. Investment properties are
capitalised and depreciated (where applicable) in accordance with the
policy stated for Tangible Fixed Assets. Impairment of investment
property is determined in accordance with the policy stated for
Impairment of Assets.
j Employee benefits
Contributions to Provident Fund for the year are recognized in the
Profit & Loss Account.
The liability towards gratuity, leave encashment, post retirement
benefits and other long-term benefits are provided for in the accounts
based on actuarial valuation as at the end of the year. Actuarial gains
and losses are recognized in the Profit and Loss Account as income or
k Earnings per share
Basic earnings per share is computed by dividing the profit / (loss)
after tax (including the post-tax effect of extraordinary items, if
any) by the weighted average number of equity shares outstanding during
the year. Diluted earnings per share is computed by dividing the
profit / (loss) after tax (including the post-tax effect of
extraordinary items, if any) as adjusted for dividend, interest and
other charges to expense or income relating to the dilutive potential
equity shares, by the weighted average number of equity shares
considered for deriving basic earnings per share and the weighted
average number of equity shares which could have been issued on the
conversion of all dilutive potential equity shares. Potential equity
shares are deemed to be dilutive only if their conversion to equity
shares would decrease the net profit per share from continuing ordinary
Potential dilutive equity shares are deemed to be converted as at the
beginning of the period, unless they have been issued at a later date.
The dilutive potential equity shares are adjusted tor the proceeds
receivable had the shares been actually issued at fair value (i.e.
average market value of the outstanding shares). Dilutive potential
equity shares are determined independently for each period presented.
The number of equity shares and potentially dilutive equity shares are
adjusted lor share splits / reverse share splits and bonus shares, as
l Taxes on income
Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the provisions of the Income Tax
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which
gives future economic benefits in the form of adjustment to future
income tax liability, is considered as an asset if there is convincing
evidence that the Company will pay normal income tax. Accordingly. MAT
is recognised as an asset in the Balance Sheet when it is probable that
future economic benefit associated with it will flow to the Company.
Deferred tax is recognised on timing differences, being the differences
between the taxable income and the accounting income that originate in
one period and are capable of reversal in one or more subsequent
periods. Deferred tax is measured using the tax rates and the tax laws
enacted or substantially enacted as at the reporting date.
Deferred tax liabilities are recognised for all timing differences.
Deferred tax assets in respect of unabsorbed depreciation and carry
forward of losses are recognised only if there is virtual certainty
that there will be sufficient future taxable income available to
realise such assets. Deferred tax assets are recognised for timing
differences of other items only to the extent that reasonable certainty
exists that sufficient future taxable income will be available against
which these can be realised. Deferred tax assets and liabilities are
offset if such items relate to taxes on income levied by the same
governing tax law:s and the Company has a legally enforceable right for
such set off. Deferred tax assets are reviewed at each Balance Sheet
date for their realisability.
Current and deferred tax relating to items directly recognised in
equity are recognised in equity and not in the Statement of Profit and
m Impairment of assets
The values of fixed assets are reviewed by the management for
impairment at each Balance Sheet date if events or circumstances
indicate that the carrying values may not be recoverable. If the
carrying value is more than the net selling price of the asset or
present value, the difference is recognized as an impairment loss.
n Provisions and contingencies
A provision is recognised when the Company has a present obligation as
a result of past events 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.
o Borrowing Costs
Borrowing costs attributable to acquisition, construction or production
of qualifying asset arc capitalized as part of the cost of that asset,
till the month in which the asset is read for use. Other borrowing
costs are recognized as an expense in the period in which these are
p Provisions, Contingent Liabilities and Capital Commitments
Provision is recognized when there is a present obligation as a result
of a 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.
Contingent liabilities are disclosed in respect of possible obligations
that arise from past events but their existence is confirmed by the
occurrence or non-occurrence of one or more uncertain future events not
wholly within the control of the company.
Capital commitments and Contingent liabilities disclosed are in respect
of items which exceed Rs.0.05 crores in each case.
Contingent liabilities are considered only on conversion of show cause
notices issued by various Government authorities into demand.
Cash flow statement is prepared segregating the cash flows operating,
investing and financing activities. Cash flow from operating activities
is reported using indirect methos
i. Transactions of non-cash nature
ii Any deferrals or accruals of past or future operating cash receipts
or payments and in. Items of income or expenses associated with
investing or financing cash flows.
Cash and cash equivalents (including bank balances) are reflected as
such in the cash flow statement. Those cash and cash equivalents which
are not available for general use as on the dale of Balance Sheet are
also included under this category with as specific disclosure.