1. Method of accounting :
The financial statements have been prepared under historical cost
convention on accrual basis and comply with notified accounting
standards as referred to in Section 211 (3C) and other relevant
provisions of the Companies Act, 1956; unless otherwise specified.
2. Use of Estimates :
The preparation of financial statements in conformity with the
generally accepted accounting principles requires estimates and
assumptions to be made that affect the reported amounts of assets and
liabilities on the date of financial statements and reported amounts of
revenues and expenses during the reported period. Difference between
the actual results and estimates are recognized in the period in which
the results are known/ materialized.
3. Fixed Assets:
Fixed assets are stated at cost, less accumulated depreciation or
amortization. Cost is inclusive of freight, duties, taxes (to the
extent of credit not availed) and incidental expenses related to
acquisition, installation, erection and commissioning. Financing cost
relating to acquisition of qualifying fixed assets are also included to
the extent they relate to the period till such assets are ready to be
put to use. Goodwill is stated at a nominal value of Re.1/-
4. Depreciation and Amortization:
a) Depreciation on Fixed Assets has been charged on Written Down Value
Method in the manner and at the rates specified in Schedule XIV to the
Companies Act, 1956, except as stated in Para (b) & (c) below.
b) Cost of Leasehold Land is amortized over remaining period of lease
c) Computer Softwares are being amortized over their estimated useful
life of 6 years.
Long term investments are stated at cost. Provision is made to
recognize the decline, other than temporary in nature, in carrying
amount of such investments. Current investments are stated at the lower
of cost or fair value.
a) Inventories are valued at lower of cost or estimated net realizable
b) Cost of raw materials, components, consumables, tools, stores and
spares is arrived at on weighted average cost basis.
c) Cost of finished goods and Work in progress is arrived at on the
basis of weighted average cost of raw material and other cost of
conversion thereof for bringing the inventories up to their present
location and condition.
7. Foreign Currency Transactions:
a) Initial Recognition: Foreign Currency Transactions are translated
into Indian Rupee at the exchange rates prevailing on the date of
b) Conversion: At the end of accounting year, the monetary items
denominated in foreign currencies are restated at the exchange rates
prevailing on the last day of the accounting year.
c) Exchange Differences: The exchange differences arising on
settlement/ conversion of foreign currency transactions are recognized
in Profit and Loss Account.
d) The financial statements of non-integral foreign operations are
translated as per provisions of AS-11.
8. Research and Development Expenses
a) Research and Development Expenses, other than Capital Expenses are
charged to Profit and Loss Account as and when incurred.
b) Capital expenditure incurred for research and development activities
are included in respective Fixed Assets and Depreciation is provided as
per rates specified, in Schedule XIV of the Companies Act, 1956.
9. Revenue Recognition:
a) Sales are accounted for net of Central Sales Tax and Value Added
b) Revenue from sale is recognized when the significant risks and
rewards of ownership of goods have been passed to customers, which
generally coincides with their removal from factory.
c) Revenue from erection and commissioning services is recognized on
percentage completion method.
d) Interest income is recognized on accrual basis at applicable
e) Dividend income is recognized when the Company''s right to receive
dividend is established.
10. Warranty Costs:
Warranty obligations are accounted for as and when claims are admitted.
11. Employee Benefits:
a) Short Term Employee Benefits :
All employee benefits falling due wholly within twelve months of
rendering the service are classified as short term employee benefits.
Benefits such as salaries, wages, bonus and other allowances and short
term compensated absences etc. are recognized in the period in which
the employee renders the related service.
b) Post-Employment Benefits:
i. Defined Contribution Plans:
The State governed Employee Pension Scheme, Employees State Insurance
Scheme, the Company''s Provident Fund administered by an independent
Trust and the Company''s Superannuation Scheme are the defined
contribution plans. The liability on account of company''s contribution
paid or payable under these schemes is recognized during the period in
which the employee renders the related service and is charged to the
Profit and Loss account. The Company has no further obligation beyond
ii. Defined Benefit Plans:
The employees'' gratuity fund scheme is the Company''s defined benefit
plan. The present value of the obligation under the said defined
benefit plan is determined on the basis of actuarial valuation from an
independent actuary except that is mentioned in the note no.09 in B
i.e. notes forming part of the accounts. Actuarial and/or actual gains
and losses are recognized immediately in the Profit and Loss Account.
c) Long Term Employee Benefits:
The accruing liability on account of encashment of leave entitlement of
employees as per the rules of the Company is determined and provided
for on the basis of the actuarial valuation from an independent actuary
except that is mentioned in the note no.09 in B i.e. notes forming part
of the accounts. Actuarial and/or actual gains and losses are
recognized immediately in the Profit and Loss Account.
12. Provision for Current and Deferred Tax:
i. Provision for Current Tax is made on the basis of estimated taxable
income for the current accounting period and in accordance with the
provisions of Income Tax Act, 1961.
ii. Provision for Deferred Tax resulting from Timing Difference''
between books and taxable profits for the year is accounted for using
the tax rates and laws that have been enacted or substantially enacted
as on balance Sheet date.
The deferred tax asset is recognized only to the extent that there is a
reasonable certainty that the assets will be adjusted in future.
13. Borrowing Cost:
Borrowing costs are charged to Profit and Loss Account, except in cases
where borrowings are directly attributable to acquisition, construction
or production of a qualifying asset. A qualifying asset is one which
necessarily takes substantial period of time to get ready for intended
14. Impairment of Assets:
Provision for impairment loss, if any, is recognised to the extent by
which the carrying amount of an asset exceeds its recoverable amount.
Recoverable amount is the higher of an asset''s net selling price and
its value in use. Value in use is determined on the basis of the
present value of estimated future cash flows expected to arise from the
continuing use of an asset and from its disposal at the end of its
15. Provisions, Contingent Liabilities and Contingent Assets:
i. Provisions are recognized for liabilities that can be measured only
by using a substantial degree of estimation, if :
a. The company has a present obligation as a result of past event,
b. The probable outflow of resources is expected to settle the
c. The amount of obligation can be reliably estimated.
ii. Contingent liabilities are disclosed in the case of:
a. A present obligation arising from a past event, when it is not
probable that an outflow of resources will be required to settle the
b. A possible obligation unless the probability of outflow of
resources is remote.
iii. Contingent Assets are neither recognized nor disclosed.
Provisions & Contingent Liabilities are disclosed after an evaluation
of the facts and legal aspects and the amounts are reviewed at each
balance sheet date
16. Change in accounting policy related to Warranty:
In current year no provision for warranty expenses is made in the books
according to change in policy last year. The Company has incurred
Rs.33.20 Lacs as warranty expenses in the current year. ( Previous year