1. Basis of Preparation of Financial Statements
a. The financial statements have been prepared in compliance with the
mandatory Accounting Standards notified under the Companies (Accounting
Standards) Rules, 2006 (as amended) and generally accepted Accounting
principles applicable in India (GAAP).Accounting policies have been
consistently applied except where a newly issued accounting standard is
initially adopted or a revision to an existing accounting standard
requires changes in the accounting policy hitherto in use.
b. The financial statements have been prepared under historical cost
convention on accrual basis.
2. Use of Estimates
The preparation of financial statements requires estimates and
assumptions to be made that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Difference between the actual results and
estimates are recognized in the period in which the results are known
3. Fixed Assets
Fixed Assets are stated at cost less accumulated depreciation and
impairment losses. Cost includes acquisition cost, freight, duties,
taxes and other incidental expense incurred during the construction /
installation stage attributable to bring- ing the asset to working
condition for its intended use.
Expenditure on software is recognized as ''Intangible Assets'' and is
amortized over a period of three years.
4. Depreciation and Amortization
Depreciation on Fixed Assets is being provided on written down value
method at the rate and in the manner specified in Schedule XIV of the
Companies Act, 1956.
Leasehold land is amortized over the initial period of lease.
The expenditure incurred on improvement on leased premises is written
off proportionately over the initial period of lease.
5. Impairment of Fixed Assets
The Company assesses at each balance sheet date whether there is any
indication that an asset may be impaired. If any such indication
exists, the company estimates the recoverable amount of the assets. If
such recoverable amount of the asset or the recoverable amount of the
cash-generating unit to which the assets belongs, is less than the
carrying amount, carrying amount is reduced to its recoverable amount.
The reduction is treated as an impairment loss and is recognised in the
profit and loss account. If at the balance sheet date there is an
indication that previously assessed impairment loss no longer exists,
the recoverable amount is reassessed and the asset is reflected at the
a. Inventories are valued at lower of cost and estimated net
realisable value. Cost is determined on ''First-in First-out'', ''Specific
Identification'', or Weighted Average'' basis, as the case may be. Cost
of Inventories Comprises of all cost of purchase, cost of conversion
and other costs incurred in bringing the inventories to their present
location and condition.
b. Raw Materials include materials issued for production. Materials
consumed are materials used for production of fin- ished goods only.
c. Determination of estimated net realizable value and specific
identification involve technical judgments of the manage- ment, which
has been relied upon by the Auditors.
Long-term investments are stated at cost. Provision for diminution in
the value of long-term investments is made if such decline is other
than temporary in nature.
Current investments are carried at lower of cost or market value.
8. Revenue Recognition
Sale of Goods:
Revenue from sales of goods is recognized when risk and rewards of
ownership of the products are passed on to the customers, which is
generally on dispatch of goods and is stated net of returns, trade
discounts, claims etc.
Dividend on Investment:
Dividends are recognised when the right to receive payment is
Interest Income is recognised on time proportion basis taking in to
account the amount outstanding & rate applicable.
9. Foreign Currency Transactions:
a. Initial Recognition:
Transactions denominated in foreign currencies are recorded at the
exchange rate prevailing at the time of the transaction.
Monetary items denominated in foreign currencies at the year-end are
translated at closing rates. Non-monetary items which are carried in
terms of historical cost denominated in foreign currency are reported
using the exchange rate at the date of transaction and investment in
foreign companies are recorded at the exchange rates prevailing on the
date of making the investments.
c. Exchange Differences:
Exchange differences arising on the settlement of monetary items or on
restatement of monetary items at rates differ- ent from those at which
they were initially recorded during the year, or reported in previous
financial statements, are recognised as income or as expenses in the
year in which they arise.
d. Forward Exchange Contract not intended for trading or speculation
The premium or discount arising at the inception of forward exchange
contracts is amortized as expense or income over the life of contract.
Exchange differences on such contract are recognized in the profit and
loss account in the year in which the exchange rate changes. Any profit
or loss arising on cancellation or renewal of forward exchange contract
is recognised as income or as expense.
10. Retirement Benefits:
Short term employee benefits are recognized as an expense at the
undiscounted amount in profit and loss account of the year in which the
related service is rendered.
The Company''s Liability towards gratuity and leave encashment are
determined on the basis of year end actuarial valuation applying
Projected Unit Credit Method done by an independent actuary. The
actuarial gains or losses determined by the actuary are recognized in
the Profit and Loss Account as income or expense.
11. Borrowing Cost:
Borrowing costs directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale are capitalized as
part of the cost of the respective asset. All other borrowing costs are
expensed in the period they occur. Borrowing costs consist of interest
and other costs that an entity incurs in connection with the borrowing
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the Profit and Loss account on a straight-line basis over the lease
13. Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting preference dividends and attributable taxes) by the weighted
average number of equity shares outstanding during the period. Partly
paid equity shares are treated as a fraction of an equity share to the
extent that they were entitled to participate in dividends relative to
a fully paid equity share during the reporting period. The weighted
average numbers of equity shares outstanding during the period are
adjusted for events of bonus issue; bonus element in a rights issue to
existing shareholders; share split; and reverse share split
(consolidation of shares).
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity share- holders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
14. Cash and Cash Equivalents
Cash and cash equivalents for the purposes of cash flow statement
comprise cash at bank and in hand and short-term investments with an
original maturity of three months or less.
15. Segment Reporting
Identification of segments:
The Company''s operating businesses are organized and managed separately
according to the nature of products and ser- vices provided, with each
segment representing a strategic business unit that offers different
products and serves different markets. The analysis of geographical
segments is based on the areas in which major operating divisions of
the Company operate.
Inter segment Transfers:
The Company generally accounts for intersegment sales and transfers as
if the sales or transfers were to third parties at current market
Allocation of common costs:
Common allocable costs are allocated to each segment according to the
relative contribution of each segment to the total common costs.
Includes general corporate income and expense items which are not
allocated to any business segment.
The company prepares its segment information in conformity with the
accounting policies adopted for preparing and pre- senting the
financial statements of the company as a whole.
16. Provision for Current and Deferred Taxation:
Income tax is accounted in accordance with AS-22 ''Accounting for taxes
on income'', issued by The Institute of Chartered Accountants of India
(ICAI), which includes current taxes and deferred taxes. Deferred
income taxes reflect the impact of the current year timing differences
between taxable income and accounting income for the year and reversal
of timing differences of earlier years. Deferred tax assets are
recognised only to the extent that there is reasonable certainty that
sufficient future taxable income will be available except that deferred
tax assets arising due to unabsorbed depreciation and losses are
recognised if there is virtual certainty that sufficient future taxable
income will be available to realise the same and are recognized using
the tax rates and tax laws that have been enacted or substantively
Current tax is determined as the amount of tax payable in respect of
taxable income using the applicable tax rates and tax laws for the
17. Provision, Contingent Liabilities and Contingent Assets:
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. a probable outflow of resources is expected to settle the obligation
c. the amount of the obligation can be reliably estimated Contingent
Liability is disclosed in 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. Contingent Assets are neither recognized, nor
Provisions, Contingent Liabilities and Contingent Assets are reviewed
at each Balance Sheet Date.