1. Basis of Preparation of Financial Statements
The Financial Statements are prepared under the historical cost
convention in accordance with the generally accepted accounting
principles in India and provisions of the Companies Act, 1956 and
comply with the Accounting Standards referred to in Section 211 (3C) of
the Companies Act, 1956.
Investments that are intended to be held for more than a year from the
date of acquisition, are classified as long term investment and are
carried at cost less any provision for permanent diminution in value.
Investments other than long term investments being current investments
are valued at cost or fair market value whichever is lower.
Inventories are valued at lower of cost or net realizable value.
4. Revenue Recognition
i) Dividend income is recognized when right to receive the payment is
ii) In respect of other heads of income, the Company follows the
practice of accounting on accrual basis.
5. Provision for Income Tax
Provision for current income-tax is recognized in accordance with the
provisions of Income Tax Act, 1961 and is made annually based on the
tax liability after taking credit for tax allowances and exemptions.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to timing differences that result between the
profits offered for income taxes and the profits as per the financial
statements. Deferred tax assets and liabilities are measured using the
tax rates and the tax laws that have been enacted or substantially
enacted at the Balance Sheet date. Deferred tax assets are recognized
only to the extent there is reasonable certainty that the assets can be
realized in the future. Deferred tax assets are reviewed as at each
Balance Sheet date.
6. Treatment of Contingent Liabilities.
i) Provisions are recognized in terms of Accounting Standard 29-
Provisions, Contingent Liabilities and Contingent Assets issued by The
Institute of Chartered Accountants of India (ICAI), when there is a
present legal or statutory obligation as a result of past events where
it is probable that there will be outflow of resources to settle the
obligation and when a reliable estimate of the amount of the obligation
can be made.
ii) Contingent Liabilities are recognized only when there is a possible
obligation arising from past events due to occurrence or non-occurrence
of one or more uncertain future events not wholly within the control of
the company or where reliable estimate of the obligation cannot be
made. Obligations are assessed on an ongoing basis and only those
having a largely probable outflow of resources are provided for.
iii) Contingent Liabilities are disclosed by way of notes.