The accounts have been prepared primarily on the historical cost
convention and in accordance with the relevant provisions of the
Companies Act, 1956 and the accounting standards notified by the
Companies (Accounting Standards) Rules, 2006. The significant
accounting policies followed by the company are stated below:
(a) USE OF ESTIMATES
The preparation of financial statements in conformity with the
generally accepted accounting principles requires the management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure relating to contingent
liabilities as at the date of the financials and the reported amounts
of revenue and expenses during the reported year.
Accounting estimates could change from period to period. Appropriate
changes in estimates are made as the management becomes aware of
changes in circumstances surrounding the estimates. The effects of
changes in accounting estimates are reflected in the financial
statements in the period in which changes are made and, if material,
their effects are disclosed in the notes to the financial statements
which are lower than the rates specified in Schedule VI of the
Companies Act, 1956.
(b) FIXED ASSETS
Fixed assets are shown at cost / revalued amount less depreciation.
Cost comprises the purchase price and other attributable expenses.
(c) DEPRECIATION ON FIXED ASSETS
(i) The Company follows the straight-line method of charging
depreciation on all its fixed assets. The Depreciation has been
provided in the manner and at the rates prescribed in Schedule XIV to
the Companies Act, 1956 on all the assets except certain equipments
which are depreciated over their estimated useful life.
(ii) Leasehold land is being amortized in equal installments over the
(d) IMPAIRMENT OF ASSETS
To provide for impairment loss if any, to the extent, the carrying
amount of assets exceeds their recoverable amount. Recoverable amount
is higher of an assets net selling price and its value in use. Value in
use is 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 useful life.
Current Investments are valued at lower of cost and fair value. Long
Term Investments are valued at cost. Where applicable, provision is
made if there is a permanent fall in valuation of long term
Inventories are valued at lower of cost and net realisable value. The
method of arriving at cost of various categories of inventories is as
(a) Stores and Spares, Raw and Packing material Weighted Average method
(b) Finished goods and Work- In-process Weighted average cost of
production, which comprises direct material costs, and appropriate
(c) Contracts-in-progress Represents expenses incurred on execution of
contracts till balance sheet date
(g) FOREIGN CURRENCY TRANSACTIONS
Transactions made during the year in foreign currency are recorded at
the exchange rate prevailing at the time of transaction. Assets and
Liabilities related to foreign currency transactions remaining
unsettled at the year end are translated at the contract rates when
covered by forward cover contracts and at year-end rate in other cases.
Realised gains and losses on foreign exchange transactions other than
those relating to fixed assets are recognised in the profit and loss
account except gain/loss on transaction of long term liabilities
incurred to acquire fixed assets is treated as an adjustment to the
carrying cost of fixed assets.
(h) REVENUE RECOGNITION
(i) Sale of goods is recognised at the point of dispatch of finished
goods to customers. Sales include amount recovered towards excise duty
but exclude sales tax. Export incentive under the Duty Entitlement Pass
Book scheme has been recognized on the basis of credits afforded in the
(ii) Income from services is recognized at the time of rendering the
(iii) Income from Property Development is recognised as soon as
contract is entered with the Party and the consideration is received
and excludes service tax.
(iv) Contract revenue is recognised on percentage completion method as
required under revised Accounting Standard -7 - Construction Contracts.
The stage of completion is determined as a proportion that contract
costs bear to the estimated total costs. When it is probable that any
stage of the contract that the total cost will exceed the total
contract revenue, the expected loss is recognised immediately.
(i) RESEARCH AND DEVELOPMENT EXPENSES
Research and Development expenditure of revenue nature is written off
in the year in which it is incurred and expenditure of a capital nature
is added to fixed assets.
(j) EMPLOYEE RETIREMENT BENEFITS
Retirement benefits to employees are provided for by means of gratuity,
superannuation and provident fund.
The gratuity liability is determined based on the actuarial valuation
as at the year end.
Payments in respect of superannuation are made to the fund administered
Provision in respect of compensated absences is made based on actuarial
valuation as at year end.
Contribution to Provident fund is based on defined contribution and
expensed as incurred.
(k) PROVISIONS AND CONTINGENCIES
The company creates a provision if there is a present obligation as a
result of past events, the settlement of which results in an outflow
economic benefits and a reliable estimate can be made of the amount of
obligation. Provisions are determined by the best estimate of the
outflow of economic benefits required to settle the obligation at the
reporting date. A disclosure for a contingent liability is made when
there is a possible obligation or a present obligation that probably
will not require an outflow of resources or where a reliable estimate
of the obligations cannot be made.
(l) TAXES ON INCOME
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 differences, being the
difference between taxable income and accounting income that originate
in one period and are capable of reversal in one or subsequent periods.
(m) SEGMENT REPORTING
The accounting policy adopted for Segment Reporting is in line with the
accounting policy of the Company with the following additional policy
for Segment Reporting:-
Revenue and expenses have been identified to segments on the basis of
their relationship to the operating activities of the segment. Revenue
and expenses, which relate to the enterprise as a whole and are not
allocable to the segments on a reasonable basis, have been included
under Unallocated Expenses. Inter Segment transfers are at cost.