01. Basis for Preparation of Financial Statements
The financial statements have been prepared on the historical cost
convention basis. The Generally Accepted Accounting Principles (GAAP)
and the Accounting Standards referred under section 211(3C) of the
Companies Act, 1956 have been adopted by the Company and disclosures
made in accordance with the requirements of Schedule VI of the
Companies Act, 1956 and the Indian Accounting Standards.
02. Fixed Assets
a) Fixed assets are stated at costs, which comprises of purchase
consideration and other directly attributable cost of bringing the
assets to its working condition for the intended use.
b) Deprecation on fixed assets is provided on straight- line method at
the rates and in the manner as prescribed in Schedule XIV to the
Companies Act, 1956.
03. Translation of Foreign Currency Items
Transactions in foreign currency are recorded at the rate of exchange
in force on the date of the transactions. Current Assets and Current
Liabilities denominated in foreign currency are translated at the
exchange rate prevalent at the date of the Balance Sheet. The resultant
gain / loss is recognized in the Profit & Loss Account, except in cases
where they relate to the acquisition of fixed assets, in which case
they are adjusted to the carrying cost of such assets. The Forward
Contract including derivatives contract entered into to hedge foreign
currency risk on unexpected firm commitments and highly probable
forecast transactions recognized in the financial statements
accordingly as per Accounting Standards issued by the Institute of
chartered Accountants of India, exchange difference arising on such
contracts are recognized in the period in which they arise. Gain and
losses arising on account of such transaction are recognized as income/
expenses in the Profit and Loss Account.
04. Research and Development
Revenue expenditure on Research & Development is included under the
natural heads of expenditure. Capital expenditure on Research &
Development is treated in the same manner as expenditure on other fixed
05. Valuation of Inventory
a) Closing stock of finished goods is valued at the lower of estimated
cost or net realizable value.
b) Closing stock of semi-finished goods is valued at estimated cost.
c) Inventory of raw material and packing material is valued at cost.
Investments are valued at costs unless there is a permanent fall in
their value as at the date of Balance Sheet.
07. Retirement Benefits
Encashment of accrued leave salary and retirement benefits to employees
are provided on accrual basis.
08. Contingent Liability
Liabilities though contingent, are provided for if there are reasonable
prospects of such liabilities maturing. The other Contingent
Liabilities, which are not acknowledged as debt are disclosed by way of
note, but claims of frivolous nature are ignored. Provisions,
contingent liabilities and contingent assets are reviewed at each
Balance Sheet date.
09. Revenue Recognition
a. Sales are inclusive of excise duty / customs duty and net of trade
discounts. Export sales include goods invoiced against confirmed orders
and cleared from excise and customs authorities.
b. Export incentives receivable on exports made during the year, are
recognized as income.
c. Other items of revenue including export benefits are recognized in
accordance with the Accounting Standard (AS-9). Accordingly, wherever
there are uncertainties in the ascertainment / realization of income
such as interest from customers, the same is not accounted for.
10. Taxes on Income
a. Provision for current income tax is made on the basis of the
estimated taxable income for the current accounting year computed in
accordance with the provisions of the Income Tax Act, 1961.
b. Deferred tax is recognized on timing difference between the income
accounted in financial statements and taxable income for the year, and
quantified using tax rates and laws enacted or substantively enacted as
on the Balance Sheet date are accounted for on the basis of Accounting
11. Borrowing Costs
Borrowing costs directly attributable to acquisition, construction and
production of assets are capitalized as a part of the cost of such
asset up to the date of completion. Other borrowing costs are
recognized as expenses in the period in which they are incurred and
charged to the Profit & Loss Account.
12. Impairment of Assets
The Company assesses at each Balance Sheet date whether there is any
indication that any asset including goodwill, may be impaired. If any
such indication exists, the carrying value of such assets is reduced to
its estimated recoverable amount and the amount of such impairment loss
is charged to Profit & Loss Account. If at the balance sheet date there
is an indication that a previously assessed impairment loss no longer
exists, then such loss is reversed and the asset is restated to that
13. Segment accounting
Segment accounting policies are in line with the accounting policies of
the company. In addition, the following specific accounting policies
have been followed for segment reporting:
a. Segment revenue includes sales and other income directly
identifiable with/ allocable to the segment.
b. Expenses that are directly identifiable with / allocable to segment
are considered for determining the segment results.
c. Segment assets and liabilities include those directly identifiable
with respective segments. Unallocable assets and liabilities represent
the assets and liabilities that relate to the company as a whole and
not allocable to any segment.