1.1 BASIS OF PREPRATION OF FINANCIAL STATEMENTS: -
The Financial Statements are prepared under the Historical Cost
Convention method in accordance with the generally accepted Accounting
Principles and the Accounting Standards referred to in Section 211(3C)
of the Companies Act, 1956.
1.2 USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles (GAAP) requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and the disclosures of contingent liabilities on the
date of financial statements and reported amounts of revenue and
expenses for that year. Actual results could differ from these
estimates. Any revision to accounting estimates is recognized
prospectively in current and future periods.
1.3 REVENUE RECOGNITION
1.3.1 All Income & Expenditure are accounted for on accrual basis
except in case of uncertainties where accrual is postponed upto
resolution of uncernainty.
1.3.2 Investments are capitalised at cost inclusive of brokerage,
Service Tax, Education Cess,transfer stamps and Security Transaction
Tax.Depository Charges and other miscellaneous transaction charges
which due to practical difficulty cannot be identified/allocated to a
particular transaction are charged directly to the Statement of Profit
1.4 FIXED ASSETS
Fixed Assets are stated at cost less depreciation.
Depreciation is provided on Fixed Assets on Straight Line method at the
rates and in the manner specified in Schedule XIV to the Companies Act,
1.6.1 Non current/Long Term Investments are valued at cost.Provision
for diminution in the value of Long term/Non current Investments is
made only if such a decline is other than temporary.
1.7 EMPLOYEE BENEFITS
1.7.1 Employee Benefits are recognized/accounted for on the basis of
revised AS-15 detailed as under :-
1.7.2 Short Term Employee benefits are recognized as expense at the
undiscounted amount in the Profit & Loss account of the year in which
they are incurred.
1.7.3 Employee benefits under defined contribution plans comprise of
contribution to Provident Fund and Superannuation. Contributions to
Provident Fund are deposited with appropriate authorities and charged
to Profit & Loss account. Contribution to Superannuation are funded
with Life Insurance Corporation of India.
1.7.4 Employee Benefits under defined benefit plans comprise of
gratuity and leave encashment which are accounted for as at the year
end based on actuarial valuation by following the Projected Unit Credit
(PUC) method. Liability for gratuity is funded with Life Insurance
Corporation of India.
1.7.5 Termination benefits are recognized as an Expense as and when
1.7.6 The actuarial gains and losses arising during the year are
recognized in the Profit & Loss account of the year without resorting
to any amortization.
Tax expenses for the year comprises of Current tax and deferred tax
charge or credit. The deferred Tax Asset and deferred Tax Liability is
calculated by applying tax rates and tax laws that have been enacted or
substantially enacted by the Balance Sheet date. Deferred Tax assets
arising mainly on account of brought forward losses and unabsorbed
depreciation under tax law are recognised only if there is virtual
certainty of its realisation. Other deferred tax assets are recognised
only to the extent there is a reasonable certainty of realisation in
future. Deferred Tax Assets/ Liabilities are reviewed at each balance
sheet date based on development during the year, further future
expectations and available case laws to reassess realisation/
1.9 IMPAIRMENT OF FIXED ASSETS
Consideration is given at each balance sheet date to determine whether
there is any indication of impairment of the carrying amount of the
Company''s Fixed Assets. If any indication exists, an asset''s
recoverable amount is estimated. An impairment loss is recognized
whenever the carrying amount of an asset exceeds its recoverable
amount. The recoverable amount is the greater of the net selling price
and value in use. In assessing value in use, the estimated future cash
flows are discounted to their present value based on an appropriate
Reversal of impairment losses recognized in prior years is recorded
when there is an indication that the impairment losses recognized for
the asset no longer exist or have decreased. However, the increase in
carrying amount of an asset due to reversal of an impairment loss is
recognized to the extent it does not exceed the carrying amount that
would have been determined (net of depreciation) had no impairment loss
been recognized for the assets in prior years.
The company creates a provision when there is present obligation as
result of a past event that probably requires an outflow of resources
and a reliable estimate can be made of the amount of the obligation. A
disclosure for a contingent liability is made when there is a possible
obligation or a present obligation that may, but probably will not,
requires an outflow of resources. When there is a possible obligation
or a present obligation in respect of which the likelihood of outflow
of resources is remote, no provision or disclosure is made.