1. Basis of accounting :
Accounting policies not specifically referred to otherwise are
consistent and in consonance with generally accepted accounting
principles and Accounting Standard issued by the Institute of Chartered
Accountants of India.
2. The Company generally follows mercantile System of Accounting
recognizing significant items of income & expenditure on accrual basis.
3. Going Concern Basis :
The Canara Bank has auctioned immovable properties and Stock of the
company and recovered part of defaulted term loan and working capital
loan due to that the company''s going concern assumption is affected
4. Fixed assets :
i. Fixed assets are stated at cost less accumulated depreciation and
impairment loss, if any.
ii. Depreciation on fixed assets have been provided on Straight Line
Method and at the rates and in the manner prescribed in the Schedule
XIV of the Companies Act, 1956.
iii. Depreciation on assets added/deducted during the year has been
provided on pro rata from/to the month of addition/deduction.
Items of inventories are measured at lower of cost or net realizable
value. Cost of inventories comprise of all cost of purchases, cost of
conversion and other costs incurred in bringing them to their
respective present location and condition. Cost of raw materials,
process chemicals, stores and spares and packing materials and trading
products are determined on FIFO basis. Cost of finished products in
determined on absorption costing method.
6. Investments are stated at cost.
7. Sales have been shown gross of sales tax but net of excise duty and
recognized at the time of dispatch of goods to the customers.
8. Excise duty is accounted at the stage of removal of goods from
9. Gratuity and other retirement benefits will be accounted & paid on
10. Borrowing Costs :
Borrowing costs, if attributable to qualifying assets (i.e., assets
that necessarily take substantial period of time to get ready for its
intended use or sale) are capitalized, otherwise charged to Profit &
11. Taxes on Income :
Current tax is determined on the basis of estimated taxable income of
the current year in accordance with provisions of the Income Tax Act,
The Company has substantial unabsorbed depreciation and business losses
in Books as well as under Income Tax Act 1961. However, as the
availability of sufficient future taxable income against which such
losse can be set of cannot be stated to be virtually certain, the
deferred tax asset has not been recognized. Deferred tax of earlier
years has also been reserved. Current tax provision made as per
applicable tax rates under IT Act, 1961.
12. Provisions, Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimations in measurements
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent liabilities are not recognized but are disclosed in the
notes. Contingent assets are neither recognized nor disclosed in the
13. Impairment of Assets
An asset is treated as impaired when the carrying cost for assets
exceeds its recoverable value, an impairment loss is charged to the
Profit & Loss account in the year in which an asset is identified as
impaired. The impairment loss recognized in prior accounting periods is
reversed if there has been a change in the estimates of recoverable