a) Accounting Convention :
i) The Financial statements have been prepared under the historical
cost convention on the accrual basis of accounting and in accordance
with the requirements of Accounting Standards prescribed by the
Companies (Accounting Standards) Rules, 2006 and the provisions of the
Companies Act, 1956, to the extent applicable.
ii) The preparation of financial statements requires the management of
the Company to make certain estimates and assumptions that affect the
reported balances of assets and liabilities and disclosures relating to
the contingent liabilities as at the date of the financial statements
and reported amounts of income and expenditure for the year. Actual
results may differ from those estimates. Any revision to such estimates
is recognised prospectively.
b) Fixed assets and Depreciation
i) Fixed assets are stated at original cost net of tax / duty credits
availed if any, less accumulated depreciation. Cost include
pre-operative expenses and all expenses related to acquisition and
installation of the concerned assets.
ii) Depreciation on Fixed assets is provided on straight line method in
accordance with the rates specified under Schedule XIV of the Companies
Act, 1956. Individual assets costing Rs.5,000/- or less are depreciated
fully in the year of purchase.
Long term investments held by the Company are stated at cost. Provision
for diminution, if any, in the value of long- term investments is made,
if the diminution is other than temporary. Current investments are
stated at lower of cost or net realisable value.
Raw Materials and Stores & Spares are valued at cost on FIFO basis.
Finished goods and Work-in-Progress are valued at lower of the cost
including related overheads or estimated net realisable value.
e) Foreign Currency Transactions
i) Foreign currency transactions are recorded at exchange rates
prevailing on the date of such transaction.
ii) Foreign Currency assets and liabilites at the year end are
realigned at the exchange rate prevailing at the year end and
difference on realignment is recognised in the Statement of Profit &
f) Revenue Recognition:
i) The Company generally follows the mercantile system of accounting
and recognises income and expenditure on an accrual basis except those
with significant uncertainties.
ii) Sale of goods is recognised when the risk and rewards of ownership
are passed on to the customers, which is generally on despatch of
iii) Dividend, interest, export incentives and Other Income are
accounted on accrual basis except those items with significant
g) Taxes on Income
a) Current tax on income for the period is determined on the basis of
taxable income and tax credits computed in accordance with the
provisions of the Income Tax Act, 1961 and based on the expected
outcome of assessment/appeals.
b) Deferred tax is recognised on timing differences between the
accounting income and the taxable income for the year, and quantified
using the tax rates and laws enacted or substantively enacted as on the
Balance Sheet date.
c) Deferred tax assets are recognised and carried forward to the extent
that there is a reasonable certainity that sufficient future income
will be available against which such deferred tax assets can be
h) Retirement Benefits
i) Defined Contribution Plans:
Employee benefits in the form of Employee Provident and Pension Funds
and Employee State Insurance plan are considered as Defined
Contribution Plans and the contributions are charged to the Statement
of Profit & Loss of the year when the contributions to the said funds
ii) Defined Benefit Plans:
Retirement benefits are considered as Defined Benefit Plans and are
provided for on the basis of an actuarial valuation using the projected
unit credit method as at the date of Balance Sheet. Actuarial
gain/losses, if any, are immediately recognised in the Statement of
Profit & Loss as income and expense.
i) Employees stock Options(ESOS) :
In respect of Employees stock Options(ESOS) the excess of market price
on the date of grant over the exercise price is recognised as deferred
compensation cost and amortised over the vesting period.
j) Impairment of Fixed assets:
As at each balance sheet date, the carrying amount of assets is tested
for impairment so as to determine;
i) the provision for impairment loss, if any, required or;
ii) the reversal, if any, required of impairment loss recognised in
Impairment loss is recognised when the carrying amount of an asset
exceeds its recoverable amount.
k) Borrowing Cost:
i) Borrowing costs attributable to the acquisition or construction of
qualifying assets are capitalised as part of such assets. All other
borrowing costs are charged to revenue.
ii) A qualifying asset is an asset that necessarily requires
substantial period of time to get ready for its intended use or sale.
l) Contingent Liabilities:
Contigent liabilities are disclosed by way of Notes to the Accounts.
m) Cash flow statements
Cash flow are reported using the indirect method, whereby net profit
before tax is adjusted for the effects of transaction of a non cash
nature and any deferrals or accruals of past or future cash receipts or
payments. The cash flow comprises regular revenue generating, investing
and financing activities of the Company. Cash and cash equivalents in
the balance sheet comprise of cash at bank and in hand and short term,
highly liquid investments that are readily convertible into known
amounts of cash and which are subject to an insignificant risk of
changes in value.