a) Basis of Accounting & Revenue Recognition
i) The financial statements are prepared under historical cost
convention in accordance with generally accepted accounting principles
and the Accounting Standard issued by the Institute of Chartered
Accountants of India and the provisions of the Companies Act, 1956.
ii) The Company follows the mercantile system of accounting and
recognizes income & expenditure on an accrual basis except those with
b) Presentation and Disclosure of Financial Statements:
For the year ended March 31, 2012 the revised Schedule VI notified
under the Companies Act, 1956, has become applicable to company, for
the preparation and presentation of its Financial Statements. Though
adoption of revises Schedule VI does not impact recognition and
measurement principles followed, it has significant impact on
presentation and disclosures made in the Financial Statements. The
Company has also reclassified the previous year figures in accordance
with the requirements applicable in the current year.
c) Fixed assets:
i) Fixed assets are stated at their original cost less depreciation.
The cost includes expenditure incurred in the acquisition, construction
and/or installation net of Cenvat and Service tax Cost includes all
expenses and interest attributable to the project till the date of
commissioning/commercial production. The Company identified Components
of plant & machinery which are not serviceable and valued as per the
certificate of valuer. The difference of the book value & valuation of
valuer were written off.
ii) Depreciation on fixed assets purchases upto 31-03-1991 has been
provided on written- down-value method and depreciation on assets
purchased after 31-03-1991 has been provided on straight-line method at
the rates prescribed by schedule XIV of the Companies (Amendment) Act,
1988. Depreciation in respect of addition and deduction from assets has
been charged on pro-rata basis with reference to the addition or
iii) The Company, at each balance sheet date, assesses whether there is
any indication of impairment of any asset and/or cash generating unit.
If such indication exists, assets are impaired by comparing carrying
amount of each assets and/or cash generating unit to the recoverable
amount being higher of the net selling price or value in use. Value in
use is determined from the present value of the estimated future cash
flows from the continuing use of the assets.
Inventories are valued at the lower of the cost & estimated net
realisable value. Cost of inventories is computed on a FIFO basis.
Finished goods & work in progress include costs of conversion & other
costs incurred in bringing the inventories to their present location &
condition. Proceeds in respect of sale of raw materials/stores are
credited to the respective heads. Obsolete, defective & unserviceable
stocks are duly provided for.
i) Sales of goods are recognised on dispatches to customers, inclusive
of excise duty and sales tax (wherever applicable) and are net of trade
ii) Waste resulting during process is partly sold and partly used in
The Cenvat is being reduced from the value of purchases of Raw
Materials, Packing Materials, Capital Goods and on other purchases.
g) Retirement benefits:
i) Provident Fund: Contribution to Provident Fund is made monthly at
the rate prescribed in the act, to appropriate authority on accrual
basis and charged to revenue.
ii) Gratuity: Gratuity liability is accounted for on the basis of
actuarial valuation by way of contribution to Employees Group Gratuity
Scheme with Kotak Mahindra Old Mutual Life Insurance Ltd.
iii) Leave Encashment: The Company has accounted for the leave
encashment liabilities on accrual basis.
h) Borrowing Cost:
Interest and other costs in connection with the borrowing of the funds
to the extent related/attributed to the acquisition/construction of
qualifying fixed assets are capitalised upto the date when such assets
are ready for its intended use and other borrowing costs are charged to
statement of Profit & Loss.
i) Investments & Investment Income:
Long Term (Non Current) Investments are stated at cost. Dividend income
is accounted for in the year in which it is received.
j) Foreign Currency Transactions:
Transactions denominated in foreign currencies are recorded at the
exchange rates prevailing on the date of the transaction.
At the year end, monetary items denominated in foreign currencies,
other that those covered by forward contracts are converted into rupee
equivalents at the year end exchange rates.
All exchange differences arising on settlement and conversion on
foreign currency transaction are included in the Statement of Profit
and Loss, except in cases where they relate to the acquisition of fixed
assets, in which case they are adjusted in the cost of the
In respect of transactions covered by forward exchange contracts, the
difference between the forward rate and the exchange rate at the date
of transaction is recognised as income or expense over the life of the
contract, except where it relates to fixed assets, in which case it is
adjusted in the cost of the corresponding assets.
k) Provision for Current and Deferred Tax:
Provision for Current Tax is made on the basis of estimated taxable
income for the current accounting period and in accordance with the
provisions as per the Income Tax Act, 1961.
Deferred Tax resulting from timing difference between book and
taxable profit for the year is accounted for using the tax rates and
laws that have been enacted or substantially enacted as on the balance
sheet date. The deferred tax asset is recognized and carried forward
only to the extent that there is a reasonable certainty/virtual
certainty that the assets will be adjusted in future.
1) Amount Due to Micro, Small and Medium Enterprises:
i) Based on the information available with the Company in respect of
MSME (as defined in the Micro, Small and Medium Enterprises Development
Act, 2006) there are no delays in payment of dues to such enterprise
during the year.
ii) The identification of Micro, Small and Medium Enterprises Suppliers
as defined under The Micro, Small and Medium Enterprises Development
Act, 2006 is based on the information available with the management.
As certified by the management, the amounts overdue as on March 31,
2012 to Micro, Small and Medium Enterprises on account of principal
amount together with interest, aggregate to Rs. Nil (P. Y. Nil).
m) Provisions, Contingent Liabilities and Contingent Assets:
Provisions involving a substantial degree of estimation in measurement
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
financial statements by way of Notes. Contingent Assets are neither
recognized nor disclosed in the financial statements.
n) Impairment of Assets:
The carrying amounts of assets are reviewed at each Balance Sheet date.
If there is any indication of impairment based on internal/external
factors, i.e. when the carrying amount of the asset exceeds the
recoverable amount, an impairment loss is charged to the statement of
Profit and Loss when an asset is identified as impaired. An impairment
loss recognized in prior accounting period if any is reversed or
reduced if there has been a favorable change in the estimate of the