A. Basis of Accounting
The financial statements of the company have been prepared using the
historical cost convention in accordance with Generally Accepted
Accounting Principles in India (Indian GAAP) to comply with the
Accounting Standards notified under Section 211(3C) of the Companies
Act, 1956 and relevant provisions of the Companies Act, 1956.
The Company follows the mercantile system of accounting and recognizes
significant items of income and expenditure on accrual basis. Wherever
it is not possible to determine the quantum of accrual with reasonable
certainty, these continue to be accounted for on settlement basis.
B. Use of Estimates
The preparation of financial statements in conformity with the
generally accepted accounting principles requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities and the disclosures relating to contingent assets and
liabilities as on the date of financial statements and the reported
amount of revenues and expenses during the reporting period. Management
believes that the estimates used in the preparation of financial
statements are prudent and reasonable. Actual results could differ from
Inventories are valued at lower of cost and net realisable value. Cost
includes cost of purchase, cost of conversion, and other incurred in
bringing the inventories to their present location and condition.
The method of determination of cost of various categories of inventory
are as follows :
Raw Material : At cost
Consumable Stores : At cost
Finished Goods : At estimated cost or market value whichever is
Goods in process : At estimated cost
Excise duty on goods manufactured and lying in factory premises are
accounted as and then goods are dispatched.
D. Fixed Assets and depreciation
Fixed assets are recorded at cost less accumulated depreciation. The
company capitalizes all cost relating to acquisition and installation
of fixed assets.
Fixed assets are depreciated pro rata to the period of use, based on
written down value method at the rates prescribed under schedule XIV of
companies act, 1956.
E. Revenue Recognition
Sale of finished goods is recognized on accrual basis. Sales are
accounted net of excise duty, returns, sales tax and freight.
Interest income is recognized using time proportion method.
Investments that are readily realizable and are intended to be held for
not more than one year from the date, on which such investments are
made, are classified as current investments. All other investments are
classified as long term investments. Current investments are stated at
lower of cost and fair value. Long term investments are stated at cost
A. Current tax is determined on the profit for the year in accordance
with provision of the income tax act, 1961.
Provisions involving 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 outflow of resources.