1.1 Basis of preparation of financial statement
I) The financial statements are prepared under historical cost
convention, on a going concern basis and in accordance with the
applicable Accounting Standard as specified in the Companies
(Accounting Standards) Rules, 2006 (the Rules) and the relevant
provisions of the Companies Act, 1956, to the extent applicable.
ii) All expenses and income to the extent ascertainable with reasonable
certainty are accounted for an accrual basis.
iii) All assets and liabilities have been classified as current or
non-current as per the Company''s normal operating cycle and other
criteria set out in the revised schedule VI to the Companies Act,
1956.Based on the nature of products and the time between the
acquisition of assets for processing and their realisation in cash and
cash equivalents, the Company has ascertained its operating cycle
forthe purpose of current-noncurrent classification of assets and
1.2 Use of estimates
The preparation of financial statements is in conformity with Generally
Accepted Accounting principles (GAAP), which 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 recognised
1.3 Revenue Recognition!
Sales are recognised when goods are supplied to customers and recorded
net of sales tax / VAT.and sales return but includes excise duty.
Export incentives under the Duty Entitlement Pass Book Scheme are
accounted for in the year of export.
Interest income is recognised on a time proportion basis
1.4 Fixed assets.
Tangible Assets : Fixed Asset are stated at cost including taxes,
freight and other incidental expenses incurred in relation to
acquisition & installation of the same, net of modvat.
Intangible Assets : The company capitalizes software where it is
reasonably estimated that the software has an enduring useful life.
The depreciation is provided on fixed assets on straight-line method at
the rates specified in the Schedule XIV of the Companies Act, 1956 on
pro-rata basis for additions/deductions.
Long term investments are stated at cost. Provision for diminution in
the value of long term investments is made only if such a decline is
other than temporary in the opinion of the management.
a. Raw materials, Stores & Spares, and Packing Materials are valued at
lower of cost or net realizable value under the FIFO method.
b. Stocks in Process are valued at lower of cost or net realizable
value under the FIFO method. The cost is arrived at on full absorption
basis as per Accounting Standard AS 2 -Valuation of inventories.
c. Finished Goods are valued at lower of cost or net realizable value,
under the FIFO method. The cost is arrived at on full absorption basis
as per Accounting Standard AS 2 - Valuation of inventories.
1.8 Retirement benefit and leave wages
a. Company''s contribution to Provident Fund, Pension Scheme &
Employees'' State Insurance Corporation Funds v are charged to the
Profit & Loss Account on an accrual basis.
b. Gratuity benefit payable at the time of retirement is charged to
Profit & Loss Account on the basis of valuation certified by the
management. The company does not have any gratuity fund whether
internal or maintained by an outside agency.
c. Provision for accrued leave encashment is made on accrual basis and
charged to Profit & Loss Account on the basis of valuation certified by
1.9 Foreign currency transactions
Foreign Currency Loan , Current Asset and Current Liabilities
outstanding at the close of financial year are revalued at the
contracted and/ or appropriate exchange rates at the close of the year.
The gain or loss due to decrease/increase in rupee liability on account
of fluctuations in the rate of exchange is adjusted to the cost of
assets if it relates to acquisition of assets, and is charged to Profit
& Loss Account in other cases.
a. Income tax expense comprises current tax and deferred tax charge or
credit (reflecting the tax effects of timing differences between
accounting income and taxable income for the year).
b. Provision for income tax is made on the basis of estimated taxable
income for the current accounting period in accordance with the Income
Tax Act, 19 61.
c. The deferred tax charge or credit and the corresponding deferred
tax liabilities or assets are recognised using the tax rates that have
been enacted or substantively enacted by the balance sheet date.
d. Deferred tax assets are recognised only to the extent that there is
virtual certainty that the assets can be realised in future. However,
where there is un-absorbed depreciation or a carry-forward loss under
taxation laws, deferred tax assets are recognised only if there is a
virtual certainty of realisation of such assets. Deferred tax assets
are reviewed at each balance sheet date and written down or up to
reflect the amount that is reasonably / virtually certain to be
e. Tax credit is recognised in respect of Minimum Alternate Tax (MAT)
as per the provisions of Section 115JAA of the Income tax Act, 1961
based on convincing evidence that the Company will pay normal income
tax within the statutory time frame and is reviewed at each balance
1.11 Borrowing Costs.
General and specific Borrowing costs (including exchange differences)
directly attributable to the acquisition, construction and production
of a qualifying asset are capitalized as paert of the cost of such
asset up to date when such asset is ready for its intended use. Other
borrowing costs are charged to the Profit & Loss Account.
Lease rentals in respect of operating leases are charged to Profit &
Loss Account as an expense.
1.13 Impairment of Asset
The carrying amount of assets is reviewed at each Balance Sheet date
for indication of any impairment based on internal / external factors.
An asset is treated as impaired when the carrying cost of an asset
exceeds its recoverable value and impairment loss is charged to the
Profit & Loss account. The impairment of loss recognized in the prior
accounting period is reversed if there has been a change in estimates
of recoverable amount.
1.14 Provisions, Contingent Liabilities and ContingentAssets
a. Provisions in respect of present obligations arising out of past
events are made in the accounts when reliable estimates can be made of
the amount of the obligation.
b. Contingent liabilities are disclosed by way of note to financial
statements after careful evaluation by the management of the facts and
legal aspects of the matter involved.
c. Contingent Assets are neither recognised nor disclosed in the