1. Use of Estimates:
The presentation of the Financial Statements, in conformity with the
Generally Accepted Accounting policies, required the managements to
make estimated and assumption that affect the reported amount of Assets
and Liabilities, Revenues and Expenses and disclosed of contingent
liabilities. Such estimation and assumption are based on management''s
evaluation of relevant facts and circumstances as on date of financial
statements. Difference between the actual results and estimates are
recognized in the period in which the results are knows/ materialized.
2. Revenue recognition
Sales are stated net of rebate and trade discount and excludes Central
Sales Tax and State Value Added Tax. With regard to sale of products,
income is reported when practically all risks and rights connected with
the ownership have been transferred to the buyers. This usually occurs
upon dispatch, after the price has been determined.
Dividend on Financial Instruments are recognised as and when realised.
Interest on deposits is recognised on accrual basis.
3. Fixed Assets
Tangible Fixed Assets acquired by the Company are reported at
acquisition value, with deductions for accumulated depreciation and
impairment losses, if any. The acquisition value includes the purchase
price (excluding refundable taxes), and expenses directly attributable
to assets to bring it to the factory and in the working condition for
its intended use. Where the construction or development of any such
asset requiring a substantial period of time to set up for its intended
use, is funded by borrowings if any, the corresponding borrowing cost
are capitalised up to the date when the asset is ready for its intended
use. - Assets related to R&D are capitalized as such. ''
Intangible Assets are reported at acquisition value with deductions for
accumulated amortisation and any impairment losses.
Capital Work in Progress
Capital work in Progress includes advances for pre-production expenses
and expenditure on project under implementation including interest and
other expenses to be capitalized.
Depreciation has been provided on Fixed Assets on Straight Line Method
as per the rates specified in Schedule XIV of the Companies Act, 1956
as amended from time to time on pro rata basis with reference to the
actual date of Purchase/Installation, on basis of efflux of time.
Amortisation of intangible assets takes place on a Straight Line basis
over the assets anticipated useful life. The useful life is determined
based on the period of the underline contract and the period of time
over which the intangible assets is expected to be used.
The carrying value of assets of the Company''s cash generating units are
reviewed for impairment annually or more often if there is an
indication of decline in value. If any indication of such impairment
exists, the recoverable amounts of those assets are estimated and
impairment loss is recognised, if the carrying amount of those assets
exceeds their recoverable amount. The recoverable amount is the greater
of the net selling price and their value in use. Value in use is
arrived at by discounting the estimated future cash flows to their
present value based on appropriate discount factor. Net Selling price
is the estimated selling price in the ordinary course of business, less
estimated cost of completion and to make the sales.
6. Excise Duty
The Excise Duty payable on finished goods is accounted for on the
clearance of the goods from factory.
7. Employee Benefits
(a) Short Term
Short Term employee benefits are recognised as an expense at the
undiscounted amount expected to be paid over the period of services
rendered by the employees to the company.
(b) Long Term
The Company has both defined contribution and defined benefit plans, of
which some have assets in approved funds. These plans are financed by
the Company in the case of defined contribution plans.
(c) Defined Contribution Plans
These are plans in which the Company pays pre-defined amounts to
separate funds and does not have any legal or informal obligation to
pay additional sums. These comprise of contributions to Employees
Provident Fund. The Company''s payments to the defined contribution
plans are reported as expenses during the period in which the employee
perform the services that the payment covers.
(d) Defined Benefit Plans
Expenses for defined benefit gratuity payment plans are calculated as
at the balance sheet date by independent actuaries in the manner that
distributes expenses over the employees working life. These commitments
are valued at the present value of the expected future payments, with
consideration for calculated future salary increases, using a
discounted rate '' corresponding to the interest rate estimated by the
actuary having regard to the interest rate on Government Bonds with a
remaining term i.e. almost equivalent to the average balance working
period of employees.
(e) Other Employee Benefit .
Compensated absences which accrue to employees which can be carried to
future periods but are expected to be encashed or availed in twelve
months immediately following the year end are reported as expenses
during the year in which the employees perform the services that the
benefit covers and the liabilities are reported at the undiscounted
amount of the benefits after deducting amounts already paid.
Investments are classified as Long Term & Current Investments. Long
Term Investments are valued at cost less provision for diminution other
than temporary, in value, if any. Current Investments are valued at
cost or fair value whichever is lower.
9. Foreign Currency Transactions
Transactions in foreign currencies are translated to the reporting
currency based on the exchange rate on the date of the transaction.
Exchange differences arising on settlement thereof during the year are
recognised as income or expenses in the Statement of Profit and Loss.
Cash and bank balances, receivables and liabilities (monetary items) in
foreign currencies as at the year end are translated at closing-date
rates, and unrealised translation differences are included in the
Statement of Profit and Loss.
Investments in foreign currency (non-monetary items) are reported using
the exchange rate at the date of the transaction.
10. Borrowing Cost
Borrowing costs are recognised in the period to which they relate,
regardless of how the funds have been utilised, except where it relates
to the financing of construction or development of assets requiring a
substantial period of time to prepare for their intended future use.
Interest on borrowings if any is capitalized upto the date when the
asset is ready for its intended use. The amount of interest capitalised
for the period is determined by applying the interest rate applicable
to appropriate borrowings.
11. Valuation Of Inventories
Inventories of Raw Materials and Stores are valued at cost or net
realisable value whichever is lower after considering the credit of VAT
Inventories of Work in Process are valued at lower of cost or net
Inventories of Finished Goods are valued at cost or net realisable
value whichever is lower. Cost of Finished Goods and Work- in-Process
are determined using the absorption costing principles Costs include
the cost of materials consumed, labour and a systematic allocation of
variable and fixed production overheads, Excise duties at the
applicable rates are also included in the cost of Finished Goods.
12. Earning per Share:
Basic earning per share is calculated by dividing the net profit after
tax for the year attributable to Equity Shareholders of the Company by
the weighted average number of Equity Shares outstanding during the
year. Diluted earning per Share is calculated by dividing net profit
attributable to equity Shareholders (after adjustment for diluted
earnings) by average number of weighted equity shares outstanding
during the year.
13. Income Tax
Provision for Current Tax is made as per the provisions of the Income
Tax Act, 1961.
Deferred Tax resulting from timing differences that are temporary in
nature between accounting and taxable profit is accounted for, using
the tax rates and laws that have been enacted as on the Balance Sheet
date. The deferred tax asset is recognised and carried forward only to
the extent that there is a reasonable or virtual certainty, as the case
may be, that the assetwill be realised in future.
14. Provisions, contingent liabilities and contingent assets
A provision is recognised when the Company has a present legal or
constructive obligation as a result of past event and it is probable
that an outflow of resources will be required to settle the obligation,
in respect ofwhich reliable estimate can b''e made. Provisions
(excluding long term benefits) are not discounted to its present value
and are determined based on best estimate required to settle the
obligation at the balance sheet date. These are reviewed at each
balance sheet date and adjusted to reflect the current best estimates.
Contingent liabilities are not recognised but are disclosed in the
notes to the Financial Statements. A contingent asset is neither
recognised nor disclosed.
15. Cash Flow Statement:
The Cash Flow Statement is prepared by the indirect method set
out in Accounting Standard 3 on Cash Flow Statements and presents
the cash flows by operating, investing and financing activities of the
Company. Cash and Cash equivalents presented in the Cash Flow Statement
consist of cash on hand and Short term highly liquid financial
instruments which are readily convertible into cash and have original
maturities of three months or less from date of purchase.