1.1 Basis of accounting and preparation of financial statements
The financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards notified under
the Companies (Accounting Standards) Rules, 2006 (as amended) and the
relevant provisions of the Companies Act, 1956. The financial
statements have been prepared on accrual basis under the historical
cost convention. The accounting policies adopted in the preparation of
the financial statements are consistent with those followed in the
previous year unless otherwise stated.
1.2 Use of estimates
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognised in the periods in which
the results are known / materialise.
Inventories of components are valued at cost or realisable value
whichever is less. Work in Progress is valued at cost of materials and
1.4 Cash and cash equivalents
Cash comprises cash on hand and demand deposits with banks. Cash
equivalents are short-term balances (with an original maturity of three
months or less from the date of acquisition), highly liquid investments
that are readily convertible into known amounts of cash and which are
subject to insignificant risk of changes in value.
1.5 Cash flow statement
Cash flows are reported using the indirect method, whereby profit /
(loss) before extraordinary items and tax is adjusted for the effects
of transactions of non-cash nature and any deferrals or accruals of
past or future cash receipts or payments. The cash flows from
operating, investing and financing activities of the Company are
segregated based on the available information.
Depreciation has been provided on the fixed assets on WDV method as per
the rates prescribed in Schedule XIV to the Companies Act, 1956.
1.7 Revenue recognition
Revenue from contracts
Revenue from contracts priced on a time and material basis are
recognised when services are rendered and related costs are incurred.
Revenue from services
Service income is recognised as per the terms of contracts with the
customer, when the related service is performed.
Sale of goods
Revenue from the product sales is exclusive of returns, and applicable
trade discounts but inclusive of duties and taxes collected on the
1.8 Other income
Interest income is accounted on accrual basis.
1.9 Tangible fixed assets
Fixed Assets are valued at original cost including incidental
expenditures, taxes and duties net of CENVAT and VAT credit availed.
Projects under which assets are not ready for their intended use and
other capital work-in-progress are carried at cost, comprising direct
cost, related incidental expenses and attributable interest.
1.10 Foreign currency transactions and translations
Transactions in foreign currencies entered into by the Company and its
integral foreign operations are accounted at the exchange rates
prevailing on the date of the transaction or at rates that closely
approximate the rate at the date of the transaction.
Measurement of foreign currency monetary items at the Balance Sheet
Foreign currency monetary items of the Company and its net investment
in non-integral foreign operations outstanding at the Balance Sheet
date are restated at the year-end rates.
Treatment of exchange differences
Exchange differences arising on settlement / restatement of short-term
foreign currency monetary assets and liabilities of the Company are
recognised as income or expense in the Statement of Profit and Loss.
Long-term investments in Subsidiary (100% wholly owned Subsidiary) are
carried at cost.
1.12 Employee benefits
Defined contribution plans
In respect of retirement benefits in the form of provident fund, the
contribution payable by the company for a year is charged to the Profit
and Loss account.
Defined benefit plans
Gratuity: Gratuity benefit is applicable to all the permanent and full
time employees of the company. Gratuity paid out is based on last
drawn basic salary and DA at the time of termination or retirement. The
scheme takes into account each completed year of service or part there
of in excess of 6 months. Annual Contribution to the employee''s
Gratuity fund, Established with LIC of India(LIC) are determined based
on an actuarial valuation made by the LIC as at the year end.
Short-term employee benefits
The Company does not have any scheme for Leave encashment in place.
1.13 Segment reporting
Since the Company has no Reportable segment to report, Segment
Reporting under Accounting Standard - 17 Issued by Institute of
Chartered Accountants of India (ICAI) is not applicable.
1.14 Earnings per share
Basic earnings per share is computed by dividing the profit / (loss)
after tax (including the post tax effect of extraordinary items, if
any) by the weighted average number of equity shares outstanding during
the year. Diluted earnings per share is computed by dividing the
profit / (loss) after tax (including the post tax effect of
extraordinary items, if any) as adjusted for dividend, interest and
other charges to expense or income relating to the dilutive potential
equity shares, by the weighted average number of equity shares
considered for deriving basic earnings per share and the weighted
average number of equity shares which could have been issued on the
conversion of all dilutive potential equity shares.
1.15 Taxes on income
Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the provisions of the Income Tax
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which
gives future economic benefits in the form of adjustment to future
income tax liability, is considered as an asset if there is convincing
evidence that the Company will pay normal income tax. Accordingly, MAT
is recognised as an asset in the Balance Sheet when it is probable that
future economic benefit associated with it will flow to the Company.
Deferred tax is recognised on timing differences, being the differences
between the taxable income and the accounting income that originate in
one period and are capable of reversal in one or more subsequent
periods. Deferred tax is measured using the tax rates and the tax laws
enacted or substantially enacted as at the reporting date. Deferred tax
liabilities are recognised for all timing differences. Deferred tax
assets in respect of unabsorbed depreciation and carry forward of
losses are recognised only if there is virtual certainty that there
will be sufficient future taxable income available to realise such
assets. Deferred tax assets are recognised for timing differences of
other items only to the extent that reasonable certainty exists that
sufficient future taxable income will be available against which these
can be realised. Deferred tax assets and liabilities are offset if such
items relate to taxes on income levied by the same governing tax laws
and the Company has a legally enforceable right for such set off.
Deferred tax assets are reviewed at each Balance Sheet date for their
1.16 Provisions and contingencies
A provision is recognised when the Company has a present obligation as
a result of past events and it is probable that an outflow of resources
will be required to settle the obligation in respect of which a
reliable estimate can be made. Provisions (excluding retirement
benefits) are not discounted to their present value and are determined
based on the 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 disclosed in the Notes.