1.1. Basis of Preparation of Financial Statements:
The financial statements are prepared in accordance with Indian
Generally Accepted Accounting Principles (GAAP) under the historical
cost convention on the accrual basis. GAAP comprises mandatory
accounting standards as specified in the Companies (Accounting
Standards) Rules, 2006, the provisions of the Companies Act, 1956 and
guidelines issued by the Securities and Exchange Board of India.
Accounting policies have been consistently applied except where a newly
issued accounting standard is initially adopted or a revision to an
existing accounting standard requires a change in the accounting policy
hitherto in use.
1.2. Use of estimates:
The presentation of financial statements in conformity with the
generally accepted accounting principles requires estimates and
assumptions to be made that may affect the reported amount of assets
and liabilities and disclosures relating to the contingent liabilities
as at the date of the financial statements and the reported amount of
revenues and expenses during the reporting period. Actual results could
differ from those estimates. Any difference between the actual results
and estimates are recognised in the period in which the results are
known / materialize. Any revision to accounting estimates is recognised
prospectively in the current and the future periods.
1.3. Fixed Assets:
Fixed assets are stated at cost less depreciation or amortisation and
impairment, if any. The cost of fixed assets includes borrowing cost
attributable to acquisition of fixed assets, if any, up to the date
when the asset is ready for its intended use and other incidental
expenses incurred up to that date. Capital work-in-progress is carried
at cost comprising direct cost, borrowing cost (if applicable) and
related incidental expenses.
a) Depreciation is provided on written down value method at the rates
prescribed under Schedule XIV of the Companies Act, 1956 for all assets
except those given below and such rates not being lower than the rates
prescribed by the said Schedule XIV Assets costing Rs 5,000 or less are
fully depreciated in the year of purchase.
b) Assets lying at retail stores are depreciated over a period of five
years on straight-line basis.
c) Software is amortised over a period of three years on straight-line
d) Mobile handsets (acquired on or after April 1, 2010) are amortised
over a period of three years on straight-line basis.
e) Leasehold Lands are amortised over the period of lease or useful
life whichever is lower
Impairment loss is recognised whenever the carrying amount of the asset
is in excess of its recoverable amount and the same is recognised as an
expense in the Statement of Profit and Loss and the carrying amount of
the asset is reduced to its recoverable amount. The recoverable amount
is the greater of the assets net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value at the weighted average cost of capital.
Long-term investments are stated at cost less diminution (other than
temporary) in value. Current investments are stated at cost or fair
value (net asset value in case of units of mutual fund); whichever is
lower, computed category wise for related investments. Investments in
liquid mutual funds are classified as cash and cash equivalents.
Investment transactions are accounted for on a trade date basis. In
determining the holding cost of investments and the gain or loss on
sale of investments, the ''Weighted Average'' method is followed.
a) Raw material, packing material and accessories, stores, chemicals
and consumables are valued at lower of cost or net realisable value.
b) Work-in-progress, finished goods and traded goods are valued at
lower of cost or estimated net realisable value. The excise duty in
respect of inventory of finished goods is included in the cost of the
c) Cost is ascertained on specific identification method and includes
appropriate production overheads in case of work-in-progress and
1.8. Revenue Recognition:
a) Sales are recognised when significant risks and rewards of ownership
of the goods have passed to the buyer that coincides with delivery and
are recorded net of trade discount, rebates and sales tax. Sales do not
include inter-divisional transfers.
b) Service Income is recognised upon rendering of services.
c) Licensing revenue is recognised in accordance with the terms of the
d) Power generation income is recognised on the basis of electrical
units generated in excess of captive consumption and recognised at
prescribed rate as per agreement of sale of electricity by the Company.
e) Interest income is recognised on time proportion basis taking into
account the amount outstanding and rate applicable.
f) Export Incentive/benefits
i. Export incentives under the Duty Drawback Scheme are recognised on
accrual basis in the year of export.
ii. Export incentives benefit in respect of duty free import of
capital goods is recognised as income only on certainty of utilising
the benefits by import of capital goods.
1.9. Foreign Currency Transactions:
Transactions in foreign currency are recorded at the exchange rate
prevailing on the date of transaction. Exchange differences arising on
foreign exchange transactions settled during the year are recognised in
the statement of profit and loss of the year. Foreign currency monetary
assets and liabilities are translated at the exchange rate prevailing
as on the balance sheet date and the resulting exchange differences are
recognised in the Statement of Profit and Loss. Non Monetary items are
carried at historical cost using exchange rate on the date of
1.10. Employees'' Benefits:
Employees'' benefits are dealt with in the following manner:
a) Provident Fund is defined contribution plan and charged to Statement
of Profit and Loss on accrual basis with corresponding contribution to
b) Gratuity is defined benefit plan and payment for present liability
of future payment of gratuity is made to an approved gratuity fund,
which fully covers the said liability under Cash Accumulation Policy of
Life Insurance Corporation of India (LIC). The additional liability
arising out of the difference between the actuarial valuation and the
fund balance with the LIC, if any, is accrued at the year-end. The
gratuity liability is determined on basis of actuarial valuation as at
year end. The actuarial valuation method used for measuring the
liability is the projected unit credit method.
c) The leave entitlements defined benefits are short term benefits and
leave liability towards such short term benefits are recognised/
measured on un-discounted basis.
d) As per the Company''s policy, employees who have completed specified
years of service are eligible for death benefit plan wherein defined
amount would be paid to the survivors of the employee on the death of
the employee whilst in service with the Company. To fulfill the
Company''s obligation for the abovementioned plan, the Company has taken
group term policy from an insurance company. The annual premium for
insurance cover is recognised in Statement of Profit and Loss.
1.11. Operating Lease:
Lease arrangements where risks and rewards incidental to ownership of
an asset substantially vests with the lessor are classified as
Rental income and expense on assets given or obtained under operating
lease arrangements are recognised on a straight-line basis / as per
lease arrangement over the term of relevant lease.
1.12. Taxes on Income:
Tax expenses for the year comprises of current tax, deferred tax and
adjustments of taxes for previous years. Current tax provision has been
determined based on reliefs and deductions available under the Income
Tax Act, 1961. Deferred tax resulting from timing differences between
taxable and accounting income is accounted for using the tax rate and
laws enacted or substantively enacted as on the balance sheet date. The
Deferred tax asset is recognised and carried forward only to the extent
that there is reasonable certainty that the asset will be realised in
1.13. Cash and Cash Equivalents:
Cash and cash equivalents comprise cash and deposits with banks. The
Company considers all highly liquid investments/mutual funds that are
readily convertible to known amounts of cash to be cash equivalents.
1.14. Cash Flow Statement:
Cash flows are reported using the indirect method, where by net profit
before tax is adjusted for the effects of transactions of a non-cash
nature, any deferrals or accruals of past or future operating cash
receipts or payments and item of income or expenses associated with
investing or financing cash flows. The cash flows from operating,
investing and financing activities are segregated.
1.15. Provisions and Contingent Liabilities:
Provisions are recognised when the Company has a legal and constructive
obligation as a result of a past event, for which it is probable that a
cash outflow will be required and a reliable estimate can be made of
the amount of the obligation. The provisions are reviewed and adjusted
to reflect the current best estimate.
Contingent liability is disclosed when there is (a) possible obligation
or (b) a present obligation, which is not recognised since it is not
probable that outflow of resources, would be required to settle the
obligation. Where there is a possible obligation or a present
obligation that the likelihood of outflow of resources is remote, no
provision or disclosure is made
1.16. Earnings per Share:
Basic earnings per share are calculated by dividing the net profit
(after tax) for the year attributable to the equity shareholders by the
weighted average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net
profits (after tax) for the year attributable to the equity
shareholders and the weighted average number of shares outstanding
during the year are adjusted for the effect of all dilutive potential
1.17. Borrowing costs
Borrowing costs attributable to qualifying assets are capitalised upto
the date when such assets are ready for their intended use. Other
borrowing costs are recognised as expense in the period in which they