1 (a). Basis of Preparation: -
The accounts are prepared on accrual basis under the historical cost
convention in accordance with the applicable accounting Standards
issued by the Institute of Chartered Accountants of India referred to
in Section 211(3C) of the companies Act, 1956 and other relevant
provisions of the Companies Act,1956.
(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 as of the date on the financial statements and the reported
amount of revenues and expenses during the reporting period. Difference
between the actual results and estimates are recognized in the year in
which results materialize.
2. Revenue recognition:-
Sales comprise sale of goods, services and export incentives. Revenue
from sale of goods is recognized:- i) When all the significant risk and
rewards of ownership are transferred to the buyer and the company
retains no effective control of the goods transferred to a degree
usually associated with ownership; and ii) No significant uncertainty
exists regarding the amount of the consideration that will be derived
from the sale of goods.
(b) Benefit under Drawback Scheme:
Revenue in respect of drawback benefit is recognized on post export
3. Fixed Assets: -
(a) Fixed assets are stated at cost less accumulated depreciation and
impairment losses. Cost comprises the purchase price and any
attributable cost of bringing the assets to its working condition for
its intended use.
(b) Capital work in progress comprises of outstanding advances paid to
acquire fixed assets and the cost of fixed assets that are not yet
ready for their intended use at the balance-sheet date.
4. Depreciation: -
(a) Depreciation on fixed assets is provided on Written down value
method in accordance with and in the manner specified in schedule XIV
to the Companies Act,1956.
(b) Depreciation on assets costingss5000 or below is charged @100% per
annum on proportionate basis.
Long-term investments are stated at cost. Provision for diminution, if
any, in the value of each long-term investment is made to recognize a
decline, other than of a temporary nature. Current investments are
stated at lower of cost or market value.
6. Borrowing costs
Borrowing cost that is directly attributable to the acquisition or
construction of a qualifying asset is considered as part of the cost of
the asset. All other borrowing costs are treated as period cost and
charged to the profit and loss account in the year in which incurred.
7. Impairment of assets
The Company assesses at each Balance sheet date whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount of the asset. If
such recoverable amount of the asset or the recoverable amount of the
cash-generating unit to which the asset belongs is less than its
carrying amount, the carrying amount is reduced to its recoverable
amount. The reduction is treated as an impairment loss and is
recognized in the profit and loss account.
8. Operating Leases: -
Lease arrangements where the risks and rewards incidental to the
ownership of an asset substantially vest with the lessor, are
recognized as operating lease. Operating lease payments are recognized
as an expense in the profit & loss account on a straight-line basis
over the lease term.
9. Inventories: -
The inventories are valued at cost or net realizable value, whichever
is lower. The cost in respect of the various item of inventory is
computed as under:
- In case of raw material, at weighted average cost.
- In case of work-in-process, at raw material cost plus conversion
cost, depending upon the stage of completion. o In case of finished
goods, at raw material cost plus conversion cost, packing cost and
other overheads incurred to bring the goods to their present location &
condition. o In case of stores & spares, at weighted average cost. o
In case of traded goods, at first-in-first-out basis. o In case of
waste & scrap , at net realizable value.
10. Employee benefits:-
(a) The company''s contribution to Employees Provident Fund is charged
to revenue on accrual basis.
(b) The company has Defined Benefit plans namely Leave Encashment and
Gratuity for all employees, the liability for which is determined on
the basis of an actuarial valuation at the end of the year.
11. Foreign Currency transaction:-
(a) Initial Recognition:
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction.
(c) Exchange Differences:
Exchange differences arising on the settlement of monetary items except
fixed assets or on reporting company''s monetary items at rates
different from those at which they were initially recorded during the
year, or reported in previous financial statements, are recognized as
income or as expense in the year in which they arise. Exchange
differences relating to acquisition of imported fixed assets are
adjusted in the carrying cost of the fixed assets.
12. Accounting for Taxes on Income:-
The accounting treatment followed for taxes on income is to provide for
Current Tax and Deferred Tax. Current tax is the aggregate amount of
income tax determined to be payable in respect of taxable income for a
period. Deferred tax is the tax effect of timing difference between
taxable income & accounting income that originate in one period and are
capable of reversal in one or more subsequent periods.
13. Segment Disclosure: -
Segment Information is prepared in conformity with the accounting
policies adopted for preparing and presenting the Financial Statements
of the enterprise as a whole in line with Accounting Standard - 17.
14. Earning per share: -
Basic earning per share is calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period for the
purpose of calculating diluted earnings per share, the net profit or
loss for the period attributable to equity shareholders and the
weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
15. Provisions, Contingent Liabilities and Contingent Assets: -
(a) Provisions are recognized only when there is 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. These are reviewed at each
Balance Sheet date and adjusted to reflect the current best estimate.
(b) A disclosure for a contingent liability is made when there is a
possible obligation or present obligation that may, but probably will
not, require an outflow of resources.
(c) Contingent Assets are not recognized in the financial statements
since this may result in the recognition of income that may never be