a. 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
b. 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.
Items of inventory are valued at cost or net realizable value,
whichever is lower. Cost is determined on the following basis: Stores,
spares and raw materials - Weighted average '' Process stock and
finished goods - Material cost plus appropriate value of overheads
Trading goods - Weighted average cost Others (land) - At cost on
conversion to stock-in trade
d. Depreciation on tangible fixed assets
Depreciation on fixed assets is provided on the straight-line basis in
accordance with the Companies Act, 1956 at the rates and in the manner
specified in the Schedule XIV of the Act except as stated below: Cost
of leasehold land is written off over the period of lease.
e. Revenue recognition
Revenue including Other Income is recognized when no significant
uncertainty as to determination or realization exists.
f. Export Benefits
Export Benefit available under prevalent scheme is accrued in the year
when the right to receive credit as per the terms of the scheme is
established in respect of exports made and are accounted to the extent
there is no significant uncertainty about the measurability and
ultimate realization / utilization of such benefits.
g. Tangible fixed assets
Fixed assets are recorded at cost of acquisition or construction. They
are stated at historical cost less accumulated depreciation,
amortisation and impairment loss, if any.
h. Foreign currency transactions and translations
Transactions in foreign currency are recorded at the original rates of
exchange in force at the time the transactions are effected. At the
year-end, monetary items denominated in foreign currency and forward
exchange contracts are reported using closing rates of exchange.
Exchange differences arising thereon and on realization/payment of
foreign exchange are accounted, in the relevant year, as income or
In case of forward exchange contracts, or other financial instruments
that are in substance forward exchange contracts, the premium or
discount arising at the inception of the contracts is amortised as
expense or income over the life of the contracts. Gains/ losses on
settlement of transactions arising on cancellation/ renewal of forward
exchange contracts are recognized as income or expense.
Long-term investments (excluding investment properties), are carried
individually at cost less provision for diminution, other than
temporary, in the value of such investments. Current investments are
carried individually, at the lower of cost and fair value. Cost of
investments include acquisition charges such as brokerage, fees and
duties. Investment properties are carried individually at cost less
accumulated depreciation and impairment, if any. Investment properties
are capitalised and depreciated (where applicable) in accordance with
the policy stated for Tangible Fixed Assets. Impairment of investment
property is determined in accordance with the policy stated for
Impairment of Assets.
j. Employee benefits
a. The Company contributes towards Provident Fund, Family Pension Fund
and Superannuation Fund which are defined contribution schemes.
Liability in respect thereof is determined on the basis of contribution
as required under the statute/ rules.
b. Gratuity liability, a defined benefit scheme, and provision for
compensated absences are accrued and provided for on the basis of
actuarial valuations made at the period end.
k. Borrowing costs
Borrowing costs that are attributable to the acquisition, construction
or production of qualifying assets are capitalized as part of the cost
of such assets. A qualifying asset is one that necessarily takes a
substantial period of time to get ready for its intended use. All other
borrowing costs are charged to revenue.
I. Operating Lease
Lease arrangements where the risks and rewards incidental to the
ownership of an asset substantially vest with the lesser are recognized
as Operating Lease. Operating Lease receipts and payments are
recognized as income or expense, as the case may be, in the Statement
of Profit and Loss on a straight-line basis over the lease term.
m. Taxes on income
Tax expenses comprise both current and deferred tax at the applicable
enacted/ substantively enacted rates. Current tax represents the amount
of income tax payable/ recoverable in respect of the taxable income/
loss for the reporting period.
Deferred tax represents the effect of timing differences between
taxable income and accounting income for the reporting period that
originate in one period and are capable of reversal in one or more
subsequent periods. Deferred Tax Assets and Liabilities are measured
using the tax rates and tax laws that have been enacted or are
substantively enacted by the balance sheet date. In the event of
unabsorbed depreciation and carry forward of losses, deferred tax
assets are recognized only to the extent that there is a virtual
certainty supported by convincing evidence that sufficient future
taxable income will be available to realize such assets. In other
situations, deferred tax assets are recognized only to the extent that
there is reasonable certainty that sufficient future taxable income
will be available to realize these assets.
n. Impairment of tangible assets
Impairment loss is provided to the extent the carrying amounf(s) of
assets exceed their recoverable amount(s). Recoverable amount is the
higher of an asset''s net selling price and its value in use. Value in
use is the present value of estimated future cash-flows expected to
arise from the continuing use of the asset and from its disposal at the
end of its useful life. Net selling price is the amount obtainable from
sale of the asset in an arm''s length transaction between knowledgeable,
willing parties, less the costs of disposal.
o. Provisions and contingencies
A provision is recognized when the Company has a legal and constructive
obligation as a result of a past event, for which it is probable that
cash outflow will be required and a reliable estimate can be made of
the amount of the obligation. A contingent liability is disclosed when
the Company has a possible or present obligation where it is not
probable that an outflow of resources will be required to settle it.
Contingent assets are neither recognized nor disclosed the financial