a. change in accounting Policy
Presentation and Disclosure of financial Statements
During the year ended the 31st March, 2012, the revised Schedule VI
notified under the Companies Act 1956, has become applicable to the
Company, for preparation and presentation of its financial statements.
The adoption of revised Schedule VI does not impact recognition and
measurement principles followed for preparation of these financial
statements. However, it has significant impact on presentation and
disclosures made in the financial statements. The Company has also
reclassified the previous year figures in accordance with the
requirements applicable in the current year.
b. use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
period. Although these estimates are based upon management''s best
knowledge of current events and actions, actual results could differ
from these estimates. Difference between the actual results and
estimates are recognized in the period in which the results are known /
c. Revenue Recognition
i) Income is accounted for on accrual basis in accordance with
Accounting Standard (AS) -9 - Revenue Recognition”.
ii) Sale is recognised on dispatch to customer.
iii) Insurance and other claims are recognised in accounts on lodgment
to the extent these are measurable with reasonable certainty of
acceptance. Excess/shortfall is adjusted in the year of receipt.
Inventories are valued at lower of cost, computed on a weighted average
basis and estimated net realisable value, after providing for cost of
obsolescence and other anticipated losses, wherever considered
necessary. Finished goods and work-in-progress include costs of
conversion and other costs in bringing the inventories to their present
location and condition.
Long term investments are stated at cost. Provision for diminution in
the value of long-term investments is made only if such a decline is
other than temporary in the opinion of the management. The current
investments are stated at lower of cost or quoted / fair value computed
f. fixed & intangible assets
i) Fixed assets are stated at historical cost less provision for
impairment losses, if any, depreciation and amortization.
ii) Borrowing costs eligible for capitalisation incurred, in respect of
acquisition / construction of a qualifying asset, till the asset is
substantially ready for use are capitalised as part of the cost of that
iii) Pre-operative, trial run and incidental expenses relating to the
projects are carried forward to be capitalised and apportioned to
various assets on commissioning of the project.
iv) Intangible assets are recognised on the basis of recognition
criteria as set out in Accounting Standard (AS) -26 – Intangible
g. Depreciation & amortisation
Depreciation & Amortisation for the year has been accounted on the
i) Plant & machinery, building, furniture & office equipment on
straight line method at the rates specified in Schedule XIV to the
Companies Act, 1956 (Also refer note no. 2.7.6 of this Schedule-Notes
ii) Vehicles on written down value method at the rates specified in
Schedule XIV to the Companies Act, 1956.
iii) Leasehold land is amortised over the period of lease.
iv) Free hold land and live stock are not depreciated.
v) Assets costing upto Rs. 5,000 are fully depreciated in the year of
vi) Software costs are amortised on straight line method, at the rate
applicable for Computers specified in Schedule XIV to the Companies
Act, 1956, which is a fair representation of the period of time over
which the asset is expected to be used.
vii) In the case of assets where an impairment loss is recognized, the
revised carrying amount is depreciated over the remaining estimated
h. impairment of assets
Assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset''s
carrying amount exceeds its recoverable amount being the higher of the
asset''s net selling price and its value in use. Value in use is based
on the present value of the estimated future cash flows relating to the
asset. For the purposes of assessing impairment, assets are grouped at
the lowest levels for which there are separately identifiable cash
flows (i.e. cash generating units).
Previously recognised impairment losses are reversed where the
recoverable amount increases because of a favourable change in the
estimates used to determine the recoverable amount since the last
impairment was recognised. A reversal of an asset''s impairment loss is
limited to its carrying amount that would have been determined (net of
depreciation or amortization), had no impairment loss been recognised
in prior years.
i. foreign currency transactions
Foreign exchange transactions are recorded at the rates of exchange
prevailing on the dates of the respective transactions. Exchange
differences arising on foreign exchange transactions settled during the
period are recognised in the Statement of Profit and Loss of the
Monetary assets and liabilities denominated in foreign currencies,
which are outstanding as at the year end are translated at exchange
rates prevailing on the last working day of the accounting year. The
resultant exchange differences are recognized in the Statement of
Profit & Loss.
Forward contracts are entered into, to hedge the foreign currency risk
of the underlying outstanding at the balance sheet date as well as
future transactions in respect of which either firm commitments have
been made or which are highly probable forecast transactions. Any
profit or loss arising on cancellation or renewal of forward exchange
contract is recognized as income or as expense for the period.
In relation to the forward contracts entered into, to hedge the foreign
currency risk of the underlying outstanding at the balance sheet date,
the exchange difference is calculated and recorded in accordance with
AS-11. The exchange difference on such a forward exchange contract is
calculated as the difference between the foreign currency amount of the
contract translated at the exchange rate at the reporting date or the
settlement date where the transaction is settled during the reporting
period, and the corresponding foreign currency amount translated at the
later of the date of inception of the forward exchange contract and the
last reporting date. Such exchange differences are recognised in the
Statement of Profit and Loss in the reporting period in which the
exchange rates change.
Derivative financial instruments not covered by AS-11, relating to a
firm commitment or a highly probable forecast transaction, which
qualify for hedge accounting and where Company has met all the
conditions of AS-30, are fair valued at balance sheet date and
resultant exchange gain / loss accounted for in the balance sheet as
per provisions of AS-30. This gain / loss would be recorded in
Statement of Profit and Loss when the underlying transactions affect
earnings. Other derivative instruments that relate to a firm commitment
or a highly probable forecast transaction and that do not qualify for
hedge accounting are recorded at fair value at the reporting date and
the resultant exchange gain / loss credited / debited to Statement of
Profit and Loss for the period.
j. government grants
Government grants, where reasonable certainty exists that the ultimate
collection will be made, are recognized as follows:
i) Grants of the nature of promoter''s contribution are credited to
ii) Grants related to specific depreciable fixed assets are deducted
from gross values of the related fixed assets in arriving at their book
iii) Grants related to revenue are recognised on a systematic basis in
the Statement of Profit and Loss, either as income or deducted from
related expenses, over the periods necessary to match them with their
k. Miscellaneous expenditure
Share issue expenses are amortised over a period of five years or
earlier on annual appraisal.
l. employee Benefits
The Company''s employee benefits primarily cover provident fund,
superannuation, gratuity and compensated absences.
Provident fund and Superannuation fund are defined contribution schemes
and the Company has no further obligation beyond the contributions made
to the fund. Contributions are charged to Statement of Profit and Loss
in the year in which they accrue.
Gratuity liability is a defined benefit obligation and is recorded
based on actuarial valuation made at the end of the year. The gratuity
liability and net periodic gratuity cost is actuarially determined
after considering discount rates, expected long term return on plan
assets and increase in compensation levels. All actuarial gains and
losses are immediately recorded to the profit and loss account and are
The undiscounted amount of short-term employee benefits expected to be
paid in exchange for the services rendered by employees is recognised
during the period when the employee renders the service. Accumulating
compensated absences are provided for based on actuarial valuation.
m. tax on income
i) Current corporate tax is provided on the results for the year after
considering applicable tax rates and laws.
ii) Deferred tax is provided on timing differences between tax and
accounting treatments that originate in one period and are expected to
be reversed or settled in subsequent periods. Deferred tax assets and
liabilities are measured using the enacted / substantively enacted tax
rates and laws for continuing operations.
Deferred tax assets in the event of unabsorbed depreciation and carry
forward losses under tax laws, that exceed the deferred tax liability
are recognized only where there is virtual certainty of realization.
Deferred tax assets on other accounts are recognized only to the extent
there is reasonable certainty of realization.
The carrying amount of deferred tax assets is reviewed at each balance
sheet date to reassess realization.
n. Provisions and contingent liabilities
Provisions are recognized for present obligations, of uncertain timing
or amount, arising as a result of a past event where a reliable
estimate can be made and it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation.
Where it is not probable that an outflow of resources embodying
economic benefits will be required or the amount cannot be estimated
reliably, the obligation is disclosed as a contingent liability unless
the possibility of outflow of resources embodying economic benefits is
Possible obligations, whose existence will only be confirmed by the
occurrence or non-occurrence of one or more uncertain future events,
are also disclosed as contingent liabilities unless the possibility of
outflow of resources embodying economic benefits is remote.
o. earnings Per Share
Basic earnings per share is computed by dividing the net profit after
tax for the period attributable to equity shareholders (after deducting
preference dividends and attributable taxes) by the weighted average
number of equity shares outstanding during the period. The weighted
average number of equity shares outstanding during the period is
adjusted for events such as bonus issue, bonus element in a rights
issue, share split and reverse share split (consolidation of shares)
that have changed the number of equity shares outstanding without a
corresponding change in resources.
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.
p. cash and cash equivalents
Cash and cash equivalents comprise cash and cash on deposit with banks
and corporations. The Company considers all highly liquid investments
with a remaining maturity at the date of purchase of three months or
less and that are readily convertible to known amounts of cash to be