(A) Basis of preparation
These financial statements have been prepared in accordance with the
generally accepted accounting principles in India under the historical
cost convention on accrual basis. These financial statements have been
prepared to comply in all material aspects with the accounting
standards notified under section 211 (3C)[Companies(Accounting
Standards) Rules,2006,as amended] and the other relevant provisions of
the Companies Act, 1956.
All assets and liabilities have been classified as current or
non-current as per the Company''s normal operating cycle and other
criteria set out in the Schedule VI to the Companies Act, 1956.
(B) Tangible Assets
Tangible Assets are stated at Cost which includes cost of acquisitions,
installaton, direct costs and borrowing cost incurred up to the date of
(i) Depreciation has been provided at the SLM rates as prescribed by
Schedule XIV of the Companies Act, 1956.
(ii) Depreciation has been provided on Triple Shift Basis.
(iii) Depreciation on additions and deletion during the year has been
provided on pro rata basis with reference to the date of addition and
(iv) Land & Site development has not been depreciated.
(D) Foreign Currency Transactions
(i) Cost of imported material is converted to Indian currency at the
rates applied in Bill of Entry for Custom purposes.
(ii) The expenditure in Foreign Currency is accounted at the rates
prevailing on the date of transaction.
(iii) The Export Sales are accounted for at the actual rates prevailing
at the time of transaction.
(iv) Exchange Fluctuation arising on repayment of Long Term Liability
incurred for the purpose of acquiring Fixed Assets is charged to Profit
& Loss Account as per the provisions of AS-11.
(v) Balances of Monetary items in Foreign Currency outstanding at the
close of the year are converted in Indian currency at the appropriate
rates of exchange prevailing on the date of the Balance Sheet.
(vi) Exchange rate difference between the prevailing rate on the date
of transaction and on the date of settlement as also on conversion of
monetary items in Current Assets and Current Liabilities at the end of
the year are recognized as income & expense as the case may be in
Profit & Loss Account.
(i) Raw material, stores, spares & maintenance items, consumable
goods, work-in-process and other goods are valued at lower of landed
cost and Net Realizable Value. The cost formula used is FIFO for all
items except for maintenance items for which the cost formula used is
weighted Average Cost.
(ii) Finished goods are valued at Cost or Net Realizable value,
Whichever is lower.
(iii) The cost of imported raw material includes custom duties and
other direct expenditure.
(iv) The cost of finished goods comprises of Raw material cost
(proportionate of selling price), Manufacturing Expenses, payment to &
provision for employees, Depreciation on Plant & Machinery and factory
building (as cost per liner meter on production).
(F) Revenue Recognition
Revenue is recognized only when it can be reliably measured and it is
reasonable to expect ultimate collection. Dividend income is recongnized
when right to receive is established. interest income is recongnized on
time proportion basis taking into account the amount outstanding and
rate applicable. Sales Within India are exclusive of Sales Tax but
inclusive of Excise Duty & net of Trade Discount .Cut off date for
accounting Export Sales is based on the date of Bill of Lading. Export
Sales are accounted for on FOB basis.
(G) Employees Benefits
(i) The Company has Defined Contribution Plan for its employees''
retirement benefits comprising of Provident Fund & Employees'' State
Insurance Fund. The Company and eligible employees make monthly
contribution to the above mentioned funds at a specified percentage of
the covered employees salary. The Company recognizes its contribution as
expense of the year in which the liability is incurred.
(ii) The Company has Defined Benefit Plan comprising of Gratuity Fund &
Leave Encashment. The Company contributes to the Gratuity and leave
encashment fund managed by the Life Insurance Corporation of India
under its Group Gratuity (Cash Accumulation) Scheme and Group Leave
Encashment Scheme .The liability for Gratuity & leave Encashment is
determined on the basis of independent actuarial valuation done at year
end. Plan assets are measured at fair value as at Balance Sheet Date.
(H) Borrowing Costs
General and specific borrowing costs directly attributable to the
acquisition .construction or production of qualifying assets, which are
assets that necessarily take a substantial period of time to get ready
for their intended use or sale, are added to the cost of those
assets, until such time as the assets are substantially ready for their
intended use or sale.AII other borrowing cost are recognised in
statement of Profit and Loss in the period in which they are incurred.
Income Tax provision comprises Current Tax and Deferred Tax charge or
credit. Provision for Current Tax is made on the assessable income at
the tax rate applicable to the relevant Assessment Year. The Deferred
Tax asset and liability is calculated by applying tax rate and tax laws
that have been enacted or substantively enacted by the Balance Sheet
date. Deferred Tax assets arising mainly on account of unabsorbed
depreciation under tax laws are recognized, only if there is a virtual
certainty of its realization, supported by convincing evidence. Deferred
Tax assets on account of other timing differences are recognised, only
to the extent there is a reasonable certainty of its realization. At
each Balance Sheet date, the carrying amount of deferred assets is
reviewed to reassure realization.
The Carrying amount of assets are reviewed at each Balance Sheet date
if there is any indication of impairment based on internal as well as
external factors. An impairment loss will be recognised wherever the
carrying amount of an Assets exceeds its Estimated recoverable amount.
The recoverable amount is greater of the Assets net selling price and
value in use. In assessing the value in use, the estimated future Cash
Flows are discounted to the present value at the Weighted Average cost
of capital. After impairment, depreciation is provided on the revised
carrying amount of the assets over the remaining useful life. Previously
recognized impairment loss is further provided or reversed depending on
changes in circumstances.
(K) Provisions, Contingent Liabilities and Contingent Assets
The Company recognizes a provision where there is a present obligation
as a result of a past event that probably requires an outflow of
resources and a reliable estimate can be made of the amount of the
obligation .A Disclosure for a contingent liability is made when there
is a possible obligation or a present obligation that may, but probably
will not, require an outflow of resources. 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. Contingent
assets are neither recognized nor disclosed. Provisions, contingent
liabilities and contingent assets are reviewed at each balance sheet
(L) Lease Transaction
For assets taken on operating lease, lease rentals payable are charged
Investments are valued at cost, Provision for diminution in the value of
long term investments is made, only if such decline is other than
(N) Use of Estimates
The preparation of financial statements requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of financial statements and the reported amount
of revenues and expenses during the reporting period. Difference between
the actual results and estimates are recognised in the period in which
the results are known/materialised.
(O) Cash and Cash Equivalents
In the cash Flow statement, cash and cash equivalents includes cash in
hand, demand deposits with banks, other short-term highly liquid
investments with original maturities of three months or less.