[a] Basis of Accounting:The financial statements have been prepared on
a going concern basis following accrual .system of accounting. They
comply in all material respects with the mandatory Accounting Standards
issued by the Institute of Chartered Accountants of India and the
relevant provisions of the Companies Act, 1956.The presentation of
financial statements requires the management to make estimates and
assumptions that affect the amounts reported in the financial
statements and accompanying notes. Although these estimates are based
on managements best knowledge of current events and actions of the
company in future, actual results may ultimately differ from the
[b] Fixed Assets (including Intangible Assets)The fixed assets
(including intangible assets) are stated at cost and other incidental
expenses of acquisition less accumulated depreciation. Pre-operative
expenses, net of revenue, are capitalized. Leasehold land has been
capitalized and the value of the land is amortised over the lease term,
i) Depreciation on fixed assets, other than land, has been provided on
straight-line basis in accordance with the provisions of the Companies
Act, 1956, at the rates and in the manner specified in Schedule XIV of
ii) Depreciation on the fixed assets .added/disposed off during the
year has been provided on pro-rata basis with reference to the month of
addition/disposal. Individual assets costing less than Rs. 5,000 are
written off in full in the* year of purchase.
iii)iv)Intangible Assets comprising of Development Expenditure on
Development of new technology and processes is long term in nature.
Therefore, the management has decided to amortise the same over 10
years. Applications for Patents have been filed with the concerned
authority. From the current year onwards the management has decided to
charge depreciation on the basis of actual utilisation of the assets.
[d] Impairment of Assets: The carrying amount of assets is reviewed at
each balance sheet date to check whether there is any indication of
impairment loss. An impairment loss is recognized when the carrying
amount of an asset exceeds its recoverable amount. At each balance
sheet date the management reviews the carrying amount of assets, an
impairment loss is charged to the Profit & Loss in the year in which an
asset is identified as impaired, and if there is a change in the
estimate of the recoverable amount, the loss recognised in the previous
year is reversed.
[e] lnventories:lnventories are valued at lower of cost or estimated
net realisable value, which ever is lower, after providing for
obsolescence and where appropriate, includes transportation cost and
[f] lnvestments:lnvestments are long term in nature and are hence
carried at cost.
[g] Transaction of Foreign Currency Items:Transactions in foreign
currency are recorded in the reporting currency by applying the
exchange rate prevailing at the time of transaction.
[h] Retirement Benef its : Provident Fund-Contributions as required
under the statute/rules are made to the Provident Fund/Government
Provident Fund.Gratuity.Employees are entitled to Gratuity payment as
per statute and the provision for gratuity payable to the retiring
staff is accounted on cash basis. Leave Encashment:Provision for annual
leave encashment benefits on retirement is accounted on cash basis,
[i] Revenue Recognition:The Company is engaged in the business of
surface enhancement of articles/tools and materials supplied by the
clients. Bills are rendered to the clients in respect of the work done
at the rates agreed with the parties. Any expenditure incurred in
respect of defective coating is borne by the company as and when
[j] Lease:Financial Lease Rentals are accounted over the life of the
asset and are expensed with reference to the lease terms.
[k] Borrowing Costs-.Borrowing costs that are attributable to the
acquisition, construction or production of qualifying assets are
capitalized as a 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 or sale. All other borrowing costs are charged to
[l] Taxes on lncome:Taxes comprise of both current tax 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 reflects
the impact of current year 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 are recognised on carry forward of unabsorbed
depreciation and tax losses only to the extent of existence of
reasonable certainty that such deferred tax asset can be realised
against future taxable profits. Unrecognised deferred tax
assets/liability of earlier years are re-assessed and recognised to the
extent of reasonable certainty of future taxable profits.
[m] Development Expenditure :Expenditure on development of new
technology and processes is amortized over a period of 10 years.
[n] Provisions and Contingencies:A provision is recognized when there
is a legal and constructive obligation as a result of a past event, for
which a probable cash outflow will be required and a reliable estimate
of the amount can be made. Provision is made in the accounts for those
contingencies, which are likely to materialize into liabilities after
the year-end till the adoption of accounts by the Board of Directors
and which have a material effect on the Balance Sheet. Contingent
Liabilities, if any, are disclosed by way of notes on accounts. They
are disclosed when the company has a possible or a present obligation
where it is not probable to reliably estimate the outflow of resources.