1.1. Basis of preparation:
The financial statements of the Company are prepared on accrual basis
under historical cost convention in accordance with Generally Accepted
Accounting Principles (GAAP) applicable in India. The company has
prepared these financial statements to comply in all material respects
with the Accounting Standards notified under Companies (Accounting
Standards) Rules, 2006 (as amended) and the provisions of the Companies
The accounting policies adopted in the preparation of financial
statement are consistent with those of previous year. The company has
prepared these financial statements including previous year as per the
format prescribed by Revised Schedule VI to the Companies Act, 1956
issued by Ministry of Corporate Affairs, Government of India.
1.2. Use of Estimates:
The preparation of financial statements requires the management of the
company to make estimates and assumptions that affect the reported
amount of assets and liabilities on the date of the 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. Though the management believes that the estimates used
are prudent and reasonable, actual results could differ from these
1.3. Fixed Assets:
Fixed assets are carried at cost of acquisition or construction less
accumulated depreciation. The cost of fixed assets includes
non-refundable taxes, duties, freight and other incidental expenses
related to the acquisition and installation of the respective assets.
Borrowing costs directly attributable to acquisition or construction of
those fixed assets which necessarily take substantial period of time to
get ready for their intended use are capitalised.
1.4. Impairment of Assets:
Impairment of an asset is reviewed and recognised in the event changes
and circumstances indicate that the carrying amount of an asset is not
recoverable. Difference between the carrying amount of an asset and the
recoverable value is recognised as impairment loss in the statement of
profit and loss in the year of impairment.
1.5. Depreciation on Fixed Assets:
1.5.1. Depreciation on fixed assets is provided on straight-line
method at the rates and in the manner prescribed in Schedule XIV of the
Companies Act, 1956 or at higher rates as stated below:
Investments are classified as long term and Current. Long term
Investments are carried at cost less provision for other than temporary
diminution, if any, in value of such investments. Current investments
are carried at lower of cost and fair value.
1.7. Foreign currency transactions:
Foreign currency transactions are accounted at the exchange rates
prevailing on the date of transaction. Gains and losses resulting from
settlement of such transactions are recognised in the statement of
profit and loss.
Liabilities related to foreign currency transactions incurred to
acquire fixed assets remaining unsettled at the end of the year are
translated at year end rates. The difference arising on such
translation and realized gain or loss adjusted to the cost of
respective fixed asset.
Monetary assets and liabilities related to foreign currency
transactions remaining unsettled at the end of the year are translated
at year end rates. The difference in translation of monetary assets and
liabilities and realized gains and loss on foreign currency
transactions are recognised in the statement of profit and loss.
Foreign branches are classified as integral foreign operations. Assets
and liabilities (both monetary and non monetary) are translated at the
closing rate prevailing at the year end. Income and expenses are
translated at the monthly average rate at the end of the respective
month. Premium or discount arising on forward exchange contracts is
recognized in the Statement of Profit and Loss.
1.8. Borrowing Costs
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalised as part of the cost
of such assets. A qualifying asset is one that necessarily takes
substantial period of time i.e. more than twelve months to get ready
for its intended use. All other borrowing costs are charged to revenue.
1.9. Retirement Benefits:
Liability for employee benefits, both short and long term, for present
and past services which are due as per the terms of employment are
recorded in accordance with Accounting Standard (AS) 15 Employee
Benefits notified by the Companies (Accounting Standard) Rules, 2006
1.9.1. Gratuity: In accordance with the Payment of Gratuity Act, 1972
the company provides for gratuity covering eligible Employees.
Liability on account of gratuity is covered by a policy with LIC and
the annual contributions are paid / provided in accordance with the
1.9.2. Superannuation: The Company makes monthly contribution to an
approved superannuation fund covered by a policy with LIC of India. The
Company has no further obligation beyond the monthly contribution.
1.9.3. Compensated Absences: Liability for compensated absence is
treated as a long term liability and is provided on the basis of
valuation by an independent actuary as at the year end.
1.9.4. Provident Fund: The Company''s Contribution towards provident
fund, administered and managed by an approved trust, is charged to
1.10.1.Current tax: Provision for current tax is made based on the
taxable income computed for the year under the Income Tax Act 1961.
1.10.2.Deferred Taxes: Deferred tax is accounted for by computing the
tax effect of timing differences which arise during the year and
reverse in subsequent periods. Deferred tax assets are recognised and
carried forward only to the extent that there is a certainty that
sufficient future taxable income will be available against which such
Deferred Tax Assets can be realized.
The Company recognises provisions when there is present obligation as a
result of past event and it is probable that there will be an outflow
of resources and reliable estimate can be made of the amount of the
obligation. A disclosure for Contingent liabilities is made when there
is a possible obligation or present obligations that may, but probably
will not, require an outflow of resources. Contingent assets are
neither recognised and nor disclosed in the financial statements.