a) BASIS OF PREPERATION OF FINANCIAL STATEMENT :
The financial statements are prepared as a going concern under
historical cost convention on accrual basis, except those with
significant uncertainty and in accordance with the Companies Act, 1956
Accounting policies not stated explicitly otherwise are consistent with
generally accepted accounting principles.
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 (Revised) to the companies
Act,1956. Based on the nature of products and the time between the
acquisition of assets for processing and their realisation in cash and
cash equivalents, the company has ascertained its operating cycle as 12
months for the purpose of current - non current classification of
assets and liabilities
b) FIXED ASSETS :
Fixed assets are stated at cost less accumulated depreciation. Cost of
fixed assets is inclusive of pre-operative expenses (Net of revenue)
incurred up to the date of Commissioning of project/plant, exchange
losses or gains arising on specific foreign currency loan taken for
acquiring the assets.
c) CAPITAL WORK IN PROGRESS :
All pre-operative project expenditure (net of income accrued) incurred
upto the date of commercial production is capitalised
d) CASH FLOW STATEMENT:
Cash flows are reported using indirect method, where by profit/ (loss)
before extraordinary items and tax is adjusted for the effects of
transactions of non-cash nature and any deferrals or accruals of past
or future cast) receipts or payments The cash flow from operating,
investing and financing activities of the company is segregated based
on the available information.
e) DEPRECIATION AND AMORTISATION :
i) Depreciation has been provided as per Straight Line Method at the
rates and in the manner prescribed in schedule XIV to the Companies
Act, 1956 and the relevant Accounting Standard issued by the Institute
of Chartered Accountants of India. Plant & Machinery have been
considered to be continuous Process Plants as defined in the said
schedule on technical assessment and depreciation has been provided
II) Lease Hold Land is being amortised over the lease period.
f) INVESTMENTS :
i. Quoted Investments are stated at Cost. Provision for diminution in
long term investment is made only, if such a decline is other than
ii. Unquoted investments are stated at Cost.
g) VALUATIONS OF INVENTORIES :
Raw Materials : Valued at Cost or Net Realisable Value whichever is
lower (Cost is computed using
Weighted Average Cost Method).
Work-in-Progress : Valued at Cost or Net Realisable Value whichever is
lower (Cost includes material Cost plus appropriate
share of overhead)(Cost is computed Using
Weighted Average Cost Method).
Finished goods :
goods: At Cost or Net Realisable Value whichever is
lower (Cost includes Cost of Purchase,
Conversion Cost, and other Cost i.e. overhead)
(Cost is computed using Weighted Average Cost
ii) Trading goods At Cost or Net Realisable Value whichever is lower
(Cost is computed using Specific Identification
Packing Materials, : Stores & Spare Parts
At Cost or Net Realisable Value whichever is lower
(Cost is Computed Using FIFO Method)
Waste : At Realisable Value
h) RECOGNITION OF INCOME AND EXPENDITURE :
i. Items of Income & Expenditure are recognised on accrual basis.
ii. Sales & Purchases are accounted for as and when deliveries are
i) PROVISION, CONTINGENT LIABILITIES & CONTINGENT ASSETS :
Provision involving substantial degree of estimation in measurement are
recognised when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent liabilities are not recognised but are disclosed in the
notes. Contingent assets are neither recognised nor disclosed in the
j) RETIREMENT BENEFITS TO EMPLOYEES :
Leave Encashment : Accrued liability for leave encashment has been
provided for as per actuarial valuation.
Gratuity : Accruing liability for gratuity to employees is covered by
the Group Gratuity-Cash-Accumulation Scheme of LIC of India and annual
contribution due there under are paid /provided in accordance
k) FOREIGN CURRENCY TRANSACTIONS :
i. Export Sales : At the rates as on the date of transactions.
ii. Expenditures : At the rates as on the date of transaction.
Outstanding amounts in respect of current assets/current liabilities
are translated at the rate as at the close of the year, at the forward
contract rates or at the rate at which liabilities/assets are likely to
be disbursed/realised, wherever applicable, and the exchange difference
thereon is adjusted in the Profit & Loss Account.
iii. Foreign Exchange Forward Contract : Exchange differences in
respect of foreign exchange contract (other than for acquisition of
fixed assets) are recognised as income or expense over the life of the
iv Bank Balance in Foreign Currency Bank Account as at dose of the year
is translated at exchange rate as on that date, v. Loans in foreign
currency for financing the fixed assets are converted at the prevailing
exchange rate on the transaction dates Liabilities payable in foreign
currencies on the date of Balance Sheet are restated and all exchange
rate differences arising from such restatement are adjusted with the
I) FINANCIAL DERIVATIVES AND COMMODITY HEDGING TRANSACTION
The company uses foreign currency forward contracts and currency
options to hedge its risk associated with foreign currency fluctuations
relating to certain firm commitments and forecasted transactions. The
company designate these hedging instruments as cash flow hedges
applying the recognition and measurement principles setout in the
Accounting Standard 30 financial Instruments: Regulation and
In respect of derivative contracts, premium paid, gain/losses on
settlement and provision for losses for cash flow hedges are recognized
in the Profit & Loss Account, except in case, where they relate to
borrowing costs that are attributable to the acquisition or
construction of fixed assets, in which case, they are adjusted to the
carrying cost of such assets
m) BORROWING COSTS :
Borrowing Costs in respect of fixed Assets charged to the respective
fixed assets till the date of commercial use and in respect of others,
is charged to Profit & Loss Account in the year, the same has been
n) PROVISION FOR CURRENT AND DEFERRED TAX :
Provision for Current Tax is made on the basis of taxable income for
the current accounting period and in accordance with the provisions as
per Income Tax Act, 1961.
Deferred Tax resulting from timing difference between book and
taxable profit for the year is accounted for using the tax rates and
laws that have been enacted or substantially enacted as on the balance
sheet date. The deferred tax asset is recognised and carried forward
only to the extent that there is a reasonable certainty that the assets
will be adjusted in future.
Current income tax is measured at the amount expected to be paid to the
tax authorities, computed in accordance with the applicable tax rates
and tax laws. In case of tax payable as per provisions of MAT under
section 115JB of the Income Tax Act, 1961, deferred MAT credit
entitlement is separately recognized under the head Long-Term loans
and Advances. Deferred MAT credit entitlement is recognized and
carried forward only if there is a reasonable certanity of it being set
off against regular tax payable within the stipulated statutory period,
o) IMPAIRMENT OF ASSETS :
The company assesses at each balance sheet date whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount of the assets. If
such recoverable amount of the assets or the recoverable amount of the
cash generating unit to which the asset belongs is less than its
carrying amount, the carrying amount is reduced to its recoverable
amount. The reduction is treated as an impairment loss and is
recognized in the profit and loss account. If at the balance sheet date
there is an indication that if a previously assessed impairment loss no
longer exists, the recoverable amount is reassessed and the asset is
reflected at the recoverable amount.
p) GOVERNMENT GRANTS / SUBSIDIES :
Government grants / subsidies are recognized when there is reasonable
certainty that the same will be received. Revenue grants are
recognized in the Profit & Loss Account either as income or deducted
from related expenses. Capital grants / subsidies are credited to
respective fixed assets where it relates to specific fixed assets.
Other grants / subsidies '' are credited to the Capital Reserve.