(a) Basis of Accounting
The financial statements are prepared as per historical cost convention
and in accordance with the generally accepted accounting principles in
India, the provisions of the Companies Act, 1956, and the applicable
Accounting Standards notified under the Companies (Accounting
Standards) Rules, 2006. All income and expenditure having material
bearing on the financial statements are recognised on accrual basis.
(b) Use of Estimates:
The presentation of the financial statements in conformity with the
generally accepted accounting principles requires the Management to
make estimates and assumptions that affect the reported amount of
assets and liabilities, revenues and expenses and disclosure of
contingent liabilities. Such estimates and assumptions are based on
management''s evaluation of relevant facts and circumstances as on the
date of financial statements. The actual outcome may diverge from these
(c) Fixed assets and depreciation:
- Tangible fixed assets and depreciation
Tangible fixed assets acquired by the Company are reported at
acquisition value, with deductions for accumulated depreciation and
impairment losses, if any. The acquisition value includes the purchase
price (excluding refundable taxes) and expenses directly attributable
to the asset to bring it to the site and in the working condition for
its intended use. Examples of directly attributable expenses included
in the acquisition value are delivery and handling costs, installation,
legal services and consultancy services.
Where the construction or development of any such asset requiring a
substantial period of time to set up for its intended use, is funded by
borrowings, the corresponding borrowing costs are capitalised up to the
date when the asset is ready for its intended use.
Depreciation is provided on a straight line basis at rates and in the
manner specified in Schedule XIV to the Companies Act, 1956, unless the
use of a higher rate or an accelerated charge is justified through
technical estimates. Accordingly, certain electronic items are
depreciated at 33.33%. Assets costing less than Rs 5,000 are fully
depreciated in the year of purchase. Extra shift depreciation is
applied to applicable items of plant and machinery for days additional
shifts are worked.
(d) Impairment of fixed assets:
Consideration is given at each Balance Sheet date to determine whether
there is any indication of impairment of the carrying amount of the
Company''s fixed assets. If any indication exists, an asset''s
recoverable amount is estimated. An impairment loss is recognised
whenever the carrying amount of the assets exceeds its recoverable
amount. The recoverable amount is greater of the net selling price and
value in use. Reversal of impairment loss is recognised immediately as
income in the Statement of Profit and Loss.
(e) Deferred Revenue Expenditure:
Monthly pension costs are amortised over the period of payment.
(f) Taxes on Income:
Current tax is determined as the amount of tax payable in respect of
taxable income for the period.
Deferred tax is calculated to correspond to the tax effect arising when
final tax is determined. Deferred tax corresponds to the net effect of
tax on all timing differences which occur as a result of items being
allowed for income tax purposes during a period different from when
they were recognised in the financial statements.
Deferred tax assets are recognised with regard to all deductible timing
differences to the extent that it is probable that taxable profit will
be available against which deductible timing differences can be
utilised. When the Company carries forward unused tax losses and
unabsorbed depreciation, deferred tax assets are recognised only to the
extent there is virtual certainty backed by convincing evidence that
sufficient future taxable income will be available against which
deferred tax assets can be realised. The carrying amount of deferred
tax assets is reviewed at each balance sheet date and reduced by the
extent that it is no longer probable that sufficient taxable profit
will be available to allow all or a part of the aggregate deferred tax
asset to be utilised.
Investments are either classified as current or long-term investments.
Current investments are carried at lower of cost and market value.
Long-term investments are carried at cost of acquisitions, net of
diminution in value, if any, which is other than temporary.
Inventories are valued at the lower of the cost and the net realisable
In the case of raw materials, packing materials and stores and spare
parts, cost is determined in accordance with the moving weighted
average principle. Costs include the purchase price, non-refundable
taxes and delivery and handling costs.
Cost of finished goods is determined using the absorption costing
principles. Costs include the cost of materials consumed, labour and a
systematic allocation of variable and fixed production overheads.
Excise duties at the applicable rates are also included in the cost of
Net realisable value is estimated at the expected selling price less
estimated completion and selling costs.
(i) Revenue Recognition:
Sales include products and services, net off trade discounts and
exclude sales tax, state value added tax and service tax. With regard
to sale of products, income is reported when practically all risks and
rights connected with ownership have been transferred to the buyer.
This usually occurs upon dispatch, after the price has been determined
and collection of the receivable is reasonably certain.
Revenue from dividend on securities is recognised when the right to
receive such dividend is established. Interest on securities is
recognised evenly over the period of the instrument.
(j) Financial Income and Borrowing Cost:
Financial income and borrowing cost include interest income on bank
deposits and interest expense on loans.
Interest income is accrued evenly over the period of the instrument.
Borrowing cost are recognised in the period to which they relate,
regardless of how the funds have been utilised, except where it relates
to financing of construction or development of assets requiring a
substantial period of time to prepare for their intended future use.
Interest is capitalised up to the date when the asset is ready for its
intended use. The amount of interest capitalised (gross of tax) for the
period is determined by applying the interest rate applicable to
appropriate borrowings outstanding during the period to the average
amount of accumulated expenditure for the assets during the period.
(k) Foreign Currency Transactions:
Transactions in foreign currencies are translated to the reporting
currency based on the exchange rate on the date of the transaction.
Exchange differences arising on settlement thereof during the year are
recognised as income or expenses in the Statement of Profit and Loss.
Cash and bank balances, receivables and liabilities (monetary items) in
foreign currencies as at the year end are translated at closing-date
rates, and unrealised translation differences are included in the
Statement of Profit and Loss.
(l) Employee Benefits:
(a) Short-term Employee Benefits
Short term employee benefits are recognised as an expense at the
undiscounted amount expected to be paid over the period of services
rendered by the employees to the Company.
(b) Long-term Employee Benefits
The Company has both defined-contribution and defined-benefit plans, of
which some have assets in special funds or securities. The plans are
financed by the Company and in the case of some defined contribution
plans by the Company along with its employees.
(i) Defined-contribution plans
Annual contribution payable to the Provident Fund and Superannuation
Fund (based on the percentage of salary) are charged as an expense as
they fall due, that is, in the same period as the employment gives rise
to the contribution. Company also contributes to an established
Provident Fund for certain employees where it is obliged to meet the
interest shortfall, if any.
(ii) Defined-benefit plans
Expenses for defined-benefit gratuity and pension are calculated as at
the Balance Sheet date by independent actuaries in a manner that
distributes expenses over the employee''s working life. These
commitments are valued at the present value of the expected future
payments, with consideration for calculated future salary increases,
using a discount rate corresponding to the interest rate estimated by
the actuary having regard to the interest rate on government bonds with
a remaining term that is almost equivalent to the average balance
working period of employees. Actuarial gains and losses are immediately
recognised in the Statement of Profit and Loss.
(c) Other Employee Benefits
Compensated absences which accrue to employees and which can be carried
to future periods but are expected to be encashed or availed in twelve
months immediately following the year end are reported as expenses
during the year in which the employees perform the services that the
benefit covers and the liabilities are reported at the undiscounted
amount of the benefits after deducting amounts already paid. Where
there are restrictions on availment of encashment of such accrued
benefit or where the availment or encashment is otherwise not expected
to wholly occur in the next twelve months, the liability on account of
the benefit is actuarially determined using the projected unit credit
(m) Provisions and Contingencies:
A provision is recognised when the Company has a present legal or
constructive obligation as a result of past events and it is probable
that an outflow of resources will be required to settle the obligation,
in respect of which reliable estimate can be made. Provisions
(excluding retirement benefits) are not discounted to its present value
and are determined based on best estimate required to settle the
obligation at the Balance Sheet date. These are reviewed at each
Balance Sheet date and adjusted to reflect the current best estimates.
Contingent liabilities are not recognised but are disclosed in the
notes to the financial statement.
(n) Operating Lease:
Assets acquired on lease where significant portion of the risks and
rewards incidental to ownership are effectively retained by the lessors
are classified as operating leases. Lease rentals are charged to the
Statement of Profit and Loss on a straight line basis over the lease
The Company has only one class of shares referred to as equity shares
having a par value of Rs 10. Each holder of equity shares is entitled to
one vote per share.
The Company declares and pays dividends in Indian rupees.The dividend
proposed by the Board of Directors is subject to the approval of the
shareholders in the ensuing Annual General Meeting.
In the event of liquidation of the Company, the holders of equity
shares will be entitled to receive any of the remaining assets of the
company, after distribution of all preferential amounts. However, no
such preferential amounts exist currently. The distribution will be in
proportion to the number of equity shares held by the shareholders.
In last 5 years, no classes of shares has been issued either by payment
being received in cash or brought back nor bonus issues made by the
Following are the names of the shareholders with numbers of Equity
Shares holding more than 5 percent of the total Equity Shares: