1. Accounting Convention
a) The Financial Statements have been prepared under Historical Cost
Convention on going concern basis and in accordance with the provisions
of the Companies Act, 1956 and comply with the Accounting Standards
issued by the Institute of Chartered Accountants of India, to the
extent applicable to the Company.
b) The Company generally follows mercantile system of accounting and
recognises income and expenditure on accrual basis except in respect of
the insurance claims, Interest on overdue debts, discounts & rebates,
dividend received and gratuity payments, leave encashment which are
consistently accounted for on cash basis.
2. Fixed Assets
Fixed assets are stated at cost less accumulated depreciation. Cost
comprises of capital costs and incidental expenses attributable to
bringing the asset to working condition for it''s intended use. Fixed
assets acquired under finance lease are accounted as per the Accounting
Standard -19 Leases issued by The Institute of Chartered Accountants of
India. Borrowing costs directly attributable to acquisition or
construction of those fixed assets which necessarily take a substantial
period of time to get ready for their intended use are capitalised.
Depreciation on fixed assets on Written Down Value Method at the rates
prescribed under the Income Tax Act 1961 mentioned here below:
4. Investments: Long Term:
Long-term investments are carried at cost of acquisition. Provision is
made only when in management''s opinion there is a decline, in the
carrying value of such investments.
5. Borrowing Costs:
Borrowing costs attributable to the acquisition or construction of
assets are capitalised as part of cost of such asset up to the date
when such asset is ready for its intended use. Other borrowing costs
are charged to revenue.
6. Revenue Recognition:
Sales of materials & spares:
The revenue in respect of sales of materials & spares is accounted for
on dispatch of goods to the customers.
Inventories of raw material, consumables and work in progress are
valued at lower of the cost or estimated net realisable value. The
Company consistently follows the policy of not recognising as inventory
the goods in transit until the goods are tested and accepted. Cost of
work-in- progress includes conversion and other costs incurred in
bringing the inventories to their present location and condition.
Obsolete, defective and unserviceable stocks are duly provided for.
8. Foreign Currency Transactions
a) Transactions in foreign currency are recorded at the rates of
exchange in force at the time of occurrence of the transactions.
b) Assets and outstanding liabilities in foreign currency at the period
end are stated at the rates of exchange prevailing at the close of the
period and resultant gains/losses are adjusted to:
i) Carrying cost of fixed assets, if they relate to fixed assets and
ii) Profit and Loss Account in other case.
Income-tax expense comprises current tax expense, fringe benefit tax
and deferred tax expense or credit
9.1 Current tax provision, as per the Income tax Act, 1961, is made
based on the tax liability computed after considering tax allowances
and exemptions at the Balance sheet date.
9.2 Deferred tax liability or asset is recognized for timing
differences between the profits/losses offered for income taxes and
profits/losses as per the financial statements. Deferred tax assets and
liabilities are measured using the tax rates and tax laws that have
been enacted or substantively enacted at the Balance sheet date.
Deferred tax assets are recognised only to the extent there is
reasonable certainty that the assets can be realized in future;
however, where there is unabsorbed depreciation or carried forward loss
under taxation laws, deferred tax assets are recognised only if there
is a virtual certainty of realisation of such assets. Deferred tax
assets are reviewed as at each Balance sheet date and written down or
written up to reflect the amount that is reasonably/virtually certain
to be realized. (Also refer Note II.ll.l)
10. Retirement Benefits:
Eligible employees receive benefits from a provident fund, which is a
defined contribution scheme. Both, the employees and the Company make
monthly contributions to this scheme equal to a specified percentage of
the covered employee''s salary. Contributions to provident fund are made
to the Government administered provident fund schemes and charged to
the Profit and loss account. The Company has no further obligations
under the provident fund plan beyond its monthly contributions.
Gratuity benefits, which are defined benefits, provide a lump Sum
payment to vested employees at retirement, death, incapacitation or
termination of employment, of an amount based on the respective
employee''s last drawn salary and the tenure of employment Liabilities
with regard to gratuity benefits are accounted on actual payment basis.
Leave encashment benefits as per Company''s rules are accounted for on
actual payment basis.
11. Research and Development Expenditure:
Revenue expenditure on Research and Development is charged to the
Profit and Loss Account in the year in which it is incurred.
12. Earnings per share ,
In determining earnings per share, the Company considers the net profit
after tax and includes the post tax effect of any extraordinary items.
The number of shares used in computing basic earnings per share is the
weighted average number of shares outstanding during the period. The
number of shares used in computing diluted earnings per share comprises
the weighted average shares considered for deriving basic earnings per
share and also the weighted average number of Equity Shares, which have
been subsequently allotted against share application money.
Contingencies arising from claims, litigation, assessment, fines,
penalties, etc are recorded when it is probable that a liability has
been incurred and the amount can be reasonably estimated. However the
contingent Liabilities are disclosed by way of notes.