(a) I Basis of Prepartation of Financial Statement
The Financial Statements are prepared at historical costs convention on
the basis of going concern in accordance with the generally accepted
accounting principles in India and the provision of the Companies Act,
1956. Figures for the previous year have been re-grouped and rearranged
wherever considered necessary. Figures in bracket represent
corresponding previous year unless otherwise stated. Separate sets of
books of accounts are maintained for separate units of production, as
required by law.
(b) Use of Estimates
The preparation of the financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the
reported balances of assets and liabilities and disclosures relating to
contingent liabilities as at the date of the financial statements and
reported amounts of income and expenses during the period. Although
these estimates are based on management''s best knowledge of current
events and actions, uncertainty about these assumptions and estimates
could result in the outcomes requiring a material adjustment to the
carrying amounts of assets or liabilities in future period.
(c) Fixed Assets
Fixed Assets are stated at historical cost net of recoverable taxes,
less accumulated depreciation and impairment loss, if any and the
assets prior to 1993-94 are at value adjusted by revaluation, which
includes expenditure incurred on the acquisition fabrication and/or
installation. Pre-operative expenditure comprising revenue expenses
incurred in connection with project implementation during the period
upto commencement of commercial production are treated as part of
project cost and are capitalized.
(d) Intangible Assets
Intangible Assets are stated at cost of acquisition net of recoverable
taxes less accumulated amortization / depletion. All costs, including
financing costs till commencement of commercial production, net charges
on foreign exchange contracts and adjustments arising from exchange
rate variation attributable to the intangible assets are capitalized.
Depreciation on fixed assets has been calculated on straight line
method at the rates prescribed in schedule XIV of the Companies Act
1956. No Depreciation has been provided on Capital Work in Progress.
Capital subsidy received has been reduced from the cost of fixed assets
for purpose of calculating depreciation.
(f) Foreign Exchange Transactions
Transactions in Foreign Currency are recorded in financial statements
based on the exchange rate existing at the time of the transactions.
Monetary items denominated in foreign currencies at the year end are
restated at year end rates.
Long term Investments are stated at cost. Provision for diminution in
the value of long term investments is made only if such a decline is
other than temporary.
Inventories are measured at lower of cost or net realisable value. Cost
of Finished goods include cost of purchase, cost of conversion and
other cost including manufacturing overhead in bringing them to their
respective present location and condition. Cost of raw material,
packing material and spares are determined on first in first out basis.
(i) Impairment of Assets
An asset is treated as impaired when the carrying cost of asset exceeds
its recoverable value. As impairment loss is charged to the Profit and
Loss Account in the year in which an asset is identified as impaired.
The impairement loss recognised in prior accounting period is reversed
if there has been a change in the estimate of recoverable amount.
(j) Recognition of Revenue and Expenditure
All revenue and expenditure are recognised and accounted for on accrual
basis. Processing Charges also includes labour charges. Interest
income is recognized on time proportion basis taking into account the
amount outstanding and rate applicable.
Provision for taxation of income tax is made on the basis of the
taxable profit computed for current accounting year in accordance with
the Income Tax Act, 1961.
Deferred Tax resulting from timing differences between Book Profits and
Tax Profits is accounted for at the current rates of tax to the extent
the timing difference are expected to crystallise, in case of Deferred
Tax Liabilities with reasonable certainty and in case of Deferred Tax
Assets with virtual certainty that there would be adequate future
taxable income against which such Deferred Tax Assets can be realised.
(l) Employee Benefits
Short term employee benefits are recognised as expense at the
undiscounted amount in the Profit and Loss Account of the year in which
the related service is rendered.
Retirement benefits in the form of provident fund, which is defined
contribution plan, is charged to the statement of profit and loss of
the year when the contribution to respective fund is due.
In case of provision of gratuity the Company has entered into an
agreement with the SBI Life Insurance company to administer its
gratuity scheme, current year amount payable on the basis of actural
valuation is provide and premium paid is charged to Profit and Loss
Provision for leave encashment is recognised as expense in the Profit
and Loss Account for the year in which employee has rendered services.
(m) Borrowing Cost
Interest and other costs in connection with the borrowing of the funds
to the extent related/attributed to the acquisition/construction of
qualifying fixed assets are capitalized upto the date when such assets
are ready for its intended use and other borrowing costs are charged to
Profit & Loss Account.
(n) Provision, Contingent Liabilities and Contingent Assets
Provision involving substantial degree of estimation in measurement are
recognized 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 recognized but are disclosed in the
notes. Contingent Assets are neither recognized nor disclosed in the
i) Operating Lease Payments are recognized as an expenses in the
Statement of Profit & Loss on a straight line basis over the lease
ii) Assets under Financial Leases are capitalized at the inception of
the lease term at the lower of fair value of the leased property and
present value of minimum lease payments.
iii) Assets given under operating Leases are included under Fixed
Assets, Lease income on these assets is recognized in the statement of
Profit & Loss on a straight line basis over the lease term.