a. Basis of Preparation of Financial Statements:
The financial statements have been prepared under the historical cost
convention in accordance with the generally accepted accounting
principles in India and the provisions of the Companies Act, 1956.
b. Use of Accounting Estimates:
The presentation of financial statements requires estimates and
assumptions to be made 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 recognized in
the period in which the results are known/materialized.
c. Fixed Assets:
Fixed assets are stated at cost, including any attributable cost for
bringing the asset to its working condition for its intended use, net
of taxes and duties less accumulated depreciation and impairment loss
and include financing cost for period up to the date of readiness of
use. There has been no revaluation of fixed assets.
An asset is treated as impaired when the carrying cost of assets
exceeds its recoverable value. An impairment loss is charged to the
Profit and Loss Account in the year in which an asset is identified as
impaired. The impairment loss recognized in prior accounting period is
reversed if there has been a change in the estimate of recoverable
Cost of Software includes license fees, cost of implementation and
system integration and capitalized as intangible assets in the year in
which the relevant software is put to use.
d. Depreciation and Amortization:
Depreciation on Fixed assets is provided on WDV at the rates and in the
manner prescribed in Schedule XIV to the Companies Act, 1956. For any
addition during the year, depreciation is charged for whole year
whereas for disposals of any assets during the year, depreciation is
provided on pro-rata for the year of use.
Computer software is amortized @ 25% on WDV basis.
e. Revenue Recognition:
1. Revenue in respect of sale of goods is recognized on dispatch of
goods from the factory on the basis of excise invoice. Sales are
accounted net of Excise Duty, Sales Tax, Discounts, Returns and
Rejections. Materials returned/rejected are accounted for in the year
2. For services rendered, the Company recognizes revenue on the basis
of Completed Contract Method.
3. Export Sales are recognized on dispatch of material from the
premises of the Company irrespective of the date of shipping document.
4. According to Maharashtra Value Added Tax Act, dealer is required to
pay sales tax on entire sales and is allowed credit of entire Value
added tax suffered on purchases. Accordingly, the balance of Value
added tax suffered on purchases not utilized against current year Sales
is available for either refund or set-off in future. Therefore, all the
transaction are accounted net of Value added tax and the balance in
Value added tax account is included under the head recoverable from Tax
department under Loans and Advances.
5. Export incentives, interest and other incomes are accounted on
accrual basis except Dividend which is accounted in the year of
f. Export Benefits:
Export benefits receivable at the end of the year are estimated based
on the applicable DEPB entitlement as per the prevailing EXIM Policy
and reviewed for excess/short provision on realization and are written
off/provided. The Export benefits, net of write off/write back is shown
in the Profit & Loss Account.
g. Excise Duty:
1. The Company has provided for Excise Duty on excisable stock of
finished goods at the end of the year.
2. Excise Duty recovered is not included in sales and is recorded
separately and any excess payment thereof is treated as an expense
during the year.
h. Retirement Benefits :
Contributions to defined contribution scheme such as Provident Fund,
Employees Pension Scheme are charged to the Profit & Loss Account as
Defined benefit plans like gratuity & Leave Encashment are determined
based on actuarial valuation carried out by an independent actuary at
the balance sheet date using the Projected Unit Credit Method, which
recognizes each period of service as giving rise to additional unit of
employee benefit, and measures each unit separately to build up final
obligation. The obligation is measured at the
present value of the estimated future cash flows. The discount rate
used for determining the present value of the obligation under defined
benefit plans, is based on the market yields on government securities
at the balance sheet date. Actuarial gains and losses are recognized
immediately in the profit and loss account.
Expenses on training, recruitment are charged to revenue in the year of
i. Foreign Currency Transactions:
1. The transactions in foreign currencies are recorded at the exchange
rate prescribed by the Customs Department for the month of the
transaction. 2 All Monetary assets and liabilities are converted at
the exchange rate prevailing on the last day of the year.
3. The foreign exchange difference arising on the settlement during
the year of the foreign currency transactions and on re-statement of
current liabilities and current assets at the rate applicable at the
year end is charged to the Profit and Loss Account of the year by
debit/credit to loss or gain on foreign Exchange Account.
4. Gains & losses in respect of foreign exchange contracts are
recognized as income or expenses over the life of the contract j.
Items of inventories are measured at lower of cost or net realizable
value. Cost of inventories comprise of all cost of purchase, cost of
conversion and other cost incurred in bringing them to their respective
present location and condition.
1. The inventory of raw material is valued at cost plus all incidental
expenses up to receipt of raw material in factory. The method of
arriving at cost is FIFO basis.
2. The inventory of Work-in-Process is valued at Raw Material cost
plus appropriate share of manufacturing overheads or at net realizable
value whichever is lower. The method of arriving at cost is FIFO basis.
3. Finished goods are valued at lower of Raw Material cost,
manufacturing overheads or net realizable value. The method of arriving
at the cost is FIFO basis.
4. Stores and spares are valued at cost. The method of arriving at the
cost is FIFO basis.
5. Re-usable metallurgical residue is valued at the realizable value,
as reduced by the estimated cost of purification/conversion, to render
the material realizable.
6. Cost of imported raw materials, components, and consumable
in-transit, is taken at the equivalent rupee calculated at the rate of
exchange prevailing at the year-end and excludes the subsequent
expenditure to be incurred.
1. Current investments are carried at the lower of cost and
quoted/fair value, computed category wise.
2. Investments, intended to be held for more than a year, from the
date of acquisition, are classified as long-term & they 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 in the opinion of
1. Current Tax
The amount of Current tax is determined as the amount of tax payable in
respect of taxable income for the year as per the provisions of the
Income Tax Act, 1961 applicable to the current financial year.
2. Deferred tax
Deferred is recognized, subject to the consideration of prudence, on
timing differences, being the difference between taxable incomes and
accounting income, that originate in one period and are capable of
reversal in one or more subsequent periods. It is accounted for, using
the tax rates and the tax laws enacted as on the balance sheet date.
Deferred Tax Asset is recognized only when there is a virtual certainty
of their realization.
m. Borrowing Costs:
Borrowing costs which are attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
of such assets. All other borrowings costs are expensed out.
n. Provisions, Contingent Liabilities & Contingent Assets:
The company creates a provision when there is present obligation
because of a past event that will probably result in the outflow of
resources and a reliable estimate can be made of the amount of
obligation Provisions are reviewed at each balance sheet date and
adjusted to reflect current best estimate.
Contingent Liabilities are disclosed when there is a possible
obligation or a present obligation but probably will not, require an
outflow of resources. When there is a possible obligation or a present
obligation in respect of which the likelihood of resources is remote,
no provision or disclosure is made.
Contingent assets are neither recognized nor disclosed in the financial
statements However, contingent assets are assessed continually and if
it is virtually certain that in flow of economic benefit will arise,
the asset and related income are recognized in the period in which such
Lease arrangements, where the risk and rewards incidental to the
ownership of asset substantially vests with the lessor are recognized
as operating lease. Lease payments under operating leases are
recognized as an expense in the Profit and Loss Account.
p. Contingencies and Event Occurring after the Balance Sheet Date:
There are no contingencies and events after the Balance Sheet dales
that affect the financial position of the company.