BASIS OF PREPARATION OF FINANCIAL STATEMENTS
a) The financial statements are prepared under the historical cost
convention, in accordance with applicable mandatory accounting
standards prescribed under the Companies (Accounting Standards), Rules,
2006 and the relevant provisions of the Companies Act, 1956.
All assets and liabilities have been classified as current or non
current as per the company’s normal operating cycle and the criteria
set out in Revised Schedule VI to the Companies Act, 1956. The Company
has ascertained its operating cycle as 12 months for the purpose of
current/non current classification of assets and liabilities.
ii) FIXED ASSETS
All fixed assets are stated at cost of acquisition less accumulated
depreciation. Cost includes taxes, duties, freight and other
identifiable direct cost incurred to bring the assets to their working
condition for intended use. Interest on borrowed funds attributable to
the qualifying assets upto the period such assets are put to use is
included in the cost of fixed assets.
Depreciation on fixed assets is provided on Written Down Value method
at the rates and in the manner specified in Schedule XIV to the
Companies Act, 1956 on pro rata basis from the date of put to use. In
respect of assets sold, discarded etc. during the year, depreciation is
provided up to date of sale/discard. Assets costing up to Rs.5000/-
each are depreciated fully in the year of purchase.
iv) REVENUE RECOGNITION
Sales are shown net of returns and excluding sales tax wherever
Inventories are shown at lower of cost or net realizable value.
Long-term investments are valued at cost with an appropriate provision
for permanent diminution in value.
Provision for current tax is made after taking into consideration
benefits admissible under the Provisions of the Income Tax Act, 1961.
Deferred tax is recognized subject to the consideration of prudence, on
timing differences, being the difference between taxable income and
accounting income that originate in one period and are capable of
reversal in one of more subsequent periods. Deferred tax assets are
recognized only to the extent there is virtual certainty and convincing
evidence that there will be sufficient future taxable income available
to realize such assets.
viii) IMPAIRMENT OF ASSETS
The carrying values of assets/cash generating units at each balance
sheet date are reviewed for impairment of assets. If any such
indication exists, impairment loss i.e. the amount by which the
carrying amount of an asset exceeds its recoverable amount is provided
in the books of accounts. In case there is any indication that an
impairment loss recognized for an asset in prior accounting periods no
longer exists or may have decreased, the recoverable value is
reassessed and the reversal of impairment loss is recognized as income
in the profit & loss account.
ix). PROVISIONS/CONTINGENT LIABILITIES
A provision is recognized when the company has a present obligation as
a result of a past event and it is probable that an outflow of
resources would be required to settle the obligation, and in respect of
which a reliable estimate can be made. Provisions are reviewed at each
balance sheet date and are adjusted to effect the current best
A contingent Liability is disclosed after a careful evaluation of the
facts and legal aspects of the matter involved where the possibility of
an outflow of resources embodying the economic benefits is remote.
x). FOREIGN EXCHANGE TRANSACTIONS
Transactions in foreign currency are recorded on initial recognition at
the exchange rate prevailing at the time of the transaction.
Transactions outstanding at the year end are translated at exchange
rates prevailing at the year end and the profit/loss so determined is
recognized in the profit and loss account