1) BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The Financial Statements are prepared under the historical cost
convention, on accrual basis and in accordance with the generally
accepted accounting principles and applicable Accounting Standards
issued by the Institute of Chartered Accountants of India and the
relevant provisions of the Companies Act, 1956.
2) FIXED ASSETS AND DEPRECIATION
Fixed Assets are stated at cost of acquisition or construction, which
comprises of purchase price (net of Modvat / Cenvat /rebate and
discounts, wherever applicable) and any directly attributable cost of
bringing the asset to its working condition for the intended use.
Expenditure during construction period including borrowing cost,
wherever applicable, is allocated on the direct cost of the relevant
assets on a pro-rata basis.
Depreciation on fixed assets has been provided as under:
a) Depreciation on fixed assets is provided on Straight Line Method at
the rates and in the manner prescribed in schedule XIV to the Companies
Act, 1956 as amended except in the case of following assets for which
depreciation has been provided at higher rates based on the useful life
as determined by Management :
Additions to Communication Equipments (w.e.f. 01.04.2001) 20%
Machinery acquired after expiry of lease term 20%
b) Depreciation on assets added /sold during the year is provided on
pro rata basis with reference to the date of addition/disposal of the
c) Depreciation on incremental cost arising on account of premium on
forward contract of foreign currency liabilities for acquisition of
fixed assets has been provided as aforesaid over the residual life of
the respective assets.
d) Individual assets costing Rs. 5,000/- or less are depreciated in
e) Leasehold land is amortized equally over unexpired period of lease
from the date it is put to use.
a) Raw materials, components, stores & spares are valued at cost on
First in First out (FIFO) basis or net realizable value which ever is
lower. The cost is arrived at after deducting the cenvat credit.
b) Finished goods and work in process are valued at lower of cost or
net realizable value. Cost is arrived at by absorption costing method.
Finished goods and work in process includes cost of conversion incurred
in bringing the inventories to its present location and condition.
c) Scrap is valued at net realizable value.
d) Goods in transit are valued at cost.
4) RECOGNITION OF INCOME AND EXPENDITURE
a) Sales are recognized, net of returns, on dispatch of goods to
customers and are recorded gross of excise duty and net of sales tax
b) Insurance claims made by the company are accounted for at the time
of their acceptance.
c) Product warranty claims are charged to the Profit & Loss account as
and when claimed by the customers on actual basis.
d) Liability on account of customs duty on imported material in transit
is accounted in the year in which the goods are cleared from the
e) Individual prior period items up to Rs. 20,000/- are treated as
income/expenditure for the current year.
5) FOREIGN CURRENCY TRANSACTIONS
Transactions in foreign currencies are recorded at the exchange rates
prevailing on the date of the transaction. Monetary foreign currency
assets and liabilities (monetary items) are reported at the exchange
rate prevailing on the balance sheet date.
'' Monetary Assets and Liabilities hedged by a hedge contract are
expressed in Indian Rupees at the rate of exchange prevailing on the
date of Balance Sheet adjusted to the rates in the hedge contract. The
exchange difference arising either on settlement or at reporting date
is recognized in the Statement of Profit and Loss except in cases where
they relate to acquisition of fixed assets, in which case they are
adjusted to the carrying cost of such assets Pursuant to the
notification of the Companies (Accounting Standards) Amendment Rules
2006 on 31 March 2009, this amended Accounting Standard 11 on the
Effects of changes arising during the year, in so far as they relate to
the acquisition of a depreciable capital asset are added to/deducted
from the cost of the asset and depreciated over the balance life of the
6) EMPLOYEE BENEFITS
Employee benefits have been recognized in accordance with revised
i) Long term compensated absences are provided for based on actuarial
valuation at the end of each financial year.
ii) Provident Fund is a defined contribution scheme and the same is
administered through Regional Employees Provident Fund Organisation.
Contribution to the said Organisation paid/ payable during the year is
recognised in the Profit and Loss account. The shortfall, if any,
between the return guaranteed by the Fund and actual earnings of the
Fund is provided for by the holding company and contributed to the
iii) Gratuity liability is a defined benefit obligation unfunded and is
fully provided for on the basis of actuarial valuation made at the end
of each financial year. The actuarial valuation is made on Projected
Unit Credit (PUC) method.
iv) Actuarial gains/losses are immediately recognised and are not
7) BORROWING COSTS
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalised/ charged to revenue
in accordance with the Accounting Standard-16 issued by the Institute
of Chartered Accountants of India. Other Borrowing Costs are charged
to Profit and Loss Statement.
8) TAXES ON INCOME
a) Provision for current tax is made in accordance with and at the
rates specified under the Income Tax Act, 1961, as amended. Tax
expenses are accounted in the same period to which the revenue and
b) Provision for deferred tax is made in accordance with Accounting
Standard 22-'' Acounting for Taxes on Income'' issued by the Institute
of Chartered Accountants of India. The deferred tax charge or credit is
recognized, using current tax rates, for timing differences between
book and tax profits that originate in one period and are capable of
reversal in one or more subsequent periods. Deferred tax assets are
recognized only when there is virtual certainty of realization of such
assets in future. Such assets are reviewed at each balance sheet date
to reassess realization.
9) REDEMPTION PREMIUM ON FOREIGN CURRENCY CONVERTIBLE BONDS
Premium payable on redemption of FCCB as per terms of issue is provided
fully in the year of issue.
10) IMPAIRMENT OF ASSETS
An Asset is treated as impaired when its carrying cost exceeds its
recoverable amount on the reporting date. An impairment loss is charged
to the Profit & loss account in the year in which an asset is
identified as impaired. The impairment loss recognized in prior periods
is reversed if there has been a change in the estimate of recoverable
amount. The recoverable amount is measured as the higher of the net
selling price and the value in use determined by the present value of
estimated future cash flows.
11) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:
Provisions 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 to accounts. Contingent assets are neither recognized nor
disclosed in the financial statements.
12) PROPOSED DIVIDEND:
Dividend on Share Capital, if proposed by the Directors, is provided in
13) CASH & CASH EQUIVALENTS
Cash and cash equivalents comprise cash and cash on deposit with banks.
The Company considers all investments that are readily convertible to
known amounts of cash to be cash equivalents.
14) USE OF ESTIMATES
The preparation of the financial statements in conformity with GAAP
requires the Management to Make estimates and assumptions that the
affect the reported balances of assets and Liabilities, disclosures
relating to contingent liabilities as at the date of the financial
statements and reported amounts of revenues and expenses for the year.
Actual results could differ from these estimates. Any revision is
recognized prospectively in current and future period.
15) Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit
before tax is adjusted for the effects of transactions of a non-cash
nature, any deferrals or accruals of past or future operating cash
receipts or payments and item of income or expenses associated with
investing or financing cash flows. The cash flows from operating,
investing and financing activities of the Company are segregated.