(a) Basis of Accounting
The Financial Statements have been prepared and presented under the
historical cost convention on accrual basis of accounting principles
generally accepted in India (GAAP) and comply in material respect with
the mandatory Accounting Standards (AS) issued by the Institute of
Chartered Acountants of India and notified under the Companies
Accounting Statndard Rules, to the extent applicable and with the
relevant provisions of the Companies Act, 1956 except accounting for
tax demands and Bonus which are accounted for on cash basis.
(b) Use of Estimates
The preparation of Financial statements in conformity with GAAP
requires management to make estimates and assumption that affect the
reported amounts of Assets and Liabilities and disclosure of contingent
liabilities on the date of the financial statements and reported
amounts of the revenue and expenses for the year. Actual result could
differ from these estimates is recognised prospectively in the current
and future periods.
(c) Fixed Assets
Fixed Assets are capitalised at acquisition cost and any cost directly
attributable to bringing the assets to their working condition for the
(d) Depreciation on Fixed Assets is provided on straight line method at
the rates prescribed under Schedule XIV of the Companies Act, 1956.
Inventories comorising of saleable stock are valued at cost or net
realisable value, which ever is lower. Consumbale stock are valued at
(f) Revenue Recognition
Revenue is recognised when the property in the goods is transferred in
favor of the customer, which normally coincides with the date of
physical delivery. In case of transit sales where goods are transferred
by transfer of the documents of title, revenue is recognised on the
transfer of the document of title.
Interest on Fixed Deposits is recognised on accrual basis.
Income from sale of Scrap is accounted on cash basis.
(g) Foreign Currency Transactions
Transactions in foreign currencies are accounted at the prevailing
exchange rates. Year end balances of payables are translated at
applicable year end rates and resultant translation differences are
recognised in the Profit and Loss account.
(h) Retirement Benefits
Gratuity expenses are accounted for on accrual basis. Provident fund
contribution are charged in the year / period the same are incurred.
(i) Borrowing Costs
Interest/Finance Cost on loans specifically borrowed for and expansion
of projects, upto the point when the project is ready for start of
commercial production is charged to the capital cost of the projects
concerned. All other borrowing costs are charged to revenue.
(j) Impairment of Assets
Consideration is given at each balance sheet date to determine whether
there is any indication of impairment of the carrying amount of the
Company''s fixed assets. If any indication exists, an asset''s
recoverable amount is estimated. An impairment loss is recognised
whenever the carrying amount of the asset exceeds its recoverable
amount.The recoverable amount is the greater of the net selling price
and value in use.In assessing value in use, the estimated future cash
flows are discounted to their present value based on an appropriate
(k) Prior period and Extraordinary items
The nature and amount of prior period items and extraordinary items are
seperately disclosed in the statement of profit and loss in a manner
that their impact on current profit and loss account can be perceived.
(m) Income Tax Expenses
Income Tax expense comprise of current tax and deferred tax charge or
The current charge for Income taxes is calculated in accordance with
the relevant tax regulations applicable to Company.
Deffered Tax charge or credit reflects the tax effects of timming
difference between accounting income and taxable income for the period.
The deferred tax charges or credit and the corresponding deferred tax
liabilities or assets are recognised using the tax rates that have been
enacted or substantially enacted by the balance sheet date. Deferred
tax assets are recognised only to the extent there is reasonable
certainty that the assets can be realised in future; however, where
there is unabsorbed depreciation or carry forward losses, deferred tax
assets are recognised only if there is a virtual certainty of
realisation of such assets. Deferred tax assets are reviewed at each
balance sheet date and is written -up to reflect the amount that is
reasonably or virtually certain, as the case may be, to be realised in
The break-up of the major components of the deferred tax assets and
liabilities as at balance sheet date has been arrived at after setting
off deferred tax assets and liablities where the Company has a legally
enforceable rights to set-off assets against liabilities and where such
assets and liabilities relate to taxes on income levied by the same
governing taxation laws.
(n) Earings per Share
The basic Earnings Per Share (EPS) is computed by dividing the
annualised net profit after tax for the period by the weighted average
number of equity shares outstanding as at the end of the period. For
the purpose of calculating diluted earnings per share, net profit after
tax for the period and the weighted average number of outstaning during
the year are adjusted for the effects of all dilutive potential equity
shares. The dilutive potential equity shares are deemed converted as of
the beginning of the period, unless they have been issued at a later
date. The dilutive potential equity shares have been adjusted for the
proceeds receivable had the shares been actually issued at fair value
(i.e. the average market value of the outstanding shares).
(o) Provisions, Contingent Liability and Assets
Provisions are recognized in terms of Accounting
Standard-29Provisions,Contingent Liabilities and Contingent Assets,
issued by the Institute of Chartered Accountants of India, where there
is a present legal or statutory obligation as a result of past events,
where it is probable that there will be outflow of resources to settle
the obligation and when a reliable estimate of the amount of the
obligation can be made.Contingent Liabilities are recognized only when
there is a possible obligation from past events due to occurrence or
non-occurrence of one or more uncertain future events not wholly within
the control of the Company or where any present obligation cannot be
measured in terms of future outflow of resources or where a reliable
estimate of the obligation cannot be made. Obligations are assessed on
an ongoing basis and only those having a largely probable outflow of
resources are provided for.
Contingent Assets are neither recognised nor disclosed.