1. Basis of Preparation of Financial Statements
The Financial Statements are prepared in accordance with Indian
Generally Accepted Accounting Principles (GAAP) under the historical
cost convention on accrual basis. GAAP Comprises Accounting Standards
as specified in the Companies (Accounting Standard) Rules, 2006, the
provisions of the Companies Act, 1956 and guidelines issued by the
Securities and Exchange Board of India. Accounting policies have been
consistently applied, unless otherwise stated, ongoing concern basis.
The Company follows mercantile system of accounting and recognizes
significant items of income and expenditure on accrual basis, unless
2. Use of Estimates
The preparation of financial statements requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of 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.
3. Fixed Assets and Capital Work in Progress
Fixed Assets are stated at cost net of CENVAT/Value Added Tax, any
subsidy less accumulated depreciation and impairment loss if any. All
costs, including financing costs till commencement of commercial
production, net charges on foreign exchange contracts and adjustments
arising from exchange rate variations attributable to the fixed assets
are capitalized. Capital work in progress comprises outstanding
advances paid to acquire fixed assets, and the cost of fixed assets
that are not yet ready for their intended use at the balance sheet
Depreciation on fixed assets is applied on the straight - line basis at
the rates and in the manner prescribed in Schedule XIV to the Companies
Act 1956 over the useful life of the assets.
5. Foreign Currency Transactions
(a) Transactions denominated in foreign currencies are recorded at the
exchange rate prevailing on the date of the transaction
(b) Monetary items denominated in foreign currencies at the year-end
are restated at year end rates. In case of items which are covered by
foreign exchange contracts, the transaction is recorded at the rate
when the same was incurred. The premium paid on forward contracts is
recognized only when the forward contract is matured.
(c) Any income or expense on account of exchange difference either on
settlement or on translation is recognized in the profit or loss
account except in cases where they relate to acquisition of fixed
assets, in which case they are adjusted to the carrying cost of such
Current Investments are carried at the lower of cost or quoted / fair
value, computed category wise. 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 valued at lower of cost or net realizable value after
providing for obsolescence, if any. In case of raw materials, packing
material, stores and spares, the cost includes duties and taxes (Net of
CENVAT/VAT, wherever applicable) and is arrived on FIFO basis. Finished
goods & WIP cost includes the cost of raw materials, an appro- priate
share of fixed and variable overheads on the basis of standard cost
method and other costs bringing them to their respective present
location and condition. Obsolete, defective and unserviceable stocks
are provided for wherever required.
Turnover includes sale of goods, services, adjusted for discounts, net
of returns, sales tax, service tax and excise duty. Sales are
recognized when goods are supplied and are recorded freight charges
realized from customers but exclude trade discounts and rebates. Export
incentive receivable in cash is recognized as income on export being
made. Export sales include goods invoiced against confirmed orders /LC.
9. Employees'' Retirement Benefits
The Company is making regular contribution to PF and other statutory
funds and their contribution is charged to P&L A/c. Provision has been
made in accounts with respect of liability for future gratuities only
for eligible employ- ees and leave encasement payable to the employees
of the company as per the provisions of Payment of Gratuity Act. 1972,
for the time being in force
10. Revenue Recognition
Revenue it recognized only when it can be reliably measured and it is
reasonable to expect ultimate collection. Interest is recognized on
the time proportion basis taking into account amount outstanding and
rate applicable. The income & expenditure are accounted for on accrual
11. Deferred revenue Expenditure
Pre - operative expenditure/Deferred Revenue Expenditure are being
amortized over a period of 5 Years
12. Provision of Current and Deferred Tax
Provision for current tax is made after taking into consideration
benefits admissible under the provisions of the Income Tax Act, 1961.
Deferred tax resulting from timing Differences between taxable and
accounting incomes is accounted for using the tax rates and laws that
are substantively enacted as on the balance sheet date. The deferred
tax is recognized and carried forward only to the extent that there is
a virtual certainty supported with convincing evidence that the asset
will be realized in future.
13. Dues to Micro, Small & Medium Enterprises
The classification of the suppliers under Micro, Small and Medium
Enterprises Development Act, 2006 is made on the basis of information
made available to the company. No principal amount or interest amount
remain unpaid to such Micro and Small Enterprises as on 31.03.2012 and
no payments were made to such enterprises beyond the appointed
day during the year. Also the Company has not paid any interest in
terms of Section 16 of the above mentioned Act or otherwise.
14. Sales / Transfers
Inter-unit transfers of finished goods for captive consumption are
valued at market price. The value of such inter- unit transfers is
included in the material consumption of consuming units. The year end
stock of such transferred goods is valued at cost.
15. Sundry Debtors
Sundry debtors are stated after writing off- bad debts.
16. 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 on the
notes. Contingent assets are neither recognized nor disclosed in the
17. Expenditure during construction
In respect of new projects, all expenses including interest incurred up
to the date of commencement of commercial production are capitalized.
In respect of substantial expansion of business at existing location
only direct costs are capitalized together with interest on funds
related to them up to the date of commercial production.
18. Borrowing Costs
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
of such assets. A qualifying asset is one that takes necessarily
substantial period of time to get ready for its intended use. All other
borrowing costs are charged to Profit & Loss Account.
19. Impairment of Assets
At each Balance Sheet date, the Company assesses whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount. If the carrying
amount of the asset exceeds its recoverable amount, an impairment loss
is recognized in the Profit & Loss Account to the extent the carrying
amount exceeds recoverable amount. The Impairment loss recognized in
the prior period is reversed if there has been a change in the estimate
of Recoverable amount.
Lease rentals in respect of finance lease are segregated into cost of
assets and interest component by applying the implicit rate of return.
Assets acquired on lease where a significant portion of the risks and
rewards of ownership are retained by the lessor are classified as
operating leases. Lease rentals are charged to the Profit and Loss
Account on accrual basis.
21. Government Grants
Any govt grants, subsidy of capital nature is reduced from the cost of
respective fixed assets and other grants, subsidies of revenue nature
are net off against the respective expenses.