a. BASIS OF PREPARATION
The financial statements have been prepared and presented under the
historical cost convention on the accrual basis of accounting and
comply with the Accounting Standards prescribed by Companies
(Accounting Standards) Rules, 2006, as amended and other pronouncements
of the Institute of Chartered Accountants of India (''ICAI'').
All assets and liabilities have been classified as current or
non-current as per the Companys'' normal operating cycle and other
criteria set out in Schedule VI to the Companies Act, 1956. Based on
the nature of operations of the Company, the Company has ascertained
its operating cycle as 12 months for the purpose of current/non-current
classification of all assets and liabilities.
b. USE OF ESTIMATES
The preparation of the financial statements is in conformity with
Generally Accepted Accounting Principles (GAAP) and requires management
to make estimates and assumptions that affect the reported amounts of
income and expenditure for the period ended, assets and liabilities and
disclosures of contingent liabilities on the date of the financial
statements. The estimates and assumptions used in the accompanying
financial statements are based upon management''s evaluation of relevant
facts and circumstances as of the date of financial statement. Actual
results could differ from those estimates. Any revision to accounting
estimates is recognised prospectively in future periods.
c. FIXED ASSETS AND DEPRECIATION
Tangible Fixed Assets are stated at cost of acquisition or construction
less accumulated depreciation. The cost of fixed assets includes
non-refundable taxes and levies, freight and other incidental expenses
related to acquisition and installation, financing costs during the
period of construction for qualifying assets .
Depreciation on fixed assets is provided on Written Down Value Method
at the rate and in the manner prescribed in Schedule XIV to the
Companies Act, 1956. Depreciation on assets purchased/acquired during
the year is charged from the date of purchase of the assets. Similarly
depreciation on assets sold/discarded during the year is charged upto
the date of sale of assets.
a) Raw Materials, Stores & Spares, Work in Process and Finished Goods
are valued at lower of cost or net realisable value.
b) Cost for Raw materials is determined on FIFO basis, net of cenvat
c) Cost for Finished Goods and Work in Process Stock is determined
taking material cost [net of cenvat credit availed] labour and relevant
appropriate overheads and cenvat duty.
d) Scrap, empty drums and replaced materials are valued at net
Long-term (Non Current) investments are stated at cost. Provision is
made for diminution in the value of the investments, if the same is
considered to be other than temporary in nature.
f. REVENUE FROM OPERATION
Revenue from operations includes sale of goods and works contract
includes excise duty, adjusted for discounts (net), Value Added Tax
Sales of product are recognised when risk and rewards of ownership of
the products are passed on to the customers, which is generally on
despatch of goods. Revenue is recognized only when it can be reliably
measured and it is reasonable to expect ultimate collection.Export
sales are accounted on the basis of date of Bill of lading.
g. RECOGNITION OF OTHER ITEMS OF INCOME & EXPENDITURES
Income and Expenditure are accounted for on accrual basis.
h. EMPLOYEE BENEFITS
(i) Short term employee benefits
All employee benefits falling due wholly within twelve months of
rendering the services are classified as short term employee benefits,
which includes benefits like salary, wages, short term compensated
absences and bonus, are recognized as expenses in the period in which
the employee renders the related service.
(ii) Post-employment Benefits
(a) Defined Contribution Plans
The Company has Defined Contribution Plans for Post employment benefits
in the form of Provident/Family Pension Fund for all employees which
are administered by Regional Provident Fund Commissioner. Provident
Fund and Family Pension Fund are classified as defined contribution
plans as the Company has no further obligation beyond making the
contributions. The Company''s contributions to Defined Contribution
plans are charged to the Profit and Loss Statement as and when
(b) Defined Benefit Plans
Non-Funded Plan : The Company has a defined benefit plan for
Post-employment benefit in the form of Gratuity. Liability for the
above defined benefit plan is provided on the basis of valuation, as at
the Balance Sheet date, carried out by an independent actuary. The
actuarial method used for measuring the liability is the Projected Unit
(iii) Termination benefits are recognised as an expense as and when
(iv) The Acturial gains and losses arising during the year, are
recognised in the Profit and Loss Statement.
(v) Provision is made for value of un-availed leaves due to employees
at the end of accounting year on actual calculations.
i. FOREIGN CURRENCY TRANSACTIONS
Transactions in foreign currency are accounted for at exchange rates
prevailing on the date of the transaction. Foreign currency assets and
liabilities (monetary items-trade receivables / trade payables) at the
year-end are accounted for at year-end exchange rates and differences,
if any, are adjusted in the Profit & Loss Statement. Exchange
differences arising on settlement of monetary items (trade receivables
/ trade payables) are recognised as income or expense in the period in
which the settlements are made.
j. IMPAIRMENT OF ASSETS
The Company evaluates the impairment losses on the fixed assets
whenever events or changes in circumstances indicate that their
carrying amounts may not be recoverable at the year-end in
term of clause 5 to 13 of AS -28. If such assets are considered to be
impaired the impairment loss is then recognised for the amount by which
the carrying amount of the assets exceeds its recoverable amount.
Recoverable amount is the higher of an asset''s 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 the appropriate
An impairment loss is charged to the Profit and Loss Statement in the
year in which an asset is identified as impaired. The impairment loss
recognized in prior accounting periods is reversed if there has been a
change in the estimate of recoverable amount.
k. BORROWING COST
Interest and other costs in connection with the borrowings of the funds
to the extents related/ attributed to the acquisition /construction of
qualifying fixed assets are capitalised upto the date when such assets
are ready for their intended use and other borrowing costs are charged
to Profit and Loss Statement.
Tax expenses for the year comprising, current tax and deferred tax, are
included in determining the net profit for the year. A provision is
made for the current tax based on tax liability computed in accordance
with relevant tax rates and tax laws. A provision is made for deferred
tax for all timing differences arising between taxable income and
accounting income at currently enacted or substantively enacted tax
rates. Deferred tax assets are recognized only if there is reasonable
certainty that they will be realized and are reviewed for the
appropriateness of their respective carrying values at each Balance
Where the Company is a Lessee
Leases where the Lessor effectively retains substantially all the risks
and benefits of ownership of the Leased Asset, are classified as
''Operating Leases. Lease rentals with respect to assets taken on
''Operating Lease'' are charged to Profit and Loss Statement on a
straight line basis over the lease term.
Leases which effectively transfer to the Company substantially all the
risks and benefits incidental to the ownership of the leased item are
classified as ''Finance Lease''. Assets acquired on Finance Lease which
substantially transfer all the risks and rewards of ownership to the
Company are capitalized as assets by the Company at the lower of the
fair value and the present value of the minimum lease payment and a
liability is created for an equivalent amount. Amortization of
capitalized Leased asset is computed on Straight Line Method over the
useful life of the asset . Lease rentals payable is apportioned
between the liability and finance charge so as to obtain a constant
periodic rate of interest on the outstanding liability for each year.
n. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Provisions involving substantial degree of estimation in measurements
are recognized when there is a present obligation as a result of past
event and it is probable that there will be an outflow of resources.
Contingent liabilities are disclosed in respect of possible obligations
that arises from past events but their existence is confirmed by the
occurence or non occurence of one or more uncertain future events not
wholly within the control of the Company. Contingent Assets are neither
recognized nor disclosed in the financial statements.