1. Basis of preparation of financial statements
The financial statements have been prepared on the basis of going
concern, under the historic cost convention on accrual basis, to comply
in all material aspects with applicable Generally Accepted Accounting
Principles in India (Indian GAAP), the Accounting Standards
(AS) notified under Section 211 (3C) of the Companies Act, 1956
(the Act) and the relevant provisions of the Act.
2. Use of Estimates
The preparation of financial statements in conformity with the
generally accepted accounting principles requires estimates and
assumptions to be made that may affect the reported amount of assets
and liabilities and disclosures relating to contingent liabilities as
at the date of the financial statements and the reported amount of
revenues and expenses during the reporting period. Management believes
the estimates used in the preparation of financial statements are
prudent and reasonable. Actual results could differ from those
estimated. Any revision to accounting estimate is recognized
prospectively in the current and future periods.
3. Tangible Fixed Assets
Tangible Fixed Assets are stated at cost less accumulated depreciation.
Cost comprises the purchase price and any attributable costs of
bringing the asset to their working condition for their intended use.
4. Intangible Assets
Intangible Assets are recorded at their cost of acquisition. Cost of an
internally generated asset, if any, comprises all expenditure that can
be directly attributed, or allocated on a reasonable and consistent
basis, to creating, producing and making the asset ready for its
Cost of leasehold land is amortised over the remaining period of lease
after the commencement of commercial production.
Depreciation on other Fixed Assets is provided on Straight Line Method
at the rates and in the manner specified in Schedule XIV to the
Companies Act, 1956. Continuous process plants are classified on
technical assessment and depreciation provided accordingly.
Depreciation on the Fixed Assets added/disposed off/ discarded during
the year is provided on pro-rata basis with reference to the month of
addition / disposal/ discarding.
6. Amortisation of Intangible assets
The Intangible Assets are amortised on straight line basis based on
their actual life of ten years whichever is lower.
7. Borrowing Costs:
Borrowing costs attributable to the acquisition or construction of
qualifying assets which take substantial period of time are capitalised
as part of cost of such asset up to the date when such asset is ready
for its intended use. Other borrowing costs are recognised as an
expense in the period in which they are incurred.
Investments which are readily realizable and are intended to be held
for not more than one year from the date, on which such investments are
made, are classified as current investments. All other investments are
classified as long term investments.
Long-term investments are carried at cost of acquisition. Provision is
made only when in management''s opinion there is a decline, other than
temporary, in the carrying value of such investments. Current
investments are valued at lower of cost and market value.
Raw materials and Stores and spares are valued at or below cost. Other
inventories are valued at lower of cost and net realizable value. The
method of determination of cost of various categories of inventories is
Raw Materials: weighted average cost, cost includes purchase cost and
Finished Goods & Work-in-process : weighted average cost of production,
which comprises of direct material costs, direct wages and applicable
overheads. Excise duty is included in the value of finished goods. The
obsolete, defective and unserviceable stocks and duty are provided for
Store & Spares: Weighted average cost
Stock in Trade: Weighted average cost
10.Foreign Currency Transactions
Transactions made during the year in foreign currency are recorded at
the exchange rate prevailing at the time of transactions. Monetary
assets and liabilities relating to foreign currency transactions
remaining unsettled at the year-end are translated at the exchange rate
prevalent at the date of Balance Sheet. Exchange differences arising on
actual payment/ realisation and year end reinstatement referred to
above are recognised in the Statement of Profit and Loss.
11. Revenue Recognition
The Company recognises Sales at the point of dispatch of goods to the
customers which coincides with the transfer of risks and rewards. .
Sales include amount recovered towards Excise Duty and exclude Sales
tax and Value added tax. Interest income is accounted for on accrual
Provision for Taxation is made for the current accounting period
(reporting period) on the basis of the taxable Income as determined in
accordance with the provision of Income Tax Act, 1961.
Deferred Tax resulting from timing differences between book and tax
profits is accounted for under the liability method using the tax rates
and laws that have been substantively enacted as at the Balance Sheet
date, to the extent that the timing differences are expected to
Deferred tax assets are recognised only to the extent there is
reasonable certainty that the assets can be realized in future.
However, where there is unabsorbed depreciation or carried forward loss
under taxation laws, deferred tax assets are recognised only if there
is a virtual certainty of realisation of such assets. Deferred tax
assets are reviewed as at each Balance Sheet date and written down or
written up to reflect the amount that is reasonably/virtually certain
to be realized.
Grants relating to Fixed Assets in the nature of project capital
subsidy are credited to Capital Reserve.
14. Retirement Benefits:
Defined contribution plans
Contributions paid/payable to defined contribution plans comprising
Provident Fund for employees covered under the Scheme are recognised in
the Statement of Profit and Loss each year.
The Company makes contributions to Recognised Provident Fund for
employees, at a specified percentage of the employees'' salary. The
Company does not have any other obligation apart from making
contributions to the fund.
Defined benefit plans
Gratuity for employees is covered under a Scheme of Life Insurance
Corporation of India (LIC) and contributions in respect of such scheme
are recognised in the Statement of Profit and Loss. The liability as at
the Balance Sheet date is provided for based on the actuarial valuation
carried out as at the end of the year.
Other long term employee benefits
Other long term employee benefits comprise of leave encashment which is
provided for based on the actuarial valuation carried out as at the end
of the year.
15.Earnings per Share
Basic earning per share is calculated by dividing the net profit for
the period attributable to equity shareholders by the weighted average
number of equity shares outstanding during the period. The weighted
average number of equity shares outstanding during the period is
adjusted for events of subsequent issue of shares.
For the purpose of calculating diluted earnings per share, the net
profit for the period attributable to equity shareholders and weighted
average number of shares outstanding during the period is adjusted for
the effects of all dilutive potential equity shares.
16.Impairment of Assets
The carrying amounts of the Company''s assets are reviewed at each
Balance Sheet date. If any indication of impairment exists, an
impairment loss is recognised to the extent of the excess of the
carrying amount over the estimated accountable amount.
17.Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognised in respect of present probable obligations,
the amount of which can be reliably estimated.
Contingent Liabilities are disclosed in respect of possible obligations
that arise from past events but their existence is confirmed by the
occurrence or non occurrence of one or more uncertain future events not
wholly within the control of the Company.
A Contingent asset is neither recognized nor disclosed in the financial