BASIS OF PREPARATION:
The financial statements have been prepared to comply in all material
respects with the accounting standards notified by Companies Accounting
Standards Rules, 2006 and the relevant provisions of the Companies Act,
1956 (‘the Act''). The financial statements have been prepared under
historical cost convention on an accrual basis in accordance with
accounting principles generally accepted in India. The accounting
policies have been consistently applied by the Company and are
consistent with those used in the previous year
USE OF ESTIMATES:
The preparation of financial statements is in conformity with generally
accepted accounting principles require the management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the result of operations during the reporting
period. Although these estimates are based upon management''s best
knowledge of current events and actions, actual results could differ
from these estimates. Significant estimates used by the management in
the preparation of these financial statements include estimates of the
economic useful lives of fixed assets and provisions for bad and
doubtful debts. Any revision to accounting estimates is recognized
(a) Accounting Convention and Revenue Recognition:
The Financial Statements have been prepared on a going concern basis.
The Company follows the mercantile system of accounting and recognizes
income and expenditure on accrual basis.
Sales are accounted inclusive of Excise duty and Sales tax and net of
(b) Cash Flow Statement : AS-3
The Company has prepared Cash Flow Statement as per the AS-3.
(c) Retirements Benefits:
The Company has not made any provision for Gratuity to its employees.
It is recognizing the gratuity expenditure on payment basis which is
not in accordance with AS-15.
(d) Fixed Assets:
Fixed Assets are stated at cost less accumulated depreciation. Cost of
acquisition of Fixed Assets is inclusive of freight, duties, taxes and
incidental expenses there to. Capital Work-in- Progress includes cost
of Fixed Assets under installation /construction on the date of Balance
sheet, any unallocated expenditure and Interest during construction
period on loans taken to finance the Fixed Assets. Advances paid
towards acquisition of assets are also included under capital work in
(e) Depreciation and amortization:
Depreciation on Fixed Assets is provided on straight-line method as per
the rates specified in Schedule XIV of the Companies Act, 1956. This is
in accordance with the AS-6 and there is no change in the method of
Depreciation during the year
Preliminary expenses are amortized over a period of 10 years.
Long term investments are stated at cost. However, provision for
diminution is made to recognise any decline, other than temporary, in
the value of long term investments. Current Investments are stated at
the lower of cost and fair value.
(g) Borrowing Cost :
Borrowing cost relating to acquisition/ construction of qualifying
assets are capitalized until the time all substantial activities
necessary to prepare the qualifying assets for their intended use are
complete. A qualifying asset is one that necessarily takes substantial
period of time to get ready for its intended use/sale. Borrowing cost
that are attributable to the projects are charged to the respective
projects. All other borrowing costs, not eligible for inventorisation/
capitalisation, are charged to revenue.
Inventories are valued as under.
i) Raw materials, stores and spares - at cost.
ii) Finished Goods and work-in-progress - at cost or net realizable
value whichever is lower. Cost includes cost of direct material, labor,
iii) Scrap - at net realizable value.
(i) Taxes on Income :
a) Provision for tax for the year comprises current Income Tax and
Deferred Tax and is provided as per the Income Tax Act, 1961.
b) Provision for current income tax is made on the tax liability
calculated on taxable income after considering tax allowances,
deductions and exemptions determined in accordance with the prevailing
c) Deferred tax resulting from timing differences between the book and
the tax profits is accounted for, at the current rate of tax, to the
extent that the timing differences are expected to crystallize.
Deferred tax assets are recognized only to the extent there is
reasonable certainty that the assets can be realized in the future;
however where there is unabsorbed depreciation or carried forward loss
under taxation laws, deferred tax assets are recognized only if there
is a virtual certainty of realization of such assets. Deferred tax
assets/ liabilities are reviewed as at each balance sheet date.
(j) Provisions, Contingent liabilities and contingent Assets:
Provisions are recognized only when there is a present obligation as a
result of past events and when a reliable estimate of the amount of the
obligation can be made. Contingent liability is disclosed for present
obligations arising from past events where it is not probable that an
outflow of resources will be required to settle the obligation or a
reliable estimate of the amount of the obligation cannot be made.
Contingent assets are not recognized in the financial statements since
this may result in the recognition of income that may never be
realized. (In line with AS-29)
(k) Earnings per Share:
The earnings considered in ascertaining the Earning Per Share comprise
of Net Profit after Tax. The number of shares used in computing Basic
Earnings Per Share is the Weighted Average number of shares outstanding
during the year, as per AS-20.
(l) Impairment of Assets:
Management periodically assesses using external and internal sources
whether there is an indication that an asset may be impaired.
Impairment occurs where the carrying value exceeds the present value of
future cash flows expected to arise from the continuing use of the
asset and its eventual disposal. The impairment loss to be expensed is
determined as the excess of the carrying amount over the higher of the
asset''s net sale price or present value as determined above.
(m) Related Party Disclosures:
The Company as required by AS-18 furnishes the details of Related Party
Disclosures in schedule 11.