A. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
These financial statements are prepared in accordance with Indian
Generally Accepted Accounting Principles (GAAP) under the historical
cost convention on the accrual basis except for certain financial
instruments which are measured at fair values. GAAP comprises mandatory
accounting standards as prescribed under Section 133 of the Companies
Act, 2013 (''Act'') read with Rule 7 of the Companies (Accounts) Rules,
2014, the provisions of the Act (to the extent notified) and guidelines
issued by the Securities and Exchange Board of India (SEBI). Accounting
policies have been consistently applied except where a newly issued
accounting standard is initially adopted or a revision to an existing
accounting standard requires a change in the accounting policy hitherto
B. USE OF ESTIMATES
The preparation of the financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the
reported balances of assets and liabilities and disclosures relating to
contingent liabilities as at the date of the financial statements and
reported amounts of income and expenses during the period.
Accounting estimates could change from period to period. Actual results
could differ from those estimates. Appropriate changes in estimates
are made as the Management becomes aware of changes in circumstances
surrounding the estimates. Changes in estimates are reflected in the
financial statements in the period in which changes are made and, if
material, their effects are disclosed in the notes to the financial
C. FIXED ASSETS
i. Fixed Assets are stated at historical cost less
depreciation. The cost comprises directly attributable costs such as
freight, insurance and specific installation charges for bringing the
assets to their working condition for intended use.
ii. Intangible Assets are recognized on the basis of recognition
criteria as set out in Accounting Standard AS- 26 Intangible Assets.
Depreciation is provided on the basis of Straight Line Method as per
the rates and in the manner prescribed in Schedule II of the Companies
i. Finished Goods are valued at cost or net realizable value whichever
ii. Raw materials are valued at lower of cost or net realizable value
iii. By products are valued at estimated realizable price.
iv. Stores and Spare parts are valued at/or under cost.
Cost for the purpose of inventory valuation is computed on FIFO (First
In First Out) basis.
F. REVENUE RECOGINTION
Revenue is recognized on mercantile basis except for claims/insurance
claims, which are accounted for on ascertainment basis in view of
uncertainty involved in determining the final amount.
Interest income on fixed deposit with bank is recognized on time
proportion basis taking into account the amount outstanding and the
Dividend income from investments is recognized when the Company''s right
to receive payment is established.
G. CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash at bank and in hand and short
term investments with an original maturity of three months or less.
State subsidies are accounted for on receipt basis.
I. RETIREMENT BENEFITS
Provision for Gratuity in the nature of defined benefit obligation is
considered on the basis of revised Accounting Standard (AS-15) on
actuarial valuation. The discount rate and other actuarial assumptions
are based on the parameters defined in the Accounting Standard.
ii. PROVIDENT FUND
Company''s contribution to the Provident Fund in the nature of Defined
Contribution Plan is being charged to Statement of Profit & Loss
Account in the year in which services are rendered by the employees.
iii. LEAVE ENCASHMENT
Short term benefits are provided for on accrual basis on the basis of
J. TAXES ON INCOME
Income tax expense is accounted for in accordance with AS-22,
Accounting for Taxes on Income, as stated below:
i. Provision for current tax is made based on taxable income
for the year computed in accordance with provisions of the Income Tax
ii. Deferred tax is recognized, subject to the consideration of
prudence, on timing differences, being the difference between taxable
income and accounting income that originate in one period and are
capable of reversal in one or more subsequent periods.
iii. Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date. Deferred
tax assets and deferred tax liabilities are offset, if a legally
enforceable right exists to set off current tax assets against current
tax liabilities and the deferred tax assets and deferred tax
liabilities relate to the taxes on income levied by same governing
iv. Deferred tax asset is recognized and carried forward to the extent
that there is a reasonable certainty of realization. In the case of
unabsorbed depreciation and carry forward tax losses deferred tax asset
is recognized, to the extent there is virtual certainty that sufficient
future taxable income will be available against which such deferred tax
assets can be realized.
K. IMPAIRMENT OF ASSETS
Impairment loss is recognized wherever the carrying amount of an asset
is in excess of its recoverable amount and the same is recognized as an
expense in the statement of profit and loss account and carrying amount
of the asset is reduced to its recoverable amount. Post impairment,
depreciation is provided on the revised carrying value of the asset
over its remaining useful life. Reversal of impairment losses
recognized in prior years is recorded when there is an indication that
the impairment losses recognized for the asset no longer exist or have
L. PROVISIONS, CONTINGENT LIABILITIES AND
A provision is recognized if, as a result of a past event, the Company
has a present legal obligation that is reasonably estimable and it is
probable that an outflow of economic benefits will be required to
settle the obligation. Provisions are determined by the best estimate
of the outflow of economic benefits required to settle the obligation
at the reporting date. Where no reliable estimate can be made, a
disclosure is made as contingent liability. A disclosure for a
contingent liability is also made when there is a possible obligation
or a present obligation that may, but probably will not, require an
outflow of resources. Where there is a possible obligation or a present
obligation in respect of which the likelihood of outflow of resources
is remote, no provision or disclosure is made.
M. EARNINGS PER SHARE
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
N. SEGMENT POLICIES
The Company''s reporting segments are identified based on
activities/products, risk and reward structure, organization structure
and internal reporting systems.
Investments intended to be held for more than a year are classified as
long term investments. All other investments are classified as current
investments. Current investments are stated at lower of cost and
market/fair value. Long term investments are stated at cost. Decline in
value of long term investments is recognized, if considered other than
P. BORROWING COSTS
Borrowing costs directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale are capitalized as
part of the cost of the respective asset. All other borrowing costs are
expensed in the period they occur. Borrowing costs consist of interest
and other costs that an entity incurs in connection with the borrowing
Q. CASH FLOW STATEMENT
Cash flows are reported using the indirect method, whereby profit
before tax is adjusted for the effects of transactions of a non-cash
nature, any deferrals or accruals of past or future operating cash
receipts or payments and item of income or expenses associated with
investing or financing cash flows. The cash flows from operating,
investing and financing activities of the Company are segregated.