A. 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 financial statements have been prepared under
the historical cost convention on an accrual basis except as stated
otherwise. The accounting policies have been consistently applied by
the Company and are consistent with those used in the previous year.
B. USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires 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 results 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. Difference between the actual result and
estimates are recognised in the period in which the results are known /
C. FIXED ASSETS
i. Fixed Assets are stated at historical cost less depreciation. The
cost comprises directly attributable costs such as j freight, insurance
and specific installation charges for bringing the assets to their
working condition for intended use. Intangible Assets are recognized
on the basis of recognition criteria as set out in Accounting Standard
26 Intangible Assets.
Depreciation is provided on the basis of Straight Line Method as per
the rates and in the manner prescribed in Schedule XIV of the Companies
i. Finished Goods are valued at cost or net realizable value whichever
is lower. ii. Raw materials are valued at lower of cost or net
realizable value. Hi. 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
i. Revenue is recognized on mercantile basis except for
claims/insurance claims, which are accounted for on I ascertainment
basis in view of uncertainty involved in determining the final amount.
ii. Interest income on fixed deposit with bank is recognized on time
proportion basis taking into account the amount outstanding and the
rate applicable. iii. Dividend income from investments is recognized
when the Company''s right to receive payment is established. G
SUBSIDIES ! State subsidies are accounted for on receipt basis.
H. RETIREMENT BENEFITS
Provision for Gratuity in the nature of defined benefit obligation is
considered on the basis of revised Accounting Standard -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 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 management estimates.
I. 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 Act, 1961.
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.
J. 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 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
decreased. K. 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. L.
The Company''s reporting segments are identified based on
activities/products, risk and reward structure, organization structure
and internal reporting systems. M. INVESTMENTS
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
temporary. N. 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
of funds. O. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Provisions are recognized for liabilities that can be measured by using
a substantial degree of estimation, if
i. the Company has a present obligation as a result of a past event,
ii. a probable outflow of resources is expected to settle the
iii. the amount of the obligation can be reliably estimated.
Contingent Liability is disclosed in the case of i. a present
obligation arising from the past event, when it is not probable that an
utflow of resources will be required to settle the obligation. ii. a
possible obligation, unless the probability of outflow of resources is
remote. Contingent Assets are neither recognized nor disclosed.
Provisions, Contingent liabilities and Contingent assets are reviewed
at each Balance Sheet date. P. 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.