1.1 Basis of Preparation
The financial statements of the company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP). The company has prepared these financial statements to
comply in all material respects with the accounting standards notified
under the Companies (Accounting Standards) Rules, 2006 (as amended) and
the relevant provisions of the Companies Act, 1956. The financial
statements have been prepared on an accrual basis and under the
historical cost convention.
The accounting policies adopted in the preparation of financial
statements are consistent with those of previous year.
1.2 Presentation and disclosure of Financial Statements
For the year ended 31st March, 2012, the revised Schedule VI notified
under the Companies Act, 1956, has become applicable to the Company,
for preparation and presentation of its Financial Statements. The
adoption of revised Schedule VI does not impact recognition and
measurement principles followed for preparation of financial
statements. However, it has significant impact on presentation and
disclosures made in the financial statements. The company has also
reclassified the previous year figures in accordance with the
requirements applicable in the current year.
1.3 Use of Estimates
The preparation of financial statements requires the management to make
estimates and assumptions considered in the reported amounts of assets
and liabilities (including contingent liabilities) as on the date of
the financial statements and the reported income and expenses during
the reporting period. The estimates and assumptions used in the
financial statements are based upon the Management''s evaluation of the
relevant facts and circumstances as on the date of financial
statements. Management believes that the estimates used in the
preparation of the financial statements are prudent and reasonable.
Future results may vary from theses estimates.
1.4 Revenue Recognition
Revenue from sale of goods is recognized:
(i) When all the significant risks and rewards of ownership are
transferred to the buyer and the company retains no effective control
of the goods transferred to a degree usually associated with ownership:
(ii) No significant uncertainty exists regarding the amount of the
consideration that will be derived from the sale of goods.
ii) Export Incentives
Revenue in respect of the above benefits is recognized on post export
Dividend income is recognized when the right to receive the payment is
Interest Income is recognized on a time proportion basis taking into
account the amount outstanding and the rate applicable.
Long term Investments are carried at cost less provision, if any, for
diminution in value which is other than temporary, and current
investments are carried at lower of cost and fair value.
Inventories are valued at cost or net realizable value, whichever is
lower except for waste which is valued at net realizable value. The
cost in respect of the various items of inventory is computed as under:
i) In respect of Raw Materials on FIFO basis.
ii) In respect of Work in process and Finished Goods, at weighted
average cost of raw material plus conversion cost & packing cost
incurred to bring the goods to their present condition & location.
iii) In respect of trading goods, on specific identification method.
iv) In respect of Consumable Stores on weighted average basis.
1.7 Foreign Currency Transactions
(a) Foreign Branch (Integral)
(i) Fixed assets are translated at the rates on the date of
purchase/acquisition of assets and Inventories are translated at the
rates that existed when costs were incurred.
(ii) All foreign currency monetary items outstanding at the year end
are translated at the year-end exchange rates. Income and expenses are
translated at average rates of exchange and depreciation is translated
at the rates referred to in (a)(i) above for fixed assets.
The resulting exchange gains & losses are recognized in the profit and
(b) Other foreign currency transactions:
(I) Transactions in foreign currency are accounted for at the exchange
rate prevailing on the date of transaction except sales that are
recorded at rate notified by the customs for invoice purposes. Such
rate is notified in the last week of every month and is adopted for
recording export sales of next month.
(ii) Foreign currency monetary items are reported using the closing
rate. Exchange differences arising on the settlement of monetary items
or on reporting the same at balance sheet date are recognized as income
or expenses in period in which they arise, except the exchange
difference in case of fixed assets which have been adjusted to the cost
of fixed assets.
(iii) Foreign currency non monetary items, which are carried in terms
of historical cost, are reported using exchange rate at the date of
1.8 Fixed Assets
(i) Fixed Assets
Fixed Assets are stated at acquisition cost including inward freight,
duties, taxes and incidental expenses relating to acquisition net of
subsidy relating to specific fixed asset and accumulated depreciation.
(ii) Capital work in progress
Capital work in progress includes cost of assets at site, construction
expenditure for acquisition of capital assets and pre-operative
expenditure pending allocation to fixed assets.
(iii) Expenditure incurred during construction period
In respect of new/major expansion, the indirect expenditure incurred
during implementation period upto the date of commencement of
commercial production, which is attributable to the construction of the
project, is capitalized on various categories of fixed assets on
proportionate basis. The unallocated expenses are shown in
1.9 (i) Cenvat Credit
Cenvat Credit of excise duty paid on capital assets is recognized in
accordance with the Cenvat Credit Rules, 2004.
(ii) Excise Duty
Excise duty is accounted on production of finished goods.
(i) Depreciation has been provided under Straight Line Method at the
rates specified in Schedule XIV of Companies Act, 1956.
(ii) The leasehold land is amortized over the lease period.
1.11 Borrowing Costs
Borrowing costs attributable to the acquisition or construction of
qualifying assets are capitalized as part of such assets, up to the
date when such assets are ready for intended use. Other borrowing costs
are charged as expenditure in the year in which they are incurred.
1.12 Employee Benefits
(I) Defined Contribution Plan:
Contribution to Provident Fund is made in accordance with the
provisions of the Employees Provident Fund and Miscellaneous Provision
Act, 1952 and is charged to the profit and loss account.
(ii) Defined Benefit Plans (Gratuity):
The Company has a defined benefit Gratuity plan covering all its
employees. Gratuity is covered under a scheme of Life Insurance
Corporation of India (LIC) and contribution in respect of such scheme
is recognized in the Profit & Loss Account. The liability/asset as at
the Balance Sheet date is provided for based on the actuarial valuation
carried out in accordance with Accounting Standard 15 on ''Employee
(iii) Leave with wages
Provision for earned leave due for the year is made on the actual
valuation as at the close of the year.
1.13 Accounting for Taxes on Income Current Taxes
Current Tax is determined as the amount of tax payable in respect of
taxable income for the period after considering tax allowances &
Deferred Tax is recognized, subject to consideration of prudence, on
timing differences, being the difference between taxable income and
accounting income that originate in one period and capable of reversal
in one or more subsequent periods.
Minimum Alternative Tax
Minimum Alternative Tax credit is recognized as an asset only when & to
the extent there is convincing evidence that the Company will pay
normal tax during the specified period. Such asset is reviewed at each
Balance Sheet date & the carrying amount of the MAT credit asset is
written down to the extent there is no longer a convincing evidence to
the effect that the company will pay normal income tax during the
1.14 Impairment of Assets
At each balance sheet date, an assessment is made whether any
indication exists that an asset has been impaired. If any such
indication exists, an impairment loss i.e. the amount by which the
carrying amount of an asset exceeds its recoverable amount is provided
in the books of account.
1.15 Provisions and Contingent Liabilities
(a) Provisions are recognized for liabilities that can be determined 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 embodying economic benefits is
expected to settle the obligation; and
(iii) The amount of the obligation can be reliably estimated
(b) Contingent liability is disclosed in the case of:
(i) A present obligation arising from a past event when it is not
probable that an outflow of resources embodying economic benefits will
be required to settle the obligation or
(ii) A possible obligation, unless the probability of outflow of
resources embodying economic benefits is remote.
1.16 Earnings per share
Basic earning per share is computed by dividing the net profit for the
period attributable to equity shareholders by the weighted average
number of shares outstanding during the period. Diluted earning per
share is computed by taking into account the aggregate of the weighted
average numbers of equity shares outstanding during the period and the
weighted average number of equity shares which would be issued on
conversion of all the dilutive potential equity shares into equity
1.17 Basis of Incorporation of integral foreign operations
Figures in respect of the Company''s overseas branch in United Arab
Emirates have been incorporated on the basis of Financial Statement
audited by the auditors of the branch.
1.18 Operating Leases
Assets acquired on leases wherein a significant portion of the risks
and rewards of ownership are retained by the lesser are classified as
operating leases. Lease rentals paid for such leases are recognized as
an expense on systematic basis over the term of lease.