Basis of preparation of financial statements:
(a) The financial statements are prepared on historical cost
convention and on the presumption of going concern in accordance with
generally accepted accounting principles in India the applicable
mandatory Accounting Standards and the relevant provisions of the
Companies Act, 1956 of India adopted consistently by the Company.
(b) The Company generally follows mercantile system of accounting and
recognizes all the income and expenditure on accrual basis.
Use of Estimates :
The preparation of financial statements in conformity with generally
accounting principles requires management to make estimates and
assumptions to be made that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities on the date of the
financial statements and the results of operations during the said
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 results and
estimates are recognized in the period in which the results are known /
a) Tangible Assets are stated at cost less accumulated depreciation and
impairment loss if any. Cost comprises of purchase price and any
attributable cost of bringing the assets to its working condition for
its intended use.
b) Intangible Assets are stated at cost less accumulated amortization.
Cost includes any expenditure directly attributable on making the asset
ready for its intended use.
Depreciation on Fixed Assets is provided on straight line method as
prescribed in Schedule XIV of the Companies Act, 1956 of India.
Intangible assets are amortized over their useful life/ a period of ten
An asset is treated as impaired when the carrying cost of asset exceeds
its recoverable value being higher of value in use and net selling
price. Value in use is computed at net present value of cash flow
expected over the balance useful life of the assets. An impairment loss
is recognized as an expense in the Profit and Loss Account in the year
in which an asset is identified as impaired.
a. Long Term Investments are carried at cost after deducting
provision, if any, for diminution in value considered being other than
temporary in nature.
b. Current investments are stated at lower of cost and fair value.
a) Raw-Materials, Stores and Packing Materials are valued at cost –
Cost is determined on FIFO basis.
b) Work-in-progress & finished goods are valued at estimated cost or
net realizable value whichever is lower.
Employee benefits of short term nature are recognized as expenses as
and when it accrues. Long Term employee benefits/ post employment
benefits (e.g. gratuity), both funded and non-funded, are recognized
as expense based on actuarial valuation at year end which takes into
account actuarial gains and losses.
Sales and Purchases:
Sales and Purchases are accounted net of returns basis. Sales include
Export Entitlements / Benefits. Export entitlements are accounted on
accrual basis at realizable value or entitlement value whichever is
Foreign Currency Transactions:
Transactions in foreign exchange are accounted at the exchange rate
prevailing on the date of transaction. The exchange difference arising
out of these transactions are dealt in profit and loss account.
The Company uses derivative financial instrument such as forward
contract to hedge its risk associated with foreign currency fl
uctuation. In respect of transactions covered by Forward Exchange
Contract, the difference between the forward rate and the exchange rate
at inception of contract is recognized as income or expense over the
life of the contract.
Taxes on Income:
Tax on Income for the current period is determined on the basis of
taxable income and tax credits computed in accordance with the
provisions of the Income Tax Act, 1961.
Deferred tax is provided in conformity with Accounting Standard-22
issued by the Institute of Chartered Accountants of India based on the
timing difference between the accounting income and the taxable income.