1) Basis of Preparation
- The financial statements have been prepared under the historical cost
convention and on accrual basis in accordance with the Generally
Accepted Accounting Practices in India (GAAP) and accounting standards
referred to in Section 211(3C) of The Companies Act, 1956 read with
Companies (Accounting Standards) Rules, 2006.
- The Company follows mercantile system of accounting and recognizes
income and expenditure on accrual basis.
- The financial statements are prepared on the Going Concern concept of
2) Use of Estimates
The preparation of financial statements, in accordance with the
Generally Accepted Accounting Principles (GAAP) requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosure of contingent liabilities at the
date of financial statements and the reported amounts of revenue and
expenses during the year. Actual results could differ from estimates.
Any revision to estimates is recognized prospectively in current and
3) Presentation and Disclosures in Financial Statements
For the year ended 31st march 2012, the Revised Schedule VI notified
under the Companies Act 1956, is applicable to the company, for
presentation and disclosures in financial statements. The Company has
reclassified the previous year''s figures in accordance with the Revised
Schedule VI as applicable in the current year.
4) Revenue Recognition
Revenue is recognized on transfer of all significant risks and rewards
of ownership to the buyer and when no significant uncertainty as to
Interest is accounted on accrual basis
Dividend is accounted when the right to receive the same is
5) Tangible Fixed Assets
Fixed Assets are stated at Cost of their acquisition less depreciation.
Cost comprises of acquisition cost, taxes (other than those
subsequently recoverable from tax authorities), duties, freight and
attributable cost of bringing the assets to its working condition for
its intended use. Pre-operative expenses are capitalized in the year of
completion of project.
6) Depreciation and Amortization
- Depreciation on Fixed Assets is provided on written down value method
at the rates prescribed under Schedule XIV of the Companies Act, 1956
as amended except in case of Plant and Machinery for which the
depreciation is provided on Straight Line Method.
- Individual assets costing less than Rs. 5,000 are fully charged to
Statement of Profit & Loss account in the year of acquisition.
7) Impairment of Assets
- As Balance Sheet date, the Company assesses whether there is any
indication that an asset may be impaired and if any such indication
exists, the Company estimates the recoverable amount of the asset. If
such recoverable amount of the asset or the recoverable amount of the
cash generating unit, to which the asset belongs, is less than its
carrying value, the carrying amount is reduced to its recoverable
amount. The reduction is treated as an impairment loss and is
recognized in the Statement of Profit and Loss.
- An assessment is also done at each Balance Sheet date as to whether
there is an indication that if a previously assessed impairment loss,
no longer exists or may have decreased, the recoverable amount is
reassessed and the asset is reflected at revised estimate of its
recoverable amount, so that the increased carrying amount does not
exceed the carrying amount that would have been determined had no
impairment loss been recognized for the asset in prior years. A
reversal of impairment loss is recognized in the statement of Profit
- After recognition of impairment loss or reversal of impairment loss
as applicable, the depreciation charge for the asset is adjusted in
future periods to allocate the asset''s revised carrying amount, less
its residual value (if any), on method of depreciation followed for the
assets concerned over its remaining useful life.
- Inventories of consumables, raw materials, work-in-progress and
finished goods are valued at lower of cost or realizable value. The
comparison of cost and net realizable value is made on Market Value or
Realizable Value basis.
- In determining cost of raw materials, packing materials,
stock-in-trade, stores, spares and consumables, FIFO method is used.
Cost of inventory comprises all costs of purchase, duties, taxes (other
than those subsequently recoverable from tax authorities) and all other
costs incurred in bringing the inventory to their present condition.
- Cost of finished goods and work-in-process includes the cost'' of raw
materials, an proportionate/appropriate share of fixed and variable
production overheads, duties and taxes as applicable and other costs
incurred in bringing the inventories to their present form.
9) Financial Derivative for Commodity Hedging Transactions
In respect of derivative contracts, gain / losses on settlement are
recognized in the Statement of Profit and Loss. On the reporting date,
profit or loss of all unsettled/outstanding contracts is determined by
comparing the value of the position at the mark to market and
recognized in the Statement of Profit and Loss.
10) Borrowing Cost
- Borrowing cost includes Interest, amortization of ancillary costs
incurred in connection with the arrangement of borrowings and exchange
differences arising from foreign currency borrowings to the extent they
are regarded as an adjustment to the interest cost.
- Borrowing costs attributable to the acquisition or construction of
assets are capitalized as part of cost of such assets up to the date
when such assets are ready for intended use. Other borrowing costs are
expensed as and when incurred.
Investments intended to be held for more than a year from the date of
the acquisition are classified as Non Current Investments and are
carried at Cost. Provision for diminution in the value of Non -Current
investments is made only if in the opinion of management, such decline
is other than temporary in nature.
Current Investments are carried at lower of cost or Fair Value. The
comparison of cost and fair value is done separately in respect of each
category of investments. On disposal of an investment, the difference
between its carrying amount and net disposal proceeds is charged or
credited to the Statement of Profit and Loss. Profit or Loss on sale of
investments is determined on a first-in-first-out (FIFO) basis.
12) Transactions in foreign exchange
Initial recognition: Foreign currency transactions are accounted at the
exchange rate prevailing on the date of such Transactions.
Measurement of foreign currency items at the Balance Sheet date:
Foreign currency monetary assets and liabilities at the Balance Sheet
date are translated at the closing rate. Gains or losses resulting
there from on settlement are recognized in the Statement of Profit and
Forward exchange contracts: The premium or discount arising at the
inception of forward exchange contract is amortized and recognized as
an expense/income over the life of the contract. Any profit or loss
arising on cancellation or renewal of such forward exchange contract is
recognized as income or expense for the period, in the Statement of
Profit and Loss.
13) Retirement Benefits
a. Short Term Employee Benefit: All employee benefits payable wholly
within twelve months of rendering the services are classified as short
term employee benefits and they are recognized in the period in which
the employee renders the related services. The company recognizes the
amount of short term employee benefits expected to be paid in exchange
for services rendered as a liability (accrued Expenses) after deducting
any amount already paid.
b. Post-employment benefits
Defined Contribution Plans: Defined contribution plans are Employees
State Insurance and Government administered Pension fund scheme for
eligible employees. The company''s contribution to defined contribution
plans are recognized in the Statement of Profit and Loss in the
financial year to which they relate.
Defined Benefit Plans
- Provident Fund Scheme: The Company is covered under the provisions
of Provident Fund and Miscellaneous Funds Act, 1952. Contribution
payable by the Company to the concerned Government Authorities in
respect of Provident Fund and Family Pension Fund are charged to the
Statement of Profit and Loss.
- Gratuity Scheme: The Company''s Liability towards unfunded Gratuity
is determined on the basis of year end Actuarial Valuation in
accordance with Accounting Standard 15 (Revised 2005) prescribed under
the Companies (Accounting Standards) Rules, 2006.
- Other long term employee benefits: Entitlement to annual leave and
sick leave are recognized when they accrue to employees concerned. Sick
leave can only be availed while annual leave can either be availed or
encashed subject to a restriction on the maximum number of accumulation
of leave. The Company determines the liability for such accumulated
leaves using the Projected Accrued Benefit Method with actuarial
valuations being carried out at each Balance sheet date. Liability for
Leave Encashment is accounted on accrual basis and expensed.
The company presents this liability as current and non-current in the
balance sheet as per actuarial valuations and certificate issued by the
14) Accounting for taxes on Income
Tax expenses comprises of current tax (i.e. amount of tax for the
period determined in accordance with the Income Tax Act, 1961) and
deferred tax charge or credit (reflecting the tax effects of timing
difference between accounting income and taxable income for the
Deferred tax is recognized on timing difference, subject to
consideration of prudence in respect of deferred tax assets on timing
difference, being the difference between the taxable incomes and
accounting income that originate in one year and are capable of
reversal in one or more subsequent years and measured using relevant
enacted or substantively enacted tax laws by the Balance Sheet date or
till the date of approval of financial statements by the Board of
Deferred tax assets are recognized only to the extent there is
reasonable certainty that the assets can be realized in future;
however, where there is unabsorbed depreciation or carry forward loss
under taxation law, deferred tax assets are recognized only if there is
a virtual certainty of realization of such assets. Deferred tax assets
are viewed at each Balance Sheet date to reassess realization.
15) Earnings per share
Basic EPS is computed and disclosed using the weighted average number
of equity shares outstanding during the year. Diluted EPS is computed
and disclosed using the weighted average number of equity and dilutive
equity equivalent shares outstanding during the period except where the
results would be anti dilutive.
A provision is recognized when there is a present obligation as a
result of past event and it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are not discounted to its
present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current management
17) Contingent Liabilities
A disclosure for a contingent liability is made when there is a
possible obligation or a present obligation that may, but probably will
not require an outflow of resources. When there is a possible
obligation or a present obligation in respect of which likelihood of
outflow of resources is remote, no provision or disclosure is made.
Contingent Liabilities are not recognized but are disclosed by way of
Notes. Contingent assets are neither recognized nor disclosed in the
18) Contingencies and Events occurring after the Balance Sheet date
All the major contingencies i.e., a condition or situation the ultimate
outcome of which is known or determined only on their occurrences or
non-occurrences of uncertain future events, till the signing of the
financial statements, have been recognized.
Material events occurring after the balance sheet date till signing of
thereof, affecting the going concern assumption or having material
impact on the financial statements, are recognized.
19) Preliminary Expenses
Preliminary expenses are amortized over a period of 5 years.