1. ACCOUNTING CONVENTION
The financial statements are prepared under the historical cost
convention, except for certain fixed assets which are revalued, from
books of accounts maintained on an accrual basis, in conformity with
all material aspects with the generally accepted accounting principles
and comply with the Accounting Standards notified underSection211
(3C)of the Companies Act, 1956 and the relevant provisions of the
2. FIXEDASSETSAND DEPRECIATION
a) Fixed assets are stated at cost (net of Cenvat/value added tax)
including freight, duties, customs, adjustments arising from exchange
rate variation and other incidental expenses relating to acquisition
and installation and includes amount added on revaluation, less
accumulated depreciation and impairment loss, if any.
b) Depreciation has been provided on written down value method (WDV) at
the rates and in the manner prescribed in Schedule XlV to the Companies
c) Capital work-in-progress- Projects under which assets are not ready
for their intended use and other capital work-in-progress are carried
at cost, comprising direct cost, related incidental expenses and
Long term investments intended to be held for more than a year from the
date of acquisition, are classified as long term investments and are
carried at cost. Provision is made for diminution, other than
temporary, in value of investments. Current investments are valued at
lower of cost and market value.
Items of inventories are measured at lower of cost or net realizable
value. Cost of Raw material, stores and spares are determined on first
in first out basis. Cost of finished goods and semi-finished goods
include cost of raw materials and packing materials, cost of conversion
and other costs incurred in bringing the inventories to the present
location and condition.
5. REVENUE RECOGNITION
Revenue from sale of goods is accounted for on the basis of dispatch of
goods. Sales are inclusive of excise duty and net of sales return and
trade discounts. Interest Income is accounted on accrual basis.
a) INCOME TAX PROVISION
The provision for taxation is based on assessable profits of the
company as determined under the Income Tax Act, 1961.
b) DEFERRED TAX
As per AS-22 issued by the Institute of Charted Accountants of India,
deferred tax is recognised, 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. Deferred Tax Asset is not
recognised unless there are timing differences, the reversal of which
will result in suffcient income or there is virtual certainly that
sufficient future taxable income will be available against which such
deferred tax asset can be realized.
7. FOREIGN CURRENCYTRANSACTIONS
i Foreign currency transactions are accounted for at the exchange rate
prevailing on the transaction date. Gain/loss arising out of
fluctuation in rate between transaction date and settlement date in
respect of revenue items are recongnised in the Profit and Loss
Monetary Assets and Liabilities in foreign currency are translated at
the year - end at the closing exchange rate and the resultant exchange
differences are recognised in the Profit and Loss Account.
Non monetary foreign currency items are carried at cost.
Accounting for Forward Contract
In case of items which are covered by forward exchange contracts, the
difference between the year end rate and rate on date of contracts is
re-conginized as exchange difference and the premium paid on forward
contracts is recognized over the life of the contract.
Intangible Assets are stated at cost of acquisition net of recoverable
taxes less accumulated acortization. All costs, including financing
costs till commencement of commercial production and adjustments
arising from exchange rate variations attributable to the intangible
assets, are capitalized.
9. RETIREMENT BENEFITS
(i) Defined Contribution Plans
The Company has a Defined Contribution Plan for post employment
benefits namely Provident Fund which is administered through
appropriate authorities. The Company makes contributions to state
plans namely Employees'' State insurance Fund and has no further
obligation beyond making the payment to them.
The Company''s contributions to the above funds are charged to revenue
(ii) Defined Benifit Plan The gratuity will be paid as and when
employee leaves. Liabiliy towards gratuity id based on actuarial
valuation carried out by the an authourized actuary which is in
compliance with AS-15(revised) issued by the Institute of Chartered
Accountants of India.
13. INSURANCE CLAIMS
Insurance claims are accounted for on the basis of claims admitted or
expected to be admited and to the extent that there is no uncertainty
in receiving the claims.
14. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENTASSETS
Provisions involving substantial degree of estimation in measurement
are recognised when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent Liabilities, in any, are not provided for in the financial
statements. However, they are separately disclosed by way of notes on
accounts. Contingent Assets are neither recognised nor disclosed in the
15. USE OF ESTIMATES
The presentation of the financial statements in conformity with the
generally accepted accounting principles requires the management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities revenues and expenses and disclousure of
contingent liabilities. Such estimates and assumptions are bassed on
management''s evaluation of relevant facts and circumstances as on the
date of financial statements. Difference between the actual results and
estimates are recognised in the period in which the results are
16. EARNING PER SHARE
As PerAS-20 issued by institute of Chartered Accountants of India basic
earnings per share is computed using the weighted average number of
equity shares outstanding during the period. Diluted earnings per share
are computed using the weighted average number of equity and dilutive
equity equivalent shares outstanding during the period, except where
the results would be anti-dilutive.
17. CASHANDCASH EQUIVALENTS
Cash comprises cash on hand demand deposits with banks. Cash
equivalents are short term (with an original maturity of three months
or less from the date of acquisition), highly liquid investments that
are readily convertible into known amounts of cash and which are subject
to insignificant risk of changes in value.
18. CASH FLOW STATEMENT
Cash flows are reported using the indirect method, whereby profit
before extraordinary items and tax is adjusted for the effects of
transactions of non-cash nature and any deferrals or accruals of past
or future cash receipts or payments. The cash flows from operating,
investing and financing activities of the company are segregated based
on the available information.
19. SHARE ISSUE EXPENSES
Share issue expenses and redemption premium are adjusted against the
Securities Premium Account as permissible under Section 78(2) of the
companies act, 1956; to the extent balance is available for utilization
in the Securities Premium Account. The balance of share issue expenses
is carried as an asset and is amortised over a period of 5 years from
date of the issue of shares.