1. Basis of Preparation of financial statement: -
The financial statements are prepared under the historical cost
convention on accrual basis of accounting in accordance with the
generally accepted principles prevalent in India.
Accounting policies not specifically referred to otherwise are in
consonance with prudent accounting principles.
All income and expenditure having material bearing on the financial
statement are recognized on an accrual basis.
2. Use of Estimate: -
The presentation of financial statement requires estimates and
assumptions to be made that affect the reported amounts of asset and
liabilities on the date of financial statement and the reported amount
of revenue and expenses during the relevant period. The estimates are
made to the best of management''s ability considering all necessary
information. Differences, if any, between actual result and estimate
are recognized in the period in which results are ascertained.
Statement of significant Accounting policies
3. Fixed Assets and Depreciation: -
a) Fixed assets are stated at their original cost (net of CENVAT /
Value Added Tax) including freight and other incidental expenses
related to acquisition and installation of the concerned assets less
accumulated depreciation and impairment losses if any.
b) Depreciation on the fixed assets added/disposed off/ discarded
during the year has been provided on WDV Basis at the rates specified
under Companies Act, 1956 with reference to the month of addition/
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal and external
factors. An impairment loss is recognized wherever the carrying amount
of assets exceeds its recoverable amount. The recoverable amount is the
greater of the assets'' net selling price and the value in use. In
assessing value in use the estimated future cash flows are discounted
to their present value at the weighted average cost of capital.
4. Inventories: -
i. Raw Materials are valued at cost or net, realizable value whichever
ii. Semi Finished Goods (Work in progress) are valued at cost.
iii. Finished Goods:
Manufactured goods are valued at cost or net realisable value whichever
is lower. Cost includes cost of raw materials used and all the related
overhead expenses. Traded Goods are valued at cost or net realisable
value whichever is lower. Cost is determined by using the First in
First out (FIFO) method.
5. Investments: -
Investments that are readily realizable and intended to be held for not
more than a year are classified as Current Investments. All other
Investments are classified as Long term Investments. Current
Investments are stated at lower of cost and market rate on an
individual investment basis. Long term investments are considered at
cost” on individual investment basis, unless there is a decline other
than temporary in the value, in which case adequate provision is made
against such diminution in the value of investments.
6. Recognition of Income and Expenditure:-
Sales are recognized when goods are supplied and are recorded net of
rebates, Sales Tax, Expenses are accounted for on accrual basis and
provision is made for all known losses and expenses.
7. Employee Benefits:-
Contributions to defined contribution schemes such as provident fund
are charged to profit and loss account as incurred. Gratuity Act is not
applicable to the Company however provision for Gratuity is made on the
basis of Valuation done by Actuary provision and for Leave encashment
payable to the employees provision is not made as the same is accounted
on cash basis.
8. Miscellaneous Expenditure: -
Preliminary expenses have been amortized over a period of five years.
9. Foreign Currency Transaction:-
No Foreign Currency Transaction had taken place during the year.
10. Taxation :-
Provision for current tax is made based on the tax payable under the
current provisions of the tax laws applicable in the jurisdiction where
in the income is assessable.
Deferred tax expenses or benefit is recognized on timing differences
being the difference between taxable income and accounting income that
arises in one period and are capable of reversal in one or more
subsequent periods. Deferred Tax assets and liabilities are accounted
for, using the tax rates and tax laws applicable as on the Balance
11. Borrowing cost:
Borrowing cost attribution to acquisition, construction or production
or qualified assets are capitalized as part of the cost of that asset,
till the period in which the asset is ready for used. Other borrowing
costs are recognized as an expense in the period in which these are
12. Use of Estimates
The preparation of financial statements in conformity with the
generally accepted accounting principles requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. Difference
between the actual result and estimates are recognized in the period in
which the results are known/ materialized.
13. Cash Flow Statement
The Company has prepared the Cash Flow Statement using the Indirect
Method in compliance with Accounting Standard issued by The Institute
of Chartered Accountants of India (AS-3).
14. Provision, contingent liabilities and contingent assets
Provision are recognized when the company has a present and legal or
constructive obligation as a result of past event, it is problem that
an outflow of resources will be required to settle the obligation and a
reliable estimate of the amount of obligation can be made. Provisions
are determined based on test estimated required to settle the
obligation at the balance sheet date. Provision are reviewed at each
balance sheet date and adjusted to reflect current best estimate. A
disclosure for a contingent liability is made when there is possible
obligation or a present obligation that may but probably will not
require an outflow of resources. When there is possible obligation or
present obligation in respect of which like hood of outflow of resource
is remote, no provision or disclosure is made.
Liabilities which are material and whose future outcome cannot be
ascertained with reasonable certainty are treated as contingent and
disclosed by way of Notes to Accounts.