1. Basis of Preparation of Financial Statements
Financial statements are prepared on accrual basis under the historical
cost convention in accordance with the Accounting Standards as notified
by the Companies (Accounting Standards) Rules 2006 and the relevant
provisions of the Companies Act 1956..
2. Use of Estimates
The Preparation of financial statements, in conformity with the
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent liabilities at the date of
the financial statements and the reported amount of revenue and
expenses for the period.
Estimates are based on historical experience, where applicable and
other assumptions that management believes are reasonable under the
circumstances. Actual results could vary from these estimates and any
such differences are dealt with in the period in which the results are
3. Fixed Assets
Fixed Assets are carried at cost less accumulated depreciation and
impairment loss if any. Cost comprises the purchase price and any
attributable cost of bringing the asset to its working condition for
its intended use. Borrowing costs relating to acquisition of Fixed
assets which takes substantial period of time to get ready for its
intended use are also included to the extent they relate to the period
till such assets are ready to be put to use.
Depreciation on fixed assets is provided on Straight Line method at the
rates and in the manner prescribed in Schedule XIV of the Companies Act
5. Revenue Recognition
Revenue is recognized when it is earned and to the extent that it is
probable that the economic benefits will flow to the company and the
revenue can be reliably measured.
Revenue from sale of goods is recognized on delivery of the products,
when all significant contractual obligations have been satisfied, the
property in the goods is transferred for a price, significant risks and
rewards of ownership are transferred to the customers and no effective
ownership is retained.
Cost of Inventories, comprises of Cost of Purchase, cost of conversion
and other costs incurred in bringing them to their respective present
location and condition.
Raw Materials and Work-in-Progress are valued at cost using the
weighted average cost method.
Finished Goods produced and purchased are valued at cost or net
realizable value whichever is lower.
Excise duty in respect of finished goods awaiting despach is included
in valuation of inventory.
Stores and Spares and packing material are carried at cost, ascertained
on weighted average basis. Necessary provision is made in the case of
obsolete and non moving items.
Long-term investments are carried at cost less provision for other than
temporary diminution in the carrying value of each investment. Current
investments are stated at the lower of cost or quoted /fair value.
Lease arrangements where the risks and rewards incident to the
ownership of an asset substantially vest with the lessor, are
recognized as operating leases. Lease rentals under operating leases
are recognized in the Profit and Loss account on a straight-line basis
over the lease term.
9. Employee Benefits
Short term employee benefits (benefits which are repayable within
twelve months after the end of the period in which the employees render
service) are measured at cost and are recognized as an expense at the
undiscounted amount in the profit and loss account of the year in which
the related service is rendered.
Contributions to Provident Fund, a defined contribution plan are made
in accordance with the statue and are recognized as an expense when
employees have rendered service entitiling them to the contributions.
Other long term employee benefits (benefits which are payable after the
end of twelve months from the end of the year in which the employees
render service) are measured on a discounted basis by the Projected
Unit Credit Method on the basis of actuarial valuation.
Acturial gains and losses are recognized in the profit and loss
10. Provisions, Contingent Liabilities and Contingent Assets
A provision is recognized when there is a present obligation as a
result of a past event, it is probable that an outflow of resources
will be required to settle the obligation and in respect of which
reliable estimate can be made.
Contingent liabilities are not provided for and are disclosed by way of
Contingent assets are neither recognized nor disclosed in the financial
11. Foreign Currency Transactions
Transactins in foreign currencies are recorded at the exchange rates
prevailing on the dates of transactions and in the case of purchase of
material and sale of goods, the exchange gains/losses on the
settlements during the year are changed to profit and loss account.
Monetary assets and liabilities denominated in foreign currencies are
translated at the rates prevailing on the date of Balance Sheet.
12. Borrowing Cost
Borrowing costs that are attributable to the acquisition or
construction of qualifying fixed assets are capitalized as part of the
cost of such assets till such time as the asset is ready for its
intended use or sale.
Current tax is determined as the amount of tax payable in respect of
taxable income of the year. Deferred tax for timing differences
between the income as per the financial statement and income as
per the Income tax Act 1961, is accounted for using the tax rates and
laws that have been enacted or substantially enacted as of the balance
Deferred tax assets arising from the timing differences are recognized
to the extent there is virtual certainty that sufficient future taxable
income will be available against which such deferred tax assets can be
14. Impairment of Assets
Assets that are subject to impairment are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is recognized for the
amount by which the assets carrying amount exceeds the recoverable
15. Earnings per share
The earnings considered in ascertaining EPS comprise the net profit
after tax. The number of shares used in computing Basic EPS is the
weighted average number of shares outstanding during the Period.
For the Purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effect of all dilutive potential equity shares.
16. Cash Flow Statement
Cash flows are reported using the indirect method, whereby net profit
before tax is adjusted for the effects of transactions of a non-cash
nature and any deferrals or accruals of past or future cash receipts or
payment. The cash flows from regular revenue generating investment and
financing activities of the Company are segregated.