1.01 Basis of Preparation of Financial Statements
The financial statements have been prepared and presented under the
historical cost convention on the accrual basis of accounting except
interest on Margin Money Deposits in accordance with the Generally
Accepted Accounting Principles in India and comply with the Accounting
Standards (AS) notified under Section 211 (3C) of the Companies Act,
1956 and other relevant provisions of the Companies Act, 1956, to the
extent applicable. The financial statements are presented in Indian
Rupees (Rs. in Lakhs).
1.02 Use of Estimates
The preparation of financial statements in conformity with Indian GAAP
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
liabilities on the date of the financial statements. Actual results
could differ from those estimates. Any revision to accounting estimates
is recognised prospectively in current and future periods.
1.03 Fixed Assets
a) Fixed assets are carried at cost of acquisition less accumulated
depreciation. The cost of fixed assets comprises the purchase price
(net of rebates and discounts) and any other directly attributable
costs of bringing the assets to working condition for their intended
use. Borrowing costs directly attributable to acquisition of those
fixed assets which necessarily take a substantial period of time to get
ready for their intended use are capitalized.
b) Advances paid towards acquisition of Fixed Assets outstanding at
each Balance Sheet date and the cost of Fixed Assets not ready for
their intended use before such date are disclosed as capital
1.04 Intangible Assets
Intangible Assets are stated at cost of acquisition less accumulated
a) Depreciation on Fixed Assets is provided using the straight-line
method as per the rates prescribed in Schedule XIV to the Companies
b) The rates of depreciation prescribed in Schedule XIV to the
Companies Act, 1956 are considered as minimum rates. If the
management''s estimate of the useful life of a Fixed Asset at the time
of acquisition of the Asset or of the remaining useful life on a
subsequent review is shorter than envisaged in the aforesaid schedule,
depreciation is provided at a higher rate based on the management''s
estimate of the useful life/remaining useful life.
c) Depreciation is calculated on a pro-rata basis from/upto the date
the assets are purchased/sold.
a) Investments are classified as current or long-term in accordance with
Accounting Standard 13 on Accounting for Investments.
b) Current Investments are stated at lower of cost and fair value. Long
Term Investments are stated at cost. Provision for diminution in the
value of long-term investments is made only if such a decline is other
c) The investments in fully owned subsidiaries are carried out at the
cost of acquisition as the same are long term investments.
1.07 Revenue Recognition
a) 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.
b) 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.
c) Sales are net of sales returns and trade discounts. Export turnover
includes related export benefits. Excise duty and VAT are recovered is
presented as a reduction from gross turnover.
d) Interest revenue on fixed deposits is recognized on accrual basis.
Inventories are valued at the lower of Cost or Net Realizable Value.
Cost of Inventories comprise all costs of purchase, costs of conversion
and other costs incurred in bringing the inventories to their present
location and condition. Cost is arrived at,
a) In case of raw materials and other trading products on weighted
average cost method.
b) In case of stores and spares on weighted average cost method.
c) In case of work in process and finished goods, includes material
cost, labour, manufacturing overheads.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion to make the
1.09 Employee Benefits
a) Short-term employee benefits
All employee benefits falling due wholly within twelve months of
rendering the services are classified as short term employee benefits.
The benefits like salaries, wages, short term compensated absences etc.
and the expected cost of bonus, ex-gratia are recognised in the period
in which the employee renders the related service.
b) Post-employed benefits
i) Long-term employee benefits (benefits which are payable after the
end of twelve months from the end of the period in which the employees
render service) and post-employment benefits (benefits which are
payable after completion of employment) are measured on a discounted
basis by the Projected Unit Credit Method on the basis of annual third
party actuarial valuations.
ii) Contributions to Provident Fund, a defined contribution plan are
made in accordance with the statute, and are recognized as an expense
when employees have rendered service entitling them to the
iii) The gratuity benefit obligations recognized in the Balance Sheet
represents the present value of the obligations as reduced by the fair
value of plan assets. Any asset resulting from this calculation is
limited to the discounted value of any economic benefits available in
the form of refunds from the plan or reductions in future contributions
to the plan.
1.10 Foreign Currency Transactions
a) Foreign currency transactions are recorded in the reporting currency
at the exchange rates prevailing on the date of the transaction.
b) Exchange differences arising on the settlement of monetary items on
reporting company''s monetary items at rates different from those at
which they were initially recorded during the year, or reported in
previous financial statements, are recognized as income or as expenses
in the year in which they arise.
c) Non-monetary items such as investments are carried at historical
cost using the exchange rates on the date of the transaction.
d) Closing Monetary Foreign Current assets and current liabilities have
been re-instated in the reporting currency at the exchange rate
prevailing on Balance Sheet date, in accordance with Accounting
Standard 11 on The Effects of changes in Foreign Exchange Rates The
difference arising on these transactions being charged/revenue to
Statement of Profit and Loss.
1.11 Taxes on Income
a) Income taxes are accounted for in accordance with Accounting
Standard 22 on Accounting for Taxes on Income.
b) Taxes comprise both current and deferred tax. Current tax is
measured at the amount expected to be paid/recovered from the revenue
authorities, using the applicable tax rates and laws.
c) Minimum alternate tax (MAT) paid in accordance with the tax laws,
which gives rise to future economic benefits in the form of adjustment
of future income tax liability, is considered as an asset if there is
convincing evidence that the Company will pay normal tax after the tax
holiday period. Accordingly, it is recognized as an asset in the
balance sheet when it is probable that the future economic benefit
associated with it will flow to the Company and the asset can be
d) The tax effect of the timing differences that result between taxable
income and accounting income and are capable of reversal in one or more
subsequent periods are recorded as a deferred tax asset or deferred tax
e) Deferred tax assets and liabilities are recognized for future tax
consequences attributable to timing differences. They are measured
using the substantively enacted tax rates and tax regulations.
f) The carrying amount of deferred tax assets at each balance sheet
date is reduced to the extent that it is no longer reasonably certain
that sufficient future taxable income will be available against which
the deferred tax asset can be realized.
g) Tax on distributed profits payable in accordance with the provisions
of Section 115O of the Income Tax Act, 1961 is in accordance with the
Guidance Note on Accounting for Corporate Dividend Tax regarded as a
tax on distribution of profits and is not considered in determination
of profits for the year.
1.12 Earnings per Share
a) The Company reports basic and diluted Earnings Per Share (EPS/DEPS)
in accordance with Accounting Standard 20 on Earnings Per Share.
Basic EPS is computed by dividing the net profit or loss for the year
by the weighted average number of equity shares outstanding during the
b) Diluted EPS is computed by dividing the net profit or loss for the
year by the weighted average number of equity shares outstanding during
the year as adjusted for the effects of all dilutive potential equity
shares from the exercise of Convertible Share Warrants of un-issued
share capital, except where the results are anti-dilutive.
a) Leases under which the Company assumes substantially all the risks
and rewards of ownership are classified as finance leases. Such assets
acquired on or after 1st April 2001 are capitalized at the fair value
or the present value of minimum lease payments at the inception of the
lease, whichever is lower.
b) Lease income from assets given on operating lease is recognized as
income in the Statement of Profit and Loss. Lease payments for assets
taken on operating lease are recognized as expense in the Statement of
Profit and Loss.
1.14 Segment Reporting
Disclosure is made as per the requirements of the Standard. Details
have furnished under Note No. 2.30 of Notes to Accounts.
1.15 Impairment of Assets
a) The Company assesses at each Balance Sheet date whether there is any
indication that any assets forming part of its cash generating units
may be impaired. 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 to is less than its carrying amount, 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
b) If at the Balance Sheet date, there is an indication that a
previously assessed impairment loss no longer exists, the recoverable
amount is re-assessed and the asset is reflected at the re-assessed
recoverable amount subject to a maximum of depreciated historical cost.
1.16 Provision for Doubtful Debts/Advances
a) Provision for doubtful debts/advances is made when there is
uncertainty of realization of debts which are long outstanding. All
debts which are over and above one year are provided in full unless
there is certainty of its recovery.
b) In addition to the above, provision is also made in respect of dues
in respect of which suits are filed. Writing off doubtful
debts/advances are made when the un-realisability is established.
1.17 Provisions, Contingent Liabilities and Contingent Assets
a) 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.
b) Contingent Liabilities are not recognised but are disclosed in the
c) Contingent Assets are neither recognised nor disclosed in the
1.18 Cash Flow statement
Cash Flow Statement has been prepared using the Indirect Method as
per the Accounting Standard 3 on Cash Flow Statements.
1.19 Borrowing cost
a) Borrowing Costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for intended use.
b) All other borrowing costs are charged to Statement of Profit and
1.20 Related party disclosure
Disclosure is made as per the requirements of the Standard and as per
the clarifications issued by the Institute of Chartered Accountants of
1.21 Interim Financial Reporting
Quarterly financial results are published in accordance with the
requirement of Listing Agreement with Stock Exchanges. The recognition
and measurement principle as laid down in the Standard have been
followed in the preparation of these results.