1. Basis of preparation of Financial Statements
(a) The financial statements have been prepared under the historical
cost convention in accordance with the generally accepted accounting
principles (GAAP) in India and the provisions of the Companies Act,
1956, as adopted consistently by the Company.
(b) The Company recognises income and expenditure on accrual basis
except those of significant uncertainties.
2. Fixed Assets
Fixed Assets are stated at cost net of CENVAT and includes amounts
added on revaluation, less accumulated depreciation. All costs,
including interest on borrowings attributable to acquisition of Fixed
Assets upto the date of commissioning of the assets and net charges on
foreign exchange contracts and adjustments arising from exchange rate
variations relating to borrowings attributable to the fixed assets are
(i) Depreciation on fixed assets is provided on straight line method at
the rates and in the manner specified in Schedule XIV to the Companies
(ii) Depreciation on additions is being provided on pro rata basis from
the date of such additions.
(iii) Depreciation on assets sold, discarded, disabled or demolished
during the year is being provided up to the date in which such assets
are sold, discarded, disabled or demolished.
(iv) Depreciation on additions on account of increase in rupee value
due to revaluation of foreign currency loan is being provided at
respective rates of depreciation of related assets.
4. Foreign CurrencyTransactions
(i) The Monetary items denominated in foreign currency are translated
at the exchange rate prevailing on the last day of the accounting year
where the Company has entered into forward exchange contracts, the
difference between the forward rate and the exchange rate at the date
of the transaction is recognised in the statement of profit & loss over
the life of the contract.
(ii) Exchange differences arising due to repayment or restatement of
monetary items denominated in foreign currency are recognised in Profit
& Loss Account.
Investments that are readily realisable 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 carried at lower of cost and fair value. Long-term
investments are carried at cost. However, provision for diminution in
value is made to recognise a decline other than temporary in the value
of the investments.
6. Employee Benefits
i. Contribution to the provident fund with the government at
pre-determined rates is a defined contribution scheme and is charged to
the Profit and Loss account. There are no other obligations other than
contribution to PF Schemes.
ii. Liabilities in respect of defined benefit plan of Gratuity is
determined as per actuarial valuations made by an independent actuary
as at the balance sheet date. The actuarial gains or losses are
recognised immediately in the profit and loss account. Company has plan
assets with Life Insurance Corporation of India and SBI Life Insurance
iii. Provisions for other long term employee benefits- leave, a defined
benefit scheme, is made on the basis of actuarial valuation at the end
of each financial year and are charged to the profit and loss account .
All actuarial gains or losses are recognised immediately in the profit
and loss account.
7. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles (GAAP) requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and the disclosure of contingent liabilities as at the
date of the financial statements and reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
these estimates. Any revision to accounting estimates is recognised
prospectively in current and future periods.
(i) Raw material, Stores & Spares are valued at cost on FIFO basis.
(ii) Finished Goods are valued at cost or net realisable value
whichever is lower. Cost includes direct cost and appropriate portion
of production overheads.
(iii) Semi-finished goods are valued at cost or net realisable value
whichever is lower.
(iv) Scrap and Salvage is valued at realisable value.
(v) Excise duty is included in value of finished goods.
9. Revenue Recognition
Sale of goods are recognised where significant risk and reward in goods
is passed to customers. In case of export sale are recognised or the
basis of dates of Mate''s Receipts and initially recorded at the
relevant exchange rates prevailing on the date of transaction.
The current charge for income tax is measured at the amount expected to
be paid to the tax authorities in accordance with the Indian Income Tax
Act including probable adjustments.
The deferred tax for timing differences between the book and tax
profits for the year is accounted for using the tax rates and laws that
have been enacted or substantively enacted as of the balance sheet
date. Deferred tax assets arising from timing differences are
recognised to the extent there is reasonable certainty that the assets
can be realised in future. Deferred tax assets are reviewed at each
balance sheet date for its readability.