1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
i) The financial statements are prepared in accordance with the
accounting principles generally accepted in India.
ii) The concern generally follows the mercantile system of accounting
and recognizes income & expenditure on an accrual basis except those
with significant uncertainties. .
2. USE OF ESTIMATES:-
The presentation of financial statements requires estimates and
assumptions to be made that affect the reported amounts of assets and
liabilities on the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period.
Differences between the actual result and estimates are recognized in
the period in which the results are known/ materialized. The material
assumptions are as under:
i) 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 Long-term
investments are carried at cost.
ii) A provision is recognized when an enterprise has a present
obligation as a result of past event; it is probable that an outflow of
resources will be required to settle the obligation, in respect of
which a reliable estimate can be made. Provisions are not discounted to
its present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current best
3. Fixed Assets
Fixed Assets are stated at cost of acquisition net of recoverable taxes
and includes amount added on revaluation, less accumulated depreciation
and impairment loss, if any. All costs, including financing cost till
commencement of commercial production, net charges on foreign exchange
Contracts and adjustments arising from exchange rate variations
attributable to the fixed assets are capitalized.
4. Expenditure during construction period
Expenditure related to and incurred during implementation of
new/expansion- cum-modernization projects is included under capital
work-in-progress and the same is allocated to the respective Fixed
Assets on completion of its construction/ erection. Interest on
borrowing costs related to a qualifying asset is worked out on the
basis of actual utilization of funds out of project specific loans
and/or other borrowings to the extent identifiable with the qualifying
asset and is capitalized with the cost of the qualifying asset.
5. Depreciation and Amortization
Depreciation on fixed assets (other than land) is provided to the
extent of depreciable amount on Straight Line method (SLM) at the rates
and in the manner prescribed in schedule XIV to the Companies Act, 1956
over its useful life.
Depreciation on additions to Fixed Assets or on sale/ discernment of
assets is calculated pro rata from the month of such addition or up to
the month of such sale/ discernment, as the case may be.
Depreciation charged on Revalued Assets has been adjusted against the
Miscellaneous expenditure is written off over a period of five years.
6. FOREIGN CURRENCY TRANSACTIONS
Transactions denominated in foreign currency are recorded at the
prevalent rates of Exchange in force at the time the transactions are
effected and exchange rate difference is accounted on the date of
realization of foreign exchange.
Monetary foreign currency assets and liabilities in foreign currency,
outstanding at the close of the year, are converted in Indian Currency
at the appropriate rates of exchange prevailing on the date of the
Balance sheet & resultant gain or losses are recognized in the PS L A/c
for the year.
7. VALUATION OF INVENTORIES
Items of inventories are measured at lower of cost and net realizable
value after providing for obsolescence, if any.
i) cost of Inventories comprises of cost of purchase, cost of
conversion and other cost including manufacturing overheads incurred in
bringing them to their respective present location & condition. Cost of
Raw Materials, Stores & spares are determined at cost.
iii) Work- in- Progress are valued at cost of purchase, cost of
conversion and other cost including manufacturing overheads incurred in
bringing them to their respective present location and conditions.
8. REVENUE RECOGNITION:-
Revenue is recognized only when it can be reliably measured and it is
reasonable to expect ultimate collection. Turnover includes sale of
goods and Job Charges adjusted for returns, discounts, Value Added Tax
(VAT), excise duty, and Sales Tax. Material returned/rejected are
accounted for in the year of return/rejection
Export sales are accounted for on the basis of the date of bill of
Income from job charges accounted for at the time of billing.
Revenue in respect of insurance / other claims, interest and commission
etc. is recognized only when ;t is reasonably certain that the
ultimate realization will be effected.
9. Excise Duty and Customs Duty
Excise Duty liability on finished goods manufactured and lying in the
factory is accounted for and the corresponding amount are considered
for valuation thereof. Customs duty in respect of materials lying in
bonded premises and in transit is accounted for as and when the
property in the goods passes to the Company.
10. Export benefits
Export benefits available under the Export Import policy of the
Government of India are accounted for in the year of export, to the
Cenvat is accounted as per exclusive method of accounting.
12. TAXES ON INCOME:-
Tax expenses comprises of current & deferred tax. Current income tax is
measured at the amount expected to be paid to the tax authority in
accordance with the Indian Income Tax. -
In accordance with Accounting Standard (AS-22) Accounting for Taxes on
Income issued by the Institute of Chartered Accountants of India,
deferred tax resulting from timing difference between taxable and
accounting income is accounted for using the tax rates and laws that
are enacted or substantively enacted as on the balance sheet date.
Deferred Tax asset is recognized and carried forward only to the extent
that there is a virtual certainty that the asset will be realized in
13. Employee Benefits
Expenses S liabilities in respect of employee benefits are recorded in
accordance with the Revised Accounting Standard (AS)^15 -Employee
Benefits (revised 2005) issued by ICAI.
a). Provident Fund
The Company makes contribution to statutory provident fund in
accordance with the Employees Provident Fund & Miscellaneous Provisions
Act, 1952 which is a defined contribution plan and contribution paid or
payable is recognized as an expense in the period in which services are
rendered by the employee.
b). Post Employee Benefits I Gratuity
Post Employment Benefit and other long term Employee Benefits are
recognized as an expense in the Profit & Loss account for the year in
which the employee has rendered Service. Provision has been made for
liability in respect of gratuity to employees on estimated basis & not
as per the actuarial Valuation.
c). Leave Encashment I Salary
The company has not provided any leave encashment / salary to the
employees as the employees fully utilizes their leaves during the year.
14. BORROWING COST:-
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as a 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.
All other borrowing costs are charged to Profit and Loss Account.
Comparative financial information is presented in accordance with the
Corresponding Figure financial reporting framework set out in
Standard of Auditing 710z` on Comparatives. Accordingly, amounts and
other disclosures for the preceding year are included as an integral
part of the current year financial statements, and are to be read in
relation to the amounts and other disclosures relating to the current
16. SEGMENT INFORMATION FOR PRIMARY SEGMENT REPORTING (BY BUSINESS
Based on guiding principles given in the Accounting standard on
''segment Reporting'' (As-17), the primary segment of the Company is
business segment, which involved in business of manufacturing Ingots,
Flanges, Forging etc. As the company operates in a single primary
business segment, no segment information thereof is given.
17. Provisions and contingent liabilities
Provisions involving substantial degree of estimation in measurement
are recognized 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 are not recognized but are disclosed in the
notes. Contingent Assets are neither recognized nor disclosed in the