1. Basis of preparation of Financial Statements
The financial statements have been prepared to comply in all material
respects with the standards notified under the Companies (Accounting
Standards) Rules, 2006 and the relevant provisions of Companies Act,
1956. The financial statements have been prepared under the historical
cost convention on an accrual basis except in case of assets for which
impairment is made and revaluation is carried out and derivative
instruments. The accounting policies have been consistently applied by
the Company and except for the changes in accounting policy discussed
more fully below, are consistent with those used in previous year.
2. Use of Estimate
The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities, the disclosure of contingent liabilities on the date
of the financial statements and the reported amounts of revenues and
expenses during the period reported. Actual results could differ from
those estimates. Any revision to accounting estimates is recognised in
accordance with the requirements of the respective accounting standard.
3. Fixed Assets
Fixed assets are stated at cost (or re-valued amounts, as the case may
be), less accumulated depreciation and impairment losses. Cost
comprises the purchase price and any attributable cost of bringing the
asset to its working condition for its intended use. Financing costs
relating to construction of fixed assets are also included to the
extent they relate to the period till such assets are ready to be put
to use. Financing costs not relating to construction of fixed assets
are charged to the income statement.
Depreciation on the fixed assets has been provided for on written down
value method at the rates prescribed and in the manner specified in
Schedule XIV to the Companies Act, 1956.
I. The carrying amounts of assets are reviewed at each balance sheet
date if there are impairment indicators. An impairment loss is
recognized wherever the carrying amount of an asset exceeds its
recoverable amount. The recoverable amount is the greater of the
asset''s net selling price and value in use. In assessing value in use,
the estimated future cash flows are discounted to their present value
at the WACC.
ii. After impairment, depreciation is provided on the revised
carrying amount of the asset over its remaining useful life.
iii. A previously recognised impairment loss is increased or decreased
based on reassessment of recoverable amount, which is carried out if
the change is significant. However the carrying value after reversal
is not increased beyond the carrying value that would have prevailed by
charging usual depreciation if there was no impairment
4. Intangible Assets
Intangible assets include miscellaneous expenditures that are
capitalized if specific criteria are met and are amortised over their
useful life, generally not exceeding 5 years. The recoverable amount of
an intangible asset that is not available for use or is being amortized
over a period exceeding 5 years should be reviewed at least at each
financial year end even if there is no indication that the asset is
Where the Company is the lessee
Finance leases, where substantially all the risks and benefits
incidental to ownership of the leased item, are transferred to the
company, are capitalized at the lower of the fair value and present
value of the minimum lease payments at the inception of the lease term
and disclosed as leased assets. Lease payments are apportioned between
finance charges and reduction of the lease liability based on the
implicit rate of return. Finance charges are charged to income. Lease
management fees, legal charges and other initial direct costs are
If there is no reasonable certainty that the Company will obtain the
ownership by the end of the lease item, capitalized leased assets are
depreciated over the shorter of the estimated useful life of the asset
or the lease term.
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased term, are classified as
operating leases. Operating lease payments are recognized as an expense
in the Profit and Loss account on a straight-line basis over the lease
Where the Company is the lessor
Assets subject to operating leases are included in fixed assets. Lease
income is recognised in the Profit and Loss Account on a straight-line
basis over the lease term. Costs, including depreciation are recognised
as an expense in the Profit and Loss Account. Initial direct costs such
as legal costs, brokerage costs, etc. are recognised immediately in the
Inventories are valued at lower of cost or net realisable value. Raw
material and manufactured finished goods are valued at cost inclusive
of excise duty. Cost is determined on using average cost method.
7. Revenue Recognition
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the company and the revenue can be
(i) Sale of goods
Revenue is recognised when the significant risks and rewards of
ownership of the goods have passed to the buyer. Sales revenue is net
of sales returns, discounts and rebates.
Revenue is recognised on a time proportion basis taking into account
the amount outstanding and the rate applicable.
Revenue is recognised when the shareholders'' right to receive payment
is established by the balance sheet date. Dividend from subsidiaries is
recognised even if same are declared after the balance sheet date
butpertains to period on or before the date of balance sheet as per the
requirement of revised schedule VI of the Companies Act, 1956
8. Foreign Exchange Transaction
(a) Transaction denominated in foreign currencies is normally recorded
at the exchange rate prevailing at the time of the transaction.
(b) Monetary items denominated in foreign currency as at the balance
sheet date are translated at the year end exchange rate.
(c) Premium on forward cover contracts in respect of import of raw
material is charged to profit & loss account over the period of
contracts except in respect of liability for acquiring fixed assets, in
which case the difference are adjusted in carrying cost of the same.
i. Retirement benefits in the form of Provident Fund is a defined
contribution scheme and the contributions are charged to the Profit and
Loss Account of the year when the contributions to the statutory
authority are due. ii. Gratuity liability are defined benefit
obligations and are provided for on the basis of an actuarial valuation
on projected unit credit method made at the end of each financial year
10. Current Tax and Deferred Tax
(i) Provision for current tax is made after taking into consideration
benefits admissible under the provision of the Income Tax Act, 1961.
(ii) Deferred tax resulting from timing difference between the book and
taxable profit is accounted for using the tax rates and laws that have
been enacted or substantively enacted as on the balance sheet date.
11. Earning per share
Basic EPS is computed using the weighted average number of equity
shares outstanding during the year. Diluted EPS is computed using the
weighted average number of equity and diluted equity equivalent shares
outstanding during the year except where the results would be
12. Cash Flow Statement
Cash flow statement is reported using the indirect method as specified
in the Accounting standard (AS)-3, ''Cash Flow Statement'' issued by The
Institute of Chartered Accountants of India.
13. Provision, Contingent Liabilities and Contingent Assets
Provision involving substantial degree of estimation in measurement is
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