1. Basis of Preparation of Financial Statements:
The Financial Statements have been prepared under the historical cost
convention using accrual method of accounting in accordance with
Generally Accepted Accounting Principles and Provisions of the
Companies Act, 1956 as adopted consistently by the Company following
going concern concept.
Accounting policies not specifically referred to otherwise are
consistent and in accordance with the accounting principles generally
accepted and as recommended by the Institute of Chartered Accountants
All assets and liabilities have been classified as current or
non-current as per revised Schedule VI to the Companies Act, 1956.
2. Revenue Recognition:
Sales are net of returns, discounts and sales tax. However, Turnover
Discount and other non-recurring discounts have not been netted from
Sales. Incomes and expenditures are recognised on accrual basis.
However, customers'' claims are accounted for as and when arise/settled
on the basis of final settlement.
3. Fixed Assets and Depreciation:
Fixed Assets are stated at cost less accumulated depreciation. The cost
includes taxes, duties, freight, installation and other directly
attributable costs of bringing the assets in its working condition for
its intended use. Long term lease hold land is stated at cost.
Intangible asset is stated at the cost of acquisition less accumulated
amortization and impairment loss.
Depreciation on Plant & Machinery and other assets are provided at the
rates prescribed under the Schedule XIV under Written down Value Method
in accordance with the provisions of the Companies Act, 1956 at the
rates and in the manner specified in Schedule XIV of the said Act.
Capital Work-in-progress and Pre-Operative Expenses towards Expansion
cum Diversification Project is disclosed separately below the Gross
Block of Assets. Such expenditures are allocated on the respective
assets in the year of installation.
Software, which is not an integral part of hardware, is treated as an
intangible asset and is amortized over its useful economic life as
estimated by the management between 3 to 5 years.
Raw Materials and Stores, Spares, Packing Materials & Stock in Trade
are valued at cost computed on FIFO basis. Scrap is valued at
estimated realisable value.
Work in Progress is valued at material cost plus conversion cost and
finished goods are valued at lower of cost or net realisable value.
Cost for this purpose includes direct cost and appropriate
administrative and other overheads.
5. Borrowing Cost:
Borrowing costs that are attributable to the acquisition of qualifying
assets are capitalised as a part of cost of such assets. All other
borrowing costs are charged to revenue.
6. Preliminary Expenses:
Preliminary expenses incurred by the company are subject to
amortization over a period of 5 years equally.
Provision for current tax is made in the accounts on the basis of
estimated tax liability as per the applicable provisions of the Income
Tax Act, 1961.
Deferred tax effect of timing differences between tax profit and book
profit is accounted for using the tax rates and laws that have been
enacted or subsequently enacted as on the Balance Sheet date. Deferred
tax assets are recognised to the extent there is virtual certainty that
these assets can be realised in future.
8. Employees'' Benefits:
Employees'' benefits in the form of contribution towards Provident Fund,
ESI are considered as defined contribution plan and the contributions
to recognised funds are charged to the Profit and Loss Account of the
year when the contributions are due, as per the provisions of
Leaves lying in credit of the employees are not paid as the Company
follows practice of granting leaves as and when demanded by the
employees. These leaves are non-accumulating and the un-availed leaves
automatically lapse at the year-end. Hence, no provision for the same
is required to be made.
Gratuity is a post employment benefit and is in the nature of defined
benefit plan. The defined benefit/obligation is calculated by Life
Insurance Corporation of India, an independent Actuary using the
projected unit credit method.
9. Foreign Currency Transactions:
Exchange rate difference arising from foreign currency transactions
relating to import/export of goods are dealt with in the Profit & Loss
Account. Further, as per the notification issued by the Ministry of
Corporate Affairs, the company has opted to capitalize the exchange
difference on the foreign currency loans against purchase of fixed
assets after the same has been put to use and depreciated over the
balance useful life of the assets.
10. Cash Flow Statement:
The cash flow statement is prepared under the indirect method as set
out in the Accounting Standards 3. Cash and cash equivalents in the
cash flow statement comprise cash at bank and in hand and short-term
investments with an original maturity of three months or less.
11. Accounting for Investments:
Investments which 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. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. Long-term investments are carried at
cost. However, provision for diminution in value is made to recognize a
decline other than temporary in the value of investments.
12. Segment Reporting:
The accounting policies applicable to the reportable segments are same
as those used in the preparation of the financial statements. However,
items of income and expenditures, assets and liabilities which are not
directly attributable / identifiable / allocable on a reasonable basis
to a business segment are shown as unallocated.
13. Earnings Per Share :
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity 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 effects of all dilutive potential equity shares.
14. Impairment of Assets:
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/ external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The same is charged to the
Profit and Loss Account. After impairment, depreciation is provided on
the revised carrying amount of the asset over its remaining useful
15. Accounting for the Government Grant
The company recognizes the Government grant only when there is
reasonable assurance that:
- The enterprise will comply with the conditions attached to them and
- The grant will be received.
16 Provisions, Contingent Liability and Contingent Assets:
A provision is recognised when there is a present obligation as a
result of past event that there is possibility of an outflow of
resources to settle the obligation and in respect of which reliable
estimate can be made. Provision is determined based on the best
estimate required to settle the obligation at the end of the year.
These are reviewed at each year end and adjusted to reflect the best
Contingent liabilities are not provided for in the accounts and are
separately shown in the Notes on Accounts. Contingent Assets are
neither recognised nor provided or disclosed in the financial