1.01 Basis of Accounting
The financial statements have been prepared under the historical cost
convention in accordance with generally accepted accounting principles
in India, the accounting standards issued by the Institute of Chartered
Accountants of India and the provisions of the Companies Act, 1956, as
adopted consistently by the company. The Company follows the
Mercantile System of accounting and recognizes items of income and
expenditure on accrual basis.
1.02 Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amount of revenues
and expenses for the years presented. Actual results could differ from
1.03 Recognition of Income and Expenditure
Sales are recognized when goods are supplied and are recorded net of
rebates and Sales Tax / VAT and inclusive of Excise Duty.
Expenses are accounted for on accrual basis and provision is made for
all known losses and expenses. Revenue is recognized to the extent
that it is probable that the economic benefits will flow to the Company
and the revenue can be reliably measured.
1.04 Fixed Assets and Depreciation
The Fixed Assets are stated at cost (Net of CENVAT and VAT where
applicable) less accumulated depreciation. Depreciation is provided on
additions and deletions on pro-rata basis on Straight Line Method at
the rates provided in Schedule XIV of the Companies Act, 1956. Direct
costs are capitalized. All pre-operative expenses, on the commencement
of commercial production attributable to the fixed assets are
1.05 Impairment of Assets
Whenever events indicate that assets may be impaired, the assets are
subject to a test of recoverability based on estimates of future cash
flows arising from continuing use of such assets and from its ultimate
A provision for impairment loss is recognized where it is probable that
the carrying value of an asset exceeds the amount to be recovered
through use or sale of the asset.
Inventories are valued at lower of cost and net realizable value.
a. Raw Materials : Average Cost Method
b. Finished Goods & Work in Progress : Includes conversion and other
cost incurred in bringing the inventories to their present location and
1.07 Retirement Benefits
a. The company contributes to the employees provident fund maintained
under the Employees Provident Fund Scheme of the Central Government and
the same is charged to Profit & Loss A/c.
b. Provision for Retirement Benefits is provided on the basis of
actuarial valuation carried out at the year end.
1.08 Insurance Claims
Insurance claims are accounted for at the time of lodging the claim
with the Insurance company. In case claim amount is greater than the
book value of the assets / damaged, the accounting of claim is
restricted to the respective book values of the assets lost/damaged.
Tax expense comprises of Current and Deferred Tax. Current Income Tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Indian Income Tax Act, 1961.
Deferred Tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the Balance Sheet date.
Deferred Tax is recognized, subject to the considerations of prudence,
on timing differences, being the difference between taxable income that
originate in one period and are capable of reversal in one or more
1.10 Foreign Currency Transactions
All transactions in foreign currency are recorded at the rates of
exchange prevailing on the dates when the relevant transactions take
Monetary items in the form of Current Assets and Current 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 loss is accounted during
1.11 Contingent Liabilities
Provision in respect of present obligation arising out of past events
are made in Accounts when reliable estimates can be made of the amount
of the obligation. Contingent Liabilities, if material, are disclosed
by way of Notes to Accounts.
1.12 Miscellaneous Expenditure
Costs incurred in connection with raising capital are adjusted against
the Securities Premium Account.
1.13 Borrowing costs attributable to acquisition or construction of
qualifying assets are capitalized as part of the cost of such assets up
to the date when such asset is ready for its intended use. Other
borrowing costs are charged to the Profit & Loss A/c.
Cash Credit Limit from PNB (Lead Bank) of Rs.1241.67 Lacs (Previous
Year [Canara Bank] Rs.1146.46 Lacs) with Other Member Banks viz. OBC of
Rs. 776.50 Lacs (Previous Year Rs.801.39 Lacs), IDBI Bank of Rs.951.99
Lacs including PC Limit of Rs.76.00 Lacs (Previous Year - Nil) and
State Bank of Hyderabad of Rs.400.06 Lacs (Previous Year Nil), is
secured by way of hypothecation of Current Assests both Current &
Future, Factory Land & Building, Plant & Machinery and other Movable
Fixed Assets of the Company on First Charge Pari-Passu basis with PNB
(Lead Bank) and other Consortium Member Banks. Personal Guarantee of
Directors of the Company viz. Mr. Sanjiv Agarwal, Mr. Rakesh Kumar
Agarwal, Mrs. Rajni Maheshwari, Corporate Guarantee of M/s Ramdeo
Polysters Pvt. Ltd. and additional Personal Guarantee of Mr. Rajeev