a) Historical Cost Basis:
The financial statements are prepared under the historical cost
convention and in accordance with applicable mandatory accounting
standards and relevant presentation requirements of the Companies Act,
b) Use of Elements :
The preparation of financial statements requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. Difference
between the actual results and estimates are recognized in the period
in which the results are known / materialized.
c) Revenue Recognisation :
All income and expenses are recognised and accounted on accrual basis,
except interest on loans which is accounted on cash basis as there is
uncertainty of realization.
d) Fixed Assets and Depreciation :
a) Fixed Assets include all expenditure of capital nature and are
stated at cost less depreciation.
b) Depreciation on fixed assets has been provided at the rates
prescribed in Schedule XIV to the Companies Act, 1956 as under:
i) As per straight line method on plant and machineries.
ii) As per written down value method on all other assets.
c) Depreciation on additions/sale of assets during the year has been
provided on pro-rata basis.
e) Impairment of Fixed Assets:
a) Consideration is given at each balance sheet date to determine
whether there is any indication of impairment of the carrying amount of
company''s fixed assets. If any indication exists an assets recoverable
amount is estimated, an impairment loss is recognized whenever the
carrying amount of an asset exceeds its recoverable amount.
b) Reversal of impairment losses recognized in prior years is recorded
when there is an indication that the impairment losses recognized for
the assets no longer exist or have decreased.
Investments are of long-term nature and are valued at acquisition cost.
Inventories of stock in process, finished goods and raw materials have
been valued at lower of cost or net realizable value. For this purpose
cost is arrived at on the First in First out basis.
h) Foreign Currency Transactions :
Foreign Currency Transactions are recorded by applying the exchange
rate prevailing on the date of payment.
a) Transactions in foreign currencies are recorded, on initial
recognition in the reporting currency, by applying to the foreign
currency amount the exchange rate between the reporting currency and
the foreign currency at the date of transaction.
b) Monetary items which are denominated in foreign currency are
translated at the exchange rates prevailing at the Balance Sheet date
and profit/ loss on translation thereon is credited or charged to the
Profit and Loss account.
Sales comprise of sales of manufactured and trading goods and are
inclusive of excise duty but it excludes sales tax and other charges
j) Employees Benefits:
The company accounts for leave encashment benefits, bonus and gratuity
k) Borrowing Cost:
Borrowing costs that are attributable to the acquisition / construction
of qualifying assets are capitalized as part of cost of such assets. A
qualifying asset is an asset that requires a substantial period of time
to get ready for its intended use. All other borrowing costs are
recognized as an expense in the period in which they are incurred.
l) Taxes on Income :
a) Tax expense comprise of current and deferred taxes.
b) Current income tax and fringe benefit tax is measured at the amount
expected to be paid to tax authorities in accordance with the Indian
Income Tax Act.
c) Deferred tax resulting from timing difference between 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. The
deferred tax asset is recognized and carried forward only to the extent
that there is a reasonable certainty that the assets will be realized.
m) Provisions, Contingent Liabilities and Contingent Assets.
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
even 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
A provision is recognized when there is present obligation as a result
of past event and 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 reviewed at each balance sheet date
and adjusted to reflect the current best estimate.
A disclosure for a contingent liability is made when there is a
possible or present obligation that may but probably will not require
an outflow of resources When there is a possible obligation in respect
of which the likelihood of outflow of resources is remote, no provision
or disclosure ts made.
Accounting Policies not specifically referred to are consistent with
generally accepted accounting practice.
o) Leases: As a Lessee
Leases on which significant portion of the risks and rewards of
ownership are effectively retained by the lessor, are classified as
operating leases. Operating leases payments are charged to the
Statement Profit and Loss on a straight-line basis over the lease
Leases: As a Lessor
The Company has leased certain tangible assets and such leases where
the Company has substantially retained all the risks and rewards of
ownership are classified as operating leases. Lease income on such
operating leases are recognized in the Statement of Profit and Loss on
a straight line basis over the lease term which is representative of
the time pattern in which benefit derived from the use of the leased
asset is diminished. Initial direct costs are recognized as an expense
in Statement of Profit and Loss in period in which they are incurred.