1. Basis of Accounting
(a) The financial statement has been prepared under the historical cost
convention and generally accepted accounting principles
(b) Accrual method of accounting Is followed with regard to Income &
2. Use of Estimates
The presentation of financial statements requires estimates and
assumption to be made that affect the reported amount of assets and
liabilities on the date of the financial statement 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.
3. Fixed Assets
Fixed assets are stated at cost of acquisition (Inclusive of freight)
or construction net of Cenvat /Tax credit, less accumulated
depreciation. All costs. Including financial costs till commencement of
commercial production and adjustment arising from exchange rate
variations attributable to the fixed assets are capitalized.
4. Capital Work- In- progress
Project under commissioning and other capital work-in- progress are
carried at cost, comprising direct cost, related Incidental expenses
and attributable Interest
a) Depredation on fixed assets has been provided on Straight Line
Method at the rates and In the manners prescribed In Schedule XIV of
the Companies Act, 1956.
b) Depredation on addition to / dedudion from fixed assets Is being
provided on pro-rata basis from/ to the date of acquisition/ disposal.
Inventories I.e. stores consumables are valued at cost (exclusive of
excise). By Products are valued at estimated realizable value. Raw
Materials are valued at cost plus freight using Weighted Average Cost
(WAC) method. Finished Goods are valued at cost or net realizable value
(NRV) whichever Is lower. Finished goods Include cost of conversion and
other cost for bringing It In the present location and condition
7. Revenue Recognition
Mercantile method of accounting Is employed unless otherwise
specifically stated elsewhere In this schedule. However, where the
amount Is Immaterial / negligible and/or establishment of accruals /
determination of amount Is not possible no entries are made for the
accrual. Sales are exclusive of excise duty, sales tax & sales returns.
An asset Is treated as Impaired when the carrying cost of assets
exceeds Its recoverable value. An Impairment loss Is normally charged
to Profit & Loss account In the year In which an asset Is Identified as
Impaired. The Impairment loss recognized In prior accounting period Is
reversed If there has been a change In the estimate of recoverable
Long term Investments are carried out at cost less any other temporary
diminution In value, determined on the specific Identification basis.
Current Investments are carried at the lower of cost and fair value.
Profit & Loss on sale of Investment Is determined on specific
10. Other Income
Interest Income Is accounted on an accrual basis. Dividend Income Is
accounted for when the right to receive Income Is established.
11. Borrowing Cost
The Borrowing costs that are attributable to the acquisition or
construction or production of the qualifying assets are capitalized as
per the cost of such assets up to the date when such assets are ready
for Its Intended use. All other borrowing costs are charged to the
Profit & Loss A/c.
12. Accounting for Taxes on Income
Current tax Is determined as the tax payable In respect of taxable
Income for the year and Is computed In accordance with relevant tax
Deferred tax assets and liabilities are recognized for future tax
consequences attributable to the timing differences that result between
taxable profit and the profit as per the financial statement. Deferred
tax assets & liabilities are measured using the tax rates and the tax
laws enacted or substantially enacted as on the Balance Sheet date.
Deferred tax assets are recognized only to the extent there Is
reasonable certainty for Its realization.
The taxable Income of the company being lower than the book profits
under the provision of the Income tax act 1961. The company Is liable
to pay Minimum Alternate tax (MAT) on Its Income.
Considering the future profitability & taxable position In the
subsequent years the company has recognized MAT Credit as an assets by
crediting the provision for Income tax & Including the same under Loans
& advances In accordance with the Guidance note on Accounting for
Credit available In respect of MAT under Income Tax Act 1961'' Issued by
the Institute of Chartered Accountant of India.
13. Cash Flow Statement
The cash flow statement Is prepared as per the Indirect method
prescribed under ''Accounting Standard - 3'' Cash Flow Statement Issued
by the Institute of Chartered Accountants of India.
14. Foreign Currency Transactions
Transactions In foreign currency are recorded In Rupees by applying the
exchange rate prevailing on the date of transaction. Transactions
remaining unsettled are translated at the rate of exchange ruling at
the end of the year. Exchange gain or loss arising on settlement shall
be adjusted In the carrying amount of the respective fixed assets In
case of loans acquired for acquisition of fixed assets.
15. Provision and Contingencies
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
16. Employee Benefits;-
a. Provident Fund Is a defined contribution scheme and the
contribution Is charged to the Profit & Loss A/c of the year when the
contributions to the Government Funds Is due.
b. Gratuity Liability Is defined benefit obligations and Is provided
for on the basis of following formula:-
= Last drawn Salary * 15/26 * No. of Completed year of Services The
above calculation Is done only for those employees who have completed
continuous five year of services. However, the above calculation of
Gratuity Is not as per Actuary Valuation.
c. Short Term Compensated absences are provided for based on
estimates. Long Term compensated absences are provided for based on
d. Actuarial gains / losses are Immediate taken to the profit & loss
account and are not deferred.
17. Segment Reporting;-
a) Business Segment : - The accounting policies adopted for segment
reporting are In the line with the accounting policies of the company.
Segment Revenue, Segment expenses, segment assets and segment
liabilities have been Identified to segments on the basis of their
relationship to the operating activities of the segment. Revenue,
Expenses, Assets, Liabilities which relates to the company as whole and
not allocable to segment on reasonable basis have been Included under
Unallocated revenue/ expenses/ assets/ liabilities''.
b) Geographical Segment The company sell Its products within India. The
condition prevailing In India being uniform. So no separate
geographical segment disclosure Is considered necessary.
18. Research a Development Expenditure
Revenue expenditure Is charged to the Profit and Loss A/c and Capital
Expenditure Is added to the cost of Fixed Assets In the year In which
It Is Incurred and depreciation thereon Is provided as per the rates
prescribed In Schedule XIV of the Companies Act, 1956.
19. Intangible assets-
Cost Incurred on Intangible assets, resulting In future economic
benefits are capitalized as Intangible assets and amortized on equated
basis over the estimated useful life of such assets.