A. Basis of Preparation of Financial Statements:
The Financial Statements have been prepared under the historical cost
convention on accrual method of accounting, in accordance with, the
generally accepted accounting principles in India, mandatory Accounting
Standard notified by the Companies (Accounting Standards) Rules, 2006
and the relevant provisions of the Companies Act, 1956, except for
certain fixed assets which have been revalued.
B. Use of Estimates:
The presentation 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 ex- penses during the reporting period.
Difference between the actual results and estimates are recognised in
the period in which the results are known/materialsed.
C. Fixed Assets
1) Fixed assets (other than those which have been revalued) including
intangible assets are stated at cost of acquisition (net of Cenvat &
VAT, wherever applicable), inclu- sive of freight, duties and other
directly at- tributable costs, less depreciation.
2) i) Depreciation on all fixed assets is pro-
vided on straight line method at the rate specified in schedule XIV of
the Compa- nies Act, 1956 or at rates arrived at on the basis of the
balance useful lives of the assets based on technical evaluation/
revaluation of the related assets, which- ever is higher, on pro-rata
ii) On assets sold, discarded, etc. during the year, depreciation is
provided upto the date of sale/discard.
iii) In respect of revalued assets, a transfer is made from the
revaluation reserve to the Profit & Loss Account for the sum of the
difference as below:
- The difference between the amount of depreciation on revalued value
and on the historical cost at rate prescribed in Schedule XIV.
Long Term investments are valued at cost. The cost of investment
includes acquisition charges such as brokerage, fees and duties.
Provision for deminution in the value of long term invest- ment is made
only if such a decline is other than temporary in the opinion of
management. Current investment are valued at lower of cost or net
Inventories are valued as under:
1) Raw Material, WIP, Stores, Spares & Pack- ing Material:
- At cost or net realisable value whichever is lower. Cost is arrived
at on first-in-first- out (FIFO) basis.
2) Finished Products:
- At cost of production or market value whichever is lower. Cost of
production is arrived at on standard cost basis.
F. Foreign Currency Transactions
1) Transactions in Foreign currencies are recorded on initial
recognition at the ex- change rate prevailing on the date of the
2) All foreign currency liabilities and monetary assets are stated at
the exchange rate prevailing at the date of the Balance Sheet except
where forward exchange cover is obtained and the loss or gain is taken
to the Profit & Loss account as exchange fluctuation.
3) In respect of the forward contracts, the difference between the
forward rate and the exchange rate at the date of transaction is
recognized as income or expense and is spread over the life of the
G. Revenue Recognition
1) Consignment Sales
The consignment sales have been accounted for on sales effected by the
2) Other Sales
Sales are accounted for net of Excise Duty, CST and VAT. Sale of
products are recog- nized on transfer of property in goods as per
3) Other Incomes
All income items in all material aspects having bearing on the
financial statement are recognized on accrual basis.
H. Provisons and Contingent Liabilities
1) Provisions are recognized for liabilities that can be measured by
using a substantial de- gree of estimation, if.
a) the Company has present obligation as a result of a past event;
b) a probable outflow of resources embodying economic benefits is
expected to settle the obligation; and
c) the amount of obligation can be relilably estimated.
2) Contingent liability is disclosed in the case of:
a) a present obligation arising from a past event when it is not
probable that an out- flow of resources embodying economic benefits
will be required to settle the ob- ligation, or,
b) a possible obligation, unless the probabil- ity of outflow of
resources embodying economic benefits is remote.
I. Employees'' Benefits
1) Short term employee benefits are recog- nized as expense in the
Profit & Loss Account of the year in which service is ren- dered.
2) Company''s contributions to Provident Fund and other Funds during the
year are charged to Profit and Loss Account.
3) Provision for retirement gratuity & leave encashments are determined
and made in accordance with the relevant laws by assuming that benefits
are payable to all em- ployees at the year end and are charged to
Profit & Loss Account.
Provision for tax is made for both current and deferred taxes.
Provision for current income- tax is made on the current tax rates
based on assessable income. The Company provides for deferred tax based
on the tax effect of timing differences resulting from the recognition
of items in the financial statements and in esti- mating its current
tax provision. The deferred tax assets is recognised and carried
forward only to the extent that there is a rea- sonable certainty that
the assets will be realised in future.
K. Borrowing Costs
Borrowing costs that are attributable to the acquisition of or
construction of qualifying assets are capitalized as part of the cost
of such assets. A qualifying assets is one that necessarily takes
substantial period of time to get ready for its intended use. All other
borrowing costs are charged to revenue.
1) Operating : Lease of assets under which significant risks and
rewards of ownership are effectively retained by the lessor are
classfied as operating leases. Lease pay- ments under an operating
lease are recog- nized as expense in the Profit & Loss Ac- count, on
straight line basis over the lease term.
2) Finance : Lease assets acquired on which significant risks and
rewards of ownership effectively transferred to the Company are
capitalized at lower of fair value or the amounts paid under such lease
arrange- ments. Such assets are amortized over the period of lease.
M. Impairment of Assets
At each Balance Sheet date an assessment is made whether any indication
exists that an as- set has been impaired, if any such indication
exists, an impairment loss, i.e. the amount by which the carrying
amount of an asset exceed its recoverable amount is provided in the
books of account.
N. Earning Per Share
The earnings considered in ascertaining the Company''s EPS comprises the
net profit after tax as per Accounting Standard-20 on Earning per
share, issued by the Institute of Chartered Accountants of India. The
number of shares used in computing basic EPS is the weighted average
number of shares outstanding during the period. The diluted EPS is
calculated on the same basis as basic EPS, after adjusting for the
effects of potential dilutive equity shares unless the effect of the
potential dilutive share is anti-dilutive.