1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The financial statements have been prepared under historical cost
convention in accordance with the generally accepted accounting
principles and provisions of the Companies Act, 1956. Company follows
the mercantile system of accounting and recognizes significant items of
income and expenditure on accrual basis.
2. FIXEDASSETS:
Fixed assets are stated at cost. Cost includes purchase price net of
excise duties and taxes recoverable, where claimed, interest on amount
borrowed for acquisition of assets for the period up to the date the
asset is ready to be put to use and incidental expenses related in
bringing the assets to working condition for their intended use.
Capital work in progress is stated at cost. Cost includes expenses
incurred during preoperative / installation period, cost of capital
goods, in transit and advances to suppliers.
3. DEPRECIATION ON FIXEDASSETS:
Depreciation On Fixed Assets has been provided on the Straight Line
Method at the rate prescribed in schedule XIV to the Companies Act,
1956.
In respect of additions to the assets made during the year,
depreciation for the year is calculated from the date of such
additions. Depreciation on assets disposed off during the year is
charged up to the date of disposal.
4. INVENTORYVALUATION:
Raw materials are valued at cost which is determined on First in First
Out Basis. Cost includes the purchase price, duties and taxes (net of
duties and taxes recoverable.
Work in progressed at factory cost consisting of direct material and
labor cost together will related factory overheads Finished goods
manufactured by the company are valued at lower of cost together with
related factory overheads Finished goods manufactured by the Company
are valued at lower of cost or net realizable values. An adequate
write off for the stock is made for old and absolute items.
5. INVESTMENTS:
Long term investments are valued at cost less provision for diminution
in value, if the diminution is other than temporary
6. SUNDRY DEBTORS/LOANS AND ADVANCES/CREDITORS:
The Company has been making Provision for Bad and Doubtful debts and
Also on Amounts Payable to Creditors. This year the management has
taken a decision to write off Payables and Receivables outstanding for
a Period of More than 3 years and accounts where there is no
Transaction in Three Years. The Payables which have been written off
are to be shown as Contingent Liabilities for a further Period of One
year.
7. FOREIGN EXCHANGE TRANSACTIONS:
Transactions in foreign currencies are recorded at the rate of exchange
prevailing on the date of the transaction and subsequent gains/losses
are recognized on realization.
Monitory assets and liabilities relating to foreign currency
transaction remaining unsettled at the end of the year are translated
at year end rates. The difference in translation of monetary assets
and liabilities on foreign exchange transactions are recognized in the
profit and loss account for the year.
8. REVENUE RECOGNITION:
Revenue from sale of goods is recognized on dispatch to customers or
authorized agent or transporter. Sales are net of sales tax recovered,
sales returns, trade discounts, rebate and allowances.
9. EMPLOYEES BENEFITS.
Employees benefit comprises payments under defined contribution plans
like provident fund and family pension. Payments under defined
contribution plans are charged to the profit and loss account. The
liability in respect of the defined benefit schemes like gratuity and
leave encashment benefit on retirement is provided on the basis of
actuarial valuation at the end of each year.
10. RESEARCH AND DEVELOPMENT:
Revenue expenditure on research and development is charged under their
respect heads of accounts. Capital expenditure on research and
development is included as part of fixed assets and depreciated on the
same basis as the other fixed assets.
11. IMPAIRMENT OF ASSETS:
An asset is related as impaired when the carrying cost of assets
exceeds its recoverable value .An impairment loss is charged to profit
and loss account in the year in which the asset is identified as
impaired he impairment loss recognized in prior accounting period id
revised if there has been a change in the estimate of recoverable
amount.
12. INCOMETAX:
Income taxes have been computed using the tax effect accounting method,
where taxes are accrued in the same period as the related revenue and
expense. Deferred tax assets and liabilities are recognized for the
expected future tax consequences attributable to timing differences
between the taxable income and the accounting income over a period.
Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the year in which the
timing differences are expected to b recovered or settles. The effect
of changes in Tax rates on deferred tax assets and liabilities is
recognized in the statement of income in the period of change. The
effect of changes in tax rates on deferred tax assets and liabilities
is realized in the statement of income in the period of change.
Deferred tax assets are recognized only to the extent management is
virtually certain as to the sufficiency to future taxable income
against which the deferred tax assets can be realized.
13. PROVISIONS AND CONTINGENCIES:
Contingencies are recorded which it is probable that a liability will
be incurred and the amount can be reasonably estimated. Where no
reliable 'estimates can be made as to the outcome of an event, a
disclosure is made as contingent liability .Contingent assets are not
recognized in the accounts.
14. EARNINGS PER SHARE:
The basic earnings per share are computed by dividing the net profit
after tax for the year by the weighted average number of equity shares
outstanding during the year. For the purpose of calculating diluted
earnings per share, net profit after tax for the year and the weighted
average
15. LEASES:
Operating Lease:
Lease where the lesser effectively retains substantially all the risks
and benefits of ownership of the leased term is classified as operating
lease.
Operating Lease payments are recognized as an expense in the profit and
loss account.
16. EVENTS AND CONTINGENCIES AFTER THE BALANCE SHEET DATE
i) Sale of place and machinery/Disposal
ii) Loss cannot be valued
iii) Going concern affected
