BASIS OF PREPARATION :
The financial statements have been prepared to comply in all material
respects with the accounting standards notified by Companies Accounting
Standards Rules, 2006 and the relevant provisions of the Companies Act,
1956 (''the Act''). The financial statements have been prepared under
historical cost convention on an accrual basis in accordance with
accounting principles generally accepted in India. The accounting
policies have been consistently applied by the Company and are
consistent with those used in the previous year.
USE OF ESTIMATES :
The preparation of financial statements in conformity with generally
accepted accounting principles require the management to make estimates
and assumptions that affect the reported amounts of Assets and
Liabilities and disclosure of Contingent Liabilities at the date of the
financial statements and the result of operations during the reporting
period. Although these estimates are based upon management''s best
knowledge of current events and actions, actual results could differ
from these estimates. Significant estimates used by the management in
the preparation of these financial statements include estimates of the
economic useful life of Fixed Assets and provisions for bad and
doubtful debts. Any revision to accounting estimates is recognized
(a) Accounting Convention and Revenue Recognition:
The Financial Statements have been prepared on a going concern basis in
accordance with historical cost convention except for such fixed assets
which are revalued. Both Income and Expenditure are recognized on
Sales are accounted Net of Excise Duty, Taxes and Sales Returns. Other
Items of Revenue are recognized in accordance with AS-9.
(b) Cash Flow Statement : AS-3
The Company has prepared Cash Flow Statement as per AS-3.
(c) Retirements Benefits:
Staff benefits arising out of retirements / death, comprising of
contributions to Provident Fund, Superannuation & Gratuity Schemes,
accrued Leave Encashment and other post–separation benefits are
accounted for on the basis of an independent actuarial valuation, in
accordance with AS-15. The actuarial liability is determined with
reference to employees at the end of each financial year.
(d) Fixed Assets:
Fixed Assets are stated at cost of acquisition and subsequent
improvements thereto, inclusive of taxes, freight and other incidental
expenses related to acquisition, improvements and installation, except
in case of revaluation of Fixed Assets where they are stated at
revalued amount, as contained in AS-10. Capital Work-in-Progress
includes cost of Fixed Assets under installation, any unallocated
expenditure and Interest during construction period on loans taken to
finance the Fixed Assets.
Depreciation on Fixed Assets is provided on straight-line method as per
the rates specified in Schedule XIV of the Companies Act, 1956. This is
in accordance with the AS-6 and there is no change in the method of
Depreciation during the year.
(f) Accounting for Government Grants:
Government Grants / Subsidies are accounted in accordance with AS-12.
(g) Investments :
Long term investments are stated at cost. However, provision for
diminution is made to recognise any decline, other than temporary, in
the value of long term investments. Current Investments are stated at
the lower of cost and fair value.
(h) (a) Intangible Assets :
Intangible assets are capitalized at cost if :
- It is probable that the future economic benefits that are
attributable to the asset will flow to the company;
- The company will have control over the assets;
- The cost of these assets can be measured reliably and is more than
Rs. 10,000/- &
- This is in accordance with AS-26.
(b) Expenditure on Research and Development:
Capital Expenditure on Research and Development has been capitalized as
Fixed Assets at the cost of acquisition inclusive of taxes, freight,
and other incidental expenses related to acquisition and installation.
Revenue Expenditure on research including the expenditure during the
research phase of Research and Development projects is charged to
Profit and Loss Account as expense in the year of occurrence.
The above accounting is in compliance with AS-8.
(i) Transactions in Foreign Exchange:
Sales / Purchases and revenue incomes / expenses in foreign currency
are booked at the exchange rate prevailing on the date of transaction.
Gain / Loss arising out of fluctuations in exchange based on the rate
on date of realization is accounted for in the Profit and Loss Account
as per AS-11.
Foreign Currency Monetary assets and liabilities are translated at year
end exchange rates.
Foreign currency loans covered by forward contracts are realigned at
the forward contract rates while those not covered by forward contracts
are realigned at the rate prevailing at the year end.
(j) Borrowing Cost :
Borrowing cost relating to acquisition/ construction of qualifying
assets are capitalized until the time all substantial activities
necessary to prepare the qualifying assets for their intended use are
complete. A qualifying asset is one that necessarily takes substantial
period of time to get ready for its intended use/sale. Borrowing costs
that are attributable to the projects are charged to the respective
projects. All other borrowing costs, not eligible for capitalisation,
are charged to revenue.
(k) Inventories :
Inventories of Raw Materials, Packing Materials, Stores & Spares,
Consumables and Work in Process is valued at cost on Weighted Average
basis. Finished goods are valued at lower of Cost or Net realisable
Value, as per AS-2.
(l) Taxes on Income :
a) Provision for tax for the year comprises current Income Tax and
Deferred Tax and is provided as per the Income Tax Act, 1961.
b) Deferred tax resulting from timing differences between the book and
the tax profits is accounted for, at the current rate of tax, to the
extent that the timing differences are expected to crystallize.
Deferred tax assets are recognized only to the extent there is
reasonable certainty that the assets can be realized in the future;
however where there is unabsorbed depreciation or carried forward loss
under taxation laws, deferred tax assets are recognized only if there
is a virtual certainty of realization of such assets. Deferred tax
assets/ liabilities are reviewed as at each balance sheet date.
(m) Provisions, Contingent Liabilities and Contingent Assets :
Provisions are recognized for liabilities that can be measured only by
using a substantial degree of estimation, if
a) the Company has a present obligation as a result of a past event;
b) a probable outflow of resources is expected to settle the
c) the amount of the obligation can be reliably estimated.
Reimbursement expected in respect of expenditure required to settle a
provision is recognized only when it is virtually certain that the
reimbursement will be received.
Contingent Liability is disclosed in the case of:
a. a present obligation arising from a past event, when it is not
probable that an outflow of resources will be required to settle the
b. a possible obligation, unless the probability of outflow of
resources is remote. Contingent Assets are neither recognized nor
(n) Earnings per Share:
The earnings considered in ascertaining the Earning Per Share comprise
of Net Profit after Tax. The number of shares used in computing Basic
Earnings Per Share is the number of shares outstanding at the end of
(o) Impairment of Assets :
Management periodically assesses using external and internal sources
whether there is an indication that an asset may be impaired.
Impairment occurs where the carrying value exceeds the present value of
future cash flows expected to arise from the continuing use of the
asset and its eventual disposal. The impairment loss to be expensed is
determined as the excess of carrying amount over the higher of the
asset''s net sale price or present value as determined above.
(p) Related Party Disclosures :
The Company as required by AS-18, furnishes the details of Related
Party Disclosures in Schedule 24.