(a) Accounting convention:
The financial statements are prepared on the basis of historical cost
convention, and on the accounting principle of a going concern.
The Company follows mercantile system of accounting and recognizes
income and expenditure on accrual basis except those with significant
The financial statements have been prepared in compliance with all
material aspects of the Accounting Standards prescribed in the
Companies (Accounting Standards) Rules, 2006 issued by the Central
Government, and in accordance with the relevant provisions of the
Companies Act, 1956.
(b) Use of estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles (GAAP) requires management to make
estimates and assumptions that affects the reported amounts of assets
and liabilities and the disclosures of contingent liabilities on the
date of financial statements and reported amounts of revenue and
expenses for that year. Although these estimates are based upon
management''s best knowledge of current events and actions, actual
results could differ from these estimates.
i. Long term investments are valued at cost less provision, if any for
diminution in value, which is other than temporary.
ii. Current investments are carried at the lower of the cost and fair
(d) Revenue recognition:
i. Revenue in respect of sale of goods is recognized when significant
risks and rewards in respect of ownership of the products are
transferred to the customer.
ii. Dividend income is accounted for when the right to receive
dividend is established.
iii. Interest income is accounted for on time basis and when the
realization of amount is certain.
(e) Accounting for taxes on income:
i. Provision for income tax is made on the basis of the estimated
taxable income for the accounting year in accordance with the
Income-tax Act, 1961.
ii. The deferred tax for timing differences between the book profits
and tax profits for the year is accounted for using the tax rates and
laws that have been enacted or substantively enacted by the balance
sheet date. Deferred tax assets arising from timing differences are
recognized to the extent there is a reasonable / virtual certainty that
these would be realized in future and are reviewed for the
appropriateness of their respective carrying values at each balance
(f) Provisions and contingent liabilities:
The Company recognizes a provision when there is a present obligation
as a result of a past event that probably requires an outflow of
resources and a reliable estimate can be made of the amount of the
obligation. Provisions are not discounted to its present value and are
determined based on best estimate required to settle the obligation at
the balance sheet date. A disclosure for a contingent liability is made
when there is a possible obligation or a present obligation that may,
but probably will not, require an outflow of resources. Where there is
a possible obligation or a present obligation but the likelihood of
outflow of resources is remote, no provision or disclosure is made.
(g) Transaction in foreign currencies:
Foreign currency transactions are recorded at the exchange rates
prevailing on the date of such transactions. Monetary assets and
liabilities as at the Balance Sheet date are translated at the rates of
exchange prevailing at the date of the Balance Sheet. Gains and losses
arising on account of differences in foreign exchange rates on
settlement/ translation of monetary assets and liabilities are
recognized in the statement of profit and loss. Non-monetary foreign
currency items are carried at cost.
(h) Impairment of assets:
The Company assesses, at each balance sheet date, whether there is any
indication that an asset may be impaired. If any such indication
exists, the management estimates the recoverable amount of the asset.
If such recoverable amount of the asset is less than its carrying
amount, the carrying amount is reduced to its recoverable amount. The
reduction is treated as an impairment loss and is recognized in the
statement of profit and loss. If, at the balance sheet date, there is
an indication that a previously assessed impairment loss no longer
exists, the recoverable amount is reassessed and the asset is reflected
at the recoverable amount subject to a maximum of depreciated
(i) Earnings per share:
The basic earnings per share (EPS) is computed by dividing the net
profit/(loss) after tax for the year attributable to equity
shareholders by the weighted average number of equity shares
outstanding during the year. For the purpose of calculating diluted
earnings per share, net profit/(loss) after tax for the year available
for equity shareholders and the weighted average number of shares
outstanding during the year are adjusted for the effects of all
dilutive potential equity shares.