a) BASIS OF ACCOUNTING
The Accounts are prepared on accrual basis under the historical cost
convention and to comply in all material aspects with the applicable
accounting principles in India, the accounting standards issued by the
Institute of Chartered Accountants of India and the relevant provisions
of the Companies Act, 1956.
The preparation of financial statements in conformity with generally
accepted accounting principles in India requires the Management to make
estimates and assumptions considered in the reported amounts of assets
and liabilities (including contingent liabilities) as of the date of
the financial statements and the reported income and expenses during
the reported period. Management believes that the estimates used in
preparation of the financial statements are prudent and reasonable.
Future results could differ from these estimates.
b) REVENUE RECOGNITION
Sales are recognised when goods are supplied to customers and are
recorded net of sales tax/ value added tax, trade Discounts, Rebate and
Returns but includes excise duty. Dividend income on investments is
accounted when the right to receive the dividend is established.
Revenue in respect of Insurance/other claims, interest etc. is
recognised only when it is reasonably certain that the ultimate
collection will be made.
c) EXPORT BENEFITS
Export benefits under various schemes of Government of hidia are
accounted on accrual basis on the basis of exports made and the value
of imports made/ to be made there against.
d) FIXED ASSETS
Fixed Assets are recorded at Cost of acquisition. They are stated at
historical costs including incidental expenses.
i) On Tangible Assets:
Depreciation has been calculated on straight-line basis in accordance
with the provisions of section 205(2)(b) of the
Companies Act, 1956 at the rates and in the manner specified in
schedule XIV of the said act.
Cost of Leasehold Land is amortised over the period of lease.
Cost of Leasehold improvements is amortised over the primary period of
lease. However, in cases where the company as a lessee has the right of
renewal of lease and it is intended to renew for further periods, then
the cost of such leasehold improvements is amortised over such extended
period, not exceeding 10 years.
ii) On Intangible Assets:
At the time of acquisition of the business, the difference between the
cost of investments and the fair value of assets as at the date of
acquisition is accounted for as goodwill. Goodwill is amortised over a
period of 10 years.
Goodwill on amalgamation in the nature of merger is amortised over a
period of 5 years.
b) Computer software is amortised on straight line basis over a period
of 6 years.
f) IMPAIRMENT OF ASSETS
An asset is treated as impaired when the carrying cost of asset exceeds
its recoverable value. Recoverable amount is the higher of an asset''s
net selling price and its value in use. Value in use is the present
value of estimated future cash flows expected to arise from the
continuing use of the asset and from its disposal at the end of its
useful life. Net selling price is the amount obtainable from sale of
the asset in an arm''s length transaction between knowledgeable, willing
parties, less the costs of disposal. An impairment loss is charged to
Statement of Profit and Loss in the year in which an asset is
identified as impaired. The impaired loss recognised in prior
accounting periods is reversed if there has been a change in the
estimate of the recoverable value.
Investments are classified into non-current investments and current
investments. Investments, which are intended to be held for more than
one year, are classified as non- current investments and investments,
which are intended to be held for less than one year, are classified as
current investments. Non- current investments are accounted at cost and
a provision for diminution is made to recognize a decline other than
temporary in the value of long term investments. Current investments
are valued at cost or fair value whichever is lower.
Investments include investments in shares of a company registered
outside India. They are stated at cost by converting at the rate of
exchange prevalent at the time of acquisition thereof.
Any profit or loss on sale of investments is determined on the basis of
the average cost of acquisition.
h) TRANSACTIONS IN FOREIGN CURRENCY
Transactions in foreign currencies are recorded at the exchange rate
prevailing on the date of the transaction. Monetary items denominated
in foreign currencies are restated at the exchange rate prevailing on
the balance sheet date. Exchange differences arising on settlement of
the transaction and on account of restatement of monetary items are
dealt with in the Statement of Profit and Loss.
Forward exchange contracts entered into to hedge the foreign currency
risk and outstanding as on balance sheet date are translated at year
end exchange rates. The premium or discount arising at the inception of
such forward exchange contracts are amortised as income or expense over
the life of the contract.
Gains/Losses on settlement of transactions arising on
cancellation/renewal of forward exchange contracts are recognized as
income or expense.
i) HEDGE ACCOUNTING
The Company uses foreign currency forward contracts to hedge its risks
associated with foreign currency fluctuations relating to certain firm
commitments and forecasted transactions. The Company designates these
hedging instruments as cash flow hedges applying the recognition and
measurement principles set out in the Accounting Standard 30 Financial
Instruments: Recognition and Measurement (AS-30).
The use of hedging instruments is governed by the Company''s policies
approved by the board of directors, which provide written principles on
the use of such financial derivatives consistent with the Company''s
risk management strategy.
Hedging instruments are initially measured at fair value, and are
remeasured at subsequent reporting dates.
Changes in the fair value of these derivatives that are designated and
effective as hedges of future cash flows are recognised directly in
shareholders'' funds and the ineffective portion is recognised
immediately in the Statement of Profit and Loss.
Changes in the fair value of derivative financial instruments that do
not qualify for hedge accounting are recognised in the Statement of
Profit and Loss as they arise.
If a hedged transaction is no longer expected to occur, the net
cumulative gain or loss recognised in shareholders'' funds is
transferred to the Statement of Profit and Loss for the period.
a) Raw materials are valued at cost or net realisable value whichever
is lower. The cost includes purchase price as well as incidental
expenses. The cost formulae used are First In First Out, Weighted
average cost or Specific identification method, as applicable and found
b) Work -in - progress is valued at cost calculated on the basis of
absorption costing or net realisable value whichever is lower.
c) Finished goods are valued at cost or net realisable value whichever
is lower. Cost is determined on the basis of absorption costing.
d) Packing materials and accessories are valued at First in First out
cost or net realisable value whichever is lower.
e) Stores and spare parts are valued at First in First out cost or net
realisable value whichever is lower.
k) EMPLOYEE BENEFITS
a) The contribution to Provident Fund as required under the statute is
made to the Government Provident Fund and is debited to Statement of
Profit and Loss.
b) Gratuity liability is a defined benefit obligation. The Company has
taken Group gratuity- cum-life assurance (cash accumulation) Scheme
offered by Life Insurance Corporation of India (LIC) . Annual
contributions are made on the basis of intimation received from LIC.
The company accounts for liability for future gratuity benefits based
on actuarial valuation carried out as at the end of each financial
year. Actuarial gains and losses are recognized in full in Statement of
Profit and Loss for the period in which they occur.
c) Benefits in the form of vesting and non-vesting compensated absences
are accounted as per actuarial valuation carried out as at the year
1) TAXES ON INCOME
Income Taxes are accounted for in accordance with Accounting Standard
(AS 22) - Accounting for Taxes on Income, notified under the Companies
(Accounting Standard) Rules, 2006. Income Tax comprises both current
and deferred tax.
Current tax is measured at the amount expected to be paid to/recovered
from the revenue authorities, using applicable tax rates and laws.
The tax effect of the timing differences that result between taxable
income and accounting income and are capable of reversal in one or more
subsequent periods are recorded as a deferred tax asset or deferred tax
liability. They are measured using the substantively enacted tax rates
and tax regulations as of the Balance Sheet date.
Deferred tax assets arising mainly on account of brought forward losses
and unabsorbed depreciation under tax laws are recognised only if there
is virtual certainty of its realization, supported by convincing
evidence. Deferred tax assets on account of other timing differences
are recognized only to the extent there is a reasonable certainty of
m) BORROWING COST
Interest and other costs in connection with the borrowing of the funds
to the extent related/ attributed to the acquisition/construction of
qualifying fixed assets are capitalised up to the date when such assets
are ready for its intended use and all other borrowing costs are
recognised as an expense in the period in which they are incurred.
Assets taken / given on lease by which all significant risks and
rewards of ownership are retained by the lessor are classified as
operating leases. Lease payment/receipts under operating leases are
recognized as expense/income on straight line basis over the lease
o) PROVISIONS AND CONTINGENCIES
Provisions are recognized when the Company has a legal and constructive
obligation as a result of a past event, for which it is probable that
cash outflow will be required and a reliable estimate can be made of
the amount of the obligation. Contingent liabilities are disclosed when
the Company has a possible or present obligation where it is not
probable that an outflow of resources will be required to settle it.
Contingent assets are neither recognized nor disclosed.