Mar 31, 2010
14.1.1 Basis of preparation of financial statements
The financial statements are prepared under the historical cost
convention on an accrual basis in accordance with the Generally
Accepted Accounting Principles in India ("GAAP"). GAAP comprises
accounting standards as specified in Rule 3 of the Companies
(Accounting Standards) Rules 2006, and the relevant provisions of the
Companies Act, 1956 to the extent applicable.
14.1.2 Use of Estimates
The preparation of financial statements in conformity with the
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities on the date of financial statements and the reported amount
of revenues and expenses during the reporting period. The difference
between the actual results and estimates are recognized in the period
in which results are known / materialized.
14.1.3 Revenue Recognition
Revenue is recognized when it is earned and no significant uncertainty
exists as to its ultimate collection. Interest income is recognized on
a time proportion basis. Dividend is recognized when right to receive
is established.
14.1.4 Fixed Assets and Depreciation
Fixed Assets are stated at cost, after reducing accumulated
depreciation and impairment upto the date of Balance Sheet. Direct
costs are capitalized until the assets are ready for use and include
financing costs relating to any borrowing attributable to acquisition
or construction of those fixed assets which necessarily take
substantial period of time to get ready for its intended use.
Intangible assets are recorded at the consideration paid for
acquisition of such assets. Depreciation on fixed assets is provided at
the rates and in the manner specified in Schedule XIV of the Companies
Act, 1956, on SLM Method.
14.1.5 Taxes on Income
Tax on income for the current period is determined on the basis of
estimated taxable income and tax credits computed in accordance with
the provisions of the Income Tax Act, 1961 and based on the expected
outcome of assessments / appeals.
Deferred tax is recognized on timing differences between the accounting
income and the estimated taxable income for the year and quantified
using the tax rates and laws enacted or substantially enacted as on the
balance sheet date. Deferred tax assets/Liabilities, other than brought
forward business loss and unabsorbed depreciation are recognized and
carried forward to the extent there is reasonable certainty that
sufficient future taxable income will be available against which
deferred tax assets/Liabilities can be adjusted.
14.1.6 Provisions, Contingent Liabilities and Contingent Assets
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.A disclosure for a contingent liability is made when there
is a present obligation that cannot be estimated reliably or a possible
or present obligation that may, but probably will not, require an
outflow of resources.When there is a possible obligation or a present
obligation that the likelihood of outflow of resources is remote, no
provision or disclosure is made. Provisions are made for all known
losses and liabilities and future unforeseeable factors that may affect
the profit of the entity. Accounting for contingencies (gains and
losses) arising out of contractual obligation, are accounted on the
basis of mutual acceptances. Contingent Assets are neither recognized
nor disclosed. Provisions, Contingent Liabilities and Contingent Assets
are reviewed at each Balance Sheet date.
14.1.7 Events Occurring After the Balance Sheet Date
Where material, events occurring after the date of the Balance Sheet
are considered upto the date of approval of accounts by the Board of
Directors
14.1.8 Impairment of Assets
Management periodically assesses using, external and internal sources,
whether there is an indication that an asset may be impaired. An
impairment loss is recognized wherever the carrying value of an asset
exceeds its recoverable amount. The recoverable amount is higher of the
assets net selling price and value in use i.e. the present value of
future cash flows expected to arise from the continuing use of the
asset and its eventual disposal. An impairment loss for an asset is
reversed if there has been a change in the estimates used to determine
the recoverable amount since the last impairment loss was recognised.
The carrying amount of an asset is increased to its revised recoverable
amount, provided that this amount does not exceed the carrying amount
that would have been determined (net of any accumulated amortization or
depreciation) had no impairment loss been recognised for the asset in
prior years.
14.1.9 Earnings per share
In determining earnings per share, the company considers the net profit
after tax.The number of shares used in computing basic earnings per
share is the weighted average number of shares outstanding during the
period. Diluted earnings per share are computed using the weighted
average number of basic and diluted common equivalent shares
outstanding during the period except where the result would be anti
dilutive.
14.1.10 Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit
before tax is adjusted for the effects of transactions of a non cash
nature and any deferrals or accruals of past or future cash receipts or
payments.The cash flows from operating, financing and investing
activities of the company are segregated.
14.I.I I Investments
Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long term investments.
Current investments are carried at lower of cost and fair value
determined on an individual investment basis. Long term investments are
carried at cost. However, provision for diminution is made to recognize
a decline, other than temporary in nature, in the carrying amount of
such long term investments.
14.1.1 2 Inventories
Inventories are valued at lower of cost and net realizable value.
14.1.13 Borrowing Cost
i) Borrowing costs on working capital is charged to profit and loss
statement in the year of incurrence. ii) Borrowing costs that are
attributable to the acquisition of tangible fixed assets are
capitalized till the date of substantial completion of the activities
necessary to prepare the relevant asset for its intended use.
iii) Borrowing costs that are attributable to the acquisition or
development of intangible assets are capitalized till the date they are
put to use.
I 4.1.1 4 Employees Benefit
i) Bonus is paid to all employees on yearly basis.The liability on
account of bonus is provided on actual basis
ii) Incentives such as mediclaim and insurance are paid for permanent
employees by the Company. The liability on account of such incentives
is provided on actual basis.
iii) The rules of the company do not provide for encashment of
unutilized leave.
14.1.15 Foreign Currency Transactions
Transactions denominated in foreign currency are recorded at the
exchange rate prevailing at the date of transaction. Monetary items
denominated in foreign currency at the year end are translated at year
end rate.The exchange differences arising on settlement / translation
are recognized in the Profit and Loss Account.
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