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Accounting Policies of Aro Granite Industries Ltd. Company

Mar 31, 2018

1. Significant Accounting Policies

25.1 BASIS OF PREPARATION

The financial statements for the period ended March 31, 2018 have been prepared in accordance with Ind AS notified under the Companies (Indian Accounting Standards) (Amendment) Rules, 2016.

Up to the year ended March 31, 2017 the Company prepared in accordance with the requirements of previous GAAP which includes Standards notified under section 133 of the Companies Act, 2013 read together with paragraph 7 of the Companies (Accounts) Rule, 2014. These are the Companies first Ind AS financial statement. The date of transition to Ind AS is April 1, 2016. Refer Note for the details of first-time adoption exemption availed by the Company.

The financial statements are presented in Indian Rupees (Rs.) and all values are rounded off to the nearest Rupees, except whether otherwise indicated.

These financial statements have been prepared on a going concern basis. Refer Note No. 25(2)(s) for information on the Company’s adoption of Ind AS.

25.2 FIRST TIME ADOPTION

The Company has prepared the opening balance sheet sheet as per Ind AS as of April 1, 2016 (the transition date) by recognizing all assets and liabilities whose recognition is required by Ind AS, not recognizing assets or liabilities which are not permitted by Ind AS, by reclassifying assets and liabilities from previous GAAP as required by Ind AS, and applying Ind AS in measurement of recognized assets and liabilities.

However, this principle is subject to certain exemption and certain optional exemption availed by the Company.

25.3 CURRENT VERSUS NON-CURRENT CLASSIFICATION

All assets and liabilities have been classified as current on non-current as per Company’s normal operating cycles and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents. The Company has determined its operating cycle as twelve months for the purpose of current-non-current classification of assets and liabilities.

25.4 PROPERTY PLANT & EQUIPMENT

Property, plant and equipment held for use in the production or supply or administrative purposes, are stated in the balance sheet at cost (net of duty/ tax credit availed ) less accumulated depreciation.

Properties in the course of construction for production, supply or administrative purpose are carried at cost, Cost includes professional fees and for qualifying assists, borrowing Costs capitalized in accordance with the Company’s accounting policy. Such properties classified to the appropriate categories of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their use

The Company has elected to continue with the carrying value of all of its property, plant and equipment Recognized so as of April 1, 2016 (the transition date) measured as per the previous GAAP and use such Carrying value as its deemed cost as of the transition date.

25.5 DEPRECIATION

Depreciation on fixed assets has been provided on Straight Line Method (SLM) basis on the rates specified in schedule II of the companies Act, 2013, as applicable on the last date of the accounting period. The useful life of assets has been used as per Schedule - II of the companies Act, 2013.

25.6 INVENTORIES

Inventories are valued at the lower of the cost or net realizable value. The cost of the inventories is assigned by using At Cost Method. Raw material, Stores & Spares and Packing Materials have been valued at cost. Process Stock is valued at cost, which is determined by taking direct material, labour cost and certain related Factory Overheads, Finished Goods have been determined on full absorption cost basis which includes all direct cost, depreciation, etc.

25.7 CASH FLOW STATEMENT

Cash flows are reported using the indirect method, whereby profit for the period is adjusted for the effects of transactions of non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the company are segregated.

25.8 REVENUE RECOGNITION

The Company follows Mercantile System of Accounting and recognizes income and expenditure on accrual basis.

25.9 FOREIGN CURRENCY TRANSACTION:

Transaction denominated in foreign currencies are normally recorded at the exchange rate prevailing at the time of transactions.

The outstanding foreign currency assets and liabilities are restated at the year-end rates. The net profit or loss arising on restatement/ settlement is adjusted to the profit & Loss account.

25.10 BORROWING COSTS

Borrowing cost that are attributable to the acquisition or constructions of qualifying assets are capitalized as a part of the cost of such assets. A qualifying assets is one that takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue.

25.11 PROPOSED DIVIDEND

The Board of Director of the company has not been recommended any dividend during the years covered our audit.

25.12 CONTINGENT LIABILITIES

Contingent liabilities are not provided and are disclosed by way of notes.

25.13 RETIREMENT BENEFITS

The Company’s contribution in respect of Provident Fund is charged against revenue every year

In respect of Gratuity, the Company provides the gratuity amount based on the respective employees salary and the tenure of employment with the Company. Liabilities with regard to the Gratuity are determined by actuarial valuation, performed by an independent actuary, at each Balance Sheet date using the projected unit credit method. The Company recognizes the net obligation of a defined benefit plan in its Balance Sheet as an asset or liability. Gains and Losses through re-measurement of the net defined benefit liability/(asset) are recognized in other comprehensive income and profit and loss account.

In respect of Leave encashment Gains and Losses through re-measurement of the net defined benefit liability/(asset) are recognized in other comprehensive income and profit and loss account.

25.14 DEFERRED TAXATION

Deferred Tax arising from timing difference between book and tax profit is accounted for under the liability method at the current rate of tax, to the extent that the timing difference are expected to crystallize.

25.15 CORPORATE SOCIAL RESPONSIBILITY

As per section 135 of the Companies Act, 2013, a company, meeting the applicability threshold, needs to spend at least 2% of its average net profit for the immediately preceding three financial years on corporate social responsibility (CSR) activities. The CSR activities undertaken by the company is to provide healthcare facilities by establishing rural health centre for the residents of all the villages surrounding the factory. A CSR committee has been formed by the company as per the Act. The funds were primarily allocated on providing the health care facilities which are specified in Schedule VII of the Companies Act, 2013. During the year Company has provided Rs. 28,39,000/- for CSR Expenses and expended Rs. 25,15,414/- for the year ended 31.03.2017.


Mar 31, 2016

1. Significant Accounting Policies

a) GENERAL - The accounts are prepared on historical cost basis, and on the accounting principles of going concern. Accounting policies not specifically referred to otherwise are consistent and in consonance with generally accepted accounting principles

b) FIXED ASSETS - Fixed assets are stated at the cost of acquisition inclusive of inward freight, duties and taxes and incidental expenses related to acquisition.

c) DEPRECIATION - Depreciation on fixed assets has been provided on Straight Line Method (SLM) basis on the rates specified in schedule II of the companies Act, 2013, as applicable on the last date of the accounting period.

d) INVENTORIES - Inventories are valued at the lower of the cost or net realizable value. The cost of the inventories is assigned by using At Cost Method. Raw material, Stores & Spares and Packing Materials have been valued at cost. Process Stock is valued at cost, which is determined by taking direct material, labour cost and certain related Factory Overheads, Finished Goods have been determined on full absorption cost basis which includes all direct cost, depreciation, etc.

e) REVENUE RECOGNITION - The Company follows Mercantile System of Accounting and recognizes income and expenditure on accrual basis.

f) FOREIGN CURRENCY TRANSACTION: Transaction denominated in foreign currencies are normally recorded at the exchange rate prevailing at the time of transactions.

The outstanding foreign currency assets and liabilities are restated at the year-end rates. The net profit or loss arising on restatement/ settlement is adjusted to the profit & Loss account.

g) BORROWING COSTS: Borrowing cost that are attributable to the acquisition or constructions of qualifying assets are capitalized as a part of the cost of such assets. A qualifying assets is one that takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue.

h) PROPOSED DIVIDEND: The company provides for the dividend as proposed by the Directors in the books of account, pending approval at the Annual General Meeting.

i) CONTINGENT LIABILITIES: contingent liabilities are not provided and are disclosed by way of notes.

j) RETIREMENT BENEFITS - The Company’s contribution in respect of Provident Fund is charged against revenue every year. In respect of Gratuity, Provision for Gratuity & Leave encashment is made by charging Profit & Loss Account by an amount determined by actuarial valuation.

k) DEFERRED TAXATION - Deferred Tax arising from timing difference between book and tax profit is accounted for under the liability method at the current rate of tax, to the extent that the timing difference are expected to crystallize.

2. NOTES TO ACCOUNTS :

(a) DETAIL OF SECURITIES AGAINST SHORT TERM & LONG TERM BORROEINGS (Refer Note No. 3 and 6)

(A) Working Capital From Bank Of Baroda and The Hongkong and Sanghai Banking Corporation Limited - Secured by Way of following : -

(i) First pari-passu charge on the entire Current Assets of the Company.

(ii) Second Pari Passu charge on the of Movable Fixed Assets of the Company, both present and future.

(iii) First pari-passu charge on the Company’s immovable properties land admeasuring 10.41 acres situated at Kamandoddi Village, Hosur Taluk, Distt. Shoolagiri, Tamil Nadu.

(iv) Second pari-passu charge on the Company’s immovable properties situated at Village: Nallaganakothapalli, Taluk: Hosur, Distt: Krishnagiri, Tamil Nadu.

(v) Pledge of FDR worth Rs.2.50 Crores equivalent to 10% of FBP limit in lieu of waiver of buyer wise ECGC cover; and

(vi) Joint and Several personal guarantees of (1) Mr. Kasturi Lal Arora, (2) Mr. Sunil K.Arora and (3)Mrs. Sujata Arora.

(B) EXTERNAL COMMERCIAL BORROWINGS from Bank of Baroda DIFC Dubai is Secured by Way of following : -

(i) First pari-passu charge with HSBC Limited over all entire fixed assets of the Company (present and future) including land and building at Nallaganakothapalli village in Hosur Taluk, Krishnagiri District.

(ii) Second pari-passu charge on all current assets of the Company with HSBC Limited.

(iii) Charge over DSRA to maintained for one quarter interest and one installment of the facility.

(iv) Pledge of FDR i.e. Rs. 2.50 Crores maintained by Company with Bank of Baroda, International Business Branch, 1st Floor, BOB Building, 16 Sansad Marg, New Delhi 110001.

(v) First pari passu charge on the property in the name of company measuring 10.41 acres situated at Kamanadoddi Village, Hosur Taluk, District Shoolagiri with HSBC Limited.

(b) i. Bills of Exchange discounted Rs. 1117.20 Lacs (PY. Rs. 1,405.31 Lacs)

ii. Guarantee & counter Guarantee Outstanding Rs. 9.61 Lacs (PY. Rs. 21.40 Lacs)

iii. Letter of Credit Rs. 583.60 Lacs (PY. Rs. 669.30 Lacs)

(c) In compliance with Accounting Standard - 22 relating to "Accounting for taxes on Income" issued by the Institute of Chartered Accountants of India, the company has adjusted the deferred tax liability (net) arising out of timing difference for the period up to 31st March 2016 with the Balance of Deferred Tax Liability (Net) accruing during the year aggregating to Rs. 87.97 has been recognized in the Profit and Loss Account.

(g) The Company is into the business of Granite Tiles and Slabs on which company have same degree of risk and return. Their production process is also similar. Further the company’s revenue from domestic market is negligible. Thus the Company does not have more than one reportable segment in line with the Accounting Standard 17 on "Segmental Reporting" issued by the Institute of Chartered Accountants of India.

(h) There are no Small Scale Undertakings to which Company owes, for more than thirty days and exceeding Rupees One Lac.


Mar 31, 2015

A) GENERAL - The accounts are prepared on historical cost basis, and on the accounting principles of going concern. Accounting policies not specifically referred to otherwise are consistent and in consonance with generally accepted accounting principles.

b) FIXED ASSETS - Fixed assets are stated at the cost of acquisition inclusive of inward freight, duties and taxes and incidental expenses related to acquisition.

c) DEPRECIATION - Depreciation on fixed assets has been provided on Straight Line Method (SLM) basis on the rates specified in schedule II of the companies Act, 2013, as applicable on the last date of the accounting period. The Company reassessed the useful lives of fixed assets as per Part C of Schedule II of the Companies Act, 2013. Consequently, the useful life of certain asset classes has been revised and depreciation for the year ended March 31, 2015 is higher by Rs. 384.78 lakhs. The depreciation on carrying value of the assets whose useful lives expired as at April 1, 2014 aggregating Rs. 213.43 Lacs has been adjusted against the opening reserves.

d) INVENTORIES - Inventories are valued at the lower of the cost or net realizable value. The cost of the inventories is assigned by using First-in First out (FIFO) Method. Raw material, Stores & Spares and Packing Materials have been valued at cost. Process Stock is valued at cost, which is determined by taking direct material, labour cost and certain related Factory Overheads, Finished Goods have been determined on full absorption cost basis which includes all direct cost, depreciation, etc.

e) REVENUE RECOGNITION - The Company follows Mercantile System of Accounting and recognizes income and expenditure on accrual basis.

f) FOREIGN CURRENCY TRANSACTION: Transaction denominated in foreign currencies are normally recorded at the exchange rate prevailing at the time of transactions.

The outstanding foreign currency assets and liabilities are restated at the year-end rates. The net profit or loss arising on restatement/ settlement is adjusted to the profit & Loss account.

g) BORROWING COSTS: Borrowing cost that are attributable to the acquisition or constructions of qualifying assets are capitalized as a part of the cost of such assets. A qualifying assets is one that takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue.

h) PROPOSED DIVIDEND: The company provides for the dividend as proposed by the Directors in the books of account, pending approval at the Annual General Meeting.

i) CONTINGENT LIABILITIES: contingent liabilities are not provided and are disclosed by way of notes.

j) RETIREMENT BENEFITS - The Company's contribution in respect of Provident Fund is charged against revenue every year. In respect of Gratuity, Provision for Gratuity & Leave encashment is made by charging Profit & Loss Account by an amount determined by actuarial valuation.

k) DEFERRED TAXATION - Deferred Tax arising from timing difference between book and tax profit is accounted for under the liability method at the current rate of tax, to the extent that the timing difference are expected to crystallize.


Mar 31, 2014

A) GENERAL – The accounts are prepared on historical cost basis, and on the accounting principles of going concern. Accounting policies not specifically referred to otherwise are consistent and in consonance with generally accepted accounting principles

b) FIXED ASSETS – Fixed assets are stated at the cost of acquisition inclusive of inward freight, duties and taxes and incidental expenses related to acquisition.

c) DEPRECIATION – Depreciation on fixed assets has been provided on Straight Line Method (SLM) on the basis of useful life of assets for Plant & Machinery and other assets on the rates specified in schedule XIV of the companies Act, 1956, as applicable on the last date of the accounting year.

d) INVENTORIES – Inventories are valued at the lower of the cost or net realizable value. The cost of the inventories is assigned by using First–in First out (FIFO) Method. Raw material, Stores & Spares and Packing Materials have been valued at cost. Process Stock is valued at cost, which is determined by taking direct material, labor cost and certain related Factory Overheads, Finished Goods have been determined on full absorption cost basis which includes all direct cost, depreciation, etc.

e) REVENUE RECOGNITION – The Company follows Mercantile System of Accounting and recognizes income and expenditure on accrual basis.

f) FOREIGN CURRENCY TRANSACTION: Transaction denominated in foreign currencies are normally recorded at the exchange rate prevailing at the time of transactions.

The outstanding foreign currency assets and liabilities are restated at the year–end rates. The net profit or loss arising on restatement/ settlement is adjusted to the profit & Loss account.

g) BORROWING COSTS: Borrowing cost that are attributable to the acquisition or constructions of qualifying assets are capitalized as a part of the cost of such assets. A qualifying assets is one that takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue.

h) PROPOSED DIVIDEND: The company provides for the dividend as proposed by the Directors in the books of account, pending approval at the Annual General Meeting.

i) CONTINGENT LIABILITIES: contingent liabilities are not provided and are disclosed by way of notes.

j) RETIREMENT BENEFITS – The Company''s contribution in respect of Provident Fund is charged against revenue every year. In respect of Gratuity, Provision for Gratuity is made by charging Profit & Loss Account by an amount determined by actuarial valuation.

k) EARNING PER SHARE (EPS) – The basic earnings per share and diluted earnings per share (EPS) is computed by dividing the net profit or loss after tax for the year attributable to equity shareholders by the weighted average number of equity shares after the issue of bonus share.

l) DEFERRED TAXATION – Deferred Tax arising from timing difference between book and tax profit is accounted for under the liability method at the current rate of tax, to the extent that the timing difference are expected to crystallize.


Mar 31, 2013

A) GENERAL - The accounts are prepared on historical cost basis, and on the accounting principles of going concern. Accounting policies not specifically referred to otherwise are consistent and in consonance with generally accepted accounting principles.

b) FIXED ASSETS - Fixed assets are stated at the cost of acquisition inclusive of inward freight, duties and taxes and incidental expenses related to acquisition.

c) DEPRECIATION - Depreciation on fixed assets has been provided on Straight Line Method (SLM) basis and on pro-rata basis on the rates specified in schedule XIV of the companies Act, 1956, as applicable on the last date of the accounting year.

d) INVENTORIES - Inventories are valued at the lower of the cost or net realizable value. The cost of the inventories is assigned by using First-in First out (FIFO) Method. Raw material, Stores & Spares and Packing Materials have been valued at cost. Process Stock is valued at cost, which is determined by taking direct material, labor cost and certain related Factory Overheads, Finished Goods have been determined on full absorption cost basis which includes all direct cost, depreciation, etc.

e) REVENUE RECOGNITION - The Company follows Mercantile System of Accounting and recognizes income and expenditure on accrual basis.

f) FOREIGN CURRENCY TRANSACTION: Transaction denominated in foreign currencies are normally recorded at the exchange rate prevailing at the time of transactions.

The outstanding foreign currency assets and liabilities are restated at the year-end rates. The net profit or loss arising on restatement/ settlement is adjusted to the profit & Loss account.

g) BORROWING COSTS: Borrowing cost that are attributable to the acquisition or constructions of qualifying assets are capitalized as a part of the cost of such assets. A qualifying assets is one that takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue.

h) PROPOSED DIVIDEND: The company provides for the dividend as proposed by the Directors in the books of account, pending approval at the Annual General Meeting.

i) CONTINGENT LIABILITIES: contingent liabilities are not provided and are disclosed by way of notes.

j) RETIREMENT BENEFITS - The Company''s contribution in respect of Provident Fund is charged against revenue every year. In respect of Gratuity, Provision for Gratuity is made by charging Profit & Loss Account by an amount determined by actuarial valuation.

k) DEFERRED TAXATION - Deferred Tax arising from timing difference between book and tax profit is accounted for under the liability method at the current rate of tax, to the extent that the timing difference are expected to crystallize.


Mar 31, 2012

A) GENERAL - The accounts are prepared on historical cost basis, and on the accounting principles of going concern. Accounting policies not specifically referred to otherwise are consistent and in consonance with generally accepted accounting principles

b) FIXED ASSETS - Fixed assets are stated at the cost of acquisition inclusive of inward freight, duties and taxes and incidental expenses related to acquisition.

c) DEPRECIATION - Depreciation on fixed assets has been provided on Straight Line Method (SLM) basis and on pro-rata basis on the rates specified in schedule XIV of the companies Act, 1956, as applicable on the last date of the accounting year.

d) INVENTORIES - Inventories are valued at the lower of the cost or net realizable value. The cost of the inventories is assigned by using First-in First out (FIFO) Method. Raw material, Stores & Spares and Packing Materials have been valued at cost. Process Stock is valued at cost, which is determined by taking direct material, labor cost and certain related Factory Overheads, Finished Goods have been determined on full absorption cost basis which includes all direct cost, depreciation, etc.

e) REVENUE RECOGNITION - The Company follows Mercantile System of Accounting and recognizes income and expenditure on accrual basis.

f) FOREIGN CURRENCY TRANSACTION: Transaction denominated in foreign currencies are normally recorded at the exchange rate prevailing at the time of transactions.

Foreign Currency Liabilities incurred for acquisition of Fixed Assets are translated at the exchange rate prevailing on the last working day of the accounting year or forward cover rates, as applicable. The net variation arising out of the said transaction is adjusted to the profit and loss account.

Other outstanding foreign currency assets and liabilities are restated at the year-end rates. The net profit or loss arising on restatement/settlement is adjusted to the profit & Loss account.

g) BORROWING COSTS: Borrowing cost that are attributable to the acquisition or constructions of qualifying assets are capitalized as a part of the cost of such assets. A qualifying assets is one that takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue.

h) PROPOSED DIVIDEND: The company provides for the dividend as proposed by the Directors in the books of account, pending approval at the Annual General Meeting.

i) CONTINGENT LIABILITIES: contingent liabilities are not provided and are disclosed by way of notes.

j) RETIREMENT BENEFITS - The Company's contribution in respect of Provident Fund is charged against revenue every year. In respect of Gratuity, Provision for Gratuity is made by charging Profit & Loss Account by an amount determined by actuarial valuation.

k) DEFERRED TAXATION - Deferred Tax arising from timing difference between book and tax profit is accounted for under the liability method at the current rate of tax, to the extent that the timing difference are expected to crystallize.


Mar 31, 2011

A) GENERAL - The accounts are prepared on historical cost basis, and on the accounting principles of going concern. Accounting policies not specifically referred to otherwise are consistent and in consonance with generally accepted accounting principles.

b) FIXED ASSETS - Fixed assets are stated at the cost of acquisition inclusive of inward freight, duties and taxes and incidental expenses related to acquisition.

c) DEPRECIATION - Depreciation on fixed assets has been provided on Straight Line Method (SLM) basis and on pro-rata basis on the rates specified in schedule XIV of the Companies Act, 1956 as applicable on the last date of the accounting year.

d) INVENTORIES - Inventories are valued at the lower of the cost or net realizable value. The cost of the inventories is assigned by using First-in First out (FIFO) Method. Raw material, Stores & Spares and Packing Materials have been valued at cost. Process Stock is valued at cost, which is determined by taking direct material, labor cost and certain related Factory Overheads. Finished Goods have been determined on full absorption cost basis which includes all direct cost, depreciation, etc.

e) REVENUE RECOGNITION - The Company follows Mercantile System of Accounting and recognizes income and expenditure on accrual basis.

f) FOREIGN CURRENCY TRANSACTION: Transaction denominated in foreign currencies are normally recorded at the exchange rate prevailing at the time of transactions.

Foreign Currency Liabilities incurred for acquisition of Fixed Assets are translated at the exchange rate prevailing on the last working day of the accounting year or forward cover rates, as applicable. The net variation arising out of the said transaction is adjusted to the profit and loss account.

Other outstanding foreign currency assets and liabilities are restated at the year-end rates. The net profit or loss arising on restatement/ settlement is adjusted to the profit & Loss account.

g) BORROWING COSTS: Borrowing cost that are attributable to the acquisition or constructions of qualifying assets are capitalized as a part of the cost of such assets. A qualifying assets is one that takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue.

h) PROPOSED DIVIDEND: The company provides for the dividend as proposed by the Directors in the books of account, pending approval at the Annual General Meeting.

i) CONTINGENT LIABILITIES: contingent liabilities are not provided and are disclosed by way of notes.

j) RETIREMENT BENEFITS - The Company's contribution in respect of Provident Fund is charged against revenue every year. In respect of Gratuity and Leave Encashment, Provision for Gratuity, Leave Encashment is made by charging Profit & Loss Account by an amount determined by actuarial valuvation.

k) DEFERRED TAXATION - Deferred Ta x arising from timing difference between book and tax profit is accounted for under the liability method at the current rate of tax to the extent that the timing difference are expected to crystallize.


Mar 31, 2010

A) GENERAL - The accounts are prepared on historical cost basis and on the accounting principles of going concern. Accounting policies not specifically referred to otherwise are consistent and in consonance with generally accepted accounting principles.

b) FIXED ASSETS - Fixed assets are stated at the cost of acquisition inclusive of inward freight, duties and taxes and incidental expenses related to acquisition.

c) DEPRECIATION - Depreciation on fixed assets has been provided on Straight Line Method (SLM) basis and on pro-rata basis on the rates specified in schedule XIV of the companies Act, 1956, as applicable on the last date of the accounting year.

d) INVENTORIES - Inventories are valued at the lower of the cost or net realizable value. The cost of the inventories is assigned by using First-in First out (FIFO) Method. Raw material, Stores & Spares and Packing Materials have been valued at cost. Process Stock is valued at cost, which is determined by taking direct material, labour cost and certain related Factory Overheads, Finished Goods have been determined on full absorption cost basis which includes all direct cost, depreciation, etc.

e) REVENUE RECOGNITION - The Company follows Mercantile System of Accounting and recognizes income and expenditure on accrual basis.

f) FOREIGN CURRENCY TRANSACTION : Transaction denominated in foreign currencies aje normally recorded at the exchange rate prevailing at the time of transactions.

Foreign Currency Liabilities incurred for acquisition of Fixed Assets are translated at the exchange rate prevailing on the last working day of the accounting year or forward cover rates, as applicable. The net variation arising out of the said transaction is adjusted to the profit and loss account.

Other outstanding foreign currency assets and liabilities are restated at the year-end rates. The net profit or loss arising on restatement/ settlement is adjusted to the profit & Loss account.

g) BORROWING COSTS : Borrowing cost that are attributable to the acquisition or constructions of qualifying assets are capitalized as a part of the cost of such assets. A qualifying assets is one that takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue.

h) PROPOSED DIVIDEND : The company provides for the dividend as proposed by the Directors in the books of account, pending approval at the Annual General Meeting.

i) CONTINGENT LIABILITIES : contingent liabilities are not provided and are disclosed by way of notes.

j) RETIREMENT BENEFITS - The companys contribution in respect of Provident Fund is charged against revenue every year. In respect of Gratuity, Provision for Gratuity is made by charging Profit & Loss Account by an amount based on the assumption that Gratuity is payable to all employees at the year-end.

k) DEFERRED TAXATION - Deferred Tax arising from timing difference between book and tax profit is accounted for under the liability method at the current rate of tax, to the extent that the timing difference are expected to crystallize.

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