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Accounting Policies of Arora Fibres Ltd. Company

Mar 31, 2015

(a) Basis of accounting and presentation of financial statements:

The Company maintains its accounts on accrual basis following the historical cost convention, except for the revaluation of certain fixed assets, in accordance with generally accepted accounting principles ["GAAP"] in compliance with the provisions of the Companies Act, 2013 and the Accounting Standards as specified in the Companies (Accounting Standards) Rules, 2006 read with Rule 7(1) of the Companies (Accounts) Rules, 2014 issued by the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013. Further, the guidance notes/announcements issued by the Institute of Chartered Accountants of India (ICAI) are also considered, wherever applicable except to the extent where compliance with other statutory promulgations override the same requiring a different treatment

The Balance Sheet and the Statement of Profit and Loss are prepared and presented in the format prescribed in the Schedule III to the Companies Act, 2013 ("the Act"). The Cash Flow Statement has been prepared and presented as per the requirements of Accounting Standard (AS) 3 "Cash Flow Statements". The disclosure requirements with respect to items in the Balance Sheet and Statement of Profit and Loss, as prescribed in the Schedule III to the Act, are presented by way of notes forming part of accounts along with the other notes required to be disclosed under the notified Accounting Standards and the Equity Listing Agreement.

(b) Use of Estimates :

The preparation of financial statements in conformity with GAAP requires that the management of the Company makes estimates and assumptions that affect the reported amounts of income and expenses of the period, the reported balances of assets and liabilities and the disclosures relating to contingent liabilities as of the date of the financial statements. Examples of such estimates include the useful lives of tangible and intangible fixed assets, allowance for doubtful debts/ advances, future obligations in respect of retirement benefit plans, etc. difference, if any, between the actual results and estimates is recognised in the period in which the results are known.

(c) Fixed Assets

i) All Fixed Assets are stated at cost less depreciation. Cost of acquisition is inclusive of purchase price, levies and any directly attributable cost of bringing the assets to its working condition for the intended use.

ii) Exchange difference arising on payment of liabilities for purchase of fixed assets from outside India and year end conversion of such liabilities is capitalized.

iv) When an asset is scrapped or otherwise disposed off, the cost and related deprecation are removed from the books of accounts and resultant profit (including capital profit) or loss, if any is reflected in the profit and Loss Account.

v) Items of fixed assets that have been retired from active use and are held for disposal are stated at the lower of their net book value and estimated net realizable value and are disclosed separately in the financial statements.

vi) Capital Work-in-Progress includes the cost of assets that are not ready for intended use at the Balance sheet date.

(d) Depreciation

Depreciation on assets carried at historical costs is provided on straight line method on the basis of useful life as specified in Schedule II to the Companies Act, 2013.

(e) 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 the carrying amount over the higher of the asset's net sales price or present value as determined above.

(f) Inventories

Stock of Raw Materials, Stores & sparse & Packing Materials are valued at cost determined on FIFO basis. Work in process is valued at lower of cost and net realizable value. Finished goods valued at cost or market price whichever is less.

(g) Investments

Long term Investments are stated at cost. Provision for diminution in value is made, if permanent.

(h) Foreign Exchange Transactions

Transactions denominated in foreign currency are recorded at the exchange rate prevailing on the date of transaction.

Monetary item dominated in foreign currency at year end are restated at year end rates. All income & expenses on account of exchange different either on settlement or on translation is recognized in the profit & loss account except in case of foreign exchange fluctuation in related to acquisition of fixed assets which is adjusted to the carry cost of such assets.

(i) Revenue Recognized

Revenue is recognized only when it can be reliable measured and it is reasonable to expect ultimate collection. Sales are accounted at net excluding taxes. Dividend is recognized when the right to receive is established. Interest is recognized on time proportion basis.

(j) Employee Benefits:

a. Defined Contribution Plans – Company's Contribution paid / payable during the year to Provident Fund are charged to the Profit & Loss Account.

b. Defined Benefit Plan – Company's liabilities towards gratuity being post employment benefit are determined actuarially using the projected unit credit method which considers each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation. Past service costs are recognized on straight line basis over the average residual period until the amended benefits become vested. Actuarial gain and losses are recognized immediately in the Statement of Profit and loss as income or expense. Obligation is measured at the present value of estimated future cash flows

(k) Income Tax and Deferred Taxes

Current tax is determined as the amount of tax payable in respect of taxable income for the year. Deferred tax is measured based on the tax rates and tax laws enacted or substantively enacted at the balance sheet date. Deferred tax is recognized, subject to consideration of prudence, on timing differences, being the difference between taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets arising on account of unabsorbed depreciation or carry forward of tax losses shall be recognized only when there is a virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realized. As there is no virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized no provision for deferred tax is made.

(l) Provisions

Provision are recognised in accounts in respect of present probable obligations, the amount of which can be reliably estimated.

(m) Contingent Liabilities and Commitments

Contingent liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confirmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the company.

Disclosure in respect of Related Party Transactions during the Year :

a) Opening Balance of Unsecured Loan from Rupinder Singh Arora Rs. 2,61,70,589/- (Previous Years Rs. 91,451,080), Received during the yearRs. 9,05,64,084/- (Previous Year Rs.5,21,46,685), Loan Paid Rs. 8,02,09,221/- (Previous Year Rs. 11,74,27,176), Closing Balance Rs. 3,65,25,452/-(Previous Year Rs. 2,61,70,589).

b) Trade Receivables from Fun Apparel Inc. of Rs.0 (Previous Year Rs.30,84,127)

1. Interest paid

a) Interest Paid to Rupinder Singh Arora during the year Nil (Previous Year Rs. 1,37,85,207)

2. Rent paid to Shri Dilawar Singh Arora amounting to Rs.4,80,000 (Previous Year Rs.4,80,000).

3. Director Sitting fees paid to Shri Rupinder Singh Arora, Shri SurendraGupta,ShriNavdeepSingh Khera and Shri Hrushikesh Deodhar amounting to Rs.34,000/- (Previous Year Rs.26,000/-)

4. Salary Paid

a) Salary Paid to Ms.Ritika Arora amounting to Rs6,00,000/- (Previous Year Rs.6,00,000)

b) Salary Paid to Ms.Amrita Arora amounting to Rs3,00,000/- (Previous Year Rs.300,000)


Mar 31, 2014

(a) Basis of preparation of Financial statements:

The Financial statements are prepared under the historical Cost convention on the accrual basis of accounting and comply in all material aspects with (a) Applicable accounting principles in India, (b) the Accounting Standards notified by Central Govt. U/S. section 211(3C). (c) Relevant provisions of the Companies Act, 1956.

(b) Use of Estimates :

The preparation of financial statements requires the management to make estimates and assumptions in the reported amount of assets and liabilities (including contingent liabilities) as on the date of financial statements and the reported income and expenses during the reporting period.Any revision to accounting estimates is recognized prospectively in current and future periods.

(c) Fixed Assets

i) All Fixed Assets are stated at cost less depreciation. Cost of acquisition is inclusive of purchase price, levies and any directly attributable cost of bringing the assets to its working condition for the intended use.

ii) Exchange difference arising on payment of liabilities for purchase of fixed assets from outside India and year end conversion of such liabilities is capitalized.

iv) When an asset is scrapped or otherwise disposed off, the cost and related deprecation are removed from the books of accounts and resultant profit (including capital profit) or loss, if any is reflected in the profit and Loss Account.

v) Items of fixed assets that have been retired from active use and are held for disposal are stated at the lower of their net book value and estimated net realizable value and are disclosed separately in the financial statements.

vi) Capital Work-in-Progress includes the cost of assets that are not ready for intended use at the Balance sheet date.

(d) Depreciation

Depreciation on fixed assets has been charged on prorata monthly basis using Straight Line Method at the rates and in manner prescribed in Schedule XIV to the Companies Act, 1956.

(e) 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 the carrying amount over the higher of the asset''s net sales price or present value as determined above.

(f) Inventories

Stock of Raw Materials, Stores & sparse & Packing Materials are valued at cost determined on FIFO basis. Work in process is valued at lower of cost and net realizable value. Finished goods valued at cost or market price whichever is less.

(g) Investments

Long term Investments are stated at cost. Provision for diminution in value is made, if permanent.

(h) Foreign Exchange Transactions

Transactions denominated in foreign currency are recorded at the exchange rate prevailing on the date of transaction.

Monetary item dominated in foreign currency at year end are restated at year end rates. All income & expenses on account of exchange different either on settlement or on translation is recognized in the profit & loss account except in case of foreign exchange fluctuation in related to acquisition of fixed assets which is adjusted to the carry cost of such assets.

(i) Revenue Recognized

Revenue is recognized only when it can be reliable measured and it is reasonable to expect ultimate collection.

Sales are accounted at net excluding taxes

Dividend is recognized when the right to receive is established.

Interest is recognized on time proportion basis.

(j) Employee Benefits:

a. Defined Contribution Plans - Company''s Contribution paid / payable during the year to Provident Fund are charged to the Profit & Loss Account.

b. Defined Benefit Plan - Company''s liabilities towards gratuity being post employment benefit are determined actuarially using the projected unit credit method which considers each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation. Past service costs are recognized on straight line basis over the average residual period until the amended benefits become vested. Actuarial gain and losses are recognized immediately in the Statement of Profit and loss as income or expense. Obligation is measured at the present value of estimated future cash flows

(k) Income Tax and Deferred Taxes

Current tax is determined as the amount of tax payable in respect of taxable income for the year. Deferred tax is measured based on the tax rates and tax laws enacted or substantively enacted at the balance sheet date. Deferred tax is recognized, subject to consideration of prudence, on timing differences, being the difference between taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets arising on account of unabsorbed depreciation or carry forward of tax losses shall be recognized only when there is a virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realized. As there is no virtual certainty that sufficient future taxable income will be availableagainst which such deferred tax assets can be realized no provision for deferred tax is made.

(l) Provisions

Provision are recognised in accounts in respect of present probable obligations, the amount of which can be reliably estimated.

(m) Contingent Liabilities

Contingent liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confirmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the company.


Mar 31, 2013

(a) Basis of preparation of Financial statements:

The Financial statements are prepared under the historical Cost convention on the accrual basis of accounting and comply - in all material aspects with (a) Applicable accounting principles in India, (b) the Accounting Standards notified by Central Govt. U/S. section 211(3C). (c) Relevant provisions of the Companies Act, 1956.

(b) Use of Estimates:

The preparation of financial statements requires the management to make estimates and assumptions in the reported amount of assets and liabilities (including contingent liabilities) as on the date of financial statements and the reported income and expenses during the reporting period. Any revision to accounting estimates is recognized prospectively in current and future periods.

(c) Fixed Assets

i) All Fixed Assets are stated at cost less depreciation. Cost of acquisition is inclusive of purchase price, levies and any directly attributable cost of bringing the assets to its working condition for the intended use.

ii) Exchange difference arising on payment of liabilities for purchase of fixed assets from outside India and year end conversion of such liabilities is capitalized.

iv) When an asset is scrapped or otherwise disposed off, the cost and related deprecation are removed from the books of accounts and resultant profit (including capital profit) or loss, if any is reflected in the profit and Loss Account.

v) Items of fixed assets that have been retired from active use and are held for disposal are stated at the lower of their net book value and estimated net realizable value and are disclosed separately in the financial statements.

vi) Capital Work-in-Progress includes the cost of assets that are not ready for intended use at the Balance sheet date.

(d) Depreciation

Depreciation on fixed assets has been charged on prorata monthly basis using Straight Line Method at the rates and in manner prescribed in Schedule XIV to the Companies Act, 1956.

(e) 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 the carrying amount over the higher of the asset''s net sales price or present value as determined above,

(f) Inventories

Stock of Raw Materials, Stores & sparse & Packing Materials are valued at cost determined on FIFO basis. Work in process is valued at lower of cost and net realizable value. Finished goods valued at cost or market price whichever is less.

(g) Investments

Long term Investments are stated at cost. Provision for diminution in value is made, if permanent.

(h) Foreign Exchange Transactions

Transactions denominated in foreign currency are recorded at the exchange rate prevailing on the date of transaction.

Monetary item dominated in foreign currency at year end are restated at year end rates. All income & expenses on account of exchange different either on settlement or on translation is recognized in the profit & loss account except in case of foreign exchange fluctuation in related to acquisition of fixed assets which is adjusted to the carry cost of such assets.

(i) Revenue Recognized

Revenue is recognized only when it can be reliable measured and it is reasonable to expect ultimate collection.

Sales are accounted at net excluding taxes

Dividend is recognized when the right to receive is established.

Interest is recognized on time proportion basis.

0) Employee Benefits:

a. Defined Contribution Plans - Company''s Contribution paid / payable during the year to Provident Fund are charged to the Profit & Loss Account.

b. Defined Benefit Plan - Company''s liabilities towards gratuity being post employment benefit are determined actuarially using the projected unit credit method which considers each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation. Past service costs are recognized on straight line basis over the average residual period until the amended benefits become vested. Actuarial gain and losses are recognized immediately in the Statement of Profit and loss as income or expense. Obligation is measured at the present value of estimated future cash flows

(k) Income Tax and Deferred Taxes

Current tax is determined as the amount of tax payable in respect of taxable income for the year. Deferred tax is measured based on the tax rates and tax laws enacted or substantively enacted at the balance sheet date. Deferred tax is recognized, subject to consideration of prudence, on timing differences, being the difference between taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets arising on account of unabsorbed depreciation or carry forward of tax losses shall be recognized only when there is a virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realized. As there is no virtual certainty that sufficient future taxable income will be availableagainst which such deferred tax assets can be realized no provision for deferred tax is made.

(I) Provisions

Provision arerecognised in accounts in respect of present probable obligations, the amount of which can be reliably estimated.

(m) Contingent Liabilities

Contingent liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confirmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the company.


Mar 31, 2012

(a) Basis of preparation of Financial statements:

The Financial statements are prepared under the historical Cost convention on the accrual basis of accounting and comply in all material aspects with (a) Applicable accounting principles in India, (b) the Accounting Standards notified by Central Govt. U/S. section 211 (3C). (c) Relevant provisions of the Companies Act, 1956.

(b) Use of Estimates :

The preparation of financial statements requires the management to make estimates and assumptions in the reported amount of assets and liabilities (including contingent liabilities) as on the date of financial statements and the reported income and expenses during the reporting period. Any revision to accounting estimates is recognized prospectively in current and future periods.

(c) Fixed Assets

i) All Fixed Assets are stated at cost less depreciation. Cost of acquisition is inclusive of purchase price, levies and any directly attributable cost of bringing the assets to its working condition for the intended use.

ii) Exchange difference arising on payment of liabilities for purchase of fixed assets from outside India and year end conversion of such liabilities is capitalized.

iv) When an asset is scrapped or otherwise disposed off, the cost and related deprecation are removed from the books of accounts and resultant profit (including capital profit) or loss, if any is reflected in the profit and Loss Account.

v) Items of fixed assets that have been retired from active use and are held for disposal are stated at the lower of their net book value and estimated net realizable value and are disclosed separately in the financial statements.

vi) Capital Work-in-Progress includes the cost of assets that are not ready for intended use at the Balance sheet date.

(d) Depreciation

Depreciation on fixed assets has been charged on prorata monthly basis using Straight Line Method at the rates and in manner prescribed in Schedule XIV to the Companies Act, 1956.

(e) 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 the carrying amount over the higher of the asset's net sales price or present value as determined above.

(f) Inventories

Stock of Raw Materials, Stores & sparse & Packing Materials are valued at cost determined on FIFO basis. Work in process is valued at lower of cost and net realizable value. Finished goods valued at cost or market price whichever is less.

(g) Investments

Long term Investments are stated at cost. Provision for diminution in value is made, if permanent.

(h) Foreign Exchange Transactions

Transactions denominated in foreign currency are recorded at the exchange rate prevailing on the date of transaction.

Monetary item dominated in foreign currency at year end are restated at year end rates. All income & expenses on account of exchange different either on settlement or on translation is recognized in the profit & loss account except in case of foreign exchange fluctuation in related to acquisition of fixed assets which is adjusted to the carry cost of such assets.

(i) Revenue Recognized

Revenue is recognized only when it can be reliable measured and it is reasonable to expect ultimate collection.

Sales are accounted at net excluding taxes

Dividend is recognized when the right to receive is established.

Interest is recognized on time proportion basis.

(j) Employee Benefits:

a. Defined Contribution Plans - Company's Contribution paid / payable during the year to Provident Fund are charged to the Profit & Loss Account.

b. Defined Benefit Plan - Company's liabilities towards gratuity being post employment benefit are determined actuarially using the projected unit credit method which considers each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation. Past service costs are recognized on straight line basis over the average residual period until the amended benefits become vested. Actuarial gain and losses are recognized immediately in the Statement of Profit and loss as income or expense. Obligation is measured at the present value of estimated future cash flows

(k) Income Tax and Deferred Taxes

Current tax is determined as the amount of tax payable in respect of taxable income for the year. Deferred tax is measured based on the tax rates and tax laws enacted or substantively enacted at the balance sheet date. Deferred tax is recognized, subject to consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets arising on account of unabsorbed depreciation or carry forward of tax losses shall be recognized only when there is a virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realized. As there is no virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized no provision for deferred tax is made.

(I) Provisions

Provision arerecognised in accounts in respect of present probable obligations, the amount of which can be reliably estimated.

(m) Contingent Liabilities

Contingent liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confirmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the company.


Mar 31, 2011

(a) Basis of preparation of Financial statements:

The Financial statements are prepared under the historical Cost convention on the accrual basis of accounting and comply in all material aspects with (a) Applicable accounting principles in India, (b) the Accounting Standards notified by Central Govt. U/S. section 211(3C). (c) Relevant provisions of the Companies Act, 1956.

(b) Use of Estimates :

The preparation of financial statements requires the management to make estimates and assumptions in the reported amount of assets and liabilities (including contingent liabilities) as on the date of financial statements and the reported income and expenses during the reporting period. Any revision to accounting estimates is recognized prospectively in current and future periods.

(c) Fixed Assets

i) All Fixed Assets are stated at cost less depreciation. Cost of acquisition is inclusive of purchase price, levies and any directly attributable cost of bringing the assets to its working condition for the intended use.

ii) Exchange difference arising on payment of liabilities for purchase of fixed assets from outside India and year end conversion of such liabilities is capitalized.

iv) When an asset is scrapped or otherwise disposed off, the cost and related deprecation are removed from the books of accounts and resultant profit (including capital profit) or loss, if any is reflected in the profit and Loss Account.

v) Items of fixed assets that have been retired from active use and are held for disposal are stated at the lower of their net book value and estimated net realizable value and are disclosed separately in the financial statements.

vi) Capital Work-in-Progress includes the cost of assets that are not ready for intended use at the Balance sheet date.

(d) Depreciation

Depreciation on fixed assets has been charged on prorata monthly basis using Straight Line Method at the rates and in manner prescribed in Schedule XIV to the Companies Act, 1956.

(e) 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 the carrying amount over the higher of the asset's net sales price or present value as determined above.

(f) Inventories

Stock of Raw Materials, Stores & sparse & Packing Materials are valued at cost determined on FIFO basis. Work in process is valued at lower of cost and net realizable value. Finished goods valued at cost or market price whichever is less.

(g) Investments

Long term Investments are stated at cost. Provision for diminution in value is made, if permanent.

(h) Foreign Exchange Transactions

Transactions denominated in foreign currency are recorded at the exchange rate prevailing on the date of transaction.

Monetary item dominated in foreign currency at year end are restated at year end rates. All income & expenses on account of exchange different either on settlement or on translation is recognized in the profit & loss account except in case of foreign exchange fluctuation in related to acquisition of fixed assets which is adjusted to the carry cost of such assets.

(i) Revenue Recognized

Revenue is recognized only when it can be reliable measured and it is reasonable to expect ultimate collection.

Sales are accounted at net excluding taxes

Dividend is recognized when the right to receive is established.

Interest is recognized on time proportion basis.

(j) Employee Benefits:

a. Defined Contribution Plans – Company's Contribution paid / payable during the year to Provident Fund are charged to the Profit & Loss Account.

b. Defined Benefit Plan – Company's liabilities towards gratuity being post employment benefit are determined actuarially using the projected unit credit method which considers each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation. Past service costs are recognized on straight line basis over the average residual period until the amended benefits become vested. Actuarial gain and losses are recognized immediately in the Statement of Profit and loss as income or expense. Obligation is measured at the present value of estimated future cash flows

(k) Income Tax and Deferred Taxes

Current tax is determined as the amount of tax payable in respect of taxable income for the year. Deferred tax is measured based on the tax rates and tax laws enacted or substantively enacted at the balance sheet date. Deferred tax is recognized, subject to consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets arising on account of unabsorbed depreciation or carry forward of tax losses shall be recognized only when there is a virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realized.

(l) Provisions

Provision are recognised in accounts in respect of present probable obligations, the amount of which can be reliably estimated.

(m) Contingent Liabilities

Contingent liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confirmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the company.


Mar 31, 2010

(a) Basis of preparation of Financial statements

The Financial statements are prepared under the historical Cost convention on the accrual basis of accounting and comply in all material aspects with (a) applicable accounting principles in India, (b) the Accounting Standards issued by the Institute ot Chartered Accountants of India and (c) relevant provisions of the Companies Act, 1956.

(b) Use of Estimates

The preparation of financial statements requires the management to make estimates and assumptions considered in the reported amount of assets and liabilities (including contingent liabilities) as on the date of financial statements and the reported income and expenses during the reporting period. Management believes that the estimates used in the preparation of the financial statement are prudent and reasonable. Actual results could differ from these estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.

(c) Fixed Assets

(i) All Fixed Assets are stated at cost less depreciation. Cost of acquisition is inclusive of purchase price, levies and any directly attributable cost of brigning the assets to its working condition for the intended use.

(ii) Exchange difference arising on payment of liabilitie for purchase of fixed assets from outside india and year end conversion of such laibilities are charged/credidted to the profit and Loss Account.

(iii) When an asset is scrapped or otherwise disposed off, the cost and related deprecation are removed from the books of accounts and resultant profit (including capital profit) or loss, if any is reflected in the profit and Loss Account.

(iv) Items of fixed assets that have been retired from active use and are held for disposal are stated at the lower of their net book value and estimated net realizable value and are disclosed separately in the financial statements.

(v) Capital Work-in-Progress includes the cost of assets that are not ready for intended use at the Balance sheet date and advances paid to acquire capital assets before the Balance Sheet date.

(d) Intangible Assets

(i) All intangible assets are initially measured at cost and amortized so as to reflect the pattern in which the assets economic benefits are consumed.

(ii) Software cpitalized as intagible asset is written off over a maximum period of three years.

(e) Depreciation

Depreciation on fixed assets has been charged using Straight Line Method at the rates and in manner prescribed in Schedule XIV to the Companies Act, 1956.

(F) IMPAIRMENT OF aSSETS

Management periodically assesses using external and internal sources whether there is an indication that an asset may be 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 the carrying amount over the higher of the assets net sales price or present value as determined above.

(g) Inventories

Stock of Raw Materials, Stores & spares and packing Materials are valued at Cost determined on FIFO basis. Work in process isvalued at cost and finished goods are valued at lower of cost and net realisable value. Finished stocks at the close of the year include provision for excise duty.

(h) Investments

Long term Investments are stated at cost. Provision for diminution in value is made, if permanent.

(i) Sales

Sales are accounted at net plus excise duty.

(j) Employee Benefits

(i) Defined Contribution Plans - Companys Contribution paid/payable during the year to Provident Fund are charged to the Profit & Loss Account.

(ii) Defined Benefit Plan - Companys liabilities towards gratuity being post employment benefit and leave encashment being other long term benefit are determined acturialiy using the projected unit credit method which considers each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation. Past service costs are recognized on straight line basis over the average residual period util the amended benefits become vested. Acturial gain and losses are recongized immediatley in the Statement of Profit and loss as income or expense. Obligation is measured at the present value of estimated future cash flows and the gross obligation is duly adjusted by the fair value of plan assets on reporting date.

(k) Income Tax and Deffered Taxes

Curent tax is determined as the amount of tax payable in respect of taxable income for the year. Deffered tax is measured based on the tax rates and tax laws enacted or substantively enacted at the balance sheet date. Deffered tax is recognised, subject to consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Dfferred tax assets arising on account of unabsorbed depreciation or carry forward of tax losses shall be recognized only when there is a virual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deffered tax assets can be realised

(l) Contlngnet Liabilities

(i) Provision are recognised in accounts in respect of present probable obligations, the amount of which can be reliably estimated.

(ii) Contingent liabilities are disclosed in repsct of possible obligations that arise from past events but their existence is confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the company.