Mar 31, 2011
A. Basis of Preparation of financial statements:
The financial statements have been prepared under historical cost convention and in conformity with the generally accepted accounting principles, applicable provisions of the Companies Act, 1956 and as per the Accounting Standards issued by the Institute of Chartered Accountants of India.
b. Income and Expenditure:
All items of income and expenditure shown in the statement having material bearing on the accounts are accounted on accrual basis.
c. Fixed Assets:
Fixed Assets are stated at their original cost of acquisition, including taxes, freight and their incidental expenses incurred in connection with the erection/commission/construction of the said assets, less accumulated depreciation.
Depreciation is computed on Straight Line method basis in accordance with the provision of Schedule XIV of the Companies Act, 1956.
e. Capital Work-in-Progress:
Includes advances given for capital goods and materials at site.
Investments are stated at cost of acquisition and the same are considered as long term investments.
Sales as reported are exclusive of Excise Duty, Sales Tax, Insurance and transport charges.
Raw materials, stores & spares, consumables and work-in-process are valued at cost. Finished goods are valued at cost or net realizable value whichever is lower. i. Miscellaneous expenses (to the extent not written off) amounting to Rs.1127.49 Lakhs relating to Research and Development and is considered as deferred revenue expenditure and Written off over a period of 10 years, out of which, 10% is written off during the financial year 2010- 2011 amounting to Rs.362.41 Lakhs.
During the financial year, the company has spent an amount of Rs.1775.05 Lakhs towards its GDR issue and is considered as deferred revenue expenditure and the same will be written off over a period of 10 years from the financial year 2011-2012.
j. Foreign Exchange Transactions:
The transactions in foreign exchange are accounted at the exchange rate prevailing on the date of transaction. Any exchange gains or losses arising out of subsequent fluctuations are accounted for in the Profit and Loss account. Receivables and liabilities outstanding in foreign currencies are translated at the exchange rates prevailing as at close of the year. k. Taxation: Tax expenses comprises of current taxes, i.e. Provision for current Income taxes is made on the taxable income at the tax rate applicable to the relevant assessment year. The Company has made current tax provision for Minimum Alternate Tax (MAT) u/s 115 JB of the Income Tax Act, 1961. As per the provisions of Section 115JAA, MAT. Credit receivable
has been recognized on the basis of return of Income filed for the previous years and MAT provided for the current year. MAT Credit is recognized as an asset to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. MAT Credit is recognized as an asset in accordance with the recommendations con- tained in guidance Note issued by the Institute of Chartered Accountants of India. The said asset is created by way of a credit to profit and loss account and shown as MAT Credit Entitlement. The Company will review the same at each Balance Sheet date and write down the carrying amount of MAT Credit entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal income tax during the specified period.
l. Deferred Income Tax:
The Company has accounted for Deferred Tax in accordance with the Accounting Standard-22 "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India.
Deferred Tax resulting from timing differences between Book Profits and Tax Profits is accounted for at the current rates of tax to the extent the timing difference are expected to in case of deferred Tax Liabilities with reasonable certainty and in case of Deferred Tax Assets with virtual certainty that there would be adequate future taxable income against which such deferred tax assets can be realized.
The deferred Tax liability for the current year amounting to Rs.234.65 Lakhs is shown in the Profit and Loss account under provision for Deferred Tax. As at the year end, deferred Tax liability aggregates to Rs.1684.39 Lakhs.
m. Employee Benefits:
Provident Fund: The company makes contribution to Provident Fund administered by the Central Government under the Provident Fund Act, 1952.
n. Gratuity and Leave Encashment
The Company has created a Trust and has taken a Group Gratuity Life Assurance Policy with Birla Sunlife Insurance Company Limited for future payments of Gratuity to employees. The premium paid thereon on actuarial valuation is charged to the Profit and Loss account. The Company has made a provision of Rs.19,37,114/- towards Gratuity and Rs.23,45,566/- towards Leave encashment of the employees.
o. Contingent Liabilities are generally not provided for in the accounts and are shown separately if any in the notes on accounts.