Mar 31, 2010
(i) The Term Loans marked "*" are secured by an equitable mortgage,
created or to be created, on immovable properties at Faridabad and
Tohana. These loans have also been charged by way of hypothecation of
all movable assets, both present and future, of Faridabad and Tohana
Units save & except book debts, stock & stores specifically charged to
Companys Bankers. The charges created or to be created shall rank
paripassu inter-se.
(ii) The Working Capital facilities mentioned at A(a)(i) & (ii)
respectively are secured by hypothecation of stocks & book debts.
(iii) The working capital facilities mentioned at A(a)(i) & (ii)
respectively are further secured by way of second charge created or to
be created over the fixed assets of the company both present & future.
(iv) The Term Loan mentioned at A (a) (iii) is secured by way of first
pari passu charge on block / fixed assets of the company.
(v) The loans from Banks are also guaranteed by Sh. Romesh Chandra
Barar, one of the promoters and other Working Directors in their
personal capacity.
(vi) Other loans from banks are secured against specific assets
financed through such loans.
1) FIXED ASSETS
a) Fixed Assets are accounted for on historical cost of acquisition or
construction and are stated net of depreciation except revaluing them
from time to time on the basis of professional valuers certificates
b) Cost includes borrowing cost, if any, attributable to qualifying
asset up to the time of start of production/use.
2) DEPRECIATION
Depreciation is provided on the rates prescribed in Schedule XIV of
Companies Act, 1956 on following basis: :
a) Machineries of Formaldehyde and Research & Development Divisions on
SLM basis.
b) All other Plant & Machinery acquired upto 31.12.1983 on WDV basis &
acquired on or after 1.1.1984 on SLM basis.
c) Other assets of Divisions, other than MDF & Environment Management
(Projects & Services) Divisions which are on SLM basis, are on WDV
basis.
d) Assets valuing upto Rs.5000/- are depreciated @ 100% in the year of
purchase irrespective of period of use.
3) INVESTMENTS
Long term investments are valued at cost. Any diminution in value,
other than temporary, is duly accounted for. Current investments are
valued at lower of cost or market price/fair values.
4) INVENTORIES
Stores & spares, loose tools, raw materials, raw material in transit,
finished goods, work-in-process and trading goods are valued at " Cost
or net realisable value, whichever is lower." Finished goods
inventories at the year end include excise duty payable at the time of
removal of goods from factory premises. Cost of trading goods in
Environment Management (Projects & Services) Division also includes
design & drawing costs.
5) FOREIGN-EXCHANGE TRANSACTIONS
a) Export Sales are accounted for at the exchange rate prevailing at
the time of Sale. Exchange differences arising at the time of
negotiation of documents and / or actual realisation are recognised in
profit & loss account.
b) Outstanding foreign currency denominated current assets and current
liabilities are converted at the exchange rates prevailing at the year
end and exchange differences are recognised in profit & loss account.
6) REVENUE RECOGNITION
a) Revenue is recognised on accrual basis. Income from interest on call
money arrears, investment in National Plan and Defence Certificates, is
accounted for on receipt basis, in view of uncertainty involved in
determining the quantum of accruals.
b) On construction contracts in Environment Management (Projects &
Services) Division under progress where profits or losses can be
reasonably ascertained, these are accounted for on percentage of
completion method on the basis of work completed upto the close of
year, considering overall profits or losses upto the stage of
completion.
c) Government grants are recognised in Profit & Loss statement over the
periods to match with related costs.
7) SALES & INTER - DIVISION TRANSFERS
a) Sales are accounted for at the time of despatch of goods to the
customers and in case of construction contracts in Environment
Management (Projects & Services) Division on the basis of running/final
bills on percentage of completion method. Export sales are recognised
at the time of issue of bill of lading.
b) Gross sales are inclusive of excise duty recovered from customers
and net of returns & rebates. Sales net of excise duty is also
disclosed separately.
c) Inter division transfer of goods as independent marketable products
produced by separate divisions for captive consumption, is done at
approximate costs and reasonable margins thereon. The same is shown as
a contra item to reflect the true working of the respective Divisions
in the Profit & Loss Account. Any unrealised profit on unsold stocks is
eliminated while valuing the inventories. This has no impact on the
profits of the Company. Inter-divisional transfer/captive consumption
to Fixed
Assets is done at cost. It is also netted off from gross sales and
respective expenditure accounts in the statement of Profit & Loss.
8) CAPITAL SUBSIDY
Capital Subsidy relating to:
a) Depreciable fixed assets is accounted for as deferred income & shown
under current liabilities. Proportionate amount of such deferred
income based on specified life of the asset is withdrawn yearly from
deferred income account & credited to profit & loss account to match
with related costs.
b) Non Depreciable fixed assets is accounted for as Capital Reserve
under Reserves & Surplus.
9) RETIREMENT BENEFITS
Contributions to Provident Fund are made to Government Administered
Provident Fund towards which the company has no further obligation
beyond monthly contributions. The company also provides for retirement
benefits in the form of gratuity. For gratuity, the company has taken a
policy from LIC of India effective from 1st April 2007 under its Group
Gratuity Cash Accumulation Scheme and is making provisions on the basis
of valuation as per the scheme done by LIC in accordance with revised
Accounting Standard AS-15 issued by The Institute of Chartered
Accountants of India. Other short term benefits are expensed in the
year in which services are rendered by the employees.
10) TAXES ON INCOME
Provision for current Income tax is made considering various allowances
and benefits available to the company under the Income Tax law. Fringe
Benefits Tax (F6T) is provided for and paid in accordance with the
provisions contained in Income Tax Law.
In pursuance of Accounting Standard AS-22 Accounting for Taxes on
Income notified pursuant to the Companies (Accounting Standards)
Rules, 2006 deferred tax is recognised on timing differences arising
between book income and taxable income to the extent such timing
differences are capable of reversal in one or more subsequent periods.
Deferred tax assets on account of unabsorbed losses and depreciation
are recognised only to the extent that there is a virtual certainty of
sufficient future taxable income available to realise such assets
11) MISCELLANEOUS EXPENDITURE
a) Debenture raising expenses are written off over the life of the
Debentures.
b) Capital raising expenses are written off in 5 equal yearly
instalments.
12) INTANGIBLE ASSETS
Intangible Assets are recognised on the basis of recognition criteria
as set out in Accounting Standard AS-26 ."Intangible Assets" notified
pursuant to the Companies (Accounting Standards) Rules, 2006.
13) IMPAIRMENT OF ASSETS
Specified aAssets are reviewed for impairment wherever events or
changes in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognized for the amount for which
the assets carrying amount exceeds its recoverable amount being higher
of assets net selling price and its value in use. Value in use is based
on the present value of the estimated future cash- flows relating to
the assets. For the purpose of assessing impairment, assets are grouped
at the lowest levels for which there are separately identifiable
cash-flows (i.e. Cash Generating Unit).
Previously recognized impairment losses, relating to assets other than
goodwill, are reversed where recoverable amount increases because of
favourable changes in the estimates used to determine the recoverable
amount since the last impairment was recognised. A reversal of an
assets impairment loss is limited to its carrying amount that would
have been determined (Net of depreciation or amortization) had no
impairment loss been recognised in prior years.
14) CONTINGENT LIABILITIES, CONTINGENT ASSETS & PROVISIONS
Provisions are recognised for present obligations of uncertain timing
or amount arising as a result of past event where a reliable estimate
can be made and it is probable that an outflow of resources embodying
economic benefits will be required to settle the obligation. Where it
is not probable that an outflow of resources embodying economic
benefits will be required or the amount can not be estimated reliably,
the obligation is disclosed as a contingent liability, unless the
possibility of outflow of resources embodying economic benefits is
remote. Possible obligations, whose existence will only be confirmed by
the occurrence or non-occurrence of one or more uncertain events are
also disclosed as contingent liabilities unless the possibility of
outflow of resources embodying economic benefits is remote.