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Accounting Policies of Premier Explosives Ltd. Company

Mar 31, 2013

1. Basis of preparation

The financial statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention on an accrual basis in all material respects with the Accounting Standards notified by the Companies (Accounting Standards) Rules, 2006 (as amended), other pronouncements of the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956.

The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.

The financial statements are presented in Indian rupees rounded off to the nearest lakh.

All assets and liabilities have been classified as current or non-current as per the company''s normal operating cycle and other criteria set out in Revised Schedule VI to the Companies Act, 1956. Based on the nature of products and time between acquisition of assets for processing and their realization in cash and cash equivalents, the company has ascertained its operating cycle as 12 months for the purpose of current/non- current classification of assets and liabilities.

2. Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of financial statements and reported amounts of revenues and expenses for the year. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates. Difference between actual results and estimates are recognised in the period in which the results are known / materialised.

3. Fixed assets

(i) Fixed assets are stated at cost of acquisition which includes inland freight, duties and taxes and incidental expenses related to acquisition and net of CENVAT wherever applicable. In respect of projects involving construction, related pre-operational expenses form part of the cost of the assets capitalised.

(ii) Revenue expenditure incurred during the construction period of the project is shown under "Unallocated Expenditure Pending Capitalisation" till the commencement of the commercial production or their intended use and the same is capitalised by allocating to relevant assets in the ratio of their direct costs.

4. Impairment of assets

The company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the Statement of Profit and Loss. If at the balance sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of amortised historical cost.

5. Depreciation

(i) Depreciation is charged under straight line method in accordance with rates specified in Schedule XIV of the Companies Act, 1956.

(ii) Depreciation has been provided at one hundred percent for assets costing less than Rs.5,000/-.

(iii) Leasehold land is amortised over the lease period.

6. Intangible assets and amortisation

Cost relating to intangible assets, which are acquired, is capitalised and amortised over a period of 3 years, which is based on their estimated useful life.

7. Inventories

(i) Raw materials and stores and spares are valued at lower of cost, calculated on weighted average basis, and net realisable value. Items held for use in the production of inventories are not written down below cost if the finished product in which these will be incorporated are expected to be sold at or above cost.

(ii) Finished goods and work-in-progress are valued at lower of cost and net realisable value. Cost includes materials, labour and a proportion of appropriate overheads based on normal operating capacity. Cost of finished goods includes excise duty. Cost is determined on a weighted average basis.

(iii) Scarp is valued at net realisable value.

(iv) Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

8. Borrowing costs

(i) Borrowing cost includes interest, ancillary costs incurred in connection with the arrangement of borrowings and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost.

(ii) Borrowing costs directly attributable to acquisition or construction of Fixed Assets which necessarily take a substantial period of time to get ready for their intended use, incurred till the time of commencement of commercial production or their intended use are capitalized. All other borrowing costs are expensed in the period they occur.

9. Investments

(i) Investments that are readily realisable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long term investments.

(ii) Current investments are carried at lower of cost and fair value determined on individual investment basis.

(iii) Long-term investments are carried at cost of acquisition. Provision is made for decline, other than temporary, in the value of investments.

(iv) On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the Statement of profit and loss .

10. Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be readily measured.

(i) Domestic sales

Gross revenue includes excise duty and adjustments for price variation and liquidated damages and recognised on dispatch of products from the factories of the company.

(ii) Export sales

Revenue from export sales is recognised when the significant risks and rewards of ownership are transferred to the customers which is based upon the terms of the applicable contract.

(iii) Service income

Service income is recognised as per the terms of the contracts with customers when the related services are performed or the agreed milestones are achieved.

(iv) Interest

Revenue is recognised on an accrual basis and on a time proportion basis taking into account the amount outstanding and the applicable rate.

(v) Dividend

Revenue is recognised when the shareholders'' right to receive payment is established by the balance sheet date.

11. Excise duty

Excise duty recovered is included in "Gross Sales". Excise duty on sales is shown as an item of expense and deducted from gross sales. Value of closing stock of finished goods includes excise duty paid / payable on such stocks wherever applicable.

12. Employee benefits

Short term employee benefits

Short term employee benefits are recognised as an expense as per the company''s scheme based on expected obligation on undiscounted basis.

Long term employee benefits

(i) Defined contribution plans

Provident fund: Contribution to provident fund is made at the prescribed rates to the Employees Provident Fund Scheme of the Central Government and is charged to the Statement of profit and loss.

(ii) State plans

Employer''s contribution to Employee''s State Insurance is charged to Statement of profit and loss.

(iii) Defined benefit plans

a) Gratuity

i) The Company makes contribution to a scheme administered by the Life Insurance Corporation of India (''LIC'') to discharge gratuity liabilities to the employees. Annual contribution to the fund as determined by the LIC is charged to Statement of profit and loss in the year of contribution. The shortfall between the accumulated funds available with LIC and liability as determined on the basis of an actuarial valuation is provided for at the year-end. The actuarial gains / losses are taken to the Statement of profit and loss.

b) Leave encashment

ii) The company records its unavailed leave liability based on actuarial valuation using projected unit credit method.

c) Actuarial gains / losses arising during the year are recognised in the Statement of profit and loss.

(iv) Terminal benefits are recognised as an expense as and when incurred.

13. Foreign exchange transactions

(i) Initial Recognition: Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and foreign currency at the date of the transaction.

(ii) Conversion: Foreign currency monetary items are reported at year-end rates. Non-monetary items which are carried in terms of historical cost denominated in foreign currency are reported using the exchange rate at the date of the transaction.

(iii) Exchange difference: Exchange differences arising on the settlement of monetary items or on reporting monetary items of Company at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognised as income or as expense in the year in which they arise.

(iv) Forward exchange contracts not intended for trading purpose: In case of forward exchange contracts, difference between forward rate and the exchange rate on the date of transaction is recognised as expense or income over the life of the contract. Exchange differences on such contracts are recognised in the Statement of profit and loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognised as income or as expense for the year.

14. Research and development

Revenue expenditure on research and development is charged to the Statement of profit and loss. Capital expenditure on research and development is shown as an addition to fixed assets.

15. Operating leases

Leases of assets under which all the risks and rewards of ownership are effectively retained by the lessor are classified as operating leases. Lease payments under operating leases are recognised as an expense on a straight-line basis over the lease term.

16. Taxation

(i) Tax expense (or tax saving), the aggregate of current year tax and deferred tax, is charged (or credited) to the Statement of profit and loss.

(ii) Current year tax

The provision for taxation is based on assessable profits of the company as determined under the Income Tax Act, 1961. The company also provides for such disallowances made on completion of assessments pending appeals, as considered appropriate depending on the merits of each case.

(iii) Deferred tax

Deferred Income Taxes are recognised for the future tax consequences attributable to timing differences between the financial statement determination of income and their recognition for tax purposes. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.

Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In situations where the company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.

In the situations where the company is entitled to tax holiday under Income tax Act, 1961 no deferred tax is recognised in respect of timing differences which reverse during the tax holiday period, to the extent company''s gross total income is subject to the deduction during the tax holiday period. Deferred tax in respect of timing differences which reverse after the tax holiday period is recognised in the year in which timing difference originate.

Unrecognised deferred tax assets of earlier years are reassessed and recognized to the extent that it has become reasonably certain or virtually certain, as the case may be that future taxable income will be available against which such deferred tax assets can be realised.

The carrying amount of deferred tax assets are reviewed at each balance sheet date. The Company writes-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realised. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.

(iv) Minimum Alternate Tax (MAT) Credit

MAT credit is recognised, as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during the specified year. In the year in which the Minimum Alternative Tax (MAT) credit becomes eligible to be recognised as an asset in accordance with the recommendation contained in Guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the profit and loss account and shown as MAT Credit Entitlement. The company reviews the same at each balance sheet date and writes 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.

17. Provisions, Contingent liabilities and Contingent assets

(i) Provisions, involving substantial degree of estimation in measurement, are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources.

(ii) Contingent liabilities, which are possible or present obligations that may but probably will not require outflow of resources, are not recognised but are disclosed in the Notes to the financial statements.

(iii) Contingent assets are neither recognised nor disclosed in the financial statements.

18. Earnings per share

(i) The basic earnings per share (EPS) is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

(ii) For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of equity shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

19. Proposed dividend

A provision is made in the books of account for the dividend proposed by the Board, pending approval at the Annual General Meeting.

20. Cash and cash equivalents

Cash and cash equivalents comprise of cash at bank and in hand and short-term investments with an original maturity of three months or less.


Mar 31, 2012

1. Accounting convention

The financial statements are prepared under the historical cost convention on an accrual basis and in accordance with notified accounting standards issued by the Companies (Accounting Standard) Rules, 2006 and the relevant provisions of the Companies Act, 1956.

2. Fixed assets

(i) Fixed assets are stated at cost of acquisition which includes inland freight, duties and taxes and incidental expenses related to acquisition and net of CENVAT wherever applicable. In respect of projects involving construction, related pre-operative expenses form part of the value of the assets capitalised.

(ii) Revenue expenditure incurred during the construction period of the project is shown under "Unallocated Expenditure Pending Capitalisation" till the commencement of the commercial production or their intended use and the same is capitalised by allocating to relevant assets in the ratio of their direct costs.

3. Depreciation

(i) Depreciation is charged in the accounts under straight line method in accordance with rates specified in Schedule XIV of the Companies Act, 1956.

(ii) Depreciation has been provided at one hundred percent for assets costing less than Rs.5,000/-.

(iii) Leasehold land is amortised over the lease period.

4. Intangible assets and amortisation

Cost relating to intangible assets, which are acquired, is capitalised and amortised over a period of 3 years, which is based on their estimated useful life.

5. Inventories

(i) Inventories are valued at cost and net realisable value whichever is lower except the scrap which is valued at net realisable value. Cost is determined using weighted average cost method.

(ii) Stationery, uniforms and canteen expenses are charged off to the revenue at the time of purchase.

6. Borrowing costs

Borrowing costs that are attributable to the acquisition or construction of a qualifying asset are capitalised as a part of cost of such asset till such time as the asset is ready for its intended use.

Other borrowing costs are recognised as expense for the period.

7. Investments

(i) Investments are classified into current and long-term investments.

(ii) Current investments are valued at lower of cost and fair value.

(iii) Long-term investments are valued at cost of acquisition. Provision is made for decline, other than temporary, in the value of investments.

(iv) On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the Statement of profit and loss.

8. Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be readily measured.

(i) Domestic sales

Gross revenue includes excise duty and adjustments for price variation and liquidated damages and recognised on dispatch of products from the factories of the company.

(ii) Export sales

Revenue from export sales is recognised when the significant risks and rewards of ownership are transferred to the customers which is based upon the terms of the applicable contract.

(iii) Service income

Service income is recognised as per the terms of the contracts with customers when the related services are performed or the agreed milestones are achieved.

(iv) Interest

Revenue is recognised on an accrual basis and on a time proportion basis taking into account the amount outstanding and the applicable rate.

(v) Dividend

Revenue is recognised when the shareholders' right to receive payment is established by the balance sheet date.

9. Excise duty

Excise duty recovered is included in "Gross Sales". Excise duty on despatches is shown as an item of expense and deducted from gross sales. Value of closing stock of finished goods includes excise duty paid / payable on such stocks wherever applicable.

10. Employee benefits

Short term employee benefits

Short term employee benefits are recognised as an expense as per the company's scheme based on expected obligation on undiscounted basis.

Long term employee benefits

(i) Defined contribution plans

Provident fund: Contribution to provident fund is made at the prescribed rates to the Employees Provident Fund Scheme of the Central Government and is charged to the Statement of profit and loss.

(ii) State plans

Employer's contribution to Employee's State Insurance is charged to Statement of profit and loss.

(iii) Defined benefit plans

a) Gratuity

The Company makes contribution to a scheme administered by the Life Insurance Corporation of India ('LIC') to discharge gratuity liabilities to the employees. Annual contribution to the fund as determined by the LIC is expensed in the year of contribution. The shortfall between the accumulated funds available with LIC and liability as determined on the basis of an actuarial valuation is provided for at the year-end. The actuarial gains / losses are immediately taken to the Statement of profit and loss.

b) Leave encashment

The company records its unavailed leave liability based on actuarial valuation using projected unit credit method.

c) Actuarial gains / losses arising during the year are recognised in the Statement of profit and loss.

(iv) Terminal benefits are recognised as an expense as and when incurred.

11. Foreign exchange transactions

Transactions in foreign exchange, other than those covered by forward contracts, are accounted for at the exchange rates prevailing on the date of transactions. Assets and liabilities remaining unsettled at the end of the year other than those covered by forward contracts are translated at the closing rate. Realised gains and losses on foreign exchange transactions are recognised in the Statement of profit and loss.

12. Research and development

Revenue expenditure on research and development is charged to the Statement of profit and loss. Capital expenditure on research and development is shown as an addition to fixed assets.

13. Operating leases

Leases of assets under which all the risks and rewards of ownership are effectively retained by the lessor are classified as operating leases. Lease payments under operating leases are recognised as an expense on a straight-line basis over the lease term.

14. Taxation

(i) Tax expense (or tax saving) is the aggregate of current year tax, deferred tax charged (or credited) to the Statement of profit and loss.

(ii) Current year tax

The provision for taxation is based on assessable profits of the company as determined under the Income Tax Act, 1961. The company also provides for such disallowances made on completion of assessments pending appeals, as considered appropriate depending on the merits of each case.

(iii) Deferred tax

Deferred Income Taxes are recognized for the future tax consequences attributable to timing differences between the financial statement determination of income and their recognition for tax purposes. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognized and carried forward only to the extent that it has become a reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realised.

(iv) Minimum Alternate Tax (MAT) Credit

MAT credit is recognised, as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during the specified year. In the year in which the Minimum Alternative Tax (MAT) credit becomes eligible to be recognised as an asset in accordance with the recommendation contained in Guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the profit and loss account and shown as MAT Credit Entitlement. The company reviews the same at each balance sheet date and writes 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.

15. Provisions, Contingent liabilities and Contingent assets

(i) Provisions, involving substantial degree of estimation in measurement, are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources.

(ii) Contingent liabilities, which are possible or present obligations that may but probably will not require outflow of resources, are not recognised but are disclosed in the Notes to the financial statements.

(iii) Contingent assets are neither recognised nor disclosed in the financial statements.

16. Earnings per share

(i) The basic earnings per share is calculated considering the weighted average number of equity shares outstanding during the year.

(ii) The diluted earnings per share is calculated considering the effects of potential equity shares on net profit after tax for the year and weighted average number of equity shares outstanding during the year.

17. Proposed dividend

A provision is made in the books of account for the dividend proposed by the directors, pending approval at the Annual General Meeting.

18. Use of estimates

Preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Differences between the actual results and estimates are recognised in the period in which the results are known / materialised.


Mar 31, 2011

1 Accounting convention

The financial statements are prepared under the historical cost convention on an accrual basis and in accordance with notified accounting standards issued by the Companies (Accounting Standard ) Rules, 2006 and the relevant provisions of the Companies Act, 1956.

2 Fixed assets

Fixed assets are stated at cost of acquisition which includes inland freight, duties and taxes and incidental expenses related to acquisition and net of CENVAT wherever applicable. In respect of projects involving construction, related pre-operational expenses form part of the value of the assets capitalised.

3 Depreciation

(i) Depreciation is charged in the accounts under Straight Line Method in accordance with rates specified in Schedule XIV of the Companies Act, 1956.

(ii) Depreciation has been provided at one hundred percent for assets costing less than Rs.5,000/-.

(iii) Leasehold land is amortised over the lease period.

4 Intangible assets and amortisation

Cost relating to intangible assets, which are acquired, is capitalised and amortised over a period of 3 years, which is based on their estimated useful life.

5 Inventories

(i) Inventories are valued at cost and net realisable value whichever is lower except the scrap which is valued at net realisable value. Cost is determined using weighted average cost method.

(ii) Stationery, uniforms and canteen expenses are charged off to the revenue at the time of purchase.

6 Borrowing costs

Borrowing costs that are attributable to the acquisition or construction of a qualifying asset are capitalised as a part of cost of such asset till such time as the asset is ready for its intended use.

7 Investments

Long term investments are valued at cost. Provision is made for decline, other than temporary, in value of investments.

8 Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be readily measured.

(i) Sales

Gross sales include excise duty and adjustments for price variation and liquidated damages.

(ii) Interest

Revenue is recognised on a time proportion basis taking into account the amount outstanding and the applicable rate.

(iii) Dividend

Revenue is recognised when the shareholders right to receive payment is established by the balance sheet date.

9 Excise duty

Excise duty recovered is included in "Gross Sales". Excise duty on despatches is shown as an item of expense and deducted from gross sales. The value of closing stock of finished goods includes excise duty paid / payable on such stocks.

10 Employee benefits

(i) Defined contribution plans

Provident fund: Contribution to provident fund is made at the prescribed rates to the Employees Provident Fund Scheme of the Central Government and is charged to the Profit and Loss Account.

(ii) State plans

Employers contribution to Employees State Insurance is charged to Profit and Loss Account.

(iii) Defined benefit plans

a) Gratuity:

The Company makes contribution to a scheme administered by the Life Insurance Corporation of India (LIC) to discharge gratuity liabilities to the employees. Annual contribution to the fund as determined by the LIC is expensed in the year of contribution. The shortfall between the accumulated funds available with LIC and liability as determined on the basis of an actuarial valuation is provided for at the year- end. The actuarial gains / losses are immediately taken to profit and loss account.

b) Leave encashment:

The company records its unavailed leave liability based on actuarial valuation using projected unit credit method.

(iv) Short term employee benefits

Short term employee benefits are recognised as an expense as per the companys scheme based on expected obligation on undiscounted basis.

11 Foreign exchange transactions

Transactions in foreign exchange, other than those covered by forward contracts, are accounted for at the exchange rates prevailing on the date of transactions. Assets and liabilities remaining unsettled at the end of the year other than those covered by forward contracts are translated at the closing rate. Realised gains and losses on foreign exchange transactions are recognised in the Profit and Loss Account.

12 Research and development

Revenue expenditure on research and development is charged to the Profit and Loss Account. Capital expenditure on research and development is shown as an addition to fixed assets.

13 Operating leases

Leases of assets under which all the risks and rewards of ownership are effectively retained by the lessor are classified as operating leases. Lease payments under operating leases are recognised as an expense on a straight- line basis over the lease term.

14 Taxation

Tax expense (or tax saving) is the aggregate of current year tax, deferred tax charged (or credited) to the Profit and Loss Account for the year.

(i) Current year charge

The provision for taxation is based on assessable profits of the company as determined under the Income Tax Act, 1961. The company also provides for such disallowances made on completion of assessments pending appeals, as considered appropriate depending on the merits of each case.

(ii) Deferred tax

Deferred income taxes are recognised for the future tax consequences attributable to timing differences between the financial statement determination of income and their recognition for tax purposes. The effect on deferred tax assets and liabilities of a change in tax rates is recognised in income using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognised and carried forward only to the extent that there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

15 Contingent liabilities

These are disclosed by way of notes on the balance sheet. Provision is made in the accounts in respect of those contingencies which are likely to materialise into liability after the year end, till the finalisation of accounts and have material effect on the position stated in the balance sheet.

16 Provisions

A provision is recognised when there is a present obligation as a result of past event. It is probable that an outflow of resources will be required to settle the obligation and in respect of which a reliable estimate can be made. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

17 Earning per share

Earning per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

18 Use of estimates

Preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Differences between the actual results and estimates are recognised in the period in which the results are known/materialised.


Mar 31, 2010

(a) Accounting convention:

The financial statements are prepared under the historical cost convention on an accrual basis and in accordance with notified accounting standards issued by the Companies (Accounting Standard ) Rules, 2006 and the relevant provisions of the Companies Act, 1956.

(b) Fixed assets :

Fixed assets are stated at cost of acquisition which includes inland freight, duties and taxes and incidental expenses related to acquisition and net of CENVAT wherever applicable. In respect of project involving construction, related pre-operational expenses form part of the value of the assets capitalised. Revalued fixed assets are stated at the fair market value as per the valuation of registered valuers .The increase in value of such assets on revaluation is credited to the revaluation reserve account.

(c) Depreciation :

(i) Depreciation is charged in the accounts under Straight Line Method in accordance with rates specified in Schedule XIV of the Companies Act, 1956

(ii) Additional depreciation is charged on the increased amount of assets due to revaluation to the Revaluation Reserve created on the revaluation of the said assets

(iii) Depreciation has been provided at one hundred percent for assets of cost less than Rs.5,000/- (iv) Leasehold Land is amortised over the lease period.

(d) Intangible assets and amortisation :

Cost relating to Intangible assets, which are acquired, are capitalised and amortised over the period of 3 years, which is based on their estimated useful life.

(e) Inventories:

(i) Inventories are valued at cost and net realisable value whichever is lower except the scrap whicherver is valued at net realisable value. Cost is determined using weighted average cost method.

(ii) Stationery, uniforms and canteen expenses are charged off to the revenue at the time of purchase.

(f) Borrowing costs:

Borrowing costs that are attributable to the acquisition or construction of a qualifying asset are capitalised as a part of cost of such asset till such time as the asset is ready for its intended use.

(g) Investments:

Long term investments are valued at cost. Provision is made for decline, other than temporary, in value of investments.

(h) Revenue recognition:

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be readily measured.

(i) Sales :

Gross sales includes excise duty and adjustments for price variation and liquidated damages.

(ii) Interest:

Revenue is recognised on a time proportion basis taking into account the amount outstanding and the applicable rate.

(iii) Dividend:

Revenue is recognised when the shareholders right to receive payment is established by the balance sheet date.

(i) Excise duty :

Excise duties recovered are included in "Gross sales". Excise duty on despatches is shown as an item of expense and deducted from Gross sales. The value of closing stock of finished goods includes excise duty paid/payable on such stocks.

(j) Employee benefits :

Defined contribution plans:

Provident fund: Contribution to provident fund is made at the prescribed rates to the Employees Provident Fund Scheme by the Central Government and is charged to the Profit and Loss Account

Defined benefit plans:

(i) Gratuity: The Company makes contribution to a scheme administered by the Life Insurance Corporation of India (LIC) to discharge gratuity liabilities to the employees. Annual contribution to the fund as determined by the LIC is expensed in the year of contribution. The shortfall between the accumulated funds available with LIC and liability as determined on the basis of an actuarial valuation is provided for at the year end. The Actuarial gains/losses are immediately taken to profit and loss account.

(ii) Leave encashment: The Company records its unavailed leave liability based on actuarial valuation using projected unit credit method

Short term employee benefits:

Short term employee benefits are recognised as an expense as per the companys scheme based on expected obligation on undiscounted basis

State plans: Employers contribution to Employees State Insurance is charged to Profit and Loss Account

(l) Research and development:

Revenue Expenditure on Research and Development is charged to the Profit and Loss Account. Capital Expenditure on Research and Development is shown as an addition to fixed assets

(m) Operating leases :

Leases of assets under which all the risks and rewards of ownership are effectively retained by the lessor are classified as operating leases. Lease payments under operating leases are recognised as an expense on a straight-line basis over the lease term.

(n) Taxation :

Tax expense (tax saving) is the aggregate of Current year Tax, Deferred Tax charged (or credited) to the Profit and Loss Account for the year.

(i) Current year charge

The provision for taxation is based on assessable profits of the Company as determined under the Income Tax Act, 1961. The Company also provides for such disallowances made on completion of assessments pending appeals, as considered appropriate depending on the merits of each case

(ii) Deferred tax

Deferred income taxes are recognised for the future tax consequences attributable to timing differences between the financial statement determination of income and their recognition for tax purposes. The effect on deferred tax assets and liabilities of a change in tax rates is recognised in income using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognised and carried forward only to the extent that there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

(o) Contingent liabilities :

These are disclosed by way of Notes on the Balance Sheet. Provision is made in the accounts in respect of those contingencies which are likely to materialise into liability after the year end, till the finalisation of accounts and have material effect on the position stated in the Balance Sheet.

(p) Provisions :

A provision is recognised when there is a present obligation as a result of past event. It is probable that an outflow of resources will be required to settle the obligation and in respect of which a reliable estimate can be made. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

(q) Earnings per share :

Earnings Per Share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

(r) Use of estimates :

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognised in the period in which the results are known/materialised.

 
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