Mar 31, 2010
A. Description of Business: The Company is engaged in Hydrogenation of vegetable oils and the related products like Vanaspati and Refined oil.
b. Basis of preparation of financial statements: The financial statements have been prepared under the historical cost convention, in accordance with the Generally Accepted Accounting Principles (GAAP) and as per the provisions of the Companies Act, 1956 as adopted consistently by the company. All the Income and Expenditure having material bearing on the financial statements are recognised on accrual basis.
c. Use of Estimates: The preparation of the financial statements in conformity with the GAAP requires that the management make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as of the date of the financial statements, and the reported amount of revenues and expenses during the reported period. Actual results could differ from those estimates.
d. Revenue Recognition: The Company follows the mercantile system of accounting and recognizes income & expenditure on accrual basis except gratuities. The accounts are prepared on the historical cost basis, as a going concern & are consistent with the generally accepted accounting principles. The gratuity is accounted for on payment basis.
e. Fixed Assets: Fixed assets are capitalized at cost of acquisition including directly attributable cost of bringing the assets to their working condition for intended use and also including an appropriate share of incidental expenditure during construction/installation.
f. Depreciation: Depreciation has been provided on the straight-line method in accordance with schedule XIV to the Companies Act, 1956. However, in case of trucks, we have discontinued to provide depreciation on those trucks whose written down value has already reached at about 5% of the Gross Block.
g. Investments: Investments that are readily realizable and intended to be held for not more than a year are classified as Current Investment. All other investments are classified as Long Term Investment. Long-term investments are valued at cost, less provision for permanent diminution in the value of investment. Current Investments are valued at cost or market value whichever is lower.
h. Foreign Currency Transactions: Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction. The exchange differences arising from foreign currency transactions are recognized in the profit & loss accounts. Monetary assets and liabilities denominated in foreign currency are translated at the rates of exchange at the balance sheet date and resultant gain or loss is recognized in the profit and loss account. Premium in respect of forward foreign exchange contracts are recognised over the life of the Contracts.
i. Accounting for Taxes on Income: Current tax is determined in accordance with the provisions of the Income Tax Act, 1961. Deferred Tax is recognized, subject to the 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 and liabilities are measured considering the tax rates and tax laws enacted or substantively enacted by the Balance Sheet date, in accordance with Accounting Standard - 22 of the Institute Of Chartered Accountants of India. Deferred tax assets are recognized based on managements judgement as to the sufficiency of future taxable income against which the deferred tax assets can be realized.
1. Raw material, Chemicals and consumables are valued at cost or net realizable value whichever is lower, cost being purchase price on FIFO basis plus other expenses incurred in bringing the inventories to their present location and condition, including duties (other than those subsequently recoverable from the taxation authorities.)
2. Work in progress is valued at cost or net realizable value whichever is lower, cost i.e. Raw materials, Chemicals & Consumables at 100% of the cost & other direct expenses at 75% of the unit cost.
3. Finished goods are valued at Net realizable value.
4. Stores spares and components are taken at estimated value.
k. Retirement Benefit:
1. Provident Fund: The Companys contribution to the fund is charged to revenue as required under the statue/rules.
2 Leave Encashment: Provision for leave is made on the basis of leaves accrued to the employees during the financial year.
3. Gratuity: Gratuity is accounted for on payment basis.
l. Impairment of Assets:
As at each Balance Sheet date an assessment is made whether any indication exists that an asset has been impaired, if any such indication exists, an impairment loss i.e. the amount by which the carrying amount of an asset exceeds its recoverable amount is provided in the books of account.