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Accounting Policies of Shree Pacetronix Ltd. Company

Mar 31, 2015

A) Basis of preparation of financial statements

These financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on the accrual basis except for certain financial instruments which are measured at fair values. GAAP comprises mandatory accounting standards as prescribed under Section 133 of the Companies Act, 2013 (Act) read with Rule 7 of the Companies (Accounts) Rules, 2014, the provisions of the Act Accounting policies have been consistently applied except where a revision to an existing accounting standard a change in the accounting policy hitherto in use.

b) Use of estimates

The preparation of financial statements is in conformity with generally accepted accounting principles requires management to make estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Difference between actual results and estimates are recognized in the period in which the results are known / materialized.

c) Revenue recognition

Revenue is recognized only when it can be reliably measured and it is reasonable to expect ultimate collection on transfer of the significant risk and reward of ownership of the goods to the buyer and stated at net of discount, rebates, returns and VAT. Revenue from operation is generally recognized when service is performed/rendered.

d) Tangible and intangible assets

Tangible and intangible assets are stated at acquisition cost, net of accumulated depreciation and accumulated impairment losses, if any. Cost includes purchase price, taxes and duties, labour cost and directly attributable costs for self constructed assets and other direct costs incurred up to the date the asset is ready for its intended use.

e) Depreciation / amortization

Depreciation on tangible assets is provided on the Written Down Value method over the useful lives of assets as prescribed in Schedule II to Companies Act, 2013. Depreciation for assets purchased/sold during a year is proportionately charged. Intangible assets are amortized over their respective individual estimated useful lives on a straight-line basis, commencing from the date the asset is available to the Company for its use.

f) Impairment of assets

An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value. Recoverable amount is higher of net selling price or value in use. Management reviews the carrying cost of the assets at the end of each balance sheet date and is of the view that the recoverable value in the assets is more than the carrying amount and hence no provision for impairment of assets has been made.

g) Foreign currency transaction

Foreign currency transactions are initially accounted at the exchange rates prevailing on the date of the transactions. Gains and losses arising on account of differences in foreign exchange rates on settlement / translation of monetary items are recognized in the Statement of Profit and Loss.

h) Borrowing cost

Borrowing cost that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the costs of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other interest and borrowing cost are charged to revenue.

i) Inventories

Cost of inventories comprises all cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Cost formulae used are "Weighted Average Method". Cost of Work in Progress and Finished Goods is determined on absorption costing method. Inventories are valued as follows:

i) Raw Materials, Stores & Spares, : At Cost or net realizable value whichever is lower

Packing Materials, Consumables

ii) Finished Goods : At cost or net realizable value whichever is lower.

iii) Traded goods : At cost or net realizable value whichever is lower

iv) Stock in Process : At cost including related overheads or net

realizable value whichever is lower

j) Retirement Benefits

i) Short-term employees contributions like Provident Fund, Employees State Insurance Scheme are charged off at the undiscounted amount in the year in which the related services are rendered.

ii) Post employment and other long term employee benefits like gratuity is provided on actuarial valuation at the end of the year and charged to Profit and Loss account. Accordingly, Group Gratuity Scheme from Life Insurance Corporation under which gratuity liability of Rs 15.87 Lacs (Previous Year Rs 13.77 Lacs) remain outstanding which is computed based on Projected Unit Credit Method and company has made provision of gratuity Rs 2.10 Lacs (Previous Year Rs 1.69 Lacs)

k) Taxation

Provision for current tax has been made on the basis of taxable income for the current year and in accordance with the provisions of Income Tax Act 1961. The deferred tax resulting from timing difference between the accounting and taxable profit for the year is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. Deferred tax assets arising on account of timing difference are recognized and carried forward to the extent there is virtual certainty that these would be realized in future.

l) Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement that can be reliably ascertained are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes, when no reliable estimate is made or when there is present or past obligation that may, but probably will not, require an outflow of resources. Contingent Assets are neither recognized nor disclosed in the financial statements.

m) Eating's Per Share

Basic eating's per share are computed by dividing the net profit after tax by the weighted average number of equity shares outstanding during the period. Diluted earnings per share is computed by dividing the net profit after tax by the weighted average number of equity share and also weighted average number of equity shares that could have been issued upon conversion of all dilutive equity share.

n) Investments

Investments are classified either long term based on Management's intention at the time of purchase. Long Term Investment are stated at cost. Provision for diminution in the value of long-term investment is not made only if such a decline in temporary.


Mar 31, 2014

A) Basis of preparation of financial statements

The financial statements are prepared under historical cost convention on an accrual basis of accounting and in accordance with generally accepted accounting principles , Accounting Standards notified under section 211(3C) of the Act read with the Companies Act 1956, and relevant provision thereof.

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 the Schedule VI to the Act. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current or non-current classification of assets and liabilities.

b) Use of estimates

The preparation of financial statements is in conformity with generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Difference between actual results and estimates are recognised in the period in which the results are known / materialized.

c) Revenue recognition

Revenue is recognized only when it can be reliably measured and it is reasonable to expect ultimate collection on transfer of the significant risk and reward of ownership of the goods to the buyer and stated at net of discount, rebates, returns and VAT.

d) Tangible and intangible assets

Tangible and intangible assets are stated at acquisition cost, net of accumulated depreciation and accumulated impairment losses, if any. Cost includes purchase price, taxes and duties, labour cost and directly attributable costs for self constructed assets and other direct costs incurred up to the date the asset is ready for its intended use.

e) Depreciation / amortization

i. Depreciation on fixed assets are provided on WDV Method at the rates and in manner as prescribed under Schedule XIV to the Companies Act, 1956.

ii. Depreciation on fixed assets added/disposed off during the year is provided on pro-rata basis.

iii. Technology purchased has been amortized over the period of ten years. Amortization is done on straight line basis.

f) Impairment of assets

An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value. Recoverable amount is higher of net selling price or value in use. Management reviews the carrying cost of the assets at the end of each balance sheet date and is of the view that the recoverable value in the assets is more than the carrying amount and hence no provision for impairment of assets has been made.

g) Foreign currency transaction

Foreign currency transactions are initially accounted at the exchange rates prevailing on the date of the transactions. Gains and losses arising on account of differences in foreign exchange rates on settlement / translation of monetary items are recognised in the Statement of Profit and Loss.

h) Borrowing cost

Borrowing cost that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the costs of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other interest and borrowing cost are charged to revenue.

i) Inventories

Cost of inventories comprises all cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. The excise duty in respect of closing inventory of finished goods is included as part of finished goods. Cost formulae used are "Weighted Average Method". Cost of Work in Progress and Finished Goods is determined on absorption costing method. Inventories are valued as follows:

i) Raw Materials, Stores & Spares, : At Cost or net realisable value Packing Materials, Consumables whichever is lower

ii) Finished Goods : At Cost or net realizable value whichever is lower.

iii) Traded goods : At Cost or net realizable value whichever is lower

iv) Stock in Process : At Cost including related overheads or net realisable value whichever is lower

j) Retirement Benefits

i) Short-term employees contributions like Provident Fund, Employees State Insurance Scheme are charged off at the undiscounted amount in the year in which the related services are rendered.

ii) Post employment and other long term employee benefits like gratuity is provided on actuarial valuation at the end of the year and charged to Profit and Loss account.Accordingly,Group Gratuity Scheme from Life Insurance Corporation under which gratuity liability of Rs.13.77 Lacs (Previous Year Rs.12.09 Lacs) remain outstanding which is computed based on Projected Unit Credit Method and company has made provision of gratuity Rs.1.69 Lacs (Previous Year Rs.1.65 Lacs)

k) Taxation

Provision for current tax has been made on the basis of taxable income for the current year and in accordance with the provisions of Income Tax Act 1961. The deferred tax resulting from timing difference between the accounting and taxable profit for the year is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. Deferred tax assets arising on account of timing difference are recognized and carried forward to the extent there is virtual certainty that these would be realized in future.

l) Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement that can be reliably ascertained are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes, when no reliable estimate is made or when there is present or past obligation that may, but probably will not, require an outflow of resources. Contingent Assets are neither recognized nor disclosed in the financial statements.

m) Earnings per share

Basic earnings per share are computed by dividing the net profit after tax by the weighted average number of equity shares outstanding during the period. Diluted earning per share is computed by dividing the net profit after tax by the weighted average number of equity share and also weighted average number of equity shares that could have been issued upon conversion of all dilutive equity share.

n) Investments

Investments are classified either long term based on Management''s intentional the time of purchase. Long Term Investment are stated at cost. Provision for dimunition in the value of long-term investment is not made only if such a decline is temporary.


Mar 31, 2013

A. Basis of preparation of Financial Statements:

The financial statements are prepared under historical cost convention on an accrual basis of accounting in accordance with generally accepted accounting principles, accounting standards notified under section 211 (3c) of the Companies Act 1956, and the relevant provisions thereof.

B. Use of Estimates :

The preparation of financial statements is in conformity with generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Difference between actual results and estimates are recognised in the period in which the results are known / materialized.

C. Fixed Assets:

Fixed assets are stated at cost (net of VAT of which credit is allowed) less accumulated depreciation and impairment, if any. All Costs, including financing costs and direct expenses incurred to bring the assets in present location and condition till commencement of commercial production attributable to the fixed assets are capitalized.

D. Intangible assets

Intangible asset are stated at cost of acquisition less accumulated amortization and impairment, if any. Technology Purchased has been amortized over the period of ten years. Amortization is done on straight line basis. E Depreciation/Amortization:

(i) Depreciation on fixed assets are provided on W D V Method at the rates and in the manner as prescribed in schedule XIV of the Companies Act, 1956.

(ii) Depreciation on fixed assets added/disposed off during the year is provided on pro-rata basis.

(Hi) Technology Purchased has been amortized over the period of ten years. Amortization is done on straight line basis.

F. Impairment of Assets :

An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value. Recoverable amount is higher of net selling price or value in use. Management reviews the carrying cost of the assets at the end of each balance sheet date and is of the view that the recoverable value in the assets is more than the carrying amount and hence no provision for impairment of assets has been made.

G Foreign Currency Transaction :

1) Transactions denominated in foreign currency are normally recorded at the exchange rates prevailing on the date of transaction.

2) Monetary assets and liabilities denominated in foreign currency are translated into the relevant functional currency at exchange rates in effect at the Balance Sheet date.

3) Non monetary foreign currency assets and liabilities measured at historical cost are translated at exchange rate prevalent at date of transaction.

4) Any income or expenses on account of exchange difference on translation is recognized in the statement of profit and loss except in case of long term liabilities, where they relate to acquisition of fixed assets, in that case they are adjusted to the carrying cost of such assets.

H. Investments:

Investments are classified either long term or short term based on Management''s intention at the time of purchase. Long Term Investments are stated at cost. Provision for diminution in the value of long-term investment is not made only if such a decline is temporary.

I. Inventories:

Inventory is measured at lower of cost or net realizable value after providing for obsolescence, if any. Accordingly, the valuation criteria for inventory valuation during the year are as follows:

(i) Raw Materials : At cost or net realizable value whichever is lower

(ii) Finished Goods : At cost or net realizable value whichever is lower

(iii) Stock in Process : At cost including related overheads or net realizable value whichever is lower.

Costs comprise all cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Cost formula used is "weighted average". Cost of work in progress and finished goods is determined on absorption costing method.

J. Revenue Recognition / Sales :

Revenue is recognized only when it can be reliably measured and it is reasonable to expect ultimate collection on transfer of the significant risk and reward of ownership of the goods to the buyer and stated at net of discount, rebates, returns anr! VAT . K. Employee Benefits:

1) Short term employees'' benefits like Provident Fund, Employees State Insurance Scheme are charged off at the undiscounted amount in the statement of Profit and loss of that year in which the related services are rendered.

2) Post employment and other long term employee benefits like gratuity is provided on actuarial valuation at the end of the year and charged to statement of Profit and Loss. Accordingly, Group Gratuity Scheme from Life Insurance Corporation under which Gratuity liability of T 12.09 lacs (Previous Year ? 10.64 Lacs) remains outstanding which is computed based on Projected Unit Credit Method and company has made provision of gratuity x"1.65 lacs (Previous Year T 1.85 Lacs) during the year.

L. Borrowing Cost:

Borrowing Costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the costs of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other interest and borrowing cost are charged to revenue.

M. Taxation:

Provision for current tax has been made on book profit of the current year and in accordance with the provisions of Income Tax Act, 1961 The deferred tax resulting from timing difference between the accounting and taxable profit for the year is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. Deferred tax assets arising on account of timing difference are recognized and carried forward to the extent there is virtual certainty that these would be realized in future.

N. Provisions. Contingent Liabilities and Contingent Assets:

Provisions involving substantial degree of estimation in measurement that can be reliably ascertained are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes, when no reliable estimate is made or when there is present or past obligation that may, but probably will not, require an outflow of resources. Contingent Assets are neither recognized nor disclosed in the financial statements. 0. Earning Per Share :

Basic earning per share is computed by dividing the net profit after tax by the weighted average number of equity shares outstanding during the period. Diluted earning per share is computed by dividing the net profit after tax by the weighted average number of equity shares and also weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity share.


Mar 31, 2012

A. Basis of preparation of Financial Statements:

The financial statements are prepared under historical cost convention as going concern and are consistent with generally accepted accounting principles and provisions of the Companies Act 1956, on an accrual basis unless otherwise stated.

B. Use of Estimates :

The preparation of financial statements is in conformity with generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Difference between actual results and estimates are recognised in the period in which the results are known / materialized.

C. Fixed Assets :

Fixed assets are stated at cost (net of VAT of which credit is allowed) less accumulated depreciation and impairment, if any. All Costs, including financing costs and direct expenses incurred to bring the assets in present location and condition till commencement of commercial production attributable to the fixed assets are capitalized. Work in Progress comprises outstanding advances paid to acquire fixed assets that are not ready for intended use at Balance Sheet date.

D. Intangible assets :

Intangible asset are stated at cost of acquisition less accumulated amortization and impairment, if any. Technology Purchased has been amortized over the period of ten years. Amortization is done on straight line basis.

E Depreciation / Amortization :

(i) Depreciation on fixed assets are provided on W D V Method at the rates and in the manner as prescribed in schedule XIV of the Companies Act, 1956.

(ii) Depreciation on fixed assets added/disposed off during the year is provided on pro-rata basis.

(iii) Technology Purchased has been amortized over the period of ten years. Amortization is done on straight line basis.

F. Impairment of Assets :

An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value. Recoverable amount is higher of net selling price or value in use. Management reviews the carrying cost of the assets at the end of each balance sheet date and is of the view that the recoverable value in the assets is more than the carrying amount and hence no provision for impairment of assets has been made.

G Foreign Currency Transaction :

1) Transactions denominated in foreign currency are normally recorded at the exchange rates prevailing on the date of transaction.

2) Monetary assets and liabilities denominated in foreign currency are translated into the relevant functional currency at exchange rates in effect at the Balance Sheet date.

3) Non monetary foreign currency assets and liabilities measured at historical cost are translated at exchange rate prevalent at date of transaction.

4) Any income or expenses on account of exchange difference on translation is recognized in the statement of profit and loss except in case of long term liabilities, where they relate to acquisition of fixed assets, in that case they are adjusted to the carrying cost of such assets.

H. Investments :

Investments are classified either long term or short term based on Management's intention at the time of purchase. Long Term Investments are stated at cost. Provision for diminution in the value of long-term investment is not made only if such a decline is temporary.

I. Inventories :

Inventory is measured at lower of cost or net realizable value after providing for obsolescence, if any. Accordingly, the valuation criteria for inventory valuation during the year are as follows:

(i) Raw Materials : At cost or net realizable value whichever is lower

(ii) Finished Goods : At cost or net realizable value whichever is lower

(iii) Stock in Process : At cost including related overheads or net realizable value whichever is lower.

(iv) Stock in Trade : At cost or net realizable value whichever is lower.

Costs comprise all cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Cost formula used is "First-in-First-out". Cost of work in progress and finished goods is determined on absorption costing method.

J. Revenue Recognition / Sales :

Revenue is recognized only when it can be reliably measured and it is reasonable to expect ultimate collection on transfer of the significant risk and reward of ownership of the goods to the buyer and stated at net of discount, rebates, returns and VAT .

K. Employee Benefits :

1) Short term employees' contributions like Provident Fund, Employees State Insurance Scheme are charged off at the undiscounted amount in the Profit and loss account of that year in which the related services are rendered.

2) Post employment and other long term employee benefits like gratuity is provided on actuarial valuation at the end of the year and charged to statement of Profit and Loss. Accordingly, Group Gratuity Scheme from Life Insurance Corporation under which Gratuity liability of Rs. 10.64 lacs (Previous Year Rs. 10.44 Lacs) remains outstanding which is computed based on Projected Unit Credit Method and company made provision of Rs. 1.85 lacs (Previous Year Rs. 1.65 Lacs) during the year.

L. Borrowing Cost :

Borrowing Costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the costs of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other interest and borrowing cost are charged to revenue.

M. Taxation :

Provision for current tax has been made on the basis of taxable income for the current year and in accordance with the provisions of Income Tax Act 1961. The deferred tax resulting from timing difference between the accounting and taxable profit for the year is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. Deferred tax assets arising on account of timing difference are recognized and carried forward to the extent there is virtual certainty that these would be realized in future.

N. Provisions, Contingent Liabilities and Contingent Assets :

Provisions involving substantial degree of estimation in measurement that can be reliably ascertained are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes, when no reliable estimate is made or when there is present or past obligation that may, but probably will not, require an outflow of resources. Contingent Assets are neither recognized nor disclosed in the financial statements.

O. Earning Per Share :

Basic earning per share is computed by dividing the net profit after tax by the weighted average number of equity shares outstanding during the period. Diluted earning per share is computed by dividing the net profit after tax by the weighted average number of equity shares and also weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity share.


Mar 31, 2011

A. Basis of preparation of Financial Statements:

The financial statements are prepared under historical cost convention as going concern and are consistent with generally accepted accounting principles and provisions of the Companies Act 1956, on an accrual basis unless otherwise stated.

B. Use of Estimates:

The preparation of financial statements is in conformity with generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Difference between actual results and estimates are recognised in the period in which the results are known / materialized.

C. Fixed Assets:

Fixed assets are stated at cost (net of VAT of which credit is allowed) less accumulated depreciation and impairment, if any. All Costs, including financing costs and direct expenses incurred to bring the assets in present location and condition till commencement of commercial production attributable to the fixed assets are capitalized. Work in Progress comprises outstanding advances paid to acquire fixed assets that are not ready for intended use at Balance Sheet date.

D. Intangible assets

Intangible asset are stated at cost of acquisition less accumulated amortization and impairment, if any. Technical know-how has been amortized over the period of ten years. Amortization is done on straight line basis.

E. Depreciation / Amortization:

(i) Depreciation on fixed assets are provided on W D V Method at the rates and in the manner as prescribed in schedule XIV of the Companies Act, 1956.

(ii) Depreciation on fixed assets added/disposed off during the year is provided on pro-rata basis.

(iii) Technical know-how has been amortized over the period of ten years. Amortization is done on straight line basis.

F. Impairment of Assets :

An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value. Recoverable amount is higher of net selling price or value in use. Management reviews the carrying cost of the assets at the end of each balance sheet date and is of the view that the recoverable value in the assets is more than the carrying amount and hence no provision for impairment of assets has been made.

G. Foreign Currency Transaction:

1) Transactions denominated in foreign currency are normally recorded at the exchange rates prevailing on the date of transaction.

2) Monetary assets and liabilities denominated in foreign currency are translated into the relevant functional currency at exchange rates in effect at the Balance Sheet date.

3) Non monetary foreign currency assets and liabilities measured at historical cost are translated at exchange rate prevalent at date of transaction.

4) Any income or expenses on account of exchange difference on translation is recognized in the profit and loss account except in case of long term liabilities, where they relate to acquisition of fixed assets, in that case they are adjusted to the carrying cost of such assets.

H. Investments:

Investments are classified either long term or short term based on Management's intention at the time of purchase. Long Term Investments are stated at cost. Provision for diminution in the value of long-term invest- ment is not made only if such a decline is temporary.

I. Inventories:

Inventory is measured at lower of cost or net realizable value after providing for obsolescence, if any. Accordingly, the valuation criteria for inventory valuation during the year are as follows:

(i) Raw Materials : At cost or net realizable value whichever is lower

(ii) Finished Goods : At cost or net realizable value whichever is lower

(iii) Stock in Process : At cost including related overheads or net realizable value whichever is lower.

Costs comprise all cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Cost formula used is "First-in-First-out". Cost of work in progress and finished goods is determined on absorption costing method.

J. Revenue Recognition / Sales:

Revenue is recognized only when it can be reliably measured and it is reasonable to expect ultimate collection on transfer of the significant risk and reward of ownership of the goods to the buyer and stated at net of discount, rebates, returns and VAT.

K. Employees benefits:

1) Short term employees' contributions like Provident Fund, Employees State Insurance Scheme are charged off at the undiscounted amount in the Profit and loss account of that year in which the related services are rendered.

2) Post employment and other long term employee benefits like gratuity is provided on actuarial valuation at the end of the year and charged to Profit and Loss account. Accordingly, Group Gratuity Scheme from Life Insurance Corporation under which Gratuity liability of Rs 10.44 Lacs remains outstanding which is computed based on Projected Unit Credit Method and company made provision of Rs 1.65 Lacs during the year.

L. Borrowing Cost:

Borrowing Costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the costs of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other interest and borrowing cost are charged to revenue.

M. Provision for Tax:

Provision for current tax has not made under the provisions of the Income Tax Act, 1961, considering loss for the current year. The deferred tax resulting from timing difference between the accounting and taxable profit for the year is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. Deferred tax assets arising on account of timing difference are recognized and carried forward to the extent there is virtual certainty that these would be realized in future.

N. Provisions. Contingent Liabilities and Contingent Assets:

Provisions involving substantial degree of estimation in measurement that can be reliably ascertained are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes, when no reliable estimate is made or when there is present or past obligation that may, but probably will not, require an outflow of resources. Contingent Assets are neither recognized nor disclosed in the financial statements.

O. Earnings Per Share:

Basic earnings per share is computed by dividing the net profit after tax by the weighted average number of equity shares outstanding during the period. Diluted earnings per share is computed by dividing the net profit after tax by the weighted average number of equity shares and also weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity share.

1. In the opinion of the Board, the current assets have a value on realization in the ordinary course of business at least equal to the amount at which these are stated above and the provisions for known liabilities is adequate and not in excess of the amount considered reasonable and necessary.

2. Security of Loans

(i) Term loan from ICICI bank is secured by hypothecation of car.

(ii) Term loan from HDFC bank is secured by hypothecation of car.

(iii) Term loan from Bank of India is secured by hypothecation of Plant and Machinery. It is further secured by First Charge over fixed assets of the company and personal guarantee of Managing Director, Shri Atul Kumar Sethi and Whole Time Director, Mrs Amita Sethi.

(iv) Cash Credit.

The cash credit facilities availed from Bank of India are secured by hypothecation of the Company's current assets consisting of stock of Finished Goods, Stock in Process, Raw Materials etc. and book debts both present and future. Further secured by extension of First Charge over fixed assets of the company and personal guarantee of Managing Director Shri Atul Kumar Sethi and Whole Time Director, Mrs Amita Sethi.

 
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