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Accounting Policies of Smruthi Organics Ltd. Company

Mar 31, 2016

Note : 1. Accounting Policies and Other information

A. Significant accounting policies

1. System of Accounting:

i. The company follows mercantile system of accounting and recognizes income and expenditure on accrual basis.

ii. The financial statements have been prepared in all material respects with Accounting Standards as relevant and notified by the Central Government.

iii. The financial statements are prepared on historical cost basis and as a going concern.

2. Revenue recognition :

Revenue from Sale of Goods is recognized when all the significant risk and rewards of ownership of the goods have been part to the buyer. The company collect the Sales Tax and value added taxes (VAT) on behalf of the Government and therefore these are not economic benefits flowing to the company. Hence there are excluded from the revenue. Excise duty deducted from revenue (Gross) is the amount i.e. included in the revenue (gross) and not the entire amount of liability arising during the year.

3. Tangible Fixed Assets and Depreciation :

Depreciation on tangible fixed assets is provided on written down value basis at the rates derived from the useful lives prescribed in Schedule II of the Companies Act, 2013 after considering the residual value at 5% of the original costs thereof except in case of reactors & distillation columns and the related equipments, electrical installations/equipments and plant and machinery used for research and development where the useful lives are considered at 23 years based on internal assessment.

Pursuant to Schedule II to the Companies Act, 2013, the Company has re-determined the written down values of the tangible assets as per the useful lives of the tangible assets as prescribed in Schedule II to the Companies Act, 2013 or, as the case may be, as per internal assessment.

4. Investments: Investments are stated at cost.

5. Inventories:

a) Finished goods are valued at cost or net realizable value whichever is the lower.

b) Stock in process is valued at cost.

c) Stock of raw materials, stores and spares and packing materials are valued at lower of cost or net realizable value.

6. Staff Benefits :

a) Contribution to Provident Fund are funded as a Percentage of Salary / Wages.

b) Provision for leave encashment salary is to be provided for the year as per Accounting Standard subject to this amount, the profit changes.

c) Provision for Gratuity is to be made of as per Payment of Gratuity Act, as per Accounting Standard 15. The gratuity provision amount is not provided separately as per Accounting Standard . Subject to this amount, profit changes.

7. Research and Development:

Revenue expenditure on research and development is charged to Statement of profit and loss in the year in which it is incurred. Capital expenditure on research and development is added to the cost of fixed assets.

8. Deferred Taxation :

Accounting treatment in respect of deferred taxation is in accordance with Accounting Standard 22 -"Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India.

9. Sales Tax Benefits:

Shortfall / increase in sales tax benefits accruing to the company are accounted for in the year in which the final assessment by the concerned authorities is completed.

10. Borrowing Costs:

Costs in respect of borrowings for the purpose of expansion / additional fixed investments including R & D projects are capitalized to such investments.

Borrowing costs relating to period after the commencement of operations of the project are charged to revenue.

11. Foreign Currency Transactions:

Foreign Exchange Transactions are recorded at pre-determined standard exchange rates which are reviewed periodically. Gains or losses arising out of such periodic revisions of such standard rates and also on realization/settlement are accounted for accordingly.

None of the fixed assets have been acquired out of these foreign currency loans and as such the carrying cost of these assets is not affected by fluctuations. Therefore gain/loss arising on account of fluctuation of foreign exchange rates are debited to the fixed assets and credited to Term Loan liability account.

12. Impairment of Assets :

The carrying amounts of assets are reviewed at each Balance Sheet date, if there is any indication of impairment based on internal / external factors. An impairment loss will be recognized wherever the carrying amount of an asset exceeds its estimated recoverable amount. The recoverable amount is greater of the asset''s net selling price and value in use. In assessing the value in use, the estimated future cash flows are discounted to the present value using the weighted average cost of capital. In carrying out such exercise, due effect is given to the requirements of Schedule 11 of the Companies Act, 2013.

13. Corporate Social Responsibility

The average operating profit of three years is in negative profit, so the company not required to spent on Corporate Social Responsibility in accordance with the provisions of Section 135 of the Companies Act, 2013.

14. Segment Reporting :

The company operates in only one segments viz. Bulk Drugs & Drug Intermediates.

15. Contingent Liabilities:

Cenvat set-off of EOU unit appeal is pending with Additional Commissioner of Central Excise, Pune for 2007 to 2011 four years amounting to Rs. 57.44 lacs and with Tribunal Mumbai for F Y 2009-10 for Rs. 1.09 lacs till the date of audit.

16. The company computed the expenditure on Corporate Social Responsibility at Rs. 22.14 lacs in accordance with the provisions of Section 135 of the Companies Act, 2013 for 31st March 2015. Till the date of audit company has not incurred any such expenditure. For the year company is not liable to compute expenditure on Corporate Social Responsibility.


Mar 31, 2015

1. System of Accounting:

i. The company follows mercantile system of accounting and recognizes income and expenditure on accrual basis.

ii. The financial statements have been prepared in all material respects with Accounting Standards as relevant and notified by tte Central Government.

iii. The financial statements are prepared on historical cost basis and as a going concern.

2. Revenue recognition :

Revenue from Sale of Goods is recognized when all the significant risk and rewards of ownership of the goods have been part to the buyer. The company collect the Sales Tax and value added taxes (VAT) on behalf of the Government and therefore these are not economic benefits flowing to the company. Hence there are excluded from the revenue. Excise duty deducted from revenue (Gross) is the amount i.e. included in the revenue (gross) and not the entire amount of liability arising during the year.

3. Tangible Fixed Assets and Depreciation :

Depreciation on tangible fixed assets is provided on written down value basis at the rates derived from the useful lives prescribed in Schedule II of the Companies Act, 2013 after considering the residual value at 5% of the original costs thereof except in case of reactors & distillation columns and the related equipments, electrical installations/equipments and plant and machinery used for research and development where the useful lives are considered at 23 years based on internal assessment.

4. Investments: Investments are stated at cost.

5. Inventories:

a) Finished goods are valued at cost or net realizable value whichever is the lower.

b) Stock in process is valued at cost.

c) Stock of raw materials, stores and spares and packing materials are valued at lower of cost or net realizable value.

d) Imported Raw material is lying with Nava Sheva Port, Mumbai is valued at cost..

6. Staff Benefits :

a) Contribution to Provident Fund are funded as a Percentage of Salary / Wages.

b) Provision for leave encashment salary is not made on the basis of actuarial valuation at the year ended of Rs. 994674/- subject to this amount, the loss changes.

c) Provision for Gratuity is to be made of as per Payment of Gratuity Act, as per Accounting Standard 15. The gratuity provision amount is not provided separately as per Accounting Standard . Subject to this amount, loss changes.

7. Research and Development:

Revenue expenditure on research and development is charged to Statement of profit and loss in the year in which it is incurred. Capital expenditure on research and development is treated at par with fixed assets and depreciated as such.

8. Deferred Taxation :

Accounting treatment in respect of deferred taxation is in accordance with Accounting Standard 22 - "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India.

9. Sales Tax Benefits:

Shortfall / increase in sales tax benefits accruing to the company are accounted for in the year in which the final assessment by the concerned authorities is completed.

10. Borrowing Costs:

Costs in respect of borrowings for the purpose of expansion / additional fixed investments including R & D projects are capitalized to such investments.

Borrowing costs relating to period after the commencement of operations of the project are charged to revenue.

11. Foreign Currency Transactions:

Foreign Exchange Transactions are recorded at pre-determined standard exchange rates which are reviewed periodically. Gains or losses arising out of such periodic revisions of such standard rates and also on realization/settlement are accounted for accordingly.

12. Impairment of Assets :

The carrying amounts of assets are reviewed at each Balance Sheet date, if there is any indication of impairment based on internal / external factors. An impairment loss will be recognized wherever the carrying amount of an asset exceeds its estimated recoverable amount. The recoverable amount is greater of the asset's net selling price and value in use. In assessing the value in use, the estimated future cash flows are discounted to the present value using the weighted average cost of capital. In carrying out such exercise, due effect is given to the requirements of Schedule 11 of the Companies Act, 2013.

13. Depreciation

Pursuant to Schedule II to the Companies Act, 2013, the Company has re-determined the written down values of the tangible assets as per the useful lives of the tangible assets as prescribed in Schedule II to the Companies Act, 2013 or, as the case may be, as per internal assessment. To the extent the existing written down values as on 1st April, 2014 are in excess of such re-determined written down values, the excess thereof, net of deferred tax, is adjusted against the retained earnings in the amount of Rs.173 lacs

The charge of depreciation, on these assets, for the year ended 31st March, 2015 is lower by Rs. 67 Lacs as compared to the position that would have obtained if estimates of useful lives adopted up to the preceding financial year were to be have been applied in this year as well.

14. Corporate Social Responsibility

The company computes the amount of Rs. 22.14 lacs required to be spent on Corporate Social Responsibility in accordance with the provisions of Section 135 of the Companies Act, 2013. The amounts are spent on the eligible projects prescribed under Schedule VII of the Act. Provision is made in the books for the amounts unspent, if material and the same is carried forward to be spent in the subsequent year.


Mar 31, 2014

(A) Accounting Convention : The financial statements are prepared on Historical Cost basis on the assumption of going concern concept.

(B) Fixed Assets and Depreciation.

a) Fixed Assets stated at cost of acquisition / constructions less depreciation.

b) Depreciation on Assets is provided on Written Down Value Method at the rates and in the manner, specified in Schedule XIV of the Companies Act 1956.

c) Continuous Process Plants as defined in Schedule XIV to the Companies Act, 1956 have been considered on Technical Assessment and Depreciation provided accordingly.

(C) Inventories :

a) Finished goods are valued at cost or net realizable value whichever is the lower.

b) Stock in process is valued at cost.

c) Stock of raw materials, stores and spares and packing materials are valued at lower of cost or net realizable value.

d) Finished Goods in transit is valued at cost or net realizable value whichever is lower.

e) Imported Raw material is lying with Nava Sheva Port, Balaji Warehouse, Mumbai is valued at cost.

(D) Sale of Goods :

Revenue from Sale of Goods is recognized when all the significant risk and rewards of ownership of the goods have been part to the buyer. The company collects the Sales Tax and Value Added Taxes (VAT) on behalf of the Government and therefore these are not economic benefits flowing to the company. Hence there are excluded from the revenue. Excise duty deducted from revenue (Gross) is the amount i.e. included in the revenue (gross) and not the entire amount of liability arising during the year.

(E) Staff Retirement Benefits :

a) Contribution to Provident Fund are funded as a Percentage of Salary / Wages.

b) Provision for leave encashment salary is not made on the basis of actuarial valuation at the year ended of Rs. 926053.00, subject to this amount, the loss changes.

c) Provision for Gratuity is to be made of as per Payment of Gratuity Act, as per Accounting Standard

15. The gratuity provision amount is not provided separately as per Accounting Standard , subject to this amount, loss changes.

(F) Provision for Income Tax is not provided as the net loss as per books of accounts.

(G) Borrowing Costs : Cost in respective the loss in foreign exchange difference on Foreign Currency Term Loan of Axis Bank Ltd, is credited to the Term Loan account and debited to the respective fixed assets at proportionately.

(H) Foreign Currency Transactions : Transactions in foreign exchange are translated in Indian Rupees at the Exchange Rates prevailing at the year end as notified by Foreign Exchange Dealers Association of India (FEDAI). Items of profit and loss account are accounted for at the exchange rates prevailing on the date of transaction. Gains and losses arising on account of periodic revisions of such standard exchange rates and also on realization are accounted to profit and loss account.

None of the fixed assets have been acquired out these foreign currency loans and as such the carrying cost of these assets is not affected by fluctuations. Therefore gain/loss arising on account of fluctuation of foreign exchange rates are credited to the fixed assets and debited to Term Loan liability account.

(I) Research and Development Expenditure :

Revenue expenditure is charged to Profit and Loss Account and Capital Expenditure added to Cost of Fixed Assets.

Expenditure details on R&D for 2013-14 and 2012-13 (Rs.In Lacs)

Particulars 2013-14 2012-13

a) Capital 00.00 00.67

b) Recurring 63.96 83.55

Total Rs.63.96 84.22

Total as 0.70% 0.47% R&D expenditure

a percentage of total turnover :

(J) Provisions, Contingent Liabilities and Contingent Assets :

A provision is made based on a reliable estimate when it is probable that an outflow of resources embodying economic benefits will be required to settle an obligation. Contingent Liabilities, if material are disclosed by way of notes to accounts. Contingent Assets are not disclosed or recognized in the financial statements.

(K) Recognition of Income and Expenditure :

a) The revenue is recognized when no significant uncertainty as regards reliability exist. In case of claims, revenue is recognized on admittance of the claim.

b) Sales Tax Benefits: Shortfall / Increase in the sales tax refund receivable by the company is accounted in the year in which the final assessment by sales tax authorities is completed. The Sales Tax amount of Rs. 83.58 Lacs is due under PSI1993 Scheme is paid during the year.

(L) Investment: Investments are stated at cost.

(M) Deferred Revenue Expenditure: Nil

(N) Impairment of Assets: AS-28

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to Profit and Loss Account in the year in which an asset is identified as impaired. The impaired loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.


Mar 31, 2013

A) Accounting Convention : The financial statements are prepared on Historical Cost basis on the assumption of going concern concept.

B) Fixed Assets and Depreciation

i) Fixed Assets stated at cost of acquisition / constructions less depreciation.

ii) Depreciation on Assets is provided on Written Down Value Method at the rates and in the manner, specified in Schedule XIV of the Companies Act 1956.

iii) Continuous Process Plants as defined in Schedule XIV to the Companies Act, 1956 have been considered on Technical Assessment and Depreciation provided accordingly.

C) Inventories

a) Finished goods are valued at cost or net realizable value whichever is the lower.

b) Stock in process is valued at cost.

c) Stock of raw materials, stores and spares and packing materials are valued at lower of cost or net realizable value.

d) Finished Goods in transit is valued at cost or net realizable value whichever is lower.

e) Imported Raw material is lying with Nava Sheva Port, Balaji Warehouse, Mumbai is valued at cost..

D) Sale of Goods : Revenue from Sale of Goods is recognized when all the significant risk and rewards of ownership of the goods have been part to the buyer. The company collects the Sales Tax and value added taxes (VAT) on behalf of the Government and therefore these are not economic benefits flowing to the company. Hence there are excluded from the revenue. Excise duty deducted from revenue (Gross) is the amount i.e. included in the revenue (gross) and not the entire amount of liability arising during the year.

E) Staff Retirement Benefits

a) Contribution to Provident Fund are funded as a Percentage of Salary / Wages.

b) Provision for leave encashment salary is not made on the basis of actuarial valuation at the year ended of Rs.625232/- . Subject to this amount, the profit changes.

c) Provision for Gratuity is made of as per payment of Gratuity Act. As per Accounting Standard 15, the gratuity amount is not provided separately.

F) Provision for Current Tax is made on the basis of relevant provisions of Income-Tax Act, 1961 considering the benefit of Exemption of R & D u/s 35 (2AB) of Income Tax Act. The Deferred Tax for timing differences between the Book and Tax Profits for the year is accounted for using the Tax Rates and Laws that have been substantively enacted as at the Balance Sheet.

G) Borrowing Costs : Costs in respect of borrowing for the purpose of expansion project have been capitalized in accordance with Accounting Standard-16 issued by The Institute of Chartered Accountants of India. During the year, the company has availed the term loan from AXIS Bank Limited, Pune towards construction of factory shed and purchase of plant and machinery and others of Rs. 700.00 lacs.and interest of Rs. 47.00 lacs as on 31.3.2013 is capitalized during the period.

H) Foreign Currency Transactions : Transactions in foreign exchange are translated in Indian Rupees at the Exchange Rates prevailing at the year end as notified by Foreign Exchange Dealers Association of India (FEDAI). Items of profit and loss account are accounted for at the exchange rates prevailing on the date of transaction. Gains and losses arising on account of periodic revisions of such standard exchange rates and also on realization are accounted to profit and loss account.

None of the fixed assets have been acquired out these foreign currency loans and as such the carrying cost of these assets is not affected by fluctuations. Therefore gain/loss arising on account of fluctuation of foreign exchange rates are credited to the fixed assets and debited to Term loan liability account.

I) Research and Development Expenditure : Revenue expenditure is charged to Profit and Loss Account and Capital Expenditure added to Cost of Fixed Assets.

J) Provisions, Contingent Liabilities and Contingent Assets : A provision is made based on a reliable estimate when it is probable that an outflow of resources embodying economic benefits will be required to settle an obligation. Contingent Liabilities, if material are disclosed by way of notes to accounts. Contingent Assets are not disclosed or recognized in the financial statements.

K) Recognition of Income and Expenditure

i) The revenue is recognized when no significant uncertainty as regards reliability exist. In case of claims, revenue is recognized on admittance of the claim.

ii) Sales Tax Benefits: Shortfall / increase in the sales tax refund receivable by the company is accounted in the year in which the final assessment by sales tax authorities is completed. The Sales Tax amount of Rs. 71.39 Lacs is due under PSI1993 Scheme is paid during the year.

L) Investment : Investments are stated at cost.

M) Deferred Revenue Expenditure : Nil

N) Impairment of Assets : AS-28

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to Profit and Loss Account in the year in which an asset is identified as impaired. The impaired loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.


Mar 31, 2012

A) Accounting Convention : The Financial statements are prepared on Historical Cost basis on the assumption of going concern concept.

B) Fixed Assets and Depreciation

i) Fixed Assets stated at cost of acquisition / constructions less depreciation.

ii) Depreciation on Assets is provided on Written Down Value Method at the rates and in the manner, specified in Schedule XIV of the Companies Act, 1956.

iii) Continuous Process Plants as defined in Schedule XIV to the Companies Act, 1956 have been considered on Technical Assessment and Depreciation provided accordingly.

C) Inventories

a) Finished goods are valued at cost or net realizable value which ever is the lower.

b) Stock in process is valued at cost.

c) Stock of raw materials, stores and spares and packing materials are valued at lower of cost or net realizable value.

D) Sale of Goods : Revenue from Sale of Goods is recognized when all the significant risk and rewards of ownership of the goods have been part to the buyer. The Company collect the Sales Tax and Value Added Taxes (VAT) on behalf of the Government and therefore these are not economic benefits flowing to the Company . Hence there are excluded from the revenue. Excise duty deducted from revenue (Gross) is the amount i.e. included in the revenue (gross) and not the entire amount of liability arising during the year.

E) Staff Retirement Benefits

a) Contribution to Provident Fund are funded as a Percentage of Salary / Wages.

b) Provision for leave encashment salary is made on the basis of actuarial valuation at the yearend.

c) Provision for Gratuity is made of as per payment of Gratuity Act. As per Accounting Standards it is not funded.

F) Provision for Current Tax is made on the basis of relevant provisions of Income Tax Act, 1961 considering the benefit of Exemption of R & D u/s 35 (2AB) of Income Tax Act. The Deferred Tax for timing differences between the Book and Tax Profits for the year is accounted for using the Tax Rates and Laws that have been substantively enacted as at the Balance Sheet.

G) Borrowing Costs : Costs in respect of borrowing for the purpose of expansion project have been capitalized in accordance with Accounting Standard-16 issued by The Institute of Chartered Accountants of India. During the year, the Company has availed the term loan from AXIS Bank Limited , Pune towards construction of factory shed and purchase of plant and machinery and others of Rs. 4.99 Crores. Interest of Rs. 11.95 Lacs as on 31.3.2012 is added to various fixed assets.

H) Foreign Currency Transactions : Transactions in foreign exchange are translated in Indian Rupees at the Exchange Rates prevailing at the year end as notified by Foreign Exchange Dealers Association of India (FEDAI). Items of profit and loss account are accounted for at the exchange rates prevailing on the date of transaction. Gains and losses arising on account of periodic revisions of such standard exchange rates and also on realization are accounted to profit and loss account.

None of the fixed assets have been acquired out of these foreign currency loans and as such the carrying cost of these assets is not affected by fluctuations. Therefore gain/loss arising on account of fluctuation of foreign exchange rates are credited to the fixed assets and debited to Term loan liability account.

I) Research and Development Expenditure : Revenue expenditure is charged to Profit and Loss Account and Capital Expenditure added to Cost of Fixed Assets.

J) Provisions, Contingent Liabilities and Contingent Assets : A provision is made based on a reliable estimate when it is probable that an outflow of resources embodying economic benefits will be required to settle an obligation. Contingent Liabilities , if material are disclosed by way of notes to accounts. Contingent Assets are not disclosed or recognized in the Financial statements.

K) Recognition of Income and Expenditure

i) The revenue is recognized when no significant uncertainty as regards reliability exist. In case of claims, revenue is recognized on admittance of the claim.

ii) Sales Tax Benefits : Shortfall / increase in the sales tax refund receivable by the Company is accounted in the year in which the final assessment by sales tax authorities is completed. The Sales Tax amount of Rs. 50.56 Lacs is due under PSI1993 Scheme is paid during the year.

L) Investment : Investments are stated at cost.

M) Deferred Revenue Expenditure : Nil

N) Impairment of Assets : AS-28

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable

value. An impairment loss is charged to Profit and Loss Account in the year in which an asset is identified as impaired. The impaired loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.


Mar 31, 2011

(A) Accounting Convention : The financial statements are prepared on Historical Cost basis on the assumption of going concern concept.

(B) Fixed Assets and Depreciation.

i) Fixed Assets stated at cost of acquisition / constructions less depreciation.

ii) Depreciation on Assets is provided on Written Down Value Method at the rates and in the manner, specified in Schedule XIV of the Companies Act 1956. iii) Continues Process Plants as defined in Schedule XIV to the Companies Act, 1956 have been considered on Technical Assessment & Depreciation provided accordingly.

(C) Inventories :

a) Finished goods are valued at cost or net realizable value which ever is the lower.

b) Stock in process is valued at cost.

c) Stock of raw materials, stores and spares and packing materials are valued at lower of cost or net realizable value.

(D) Sale of Products :

a) Sales includes excise duty and sales tax arising on sale transactions but trade discount are separately booked as a expenditure.

b) Excise duty is chargeable on production but is payable on clearance of goods. Excise duty on the goods manufactured by the company is accounted for at the time of their clearance. Duty on finished goods, lying in the bonded warehouse as on the balance sheet date, is not provided for.

(E) Staff Retirement Benefits :

a) Contribution to Provident Fund are funded as a Percentage of Salary/ Wages.

b) Provision for leave encashment salary is made on the basis of actuarial valuation at theyearend.

c) Provision for Gratuity is made of as per payment of Gratuity Act.

(F) Provision for Current Tax is made on the basis of relevant provisions of Income-Tax Act, 1961 considering the benefit of Exemption of EOU u/s 10B of Income Tax Act. The Deferred Tax for timing differences between the Book and Tax Profits for the year is accounted for using the Tax Rates and Laws that have been substantively enacted as at the Balance Sheet.

(G) Borrowing Costs : Costs in respect of borrowing for the purpose of expansion project have been capitalized in accordance with Accounting Standard 16 issued by The Institute of Chartered Accountants of India- No loan is obtained during the year.

(H) Foreign Currency Transactions : Transactions in foreign exchange are translated in Indian Rupees at the Exchange Rates prevailing at the year end as notified by Foreign Exchange Dealers Association of India (FEDAI). Items of profit and loss account are accounted for at the exchange rates prevailing on the date of transaction. Gains and losses arising on account of periodic revisions of such standard exchange rates and also on realization are accounted to profit and loss account.

None of the fixed assets have been acquired out these foreign currency loans and as such the carrying cost of these assets is not affected by fluctuations. Therefore gain/loss arising on account of fluctuation of foreign exchange rates are credited to the fixed assets and debited to Term loan liability account.

(I) Research and Development Expenditure :

Revenue expenditure is charged to Profit and Loss Account and Capital Expenditure added to Cost of Fixed Assets.

Expenditure details on R & D for 2010-11 and 2009-10 (Rs. in Lacs)

Particulars 2010-11 2009-10

a) Capital 26.60 42.28

b) Recurring 77.36 82.82

Total Rs. 103.96 125.10

Total R&D expenditure as 0.66% 1.04% a percentage of total turnover

(J) Provisions, Contingent Liabilities and Contingent Assets :

A provision is made based on a reliable estimate when it is probable that an outflow of resources embodying economic benefits will be required to settle an obligation. Contingent Liabilities, if material are disclosed by way of notes to accounts. Contingent Assets are not disclosed or recognized in the financial statements.

(K) Recognition of Income and Expenditure.:

i) The revenue is recognized when no significant uncertainty as regards reliability exist. In case of claims, revenue is recognized on admittance of the claim.

ii) Sales Tax Benefits : Shortfall / increase in the sales tax refund receivable by the company is accounted in the year in which the final assessment by sales tax authorities is completed. The Sales Tax amount of Rs. 25.16 lacs is due under PSI1993 Scheme is paid during the year.

(L) Investment: Investments are stated at cost.

(M) Deferred Revenue Expenditure : Out of the total expenditure of Rs. 25.21 lacs, the company has transferred Rs.8.40 lacs to Profit and Loss Account during the year.

(N ) Impairment of Assets : AS-28

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to Profit and Loss Account in the year in which an asset is identified as impaired. The impaired loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.


Mar 31, 2010

(A) Accounting Convention : The financial statements are prepared on Historical Cost basis on the assumption of going concern concept.

(B) Fixed Assets and Depreciation.

i) Fixed Assets stated at cost of acquisition / constructions less depreciation.

ii) Depreciation on Assets is provided on Written Down Value Method at the rates and in the manner, specified in Schedule XIV of the Companies Act 1956.

iii) Continues Process Plants as defined in Schedule XIV to the Companies Act, 1956 have been considered on Technical Assessment and Depreciation provided accordingly.

(C) Inventories :

a) Finished goods are valued at cost or net realizable value which ever is the lower.

b) Stock in process is valued at cost.

c) Stock of raw materials, stores and spares and packing materials are valued at lower of cost or net realizable value.

(D) Sale of Products :

a) Sales includes excise duty and sales tax arising on sale transactions but trade discount are separately booked as a expenditure.

b) Excise duty is chargeable on production but is payable on clearance of goods. Excise duty on the goods manufactured by the company is accounted for at the time of their clearance. Duty on finished goods, lying in the bonded warehouse as on the balance sheet date, is not provided for.

(E) Staff Retirement Benefits :

a. Contribution to Provident Fund are funded as a Percentage of Salary / Wages.

b. Provision for leave encashment salary is made on the basis of actuarial valuation attheyearend.

c. Provision for Gratuity is made of as per payment of Gratuity Act.

(F) Provision for Current Tax is made on the basis of relevant provisions of Income-Tax Act, 1961 considering the benefit of Exemption of EOU u/s 10 B of Income Tax Act. The Deferred Tax for timing differences between the Book and Tax Profits for the year is accounted for using the Tax Rates and Laws that have been substantively enacted as at the Balance Sheet.

(G) Borrowing Costs : Costs in respect of borrowing for the purpose of expansion project have been capitalized in accordance with Accounting Standard 16 issued by The Institute of Chartered Accountants of India.

(H) Foreign Currency Transactions : Transactions in foreign exchange are translated in Indian Rupees at the Exchange Rates prevailing at the year end as notified by Foreign

Exchange Dealers Association of India (FEDAI). Items of profit and loss account are accounted for at the exchange rates prevailing on the date of transaction. Gains and losses arising on account of periodic revisions of such standard exchange rates and also on realization are accounted to profit and loss account. None of the fixed assets have been acquired out these foreign currency loans and as such the carrying cost of these assets is not affected by fluctuations. Therefore the gain / loss arising on account of fluctuation of foreign exchange rates is taken to profit and loss account as per AS-11.

(I) Research and Development Expenditure :

Revenue expenditure is charged to Profit and Loss Account and Capital Expenditure added to Cost of Fixed Assets.

(]) Provisions, Contingent Liabilities and Contingent Assets :

A provision is made based on a reliable estimate when it is probable that an outflow of resources embodying economic benefits will be required to settle an obligation. Contingent Liabilities, if material are disclosed by way of notes to accounts. Contingent Assets are not disclosed or recognized in the financial statements.

(K) Recognition of Income and Expenditure.:

i) The revenue is recognized when no significant uncertainty as regards reliability exist. In case of claims, revenue is recognized on admittance of the claim.

ii) Sales Tax Benefits : Shortfall / increase in the sales tax refund receivable by the company is accounted in the year in which the final assessment by sales tax authorities is completed. Company has repaid Sales tax loan amount payable under PSI 1988 Scheme. The sales tax amount of Rs. 19.55 lacs is due under PSI 1993 scheme for the year.

(L) Investment: Investments are stated at cost.

(M) Deferred Revenue Expenditure : During the year Rs. 25.21 lacs has paid against Foreign Technical consulting charges which is deferred for three years. Out of which Rs 8.40 lacs is transferred to Profit & Loss account. Out of existing Deferral Revenue Expenditure Rs. 8.31 lacs is transferred to Profit and Loss Account.

(N) Impairment of Assets : AS-28

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to Profit and Loss Account in the year in which an asset is identified as impaired. The impaired loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.


Mar 31, 2000

1. GENERAL :

a) The accounts have been prepared under the historical cost convention and on the basis of a going concern.

b) Accounting policies not specifically referred to are consistent and in consonance with generally accepted accounting principles.

c) Expenses and income to the extent considered payable and receivable respectively are accounted for on accrual basis.

d) Contingencies which can be reasonably ascertained are provided for it, in opinion of the Company

2. SALES :

a) Sales includes Excise Duty, Sales Tax and foreign exchange differences arising on sale transaction, but trade discount are separately booked as a expenditure.

b) Excise duty is chargeable on production but is payable on clearance of goods. Excise duty on the goods manufactured by the Company is accounted for at the time of their clearance. Duty on finished goods, lying in the Bonded Warehouse as on the Balance Sheet date, is not provided for.

3. VALUATION OF INVENTORIES :

a) Raw Materials, Consumable, Work in Process, Stores, Packing Material and Spares are valued at cost.

b) Finished goods are valued at lower of cost and net realisable value. Cost for this purpose inlcludes direct materials, direct labour, factory administration and other overheads.

4. FIXED ASSETS :

Fixed Assets are stated at cost of acquisition or construction less depreciation.

5. INVESTMENTS :

Long term investments are valued at cost.

6. MISCELLANEOUS EXPANDER :

Preliminary expenses are written off over a period of ten years from the year of commencement of commercial production.

7. RETIREMENT BENEFITS :

i) No provision is made for accrued gratuity liability by the Company. The amount is uncertained. the necessary provision will be made in the respective year of payment.

ii) Provision is made for the value of unutilised leave due to employees at the end of the year.

8. RECOGNITION OF INCOME & EXPENDITURE :

The Revenue is recognised when no significant uncertainty as regards realisability exist. In case of claims revenue is recognised on admittance of the claim.

9. FOREIGH EXCHANGE TRANSACTIONS :-

Foreign Exchange transactions are recorded at the exchange rates prevailing on the date of transaction.

10. EXPORT BENEFITS :

Export benefits arising on account of entitlement of duty free import under Duty Entitlement Pass Book Scheme is accounted in the year of exports.

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