Mar 31, 2012
1 Accounting Convention
The financial statements, other than the cash flow statement, are prepared on accrual basis under the historical cost convention treating the entity as a going concern and in accordance with the applicable Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956.
ii. Fixed Assets
Fixed assets are stated at cost of acquisition or construction less accumulated depreciation and impairment loss, if any. The cost comprises purchase price/construction cost and any directly attributable cost of bringing the asset to its working condition for its intended use. The borrowing costs in respect of qualifying assets incurred till the asset is ready for its intended use are capitalized.
Depreciation on fixed assets in the GP/GC unit is charged on the straight line method. The depreciation on fixed assets in other units is charged on the written down value method. Depredation is charged at the rates and in the manner prescribed under Schedule XIV to the Companies Act, 1956.
iv. Impairment of Assets
At each balance sheet date, an assessment is made whether any indication exists that an asset has been impaired in terms of Accounting Standard 28 issued by Institute of Chartered Accountants of India (ICAI). If such an 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 and charged to the Statement of Profit if Loss. The impairment loss recognized in prior accounting periods is reversed if there is a change in the estimate of recoverable amount of an asset.
v. Revenue Recognition
a) Revenue from sale of goods is recognized at the point of passing of title of the goods to the customer which generally coincides with delivery.
b) Sale value is inclusive of excise duty paid at the time of clearance of goods but exclusive of sales tax.
c) Export sales are accounted for on the basis of the "Let Export" date.
d) Revenue in respect of export incentives is recognized when such incentives accrue upon export of goods.
Inventories are valued at cost or net realizable value, whichever is lower after providing obsolescence, if any. The cost in respect of various items of inventory is determined as under:
a) In case of Raw Materials, stores and spares, at weighted average cost;
b) In case of Work in Process, at the raw material cost plus conversion cost depending upon the stage of completion of goods;
c) In case of Finished Goods at the raw material cost, conversion cost and other overheads incurred to bring the goods to their present location and condition.
Long-term investments are carried at cost less provisions, if any, for permanent diminution in value. Current investments are carried at lower of cost or fair value.
viii. Foreign Exchange Transactions
Transactions in foreign currency are recorded at the exchange rates prevalent at the time of transaction. Foreign Currency assets and liabilities are stated at the exchange rates prevailing at the date of Balance Sheet or at forward contract rates, wherever so covered. Realized gains or losses on foreign exchange transactions, other than those relating to fixed assets, are recognized in the Statement of Profit and Loss. The difference in foreign exchange rates in the case of fixed assets is adjusted to the cost of fixed assets.
ix. Accounting for Taxes on Income
Provision for current tax is made on the basis of aggregate amount of income to actually payable for the year on the estimated taxable income computed in accordance with the provisions of the Income Tax Act, 1961.
Deferred Tax resulting from the timing differences between Book Profit and Tax Profit is accounted for at the enacted rate of tax to the extent that the timing differences are expected to reverse in future. Deferred Tax Assets are recognized only to the extent there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. Deferred Tax Assets in respect of unabsorbed depreciation and carried forward losses are recognized only to the extent there is a virtual certainty that future taxable income will be available to realize these assets.
In terms of the Guidance Note on "Accounting for Credit available in respect of Minimum Alternate Tax (MAT) under the Income Tax Act, 1961 " issued by the Institute of Chartered Accountant of India, MAT credit is recognized as an asset only to the extent there is a convincing evidence that the company will be paying normal income tax during the specified period.
x. Employee Benefits
1. Short-term employee benefits
Short-term employee benefits are recognized as an expense in the Statement of Profit &. Loss in the year in which the related services are rendered by the employees.
2. Retirement benefits Defined contribution plans
Contributions to the employees' provident fund are made in accordance with the provisions of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952. Such contributions are charged to the Statement of Profit 8. Loss of the year in which the related services are rendered by the employees.
Defined benefit plans
Liability in respect of Gratuity is accounted for on the basis of an actuarial valuation. The present value of defined benefit obligation as at the end of the year is determined using the Projected Unit Credit method i.e. each period of service rendered by the employee is considered to give rise to an additional unit of benefit entitlement, gradually building up the final obligation.
xi. Contingent Liabilities
No provision is made for liabilities that are contingent in nature, unless it is probable that future events will confirm that an asset has been impaired or a liability incurred as at the balance sheet date and a reasonable estimate of the resulting loss can be made. However, all known, material contingent liabilities are disclosed by way of separate notes.
Mar 31, 2010
I Basis of Preparation of Financial Statements:
The financial statements are prepared under the historical cost convention which are in accordance with the generally accepted accounting principles in India and provisions of the Companies Act, 1956.
ii. 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 recognized in the period in which the results are known/materialised
iii. Revenue Recognition:
Revenue is recognized only when it can be reliably measured and it is reasonable to expect ultimate collection. Turnover includes sales of raw material, by-products and wastes. Sales is inclusive of Excise Duty but excludes Value Added Tax and Central Sales Tax and it is adjusted for discounts, if any.
iv. Fixed Assets:
Fixed assets are stated at cost net of value added tax less accumulated depreciation and impairment loss, if any. The cost comprises purchase price, construction cost, including non refundable taxes or levies and any directly attributed cost of bringing the assets to its working condition for its intended use. The financing costs till commencement of commercial production and adjustments arising from exchange rate variations attributable to the fixed assets are capitalized.
Depreciation on fixed assets of the company is provided to the extent of depreciable amount on Written Down Value method over heir useful life at rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956 except, on fixed assets pertaining to GP/GC unit, in which depreciation is provided under Straight Line Method over their useful life at rates and in manner prescribed in schedule XIV to the companies Act, 1956.
Inventories are valued at cost except material in process and finished goods which are valued at cost or realisable value whichever is lower.
vii. Foreign Exchange Transactions:
Transactions in foreign currency are recorded at the exchange rate prevalent on the date of the transaction or that approximates the actual rate at the date of the transaction. Foreign currency assets and liabilities are reinstated at the exchange rates prevailing at the date of Balance sheet and at forward contract rates wherever so covered. Realised gains or losses on foreign exchange transactions, other than those relating to fixed assets are recognized in the profit and loss account. The difference in foreign exchange in the case of fixed assets is adjusted to the cost of fixed assets.
viii. Provision For Current Tax and Deferred Tax:
Provision for tax for Current Year has been made on the basis of estimated taxable income computed in accordance with Provisions as per Income Tax Act, 1961.
In accordance with the Accounting Standard - 22 Accounting for Taxes on Income, issued by the Institute of Chartered Accountants of India, the deferred Tax resulting from all timing differences between taxable and accounting income is accounted for, at the enacted rate of tax, to the extent that the timing differences are expected to crystalise.
ix. Impairment of Assets :
An assets is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the Profit & Loss Account in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.
x. Borrowing Costs:
Borrowing costs directly attributable to the acquisition or construction of qualifying fixed assets are capitalized as part of the cost of the assets, upto the date the asset is put to use. Other borrowing costs are charged to the Profit & Loss Account in the year in which they are incurred. xi. Employees Benefits :
a) Short Term Employee Benefits
Employee benefits payable wholly within twelve months of rendering services are classified as short term employee benefits and are recognised in the period in which the employee renders the related services.
b) Post Employment Benefits (defined benefit plans)
The employees gratuity scheme is defined benefit plans. The present value of the obligation under such defined benefit plan is determined at each Balance Sheet date based on an actuarial valuation. Acturial gains and losses are recognised immediately in the Profit & Loss Account.
c) Post Employment Benefits (defined contribution plans)
Contributions to the Employees Provident Fund, Labour Welfare Fund and Employee State Insurance Fund, which are defined contribution schemes, are recognised as an expense in the Profit and Loss Account in the period in which the contribution is due.
d) Long Term Employment Benefits
Long term employee benfits comprise of compensated absences (i.e. Leave with wages) and other employee incentives. These are measured on yealy basis for actual leave with wages payable at each Balance Sheet date unless they are insignificant.
Current Investments are carried at lower of cost and quoted/fair value, computed category wise. Long Term investments are stated at cost. Provision for diminution in the value of long term investments is made only if such a decline is other than temporary.
xiii. Earning Per Share:
Basic Earning per share is computed by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Diluted earning per share is computed by taking into account the aggregate of the weighted average number of equity outstanding during the period and the weighted average number of equity shares which would be issued on conversion of all dilutive potential equity shares into equity shares.
xiv. Provisions, Contingent Liabilities And Contingent Assets:
Provisions are recognized in terms of Accounting Standard-29 " Provisions, Contingent Liabilities and Contingent Assets" issued by the Institute of Chartered Accountants of India.
Provisions involving substantial degree of estimation in measurement 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 economic benefits will be required to settle the obligations.
Contingent liabilities are recognized only when there is a possible obligation arising from past events due to occurrence or non- occurrence of one or more uncertain future events not wholly within the control of the company or where any present obligation cannot be measured in terms of future outflow of resources or where a reliable estimate of the obligation can not be made. Obligations are assessed on an ongoing basis and only those having a largely probable outflow of resources are provided for. Contingent assets are neither recognized nor disclosed in the financial statements.
xv. Leased Assets:
Operating Leases: Rentals are expenses with reference to lease terms and other considerations.