Mar 31, 2010
1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The financial statements have been prepared under historical cost
convention in accordance with the generally accepted accounting
principles and the provisions of the Companies Act, 1956. The Company
follows the mercantile system of accounting and recognizes significant
items of income and expenditure on accrual basis.
2. FIXED ASSETS
Fixed Assets are stated at cost. Cost includes purchase price net of
excise duty and taxes recoverable, where claimed, interest on amount
borrowed for acquisition of assets, for the period up to the date the
asset is ready to be put to use and incidental expenses related to
bringing the assets to working condition for their intended use.
Capital work in progress is stated at cost. Cost includes expenses
incurred during preoperative / installation period, cost of capital
goods in transit and advances to suppliers.
3. DEPRECIATION ON FIXED ASSETS
Depreciation on Fixed Assets has been provided on the Straight Line
Method at the rates prescribed in Schedule XIV to the Companies Act,
1956.
In respect of additions to the assets made during the year,
depreciation for the year is calculated from the date of such addition
(except in respect of those assets costing up to Rs.5,000/- which are,
depreciated 100% in the year of addition). Depreciation on assets
disposed off during the year is charged up to the date of disposal.
4. INVENTORY VALUATION
Raw materials are valued at cost, which is determined on First In First
Out basis. Cost includes the purchase price, duties and taxes (net of
duties and taxes recoverable).
Work in progress is valued at factory cost consisting of direct
material and labour cost together with related factory overheads.
Finished goods manufactured by the Company are valued at lower of cost
or net realizable value.
5. INVESTMENTS
Long-term investments are valued at cost less provision for diminution
in value, if the diminution is other than temporary.
6. SUNDRYDEBTORS/LOANS AND ADVANCES
Sundry Debtors and Loans and Advances are stated after making adequate
provision for doubtful debts / advances.
7. FOREIGN EXCHANGE TRANSACTIONS
Transactions in foreign currencies are recorded at the rate of exchange
prevailing on the date of the transaction and subsequent gains / losses
are recognized on realization.
Monetary assets and liabilities relating to foreign currency
transactions remaining unsettled at the end of the year are translated
at year-end rates. The difference in translation of monetary assets and
liabilities on foreign exchange transactions are recognized in the
Profit and Loss Account for the year.
8. REVENUE RECOGNITION
Revenue from sale of goods is recognized on dispatch to customers or
duly authorized agent or transporter. Sales are net of sales tax
recovered, sales returns, trade discounts, rebates and allowances.
9. EMPLOYEE BENEFITS
Employee benefits comprise payments under defined contribution plans
like provident fund and family pension. Payments under defined
contribution plans are charged to the profit and loss account. The
liability in respect of defined benefit schemes like gratuity and leave
encashment benefit on retirement is provided on the basis of actuarial
valuation at the end of each year.
10. RESEARCH AND DEVELOPMENT
Revenue Expenditure on Research and Development is charged under the
respective heads of account. Capital Expenditure on Research and
Development is included as part of Fixed Assets and depreciated on the
same basis as the other Fixed Assets.
11. IMPAIRMENT OF ASSETS
An asset 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.
12. INCOME TAX
Income taxes have been computed using the tax effect accounting method,
where taxes are accrued in the same period as the related revenue and
expenses. . Deferred tax assets and liabilities are recognized for the
expected future tax consequences attributable to timing differences
between the taxable income and the accounting income for a period.
Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which the
timing differences are expected to be recovered or settled. The effect
of changes in tax rates on deferred tax assets and liabilities is
recognized in the statement of income in the period of change. Deferred
tax assets are recognized only to the extent management is virtually
certain as to the sufficiency of future taxable income against which
the deferred tax asset can be realized.
13. PROVISIONS AND CONTINGENCIES
Contingencies are recorded when it is probable that a liability will be
incurred and the amount can be reasonably estimated. Where no reliable
estimate can be made as to the outcome of an event, a disclosure is
made as contingent liability. Contingent assets are not recognised in
the accounts.
A provision is recognized when the company has present obligation as a
result of a past event and it is probable that an outflow of resources
will be required to settle the same. Provisions are determined based on
the best estimates required to settle the obligation at the balance
sheet date.
14. EARNING PER SHARE
The basic earnings per share is computed by dividing the net profit
after tax for the year by the weighted average number of equity shares
outstanding during the year. For the purpose of calculating diluted
earnings per share, net profit after tax for the year and the weighted
average number of shares outstanding during the year are adjusted for
the effects of all dilutive potential equity shares.
15. LEASES
Operating lease:
Lease where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased term is classified as operating
lease. Operating lease payments are recognized as an expense in the
Profit and Loss Account.
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