Mar 31, 2015
2.1 Basis of accounting and preparation of financial statements
These financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards notified under
section 211(3C) & the other relevant provisions of the Companies Act,
2013, other pronouncements of the Institute of Chartered Accountants of
India and guidelines issued by the Securities and Exchange Board of
India(SEBI).
All the 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 Companies Act, 2013. Based on the nature of products and
the time between the acquisition of assets for processing and their
realization in cash and cash equivalent, the Company has ascertained
its operating cycle to be less than 12 months.
2.2 Use of estimates
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognised in the periods in which
the results are known / materialise.
2.3 Cash and cash equivalents (for purposes of Cash Flow Statement)
Cash comprises cash on hand and demand deposits with banks. Cash
equivalents are short-term balances (with an original maturity of three
months or less from the date of acquisition), highly liquid investments
that are readily convertible into known amounts of cash and which are
subject to insignificant risk of changes in value.
2.4 Cash flow statement
Cash flows are reported using the indirect method, whereby loss before
extraordinary items and tax is adjusted for the effects of transactions
of non-cash nature, any deferrals or accruals of past or future cash
receipts or payments and item of income or expenses associated with
investing or financing cash flows. The cash flows from operating,
investing and financing activities of the Company are segregated.
2.5 Depreciation and amortisation
Depreciation has been provided on the written down value method as per
the rates prescribed in Schedule II of the Companies Act, 2013 and AS 6
state that Depreciation is the systematic allocation of the depreciable
amount of an asset over its useful life. The depreciable amount of an
asset is the cost of an asset or other amount substituted for cost,
less its residual value. The useful life of an asset is the period over
which an asset is expected to be available for use by an entity, or the
number of production or similar units expected to be obtained from the
asset by the entity. The useful life of an asset shall not ordinarily
different from the useful life specified in Part C and the residual
value of an asset shall not be more than five per cent of the original
cost of the asset.'
2.6 Revenue recognition
(a) 'Sales are recognised, net of returns and trade discounts, on
transfer of significant risks and rewards of ownership to the buyer,
which generally coincides with the delivery of goods to customers.
(b) Gross Sales (net of Return) include VAT/CST, Wherever applicable.
(c) Other Income is recognized on accrual basis.
(d) Dividend Income is recognized when right to receive dividend is
established.
(e) Interest Income is recognized when no significant uncertainity as
to its realization exists and is accounted for on time propotion basis
at contracted rates.
(f) Scrap, Salvage/Waste materials and sweepings are accounted for on
realization.
(g) Insurance and other miscellaneous claims are recognized on
receipt/acceptance of claim. Contractual pass throught incentives,
benefits, etc. are recognized on receipt basis.
2.7 Tangible fixed assets, Intangible assets and work-in-progress
Fixed assets are stated at cost, less accumulated depreciation and
impairment, if any. Direct costs are capitalized until fixed assets are
ready for use. Capital work-in-progress comprises of the cost of fixed
assets that are not yet ready for their intended use at the reporting
date. Intangible assets are recoded at the consideration paid for
acquisition of such assets and are carried at cost less accumulated
amortization and impairment.
2.8 Investments
Long-term investments are carried individually at acquisition cost less
provision for diminution, other than temporary, in the value of long
term investments.
2.9 Borrowing costs
Borrowing costs relating to the acquisition / construction of
qualifying assets are capitalised until the time all substantial
activities necessary to prepare the qualifying assets for their
intended use are complete. A qualifying asset is one that necessarily
takes substantial period of time to get ready for its intended use.
Capitalisation of borrowing costs is suspended and charged to the
Statement of Profit and Loss during extended periods when active
development activity on the qualifying assets is interrupted.
2.10 Inventories
Finished goods are valued at the lower of cost and net realisable
value.
2.11 Earnings per share
Basic earnings per share is computed by dividing the profit / (loss)
after tax (including the post tax effect of extraordinary items, if
any) by the weighted average number of equity shares outstanding during
the year. Diluted earnings per share is computed by dividing the
profit / (loss) after tax (including the post tax effect of
extraordinary items, if any) as adjusted for dividend, interest and
other charges to expense or income relating to the dilutive potential
equity shares, by the weighted average number of equity shares
considered for deriving basic earnings per share and the weighted
average number of equity shares which could have been issued on the
conversion of all dilutive potential equity shares. Potential equity
shares are deemed to be dilutive only if their conversion to equity
shares would decrease the net profit per share from continuing ordinary
operations. Potential dilutive equity shares are deemed to be converted
as at the beginning of the period, unless they have been issued at a
later date.
2.12 Taxes on income
'Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the provisions of the Income Tax
Act, 1961.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which
gives future economic benefits in the form of adjustment to future
income tax liability, is considered as an asset if there is convincing
evidence that the Company will pay normal income tax. Accordingly, MAT
is recognised as an asset in the Balance Sheet when it is probable that
future economic benefit associated with it will flow to the Company.
Deferred tax is recognised on timing differences, being the differences
between the taxable income and the accounting income that originate in
one period and are capable of reversal in one or more subsequent
periods. Deferred tax is measured using the tax rates and the tax laws
enacted or substantially enacted as at the reporting date. Deferred tax
liabilities are recognised for all timing differences. Deferred tax
assets in respect of unabsorbed depreciation and carry forward of
losses are recognised only if there is virtual certainty that there
will be sufficient future taxable income available to realise such
assets. Deferred tax assets are recognised for timing differences of
other items only to the extent that reasonable certainty exists that
sufficient future taxable income will be available against which these
can be realised. Deferred tax assets and liabilities are offset if such
items relate to taxes on income levied by the same governing tax laws
and the Company has a legally enforceable right for such set off.
Deferred tax assets are reviewed at each Balance Sheet date for their
realisability.
Current and deferred tax relating to items directly recognised in
equity are recognised in equity and not in the Statement of Profit and
Loss.
2.13 Provisions and contingencies
A provision is recognised when the Company has a present obligation as
a result of past events and it is probable that an outflow of resources
will be required to settle the obligation in respect of which a
reliable estimate can be made. Provisions (excluding retirement
benefits) are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
Balance Sheet date. These are reviewed at each Balance Sheet date and
adjusted to reflect the current best estimates. Contingent liabilities
are disclosed in the Notes.
2.14 Retirement benefits
For defined benefit plans in the form of gratuity fund and
post-employment medical benefits, the cost of providing benefits is
determined using the Projected Unit Credit method, with actuarial
valuations being carried out at each Balance Sheet date. Actuarial
gains and losses are recognised in the Statement of Profit and Loss in
the period in which they occur. Past service cost is recognised
immediately to the extent that the benefits are already vested and
otherwise is amortised on a straight-line basis over the average period
until the benefits become vested. The retirement benefit obligation
recognised in the Balance Sheet represents the present value of the
defined benefit obligation as adjusted for unrecognised past service
cost, as reduced by the fair value of scheme assets. Any asset
resulting from this calculation is limited to past service cost, plus
the present value of available refunds and reductions in future
contributions to the schemes.
2.15 Foreign currency transactions
Foreign currency transactions are recorded on the basis of exchange
rates prevailing on the date of the transactions.Monetary assets and
liabilities denominated in foreign currencies as at the balance sheet
date are traslated at the closing exchange rates on that date.Exchange
differences arising on foreign exchange transactions during the year
and on restatement of monetary assets and liability are recognized in
the profit and loss account of the year.
2.16 Impairment of Assets
An asset is treated as impaired when the carrying cost of asset 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 recognised in prior accounting periods is reversed
if there has been a change in the estimate of recoverable account in
subsequent period.
2.17 Share issues expenses
Share issue expenses and redemption premium are adjusted against the
Securities Premium Account, to the extent balance is available for
utilisation in the Securities Premium Account. The balance of share
issue expenses is carried as an asset and is amortised over a period of
5 years from the date of the issue of shares.
2.18 Service tax input credit
Service tax input credit is accounted for in the books in the period in
which the underlying service received is accounted and when there is no
uncertainty in availing / utilising the credits.
2.19 Identification of segments
The operations of the company predominantly comprises of Trading
Activity of Water Treatment system.This activity constitutes the
primary segment and is the only reportable segment.
2.20 Preliminary Expenses
The balance of Preliminary expenses is carried as an Other Current
asset and is amortised over a period of 5 years from the date of the
issue of shares.
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