Accounting Policies of Gujarat Raffia Industries Ltd. Company

Mar 31, 2014

1) Method of Accounting :

The Financial Statements are prepared as per Historical Cost Convention on "Accrual Concept" and in compliance, in all material aspects, of accountancy in accordance with the Generally Accepted Accounting Principles in India, applicable provisions of the Companies Act 1956, the applicable Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 by the Central Government or any other relevant provisions of the Companies Act, 1956. All Income and Expenditures having material bearing on the Financial Statements are recognized on accrual basis.

Based on the nature of the 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) Use of Estimates :

The preparation of the Financial Statements in conformity of Accounting Standard generally accepted in India requires, the management to make estimates and assumptions that affect the reported amount of Assets and Liabilities and disclosure of Contingent Liabilities as 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 / materialized.

3) Revenue Recognition :

A. Revenue from sale of goods is recognized when significant risks and rewards of ownership of the goods have been passed to the buyer. Sales are stated inclusive of Excise and Sales Tax and net of rebate and trade discount.

B. Service income is recognized as per the terms of contracts with the customers when the related services are performed or the agreed milestones are achieved and are net of service tax wherever applicable.

C. Dividend income is recognized when the unconditional right to receive the income is established.

D. Interest income is recognized on time proportionate method taking into accounts the amount outstanding and rate applicable.

E. Revenue in respect of other income is recognized when no significant uncertainty as to its determination or realization exists.

4) Fixed Assets :

A. Fixed Assets are stated at historical cost of acquisition/construction less accumulated depreciation (except free hold land, where no depreciation is charged) and impairment loss. Cost includes the purchase price (Net of Input tax credit received/ receivable or refundable taxes), and expenses directly attributable to assets to bring it to the factory and in the working condition for its intended use and pre-operative and project expenses for the period up to completion of construction/assets are put to use.

B. The loss or gain on exchange rates on long term foreign currency loans attributable to fixed assets, effective from April 1,2007 is adjusted to the cost of respective fixed assets.

C. Where the construction or development of any such asset requiring a substantial period of time to set up for its intended use, is funded by borrowings if any, the corresponding borrowing cost are capitalized up to the date when the asset is ready for its intended use.

D. Intangible Assets are reported at acquisition value with deductions for accumulated amortization and any impairment losses.

E. Capital work in progress includes cost of assets (Net of Input tax credit received/ receivable or refundable taxes) at sites, construction expenditure, advances made for acquisition of capital assets.

F. The expenditure incidental to the expansion/new projects are allocated to fixed assets in the year of the commencement of commercial production.

5) Depreciation :

A. Depreciation is provided on "Straight Line Method" on all assets (except freehold land, where no depreciation is provided) as per Section 205 (2) (b) of the Companies Act, 1956 at the rates prescribed in Schedule XIV thereto as amended from time to time.

B. Depreciation on impaired assets is calculated on its residual value, if any, on a systematic basis over its remaining useful life.

C. Depreciation on additions/disposals of the fixed assets during the year is provided on pro-rata basis according to the period during which assets are put to use.

D. Fixed assets costing Rs. 5000/- or less are fully depreciated in the year of acquisition.

6) Impairment of Assets :

The carrying value of assets of the Company''s cash generating units are reviewed for impairment annually at each Balance Sheet Date or more often if there is an indication of decline in value. If any indication of such impairment exists based on internal/external, the recoverable amounts of those assets are estimated and impairment loss is recognized, if the carrying amount of those assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the estimated future cash flows to their present value based on appropriate discount factor. The impairment loss recognized in prior accounting period is reversed if there has been a change in recoverable amount.

7) Investments :

Investments are classified as Long Term and Current Investments. Long Term Investments are valued at cost less provision for diminution other than temporary, in value, if any. Current Investments are valued at cost or fair value whichever is lower.

8) Inventories :

A. Raw Materials, Stores and Spare Parts, Packing Materials, Finished Goods and Works-in-Progress are valued at lower of cost and net realizable value after providing for obsolescence, if any.

B. Cost [Net of Input tax credit availed] of Raw Materials, Stores and Spare Parts, Packing Materials and Finished Goods are determined on FIFO Method.

C. Cost of Finished Goods and Works-in-Progress is determined by taking material cost [Net of Input tax credit availed], labour and relevant appropriate overheads using the absorption costing method and other costs incurred in bringing them to their respective present location and condition.

9) Employee Benefit :

(a) Short Term :

Short Term employee benefits are recognized as an expense at the undiscounted amount expected to be paid over the period of services rendered by the employees to the company.

(b) Long Term :

The Company has both defined contribution and defined benefit plans. These plans are financed by the Company in the case of defined contribution plans.

(c) Defined Contribution Plans :

These are plans in which the Company pays pre-defined amounts to separate funds and does not have any legal or informal obligation to pay additional sums. These comprise of contributions to Employees Provident Fund. The Company''s payments to the defined contribution plans are reported as expenses during the period in which the employees perform the services that the payment covers.

(d) Defined Benefit Plans :

Expenses for defined benefit i.e. gratuity payment plans are calculated as at the balance sheet date by independent actuaries in the manner that distributes expenses over the employees working life. These commitments are valued at the present value of the expected future payments, with consideration for calculated future salary increases, using a discounted rate corresponding to the interest rate estimated by the actuary having regard to the interest rate on Government Bonds with a remaining term i.e. almost equivalent to the average balance working period of employees.

(e) Leave Liability :

The employees of the company are entitled to leave as per the leave policy of the company. The liability on account of accumulated leave as on last day of the accounting year is recognized as at the balance sheet date.

(f) Termination Benefits/Other Long Term Benefits :

Termination benefits are recognized as and when incurred. Other long term employee benefits are recognized in the same manner as defined benefit plans.

10) Central Excise Duty :

A. Excise duty is accounted gross of Cenvat benefit availed on inputs, fixed assets and eligible services.

B. Excise duty is accounted on the basis of both, payments made in respect of goods cleared as also provision made for goods lying in stock/bonded warehouses.

11) Foreign Currency Transactions :

A. The transactions in foreign currencies on revenue accounts are stated at the rates of exchange prevailing on the dates of transactions.

B. Assets and liabilities (monetary items) in foreign currencies outstanding at the close of year are, converted in Indian currency at the appropriate rate of exchange prevailing on the date of the balance sheet. The resultant gain or loss is accounted during the year.

C. The net gain or loss on account of exchange differences either on settlement or on translation of short term monetary items is recognized in the Profit and Loss Account.

D. The net gain or loss on account of exchange differences either on settlement or on translation of short term monetary.

E. The net gain or loss on account of exchange differences either on settlement or on translation of long term monetary items including long term forward contracts is recognised under "Foreign Currency Monetary Items Translation Difference Account" [FCMITDA], except in case of foreign currency loans taken for funding of fixed assets, where such difference is adjusted to the cost of respective fixed assets. The FCMITDA is amortized during the tenure of loans but not beyond March 31,2020.

F. Investments in foreign subsidiaries are recorded in Indian Currency at the rates of exchange prevailing at the time when the investments were made.

G. The foreign currency assets and liabilities including forward contracts are restated at the prevailing exchange rates at the year end. The premium in respect of forward contracts is accounted over the period of the contract.

12) Borrowing Cost :

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

B. All other borrowing costs are charged to Profit and Loss Account in which they are incurred.

13) Earning per Share :

A. Basic earnings per share are calculated by dividing the net profit after tax for the year attributable to Equity Shareholders of the Company by the weighted average number of Equity Shares in issue during the year.

B. Diluted earnings per Share is calculated by dividing net profit attributable to equity Shareholders (after adjustment for diluted earnings) by average number of weighted equity shares outstanding during the year.

14) Provisions, Contingent Liabilities and Contingent Assets :

Provision is recognized when the Company has a present legal or constructive obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which reliable estimate can be made. Provisions (excluding long term benefits) are not discounted to its present value and are determined based on 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 not recognized but are disclosed in the notes to the Financial Statements. A contingent asset is neither recognized nor disclosed.

15) Taxation :

Current Tax :

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of Income Tax Act, 1961.

Deferred Tax :

Deferred Tax is recognized on timing differences being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets are not recognized on unabsorbed depreciation and carry forward of losses unless there is virtual certainly that sufficient future taxable income will be available against which such deferred tax assets can be realized.

16) Cash Flow Statement :

A. The Cash Flow Statement is prepared by the "Indirect Method" set out in Accounting Standard 3 on "Cash Flow Statements and presents the cash flows by operating, investing and financing activities of the Company.

B. Cash and Cash equivalents presented in the Cash Flow Statement consist of cash on hand and demand deposits with banks.

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Mar 31, 2013

1) Method of Accounting:

The Financial Statements are prepared as per Historical Cost Convention on "Accrual Concept" and in compliance, in all material aspects, of accountancy in accordance with the Generally Accepted Accounting Principles in India, applicable provisions of the Companies Act 1956, the applicable Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 by the Central Government or any other relevant provisions of the Companies Act, 1956. All Income and Expenditures having material bearing on the Financial Statements are recognized on accrual basis.

Based on the nature of the 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) Use of Estimates:

The preparation of the Financial Statements in conformity of Accounting Standard generally accepted in India requires, the management to make estimates and assumptions that affect the reported amount of Assets and Liabilities and disclosure of Contingent Liabilities as 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 / materialized.

3) Revenue Recognition:

A. Revenue from sale of goods is recognized when significant risks and rewards of ownership of the goods have been passed to the buyer. Sales are stated inclusive of Excise and Sales Tax and net of rebate and trade discount.

B. Service income is recognized as per the terms of contracts with the customers when the related services are performed or the agreed milestones are achieved and are net of service tax wherever applicable.

C. Dividend income is recognized when the unconditional right to receive the income is established.

D. Interest income is recognized on time proportionate method taking into accounts the amount outstanding and rate applicable.

E. Revenue in respect of other income is recognized when no significant uncertainty as to its determination or realization exists.

4) Fixed Assets:

A. Fixed Assets are stated at historical cost of acquisition/construction less accumulated depreciation (except free hold land, where no depreciation is charged) and impairment loss. Cost includes the purchase price (Net of Input tax credit received/ receivable or refundable taxes), and expenses directly attributable to assets to bring it to the factory and in the working condition for its intended use and pre-operative and project expenses for the period up to completion of construction/ assets are put to use.

B. The loss or gain on exchange rates on long term foreign currency loans attributable to fixed assets, effective from April 1, 2007 is adjusted to the cost of respective fixed assets.

C. Where the construction or development of any such asset requiring a substantial period of time to set up for its intended use, is funded by borrowings if any, the corresponding borrowing cost are capitalized up to the date when the asset is ready for its''intended use.

D. Intangible Assets are reported at acquisition value with deductions for accumulated amortization and any impairment losses.

E. Capital work in progress includes cost of assets (Net of Input tax credit received/ receivable or refundable taxes) at sites, construction expenditure, advances made for acquisition of capital assets.

F The expenditure incidental to the expansion/new projects are allocated to fixed assets in the year ot the commencement of commercial production.

5) Depreciation:

A. Depreciation is provided on "Straight Line Method" on all assets (except freehold land, where no depreciation is provided) as per Section 205 (2) (b) of the Companies Act, 1956 at the rates prescribed in Schedule XIV thereto as amended from time to time.

B. Depreciation on impaired assets is calculated on its residual value, if any, on a systematic basis over its remaining useful life.

C. Depreciation on additions/disposals of the fixed assets during the year is provided on pro-rata basis according to the period during which assets are put to use.

D. Fixed assets costing Rs. 5000/- or less are fully depreciated in the year of acquisition.

6) Impairment of Assets:

The carrying value of assets of the Company''s cash generating units are reviewed for impairment annually at each Balance Sheet Date or more often if there is an indication of decline in value. If any indication of such impairment exists based on internal/external, the recoverable amounts of those assets are estimated and impairment loss is recognized, if the carrying amount of those assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the estimated future cash flows to their present value based on appropriate discount factor. The impairment loss recognized in prior accounting period is reversed if there has been a change in recoverable amount.

7) Investments :

Investments are classified as Long Term and Current Investments. Long Term Investments are valued at cost less provision for diminution other than temporary, in value, if any. Current Investments are valued at cost or fair value whichever is lower.

8) Inventories:

A. Raw Materials, Stores and Spare Parts, Packing Materials, Finished Goods and Works-in-Progress are valued at lower of cost and net realizable value after providing for obsolescence, if any.

B. Cost [Net of Input tax credit availed] of Raw Materials, Stores and Spare Parts, Packing Materials and Finished Goods are determined on FIFO Method.

C. Cost of Finished Goods and Works-in-Progress is determined by taking material cost [Net of Input tax credit availed], labour and relevant appropriate overheads using the absorption costing method and other costs incurred in bringing them to their respective present location and condition.

9) Employee Benefit:

(a) Short Term

Short Term employee benefits are recognized as an expense at the undiscounted amount expected to be paid over the period of services rendered by the employees to the company.

(b) Long Term

The Company has both defined contribution and defined benefit plans. These plans are financed by the Company in the case of defined contribution plans.

(c) Defined Contribution Plans

These are plans in which the Company pays pre-defined amounts to separate funds and does not have any legal or informal obligation to pay additional sums. These comprise of contributions to Employees Provident Fund. The Company''s payments to the defined contribution plans are reported as expenses during the period in which the employees perform the services that the payment covers.

(d) Defined Benefit Plans

Expenses for defined benefit i.e. gratuity payment plans are calculated as at the balance sheet date by independent actuaries in the manner that distributes expenses over the employees working life. These commitments are valued at the present value of the expected future payments, with consideration for calculated future salary increases, using a discounted rate corresponding to the interest rate estimated by the actuary having regard to the interest rate on Government Bonds with a remaining term i.e. almost equivalent to the average balance working period of employees.

(e) Leave Liability:

The employees of the company are entitled to leave as per the leave policy of the company. The liability on account of accumulated leave as on last day of the accounting year is recognized as at the balance sheet date.

(f) Termination Benefits/Other Long Term Benefits:

Termination benefits are recognized as and when incurred. Other long term employee benefits are recognized in the same manner as defined benefit plans.

10) Central Excise Duty:

A. Excise duty is accounted gross of Cenvat benefit availed on inputs, fixed assets and eligible services.

B. Excise duty is accounted on the basis of both, payments made in respect of goods cleared as also provision made for goods lying in stock/bonded warehouses.

11) Foreign Currency Transactions:

A. The transactions in foreign currencies on revenue accounts are stated at the rates of exchange prevailing on the dates of transactions.

B. Assets and liabilities (monetary items) in foreign currencies outstanding at the close of year are, converted in Indian currency at the appropriate rate of exchange prevailing on the date of the balance sheet. The resultant gain or loss is accounted during the year.

C. The net gain or loss on account of exchange differences either on settlement or on translation of short term monetary items is recognized in the Profit and Loss Account.

D. The net gain or loss on account of exchange differences either on settlement or on translation of short term monetary

E. The net gain or loss on account of exchange differences either on settlement or on translation of long term monetary items including long term forward contracts is recognised under "Foreign Currency Monetary Items Translation Difference Account" [FCMITDA], except in case of foreign currency loans taken for funding of fixed assets, where such difference is adjusted to the cost of respective fixed assets. The FCMITDA is amortized during the tenure of loans but not beyond March 31, 2020.

F Investments in foreign subsidiaries are recorded in Indian Currency at the rates of exchange prevailing at the time when the investments were made.

G. The foreign currency assets and liabilities including forward contracts are restated at the prevailing exchange rates at the year end. The premium in respect of forward contracts is accounted over the period of the contract.

12) Borrowing Cost:

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

B. All other borrowing costs are charged to Profit and Loss Account in which they are incurred.

13) Earning per Share:

A. Basic earnings per share are calculated by dividing the net profit after tax for the year attributable to Equity Shareholders of the Company by the weighted average number of Equity Shares in issue during the year.

B. Diluted earnings per Share is calculated by dividing net profit attributable to equity Shareholders (after adjustment for diluted earnings) by average number of weighted equity shares outstanding during the year.

14) Provisions. Contingent Liabilities and Contingent Assets:

Provision is recognized when the Company has a present legal or constructive obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which reliable estimate can be made. Provisions (excluding long term benefits) are not discounted to its present value and are determined based on 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 not recognized but are disclosed in the notes to the Financial Statements. A contingent asset is neither recognized nor disclosed.

15) Taxation:

Current Tax

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of Income Tax Act, 1961.

Deferred Tax

Deferred Tax is recognized on timing differences being the difference between taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets are not recognized on unabsorbed depreciation and carry forward of losses unless there is virtual certainly that sufficient future taxable income wiil be available against which such deferred tax assets can be realized.

16) Cash Flow Statement:

A. The Cash Flow Statement is prepared by the "Indirect Method" set out in Accounting Standard 3 on "Cash Flow Statements" and presents the cash flows by operating, investing and financing activities of the Company.

B. Cash and Cash equivalents presented in the Cash Flow Statement consist of cash on hand and demand deposits with banks.

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Mar 31, 2012

1) Method of Accounting:

The Financial Statements are prepared as per Historical Cost Convention on "Accrual Concept" and in compliance, in all material aspects, of accountancy in accordance with the Generally Accepted Accounting Principles in India, applicable provisions of the Companies Act 1956, the applicable Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 by the Central Government or any other relevant provisions of the Companies Act, 1956. All Income and Expenditures having material bearing on the Financial Statements are recognized on accrual basis.

Based on the nature of the 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) Use of Estimates:

The preparation of the Financial Statements in conformity of Accounting Standard generally accepted in India requires, the management to make estimates and assumptions that affect the reported amount of Assets and Liabilities and disclosure of Contingent Liabilities as 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 / materialized.

3) Revenue Recognition:

A. Revenue from sale of goods is recognized when significant risks and rewards of ownership of the goods have been passed to the buyer. Sales are stated inclusive of Excise and Sales Tax and net of rebate and trade discount.

B. Service income is recognized as per the terms of contracts with the customers when the related services are performed or the agreed milestones are achieved and are net of service tax wherever applicable.

C. Dividend income is recognized when the unconditional right to receive the income is established.

D. Interest income is recognized on time proportionate method taking into accounts the amount outstanding and rate applicable.

E. Revenue in respect of other income is recognized when no significant uncertainty as to its determination or realization exists.

4) Fixed Assets:

A. Fixed Assets are stated at historical cost of acquisition/construction less accumulated depreciation (except free hold land, where no depreciation is charged) and impairment loss. Cost includes the purchase price (Net of Input tax credit received/ receivable or refundable taxes), and expenses directly attributable to assets to bring it to the factory and in the working condition for its intended use and pre-operative and project expenses for the period up to completion of construction/ assets are put to use.

B. The loss or gain on exchange rates on long term foreign currency loans attributable to fixed assets, effective from April 1, 2007 is adjusted to the cost of respective fixed assets.

C. Where the construction or development of any such asset requiring a substantial period of time to set up for its intended use, is funded by borrowings if any, the corresponding borrowing cost are capitalized up to the date when the asset is ready for its intended use.

D. Intangible Assets are reported at acquisition value with deductions for accumulated amortization and any impairment losses.

E. Capital work in progress includes cost of assets (Net of Input tax credit received/ receivable or refundable taxes) at sites, construction expenditure, advances made for acquisition of capital assets.

F The expenditure incidental to the expansion/new projects are allocated to fixed assets in the year of the commencement of commercial production.

5) Depreciation :

A. Depreciation is provided on "Straight Line Method" on all assets (except freehold land, where no depreciation is provided) as per Section 205 (2) (b) of the Companies Act, 1956 at the rates prescribed in Schedule XIV thereto as amended from time to time.

B. Depreciation on impaired assets is calculated on its residual value, if any, on a systematic basis over its remaining useful life.

C. Depreciation on additions/disposals of the fixed assets during the year is provided on pro-rata basis according to the period during which assets are put to use.

D. Fixed assets costing Rs. 5000/- or less are fully depreciated in the year of acquisition.

6) Impairment of Assets:

The carrying value of assets of the Company's cash generating units are reviewed for impairment annually at each Balance Sheet Date or more often if there is an indication of decline in value. If any indication of such impairment exists based on internal/external, the recoverable amounts of those assets are estimated and impairment loss is recognized, if the carrying amount of those assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the estimated future cash flows to their present value based on appropriate discount factor. The impairment loss recognized in prior accounting period is reversed if there has been a change in recoverable amount.

7) Investments :

Investments are classified as Long Term and Current Investments. Long Term Investments are valued at cost less provision for diminution other than temporary, in value, if any. Current Investments are valued at cost or fair value whichever is lower.

8) Inventories:

A. Raw Materials, Stores and Spare Parts, Packing Materials, Finished Goods and Works-in-Progress are valued at lower of cost and net realizable value after providing for obsolescence, if any.

B. Cost [Net of Input tax credit availed] of Raw Materials, Stores and Spare Parts, Packing Materials and Finished Goods are determined on FIFO Method.

C. Cost of Finished Goods and Works-in-Progress is determined by taking material cost [Net of Input tax credit availed], labour and relevant appropriate overheads using the absorption costing method and other costs incurred in bringing them to their respective present location and condition.

9) Employee Benefit:

(a) Short Term

Short Term employee benefits are recognized as an expense at the undiscounted amount expected to be paid over the period of services rendered by the employees to the company.

(b) Long Term

The Company has both defined contribution and defined benefit plans. These plans are financed by the Company in the case of defined contribution plans.

(c) Defined Contribution Plans

These are plans in which the Company pays pre-defined amounts to separate funds and does not have any legal or informal obligation to pay additional sums. These comprise of contributions to Employees Provident Fund. The Company's payments to the defined contribution plans are reported as expenses during the period in which the employees perform the services that the payment covers.

(d) Defined Benefit Plans

Expenses for defined benefit i.e. gratuity payment plans are calculated as at the balance sheet date by independent actuaries in the manner that distributes expenses over the employees working life. These commitments are valued at the present value of the expected future payments, with consideration for calculated future salary increases, using a discounted rate corresponding to the interest rate estimated by the actuary having regard to the interest rate on Government Bonds with a remaining term i.e. almost equivalent to the average balance working period of employees.

(e) Leave Liability:

The employees of the company are entitled to leave as per the leave policy of the company. The liability on account of accumulated leave as on last day of the accounting year is recognized as at the balance sheet date.

(f) Termination Benefits/Other Long Term Benefits:

Termination benefits are recognized as and when incurred. Other long term employee benefits are recognized in the same manner as defined benefit plans.

10) Central Excise Duty:

A. Excise duty is accounted gross of Cenvat benefit availed on inputs, fixed assets and eligible services.

B. Excise duty is accounted on the basis of both, payments made in respect of goods cleared as also provision made for goods lying in stock/bonded warehouses.

11) Foreign Currency Transactions:

A. The transactions in foreign currencies on revenue accounts are stated at the rates of exchange prevailing on the dates of transactions.

B. Assets and liabilities (monetary items) in foreign currencies outstanding at the close of year are, converted in Indian currency at the appropriate rate of exchange prevailing on the date of the balance sheet. The resultant gain or loss is accounted during the year.

C. The net gain or loss on account of exchange differences either on settlement or on translation of short term monetary items is recognized in the Profit and Loss Account.

D. The net gain or loss on account of exchange differences either on settlement or on translation of short term monetary

E. The net gain or loss on account of exchange differences either on settlement or on translation of long term monetary items including long term forward contracts is recognised under "Foreign Currency Monetary Items Translation Difference Account" [FCMITDA], except in case of foreign currency loans taken for funding of fixed assets, where such difference is adjusted to the cost of respective fixed assets. The FCMITDA is amortized during the tenure of loans but not beyond March 31, 2020.

F Investments in foreign subsidiaries are recorded in Indian Currency at the rates of exchange prevailing at the time when the investments were made.

G. The foreign currency assets and liabilities including forward contracts are restated at the prevailing exchange rates at the year end. The premium in respect of forward contracts is accounted over the period of the contract.

12) Borrowing Cost:

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

B. All other borrowing costs are charged to Profit and Loss Account in which they are incurred.

13) Earning per Share:

A. Basic earnings per share are calculated by dividing the net profit after tax for the year attributable to Equity Shareholders of the Company by the weighted average number of Equity Shares in issue during the year.

B. Diluted earnings per Share is calculated by dividing net profit attributable to equity Shareholders (after adjustment for diluted earnings) by average number of weighted equity shares outstanding during the year.

14) Provisions, Contingent Liabilities and Contingent Assets:

Provision is recognized when the Company has a present legal or constructive obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which reliable estimate can be made. Provisions (excluding long term benefits) are not discounted to its present value and are determined based on 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 not recognized but are disclosed in the notes to the Financial Statements. A contingent asset is neither recognized nor disclosed.

15) Taxation: Current Tax

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of Income Tax Act, 1961.

Deferred Tax

Deferred Tax is recognized on timing differences being the difference between taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets are not recognized on unabsorbed depreciation and carry forward of losses unless there is virtual certainly that sufficient future taxable income will be available against which such deferred tax assets can be realized.

16) Cash Flow Statement:

A. The Cash Flow Statement is prepared by the "Indirect Method" set out in Accounting Standard 3 on "Cash Flow Statements" and presents the cash flows by operating, investing and financing activities of the Company.

B. Cash and Cash equivalents presented in the Cash Flow Statement consist of cash on hand and demand deposits with banks.

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Mar 31, 2010

1) Basis of Preparation of Financial Statements.

The Financial Statements are prepared as per historical cost convention and in accordance with the Generally Accepted Accounting Principles in India, the provisions of the Companies Act 1956 and the applicable Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006. All Income and Expenditures having material bearing on the Financial statements are recognized on accrual basis.

2) Use of Estimates:

The preparation of the 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/ materialized.

3) Revenue Recognition:

Revenue is recognized only when it can be reliably measured and it is reasonable to expect ultimate collection. Sales are stated net of rebate and trade discount and excludes Central Sales Tax, State Value Added Tad. Divided income is recognized when the right to receive is established. Interest income is recognised on time proportion basis taking into account the amount outstanding and rate applicable.

4) Fixed Assets:

Tangible Fixed Assets acquired by the company are reported at acquisition value, with deduction for accumulated depreciation and impairment losses, if any. The acquisition value includes the purchase price (excluding refundable duties and taxes) and expenses directly attributable to assets to bring it to the factory and in the working condition for its intended use. Where the construction or development of any such asset requiring a substantial period of time to set up for its intended use, is funded by borrowings if any, the corresponding borrowing cost are capitalized up to the date when the asset is ready for its intended use.

Intangible Assets, if any, are reported at acquisition value with deductions for accumulated amortization and any impairment losses.

5) Depreciation:

Depreciation has been provided on Fixed Assets on Straight Line Method ad per the rates specified in schedule XIV of the Companies Act, 1956 as amended from time to time. Depreciation for addition/deletion from assets is calculated on pro-rata from the day of additions/deletion. Fixed Assets Costing Rs 5000/- or less are fully depreciated in the year of acquisition.

6) Impairment of Assets:

The Carrying value of assets of the Company's Cash generating units are reviewed for impairment annually or more often if there is an indication of decline in value. If any indication of such impairment exists, the recoverable amounts of those assets are estimated and impairment loss is recognized, if the carrying amount of those assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the estimated future cash flows to their present value based on appropriate discount factor. The impairment loss recognized in prior accounting period is reversed if there has been a change in recoverable amount.

7. Investments:

Investments are classified as Long Terms & Current Investments. Long Terms Investments are valued at cost less provision for diminution other than temporary in value, if any current Investments are valued at cost or fair value whichever is lower.

8. Inventories:

Items of Inventories are measured at lower of cost or net realizable value after providing for obsolescence. Cost of Finished Goods and Work-in-progress are determined using the absorption costing method. Cost of inventories comprises the cost of purchase, Cost of purchases, and other costs incurred in bringing them to their respective present location and condition. Cost of inventories are determined using FIFO method.

9) Employee Benefit:

(a) Short Term

Short Term employee benefits are recognized as an expense at the undiscounted amount expected to be paid over the period of services rendered by the employees to the company.

(b) Long Term

The Company has both defined contribution and defined benefit plans, of which some have assets in approved funds. These plans are financed by the company in the case of defined contribution plans.

(c) Defined Contribution Plans

These are plans in which the Company pays pre-defined amounts to separate funds and does not have any legal or informal obligation to pay additional sums. These comprise of contributions to Employees provident Fund. The Company's Payments to the defined contribution plans are reported as expenses during the period in which the employee perform the services that the payment covers.

(d) Defined Benefit Plans

Expenses for defined benefit gratuity payment plans are calculated as at the balance sheet date by independent actuaries in the manner that distributes expenses over the employees working life. These commitments are valued at the present value of the expected future payments, with consideration for calculated future salary increases, using a discounted rate corresponding to the interest rate estimated by the actuary having regard to the interest rate on Government Bonds with a remaining term i.e. almost equivalent to the average balance working period of employees.

10) Foreign Currency Transactions:

Transactions is foreign Currencies are translated to the reporting currency based on the exchange rate on the date of the transaction Exchange differences arising on settlement thereof during the year are recognized as income ore expenses in the profit and Loss Account.

Cash and bank balances receivables and liabilities (monetary items) in foreign currencies as at the year end are translated at closing-date rates, and unrealized translation differences are included in the profit and Loss Account.

11) Central Excise Duty:

Excise duty is accounted on the basis of both, payments made in respect of goods cleared as also provision made for goods lying in bonded warehouses.

12) Borrowing Cost:

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

13) Earnings per shares:

Basic earnings per share is calculated by dividing the net profit after tax for the year attributable to Equity Shareholders of the company by the weighted average number of Equity Shares in issue during the year. Diluted earning per share is calculated by dividing net profit attributable to equity shareholders (after adjustment for diluted earnings) by average number of weighted equity shares outstanding during the year.

14) Provisions, Contingent Liabilities and Contingent Assets:

A provision is recognized when the company has a present legal or constructive obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which reliable estimate can be made. provisions (excluding long term benefits) are not discounted to its present value and are determined based on 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 not recognized but are disclosed in the notes to the Financial Statements. A contingent asset is neither recognized nor disclosed.

15) Taxation on Income:

Current Tax

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of Income Tax Act, 1961.

Deferred Tax

Deferred Tax is recognised on timing differences being the difference between taxable income & accounting income that originate in one period & and capable of reversal in one or more subsequent periods. Deferred tax assets are not recognised on unabsorbed depreciation and carry forward of losses unless there is virtual certainly that sufficient future taxable income will be available against which such deferred tax assets can be realised.

16) Cash Flow Statement:

The Cash Flow Statement is prepared by the "Indirect method" set out in Accounting Standard 3 on "Cash Flow Statements" and presents the cash flows by operating, investing and financing activities of the company.

Cash and Cash equivalents presented in the Cash Flow statement consist of cash on hand and demand deposits with banks.