Mar 31, 2010
A. Description of Business: The Company is engaged in Hydrogenation of
vegetable oils and the related products like Vanaspati and Refined oil.
b. Basis of preparation of financial statements: The financial
statements have been prepared under the historical cost convention, in
accordance with the Generally Accepted Accounting Principles (GAAP) and
as per the provisions of the Companies Act, 1956 as adopted
consistently by the company. All the Income and Expenditure having
material bearing on the financial statements are recognised on accrual
basis.
c. Use of Estimates: The preparation of the financial statements in
conformity with the GAAP requires that the management make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities as of the date of
the financial statements, and the reported amount of revenues and
expenses during the reported period. Actual results could differ from
those estimates.
d. Revenue Recognition: The Company follows the mercantile system of
accounting and recognizes income & expenditure on accrual basis except
gratuities. The accounts are prepared on the historical cost basis, as
a going concern & are consistent with the generally accepted accounting
principles. The gratuity is accounted for on payment basis.
e. Fixed Assets: Fixed assets are capitalized at cost of acquisition
including directly attributable cost of bringing the assets to their
working condition for intended use and also including an appropriate
share of incidental expenditure during construction/installation.
f. Depreciation: Depreciation has been provided on the straight-line
method in accordance with schedule XIV to the Companies Act, 1956.
However, in case of trucks, we have discontinued to provide
depreciation on those trucks whose written down value has already
reached at about 5% of the Gross Block.
g. Investments: Investments that are readily realizable and intended
to be held for not more than a year are classified as Current
Investment. All other investments are classified as Long Term
Investment. Long-term investments are valued at cost, less provision
for permanent diminution in the value of investment. Current
Investments are valued at cost or market value whichever is lower.
h. Foreign Currency Transactions: Transactions in foreign currencies
are recorded at the exchange rates prevailing on the date of
transaction. The exchange differences arising from foreign currency
transactions are recognized in the profit & loss accounts. Monetary
assets and liabilities denominated in foreign currency are translated
at the rates of exchange at the balance sheet date and resultant gain
or loss is recognized in the profit and loss account. Premium in
respect of forward foreign exchange contracts are recognised over the
life of the Contracts.
i. Accounting for Taxes on Income: Current tax is determined in
accordance with the provisions of the Income Tax Act, 1961. Deferred
Tax is recognized, subject to the consideration of prudence, 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 and
liabilities are measured considering the tax rates and tax laws enacted
or substantively enacted by the Balance Sheet date, in accordance with
Accounting Standard - 22 of the Institute Of Chartered Accountants of
India. Deferred tax assets are recognized based on managements
judgement as to the sufficiency of future taxable income against which
the deferred tax assets can be realized.
j. Inventories:
1. Raw material, Chemicals and consumables are valued at cost or net
realizable value whichever is lower, cost being purchase price on FIFO
basis plus other expenses incurred in bringing the inventories to their
present location and condition, including duties (other than those
subsequently recoverable from the taxation authorities.)
2. Work in progress is valued at cost or net realizable value
whichever is lower, cost i.e. Raw materials, Chemicals & Consumables at
100% of the cost & other direct expenses at 75% of the unit cost.
3. Finished goods are valued at Net realizable value.
4. Stores spares and components are taken at estimated value.
k. Retirement Benefit:
1. Provident Fund: The Companys contribution to the fund is charged to
revenue as required under the statue/rules.
2 Leave Encashment: Provision for leave is made on the basis of leaves
accrued to the employees during the financial year.
3. Gratuity: Gratuity is accounted for on payment basis.
l. Impairment of Assets:
As at each Balance Sheet date an assessment is made whether any
indication exists that an asset has been impaired, if any such
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.
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