I) BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The financial statements have been prepared to comply in all material
respects with the notified accounting standards by Companies Accounting
Standards Rules, 2006 and the relevant provisions of the Companies Act,
1956. The financial statements have been prepared under the historical
cost convention on an accrual basis. The accounting policies applied by
the company are consistent with those used in the previous year.
II) Revenue Recognition
Revenue/Income and Cost/Expenditure are generally accounted on accrual
basis as they are earned or incurred. Incentives from various
government agencies (for which the company is entitled under different
schemes of the Government) are accounted for in the year of
eligibility.
III) Use of Estimates The preparation of financial statements requires
management to make certain estimates and assumptions that effects the
amounts reported in the financial statements and notes thereto.
Difference between actual results and estimates are recognized in the
period in which the results are known/ materialized.
IV) Fixed Assets and Depreciation Fixed Assets
Fixed Assets are stated at cost of construction/ acquisition less
accumulated depreciation and impairment losses. Cost comprises Purchase
price and all other Costs of bringing the assets to its working
condition for intended use. Financial costs relating to acquisition of
qualifying fixed assets are also included to the extent they relate to
the period till such assets are ready to be put to use. Pre-operative
expenses for major projects are also capitalised, where appropriate
Depreciation
Depreciation on fixed assets is provided on straight line method in the
manner and at the rates specified in schedule XIV to the Companies Act,
1956.
Impairment Loss
Company has reviewed its future earning of its cash generating unit as
on 31st March 2014 in accordance with the accounting standard issued by
'The Institute of Chartered Accountant of India'. Since the carrying
amount of the assets does not exceed the future recoverable amount,
consequently, no adjustment is considered necessary by the Management.
V) Inventories
Inventories are valued at lower of cost or estimated net realizable
value. The basis of determination of cost for different categories of
inventories are as follows:
Raw Material , Store and spares At lower of cost or net realizable
value on first-in first-out basis Finished Goods At lower of cost or
net realizable value
Work in Progress The cost includes - Material cost, Labour and
appropriate share of
manufacturing and other costs incurred in bringing the inventories to
the present location and condition.
VI) Sales
Sales/Sales Returns are accounted for on dispatch of goods from/receipt
of goods in the factory to/from the customers or Rejection. Sales are
net of returns, if any, rejection of goods.
VII) Custom Duty and Excise Duty
Custom Duty and Excise Duty is accounted for at the time of dispatch of
goods from factory.
VIII) Foreign Exchange Transactions
a) Transactions denominated in foreign currencies are recorded at the
exchange rates prevailing on the date of transaction.
b) At the year end, monetary items denominated in foreign currencies
other than those covered by forward contracts are converted into rupee
equivalent at the year-end exchange rates.
c) All exchange differences arising on settlement / conversion of
foreign currency transactions are recorded in the Profit and loss
account
d) In respect of transactions covered by forward exchange contracts,
the difference between
the forward rate and the exchange rate at the date of the transaction
is recognized as income or expense over the period of contract.
IX ) Research & Development
Revenue expenditure on research & Development (other than Cost of
Assets acquired) are charged to Profit and Loss Account in the year in
which they are incurred.
X ) Employee Benefits
a) Short Term Employee Benefit :All employees' benefits payable within
twelve months of rendering of services are classified as short term
benefits. Such benefits include salaries, wages, bonus, short term
compensated absences, earned leave, awards, exgratia etc. and the same
are recognized in the period in which the employee renders the related
service.
b) Post Employment Benefits:
i) Defined Contribution Plan:
The Company's approved superannuation scheme, provident Fund Scheme are
defined contribution plans. The contribution paid / Payable under the
schemes are recognized during the period in which the employee renders
the related services.
ii) Defined Benefit Plan:
The employee's gratuity fund scheme is company's defined benefit plan.
The present value of the obligation under such defined benefit plan is
determined based on the actuarial valuation using the Project Unit
Credit Method as at the date of the Balance Sheet. In case of Funded
plans, the fair value of the plan asset is reduced from the gross
obligation under the defined benefits plan, to recognize the obligation
on the net basis.
XI ) Deferred Revenue Expenditure
Processing charges and Syndication paid for obtaining Term Loans for
repayment of High cost loans has been treated as Deferred Revenue
Expenditure and are written off over the period of loan.
XII) Taxation
Current tax is determined as the amount of tax payable in respect of
taxable income for the period based on applicable tax rate and laws.
Deferred tax is recognized on timing difference, being the difference
between taxable income and accounting income that originates in one
period and are capable of reversal in one or more subsequent periods
and is measured using tax rate and laws that have been enacted or
substantively enacted by the Balance Sheet date. Deferred tax assets
are reviewed at each Balance Sheet date.
XIII) Expenditure during Construction Period
In the case expansion of existing/New units, all pre-operating
expenditure especially for the project, incurred up to the date of
installation, are capitalized and added pro rata to the cost of fixed
assets.
XIV) Borrowing costs:
Borrowing costs attributable to the acquisition and construction of
qualifying assets are added to the cost up to the date when such assets
are ready for the intended use. The other borrowing costs are
recognized as expense in the period in which these are incurred.
XV) Prior Period & Extraordinary Items
Prior period, extra ordinary items and changes in accounting policies
having material impact on the financial affairs of the company are
disclosed.
XVI) Provision & Contingent Liabilities
The company recognises a provision when there is a present obligation
as a result of a past event that probably requires an outflow of
resources and a reliable estimate can be made of the amount of the
obligation. A disclosure for a contingent liability is made when there
is a possible obligation or a present obligation that may, but probably
will not, require an outflow of resources. Where there is a possible
obligation or a present obligation and the likelihood of outflow of
resources is remote, no provision or disclosure for contingent
liability is made.
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