| (i) Basis of Accounting
(i) The financial statements are prepared under historical cost
convention, on accrual basis and are in accordance with the
requirements of the Companies act, 1956. (ii) The company generally
follows mercantile system of accounting and recognizes significant item
of income and expenditure on accrual basis.
(iii) Accounting policies not specifically referred to otherwise are in
consonance with generally accepted accounting principles.
(II) Fixed Assets & Depreciation :
Fixed Assets are stated at cost less accumulated depreciation. Cost of
acquisition is inclusive of incidental expenses. Depreciation is
charged on a pro-rata basis at the Straight line method at the rates
prescribed in Schedule XIV of the Companies Act 1956.
(III) Investment :
All Investments are long-term investments. Provision for permanent
diminution in value of investment made if it is otherwise than
temporary.
(IV) Inventories :
Raw Materials and finished goods are valued at cost or net realizable
value whichever is lower.
(V) Revenue Recognition :
(i) SALES - Sales are exclusive of all the duty, forwarding charges.
(ii) Interest and consignment commission incomes are accounted on
accrual basis. (iii) Dividend income are realized on cash basis. (iv)
Vatav/Kasar Charges are recognised on settlement of account. (v)
Commodities settlement income/charges recognize on settlement of dues.
(vi) Write off balances are as per management opinion.
(VI) Retirement Benefits :
Gratuity, other ex-gratia benefits and leave encashment are accounted
on cash basis. Provisions for Provident Fund, Super annuation, pension
and ESIC are not applicable to the company as number of employees are
below statutory limit.
(VII) Preliminary Expenses :
Preliminary expenses and Share issue expenses have been amortized over
a period of years as defined in section 35D of Income Tax Act, 1961.
(VIII) Income tax Expenses :
Income tax expenses comprise current tax and deferred tax charge or
credit.
- Current Tax : The current charge for income taxes is calculated in
accordance with the relevant tax regulations applicable to the company.
- Deferred Tax : In accordance with the Accounting Standards - 22
Accounting for taxes on Income, issued by the Institute of Chartered
Accountants of India, Deferred tax resulting from timing difference
between book and tax profits is accounted for, at the current rate of
tax, to the extent that the timing differences are expected to
crystallize.
Deferred tax assets arising on account of brought forward losses and
unabsorbed depreciation are recognized only when there is virtual
certainty supported by convincing evidence that such assets will
realized as a principle of prudence. Deferred tax assets arising on
other temporary timing differences are recognized only if there is a
reasonable certainty of realization.
(IX) Provision, Contingent Liabilities and Contingent Assets :
Provisions are recognized when there is a present obligation as a
result of past events and it is probable that there will be an
outflow of resources to settle the obligation that can be reliably
estimated. Contingent Liabilities are not recognized but are
disclosed in the notes. Contingent Assets are neither recognized
nor disclosed.
(X) Provision for Bad and Doubtful Debts/Loans and Advances :
Provision for debtor Bad and Doubtful debts, Loans and Advances are
provided as per the management opinion and their discretion.
(XI) Impairment of Assets :
Impairment loss is charged to the profit and loss account in the period
in which, an asset is identified as impaired, when the carrying value
of the asset exceeds its recoverable value. The impairment loss
recognized in the prior accounting periods is reversed if there has
been a change in the estimate of recoverable amount.
(XII) Borrowing Cost :
Borrowing cost attributable to acquisition, construction or production
of qualifying assets are capitalized as part of the cost of that
assets, till the assets is ready for use. Other Borrowing costs are
recognized as an expense in the period in which these are incurred.
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