B. SIGNIFICANT ACCOUNTING POLICIES
1. Accounting Convention
The financial statement are prepared under the historical cost convention on the “Accrual Concept” and Going Concern
assumption of accountancy in accordance with the accounting principles generally accepted in India and comply with the
accounting standards as prescribed by Companies (Accounting Standard) Rules, 2006 and with the relevant provisions of the
Companies Act, 2013 and rules made there under.
2. Use of Estimates
The preparation of financial statements requires management to make estimates and assumptions that affect the reported
amount of assets and liabilities on the date of the financial statement 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 results are
known/materialized.
3. Property, Plant and Equitpment
Property, Plant and Equitpment are stated at cost less accumulated depreciation and impairment losses, if any. Cost comprises
of all expenses incurred to bring the assets to its present location and condition. Borrowing cost directly attributable to the
acquisition /construction are included in the cost of fixed assets. Adjustments arising from exchange rate variations attributable
to the fixed assets are capitalized.
In case of new projects / expansion of existing projects, expenditure incurred during construction / preoperative period
including interest and finance charge on specific / general purpose loans, prior to commencement of commercial production
are capitalized. The same are allocated to the respective t on completion of construction / erection of the capital project / fixed
assets.
Subsequent expenditures related to an item of tangible asset are added to its book value only if they increase the future
economic benefits from the existing asset beyond its previously assessed standard of performance.
Capital assets (including expenditure incurred during the construction period) under erection / installation are stated in the
Balance Sheet as “Capital Work in Progress.”
4. Impairment of Assets
At each balance sheet date, the Company reviews the carrying amount of its fixed assets to determine whether there is any
indication that those assets suffered an impairment loss. If any such indication exists, the recoverable amount of the assets is
estimated in order to determine the extent of impairment loss. Recoverable amount is the higher of an asset’s net selling pri ce
and value in use. In assessing value in use, the estimated future cash flows expected from the continuing use of the assets and
from its disposal are discounted to their present value using a pre-tax discount rate that reflects the current market assessments
of time value of money and the risks specific to the assets.
5. Depreciation
All fixed assets, except capital work in progress, are depreciated on SLM Method. Depreciation is provided based on useful
life of the assets as prescribed in Schedule II to the Companies Act, 2013. Depreciation on additions to / deletions from fixed
assets made during the period is provided on pro-rata basis from / up to the date of such addition /deletion as the case may be.
6. Investments
Investments are classified into current investments and non-current investments. Current investments i.e. investments that are
readily realizable and intended to be held for not more than a year valued at cost. Any permanent reduction in the carrying
amount or any reversals of such, reductions are charged or credited to the Statement of Profit & loss Account.
Non-current investments are stated at cost. Provision for dimunintion in the value of these investments is made only if such
decline is other than temporary, in the opinion of the management.
7. Inventories
Inventories consist of Raw Material/Semi Finished Goods & Finished Goods are valued at Cost or Net Realizable Value,
whichever is lower.
8. Revenue Recognition
Revenue from the operations is recognized on generally accepted accounting principal and when it is earned and no significant
uncertainty exists as to its ultimate collection and includes taxes, wherever applicable.
The capital gain on sale of investments if any are recognized on completion of transaction. No notional profit/loss are
recognized on such investments.
Interst income is recognized on time proportion basis, when it is accured and due for payment.
9. Borrowing Cost
Borrowing cost that are attributable to the acquisition, construction or production of qualifying assets are capitalized as part of
the cost of such assets. A qualifying assets is one that necessarily takes a substantial period of time to get ready for its intended
use. All other borrowing costs are charged to revenue.
10. Employee Benefits
Short - term employee benefits are recognized as an expense at the undiscounted amount in the profit & loss account of the
year in which the related service is rendered.
Post employment and other long term employee benefits are recognized as an expense in the profit & loss account for the year
in which the liabilities are crystallized.
11. Taxes on Income
Income tax expenses for the year comprises of current tax and deferred tax. Current tax provision is determined on the basis of
taxable income computed as per the provisions of the Income Tax Act. Deferred tax is recognized for all timing differences
that are capable of reversal in one or more subsequent periods subject to conditions of prudence and by applying tax rates that
have been substantively enacted by the balance sheet date.
12. Foreign Currency Translation
a) Transaction denominated in foreign currencies are recorded at the exchange rate prevailing at the date of the
transaction. Monetary assets and liabilities denominated in foreign currencies at the year end are restated at closing
rate..
b) Any exchange difference on account of settlement of foreign currency transaction and restatement of monetary assets
and liabilities denominated in foreign currency is recognized in the statement of Profit & loss Account.
|