| a. Use of Estimates
The preparation of financial statements in conformity with Indian GAAP
requires the management to the judgments, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities, at the end of
the reporting period. Although these estimates are based on the
management's best knowledge of current events and actions, uncertainty
about these assumptions and estimates could result in the outcomes
requiring a material adjustment to the carrying amounts of assets or
liabilities in future periods.
b. Tangible fixed assets
Fixed assets are stated at cost, net of accumulated depreciation and
accumulated impairment losses, if any, The cost comprises purchase
price, borrowing cost if capitalization criteria are met and directly
attributable cost of bringing the assets to its working condition for
the intended use. Any trade discounts and rebates are deducted in
arriving at the purchase price.
Subsequent expenditure related to an item of fixed asset is added to
its book value only if it increases the future benefits from the
existing asset beyond its previously assessed standard of performance.
All other expenses on existing fixed assets, including day to day
repaired maintenance expenditure and cost of replacing parts, are
charged to the statement of profit and loss for the period during which
such expenses are incurred.
Gains or losses arising from de recognition of fixed assets are
measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognized in the statement of
profit & loss when the asset is de recognized.
d. Depreciation on Tangible Fixed Asset
Depreciation on fixed asset is calculated on Straight Line method using
the rates prescribed under the Schedule XIV to The Companies Act, 1956.
e. Investments
Investments, which are readily realizable and intended to be held for
not more than one year from the dale on which such investments are
made, are classified as current investments. All other investments are
classified as long- term investments.
f. Long term investments are carried at cost. However, provision for
diminution in value is to he made to recognize a decline other than
temporary in the value of investments.
h. Income Tax
Tax expense comprises current and deferred tax. Current income tax is
measured at the amount expected to be paid to the tax authorities in
accordance with the Income Tax Act. 1961 enacted in India and tax laws
prevailing in the respective tax jurisdiction where the company
operates. The tax rates and tax laws used to compute the amount are
those that are enacted, at the reporting dale.
Deferred tax assets and liabilities are measured using the tax rates
and tax laws that have been announced up to the Balance Sheet date.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to timing differences between the taxable
income and accounting income. The effect of tax rate change is
considered in the Profit & Loss Account of the respective year of
change.
i. Earnings per share.
Basic earnings per share arc computed by dividing the net profit after
tax by the weighted average number of equity shares outstanding during
the period.
j. Provisions and Contingent liabilities
A provision is recognized when the Company has a present obligation as
a result of past event. It is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of the obligation.
Provisions are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
reporting date. These estimates are reviewed at each reporting date and
adjusted to reflect the current best estimate.
Where no reliable estimate can be made, a disclosure is made as a
contingent liability. A disclosure for a contingent liability is also
made when there is a possible obligation that may, but probably will
not, require an outflow of resources. Where there is a possible
obligation or a present obligation in respect of which the likelihood
of outflow of resources is remote, no provision or disclosure is made.
K .Cash & Cash equivalents
Cash and cash equivalents comprise cash and cash on deposit with banks
and corporations. The company considers all highly liquid investments
with a remaining maturity at the date of purchase of three months or
less and that are readily convertible to known amounts of cash to be
cash equivalents.
L. Retirement Benefits
The provision of payment of Gratuity is not applicable and hence no
policy is made in respect of the same.
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