| (I) Accounting Convention:
(a) The Accounts have been prepared to comply with the Accounting
Standards referred to in section 211(3C) of the Companies Act, 1956.
(b) The Company follows the Mercantile System of accounting and
recognizes Income and Expenditure on Accrual Basis, except the
income/expenditure which is not reasonably ascertainable.
(ii) Fixed Assets :
Fixed assets are recorded at cost of acquisition or construction cost
(as reduced by CENVAT Credit as applicable) along with capitalised
portion of specific or allocated expenses.
(iii) Depreciation :
Depreciation on Fixed Assets is provided on Straight Line Method in
accordance with and at the rates specified in Schedule XIV of the
Companies Act, 1956; Additions to fixed assets are depreciated on pro
rata basis for number of days used during the year. Asset costing less
than Rs 5000/- is 100% depreciated.
(iv) Inventories:
Stock is valued at cost or market value whichever is lower. Cost is
calculated on First-In-First-Out . basis after adjusting Sales tax and
other set-off, if applicable.
(v) Revenue Recognition :
* Sale of Goods:
Sale of goods is recognised at the point of transfer of risks and
rewards to customers.
* Commission Income:
Commission income is recognised on completion of the service.
(vi) Retirement Benefits:
The Company's contribution to Provident Fund is charged to the
Statement of Profit and Loss.
Other long term employee benefits comprise compensated absences which
are provided based on an actuarial valuation carried out in accordance
with AS 15 as at the Balance Sheet date.
The gratuity liability, which is a defined benefit plan, is provided on
the basis of actuarial valuation as on Balance Sheet date on the
projected unit credit method
(vii) Foreign Currency Transactions:
Transactions in foreign currency are recorded at the rates of exchange
in force at the time of the transactions effected as prescribed in
Accounting Standard -11 "The Effects of Changes in Foreign Exchange
Rates" prescribed by Institute of Chartered Accountants of India.
(viii) Government Grants :
Subsidies received from Central and State Governments are accounted as
Capital Reserve or credited to Profit and Loss a/c considering the
nature of the Subsidy, the purpose for which it has been received and
condition attached to that Subsidy.
(ix) Debtors/Creditors/Advances :
Undisputed Debtors/Creditors balances/ advances outstanding for more
than three years are provided/ adjusted at the financial year end after
identification and ascertainment about their recoverability/ payments.
(x) Borrowing Cost:
Borrowing Cost that is directly attributable to the acquisition,
construction or production of a qualifying asset is capitalised.
(xi) Taxes on Income :
Provision for current tax is made on the basis of estimated taxable
income for the current accounting period and in accordance with the
provisions of Income Tax Act, 1961. Company is registered as a sick
Company with BIFR and hence MAT provisions related to Income Tax are
not applicable.
Deferred Tax resulting from "timing difference" between accounting
income and taxable income, for a period, that originate in one period
and are capable of reversal in one or more subsequent period are
recognised, subject to prudence, using the tax rates and tax laws that
have been enacted or substantially enacted by the Balance Sheet date.
(xii) Impairment of Assets:
An asset is treated as impaired when the carrying cost of assets
exceeds its recoverable value.
An impairment loss is charged to the Profit and Loss Account in the
year in which an asset is identified as impaired. The impairment loss
recognised in prior accounting periods is reversed if there has been a
change in the estimate of recoverable amount.
(xiii) Provisions, Contingent liabilities and Contingent Asset:
The company creates a provision when there is 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. Contingent Asset is neither provided
nor shown in notes on accounts.
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