SIGNIFICANT ACCOUNTING POLICIES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2013.

1.             Basis of brparation of Financial Statements

The accompanying financial statements are brpared under the historical cost convention in accordance with the generally accepted accounting principles in India (“GAAP”) and in accordance with the accounting standards referred to in Section 211 (3C) of the Companies Act, 1956.

2.             Use of Estimates

The brparation of financial statements in conformity with GAAP in India requires the management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities at the date of financial statements, and the reported amount of revenues and expenses during the reporting period. Actual results could differ from these estimates. On an ongoing basis, estimates are evaluated based on historical experience and on various other assumptions that are believed to be reasonable, the results of which forms the basis for making judgments about the carrying value of assets and liabilities. Actual results could differ from those estimates. Any revision to estimates or difference between the actual result and estimates are recognised in the period in which the results are known/ materialised.

3.             Fixed Assets   

a)            Fixed assets are accounted for on historical cost basis (inclusive of the cost of installation and other incidental costs till commencement of commercial production) net of recoverable taxes, less accumulated debrciation and impairment loss, if any.

b)                            Expenditure on renovation/ modernisation relating to existing fixed assets is added to the cost of such assets where it increases its performance/life significantly.

c)             Cost of leasehold land is amortized over the period of lease.

4.             Debrciation   

a)                   Debrciation on fixed assets is provided on written down value basis at the applicable rates brscribed under Schedule XIV of the Companies Act, 1956. The assets costing upto Rs. 5,000/- are fully debrciated during the year of addition.

b)                   Debrciation on addition or on sale/discard of an asset is calculated pro-rata from the date of such addition or sale/discard.

5.                    Revenue Recognition

a)                 Sale Revenue is recognized net of trade discount, on transfer of the significant risks and rewards of ownership of the goods to the buyer and is inclusive of excise duty but excludes the sales tax/VAT which is recoverable from the buyer. Sale also includes excise duty charged on inter unit transfers, but excludes the transaction value of the inter unit transfers.

b)                 Export incentive such as Duty drawback is recognized on post export basis on the basis of their entitlement rates.

c)                  Interest income is recognised on time proportion basis.

d)                 Insurances claims are recognised to the extent the Company is reasonably certain of their ultimate receipt.

6.                    Provision for product Warranties.

Provision for product related warranty cost is based on the claims received upto the year end as well as the management estimates of further liability to be incurred in this regard computed on the basis of probable customers’ claims.

 7.             Government Grants / Subsidy

Government grants are recognized when it is reasonably certain that the ultimate collection will be made. Government grants of capital nature are credited to capital reserve.  Other government grants of revenue nature including subsidies are credited to specific expense head in the Statement of Profit and Loss.

8.                                                   Investments

Investments primarily meant to be held over long term period are valued at cost. Provision is made when in the management’s opinion there is a decline, other than temporary, in the carrying value of such investments. Current investments are stated at the lower of cost or quoted price. Investment in foreign company is carried at exchange rates brvailing on the date of its acquisition.

9.             Inventory Valuation

a)                   Inventories are valued at the lower of cost and net realisable value. 

b)                   In respect of raw material, packing material and stores & spares, cost is computed on first in first out basis.  

c)                    Finished goods and stock-in-process include cost of input conversion and other costs including manufacturing overheads incurred in bringing them to their brsent location and condition.

d)                   Obsolete, defective and unserviceable stocks are provided for, wherever required.

e)                   Excise duty on finished goods manufactured is accounted for on clearance of goods from factory brmises.

10.           Impairment of Assets

An asset is treated as impaired when the carrying cost of assets exceeds recoverable value. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impaired loss of prior accounting period is increased/ reversed where there has been change in the estimate of recoverable amount. The recoverable value is the higher of the assets’ net selling price and value in use.

11.           Employee Benefits

a)                   Liability towards Gratuity is considered as the defined benefit scheme and isrecognized on the basis of actuarial valuation on projected unit credit method at balance sheet date.

b)                   Earned Leave which is encashable is considered as long term benefit and is provided on the basis of actuarial valuation on projected unit credit method at balance sheet date.

c)                    The benefits in the form of contribution to Provident Fund, Employee State Insurance and Medical Welfare Fund are considered as the defined contribution schemes and arerecognized on the basis of the amount paid or payable for the period during which services are rendered by the employees.

12.           Borrowing costs:

Borrowing costs attributable to the acquisition and/or construction of qualifying assets are capitalized as a part of the cost of such assets, upto the date when such assets are ready for intended use. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. Other borrowing costs are charged to the Statement of Profit and Loss.

13.           Foreign Currency Transactions

Foreign currency transactions are recorded at the exchange rate brvailing on the date of transaction. Monetary assets and liabilities in foreign currency existing at balance sheet date are translated at the year end exchange rates. Exchange rate differences arising on settlement of transaction and translation of monetary items are recognized as income or expenses in the year in which they arise. Premium or discount on forward exchange contract is amortised as income or expense over the life of the contract. Exchange difference on such contract is recognized in the Statement of Profit and Loss in the reporting period in which the exchange rate changes. Any profit or loss arising on cancellation or renewal of forward contract is recognized as income or expenditure during the period.

14.          Transactions with Group Companies

               Transactions including expenses to be shared with group companies are initially recorded under operational heads and reduced on actual or proportionate (where those are not directly identifiable) basis.  

15.           Taxation

Provision for current taxes is made after taking into consideration benefits admissible under the provisions of Income Tax Act, 1961. Deferred Tax resulting from “timing differences” between taxable and accounting income is accounted for using the tax rates and laws that have been substantially enacted as of the balance sheet date. Deferred tax assets arising from timing differences are recognized to the extent there is reasonable certainty that these would be realized in future.    

16.           Earning per Share:

Basic earning per share is calculated by dividing net profit of the year by the weighted average number of equity shares outstanding during the year. For the purpose of calculating diluted earning per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

Employee Benefits

a)                   Liability towards Gratuity is considered as the defined benefit scheme and isrecognized on the basis of actuarial valuation on projected unit credit method at balance sheet date.

b)                   Earned Leave which is encashable is considered as long term benefit and is provided on the basis of actuarial valuation on projected unit credit method at balance sheet date.

c)                    The benefits in the form of contribution to Provident Fund, Employee State Insurance and Medical Welfare Fund are considered as the defined contribution schemes and arerecognized on the basis of the amount paid or payable for the period during which services are rendered by the employees.