| a. Basis of preparation of Financial Statements
The accounts have been prepared on accrual basis and historical cost
convention in accordance with the Generally Accepted Accounting
Principles in India and the provisions of the Companies Act 1956. The
accompanying financial statements have been prepared to comply in all
material respects with the Accounting Standards notified by Companies
Accounting Standard Rules 2006 and the relevant provisions of the
Companies Act, 1956. The accounting policies have been consistently
applied by the Company and are consistent with those in the previous
year.
b. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the required amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
period. Although these estimates are based upon management's best
knowledge of current events and actions, actual results could differ
from these estimates.
c. Revenue Recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and revenue can be reliably
measured.
d. Fixed Assets and Depreciation
i. Fixed Assets are stated at cost less accumulated depreciation. Cost
comprises the purchase price, freight, duties, taxes and any
attributable cost of bringing the asset to its working condition for
its intended use.
ii. Depreciation is provided on Written Down Value method, based on
useful life of the assets as estimated by the Management which
coincides with rates prescribed under Schedule XIV to the Companies
Act, 1956.
e. Long Term investments are carried at cost less provision for
permanent diminution, if any, in value of such investments.
f. Borrowing costs:
Borrowing costs that are directly attributable to the acquisition or
the construction of a qualifying asset is capitalized for the period
until the asset is ready for its intended use. A qualifying asset is
one that necessarily takes substantial period of time i.e more than 12
months to get ready for intended use. All other borrowing costs are
charged to revenues
g. Inventories
i. Materials are valued at the lower of cost and estimated net
realizable value.
Net realizable value is the estimated selling price in the ordinary
course of business, reduced by the estimated costs of completion and
costs to effect the sale.
h. Income Tax
i. Current tax
Current income tax is measured at the amount expected to be paid to the
tax authorities in accordance with the Indian Income Tax Act, 1961.
ii. Deferred tax
Deferred income taxes is recognized, subject to the consideration of
prudence on timing differences, being the difference between taxable
income and accounting income that originate in one period and are
capable of reversal in one or more subsequent periods. Deferred tax is
measured based on the tax rates and the tax laws enacted or
substantively enacted at the balance sheet date.
' Deferred tax assets are recognized only to the extent that there is
reasonable certainty that sufficient future taxable income will be
available against which such deferred tax assets can be realized.
Where the Company has carry forward of unabsorbed depreciation or tax
losses deferred tax assets are recognized only if it is virtually
certain backed by convincing evidence that such deferred tax assets can
be realized against future taxable profits.
i. Earnings per share
Basic earnings per share is calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period.
j. Provisions
A Provision is recognized when the Company has a present obligation as
a result of past event i.e it is probable that an outflow of resources
will be required to settle the obligation in respect of which a
reliable estimate can be made. Provisions are not discounted to its
present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current best
estimates.
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