A. Basis of Preparation of Financial Statements
The Accounts have been prepared as a going concern under historical
cost convention in accordance with the generally accepted accounting
principles in India and the provisions of the Companies Act, 1956.
B. Fixed Assets:
All fixed assets are valued at their original cost which includes
expenditure incurred in acquisition and construction I installation and
other related expenses less accumulated depreciation. Capital work in
progress is carried at cost comprising of direct cost and related
C. Intangible Assets:
Intangible Assets are stated at cost of acquisition less amortization.
Investments are stated at cost as the same are Long Term Investments.
Inventories are valued on FIFO basis as under:
a) Raw material and components are valued at lower of Cost or Net
b) Finished Goods are valued at lower of Cost or Net Realizable Value.
c) Stores, spares and consumables are valued at Cost.
d) Goods in transit are valued at Cost.
e) Cost of manufactured goods is ascertained at cost plus appropriate
share of overheads.
The management has written off the cost of machines & spares given on
rental basis on the basis of evaluation of its usage of the finished
product to bring the same to its realizable market value.
Depreciation on fixed assets has been provided on Straight Line basis
at the rates prescribed in Schedule XIV of the Companies Act, 1956.
Intangible Assets are amortized on straight line basis over the
estimated economic useful life.
G. Impairment of Assets:
The Company on an annual basis makes an assessment of any indicator
that may lead to Impairment of Assets. If any such indications
exist, the Company estimates the recoverable amount of the assets. If
such recoverable amount is less than the carrying amount of the assets,
than the carrying amount is reduced to its recoverable amount by
treating the difference between them as impairment loss and the same is
charged to Profit & Loss Account.
H. Revenue Recognition:
Sales are net of returns and claims. Income and expenditure are
recognized on accrual basis. Revenue from contracts priced on a time and
material basis are recognized when services are rendered and related
costs are incurred. Revenue from maintenance contracts are recognized
pro- rata over the period of the contract.
I. Foreign Currency Transactions :
Transactions denominated in foreign currencies are recorded at the
exchange rate prevailing on the date of the transaction or that
approximates the actual rate at the date of the transaction. Monetary
items denominated in foreign currencies at the yearend are restated at
year end rates. Any income or expense on account of exchange difference
either on settlement or on translation is recognized in the Profit and
Loss account except in case of long term liabilities, where they relate
to acquisition of fixed assets, in which case they are adjusted to the
carrying cost of such assets.
J. Employee Benefits:
Short-term employee benefits are recognized as an expense at the
undiscounted amount in the Profit and 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 and Loss
account for the year in which the employee has rendered services. The
expense is recognized at the present value of the amounts payable
determined using actuarial valuation techniques. Actuarial gains and
losses in respect of post employment and other long term benefits are
charged to the Profit and Loss Account.
K. Borrowing Costs:
Borrowing Costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for its intended use. All other
borrowing costs are charged to profit and loss account.
L. Provisions, Contingent Liabilities and Contingent Assets:
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent liabilities are not recognized but are disclosed in Notes to
Accounts. Contingent Assets are neither recognized nor disclosed in
The Current charge for income taxes is calculated in accordance with
the relevant tax regulations, past assessments & legal opinion sought
by the Company. Deferred-tax assets and liabilities are recognized for
future tax consequences attributable to the timing differences that
result between the profit offered for income tax and the profit as per
the financial statements. Deferred tax assets and liabilities are
measured as per the tax rates/laws that have been enacted
or substantively enacted by the Balance Sheet date.