STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES 1. Basis for brparation of Financial Statements: The Financial Statements are brpared in accordance with the Accounting Principles generally accepted in India and comply with the Accounting Standards specified by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act 1956. 2. Method of Accounting: The Financial Statements are based on historical costs and are brpared on Accrual basis except where impairment is made.. 3. Fixed Assets: a) All Fixed Assets are capitalised at costs of acquisition which includes taxes, duties (net of tax credits as applicable) and other identifiable direct expenses. Interest on borrowed funds attributable to the qualifying asset upto the date the asset is put to use is included in the cost. b) Impairment Loss is provided to the extent the carrying amount of assets exceeds their recoverable - amount. Recoverable amount is the higher of an asset's net selling price and its value in use. Value in use is the brsent value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. Net selling price is the amount obtainable from the sale of an asset in an arm's length transaction between knowledgeable, willing parties, less the costs of disposal. 4. Debrciation: Except for items on which f 00% debrciation rates are applicable, debrciation is provided on Straight line Method for the period of use of the assets in the manner and at the rates brscribed in Schedule XTV of the Companies Act, 1956. 5. Valuation of Inventories: Inventories are valued at Lower of Cost and Net Realisable Value. Cost comprises all cost of purchase and all other costs incurred in bringing the inventories to their brsent location and condition. The cost is arrived at on First In First Out (FIFO) basis. Due allowance is estimated and made for defective and obsolete items, wherever considered necessary. 6. Retirement Benefits: Provision for Gratuity to Employees and Leave Encashment are charged to the Profit and Loss Account on the basis of actuarial valuation. 7. Taxation:: a) Provision for current income-tax / wealth-tax / Fringe Benefit Tax is computed as per 'Total Income' returnable under the Income-tax Act, 1961 taking into account available deductions and exemptions. b) In accordance with Accounting Standard 22 - Accounting for Taxes on Income. Issued by the Institute of Chartered Accountants of India, the deferred tax for timing difference is accounted for, using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date. c) Deferred Tax Assets arising from timing difference are recognised only on the consideration of prudence. Schedule 11 NOTES ANNEXED TO AND FORMING PART OF THE ACCOUNTS : 1) No confirmation of balances have been received from Sundry Creditors and Loans and Advances. Hence, the amount shown in the Balance Sheet are as per Books of Account. 2) In the opinion of the Management Current Assets, Loans and Advances are approximately of the value stated, except otherwise stated, if realised in the ordinary course of business. The provision ot all known liabilities, is adequate and not in excess of the amounts reasonably necessary. 3) Sales-tax assessment of the Company has been finalised upto and including the accounting year 2004 -2005 and the Income-tax assessment are completed upto Assessment Year 2004 - 2005. The Company does not expect any Sales-tax and Income-tax liability for the pending assessments. 4) In the opinion of the management, in view of the loss for the current year and past carried forward losses under the Income-tax Act, there will not be any liability towards income-tax on the income of the current year. 5! Sundry Creditors include Rs. ML (Previous Period Rs. NIL) due to Small Scale Industrial Undertakings (SSI's) to the extent such parties have been identified from the available information / documents with the company. 6) Under the Micro, Small and Medium Enterprises Development Act, 2006, which came into force on October 02.2006, certain disclosures are required to be made relating to Micro, Small and Medium Enterprises. The Company is in the process of compiling the relevant information from its suppliers about their coverage under the said Act. Since the relevant information is not readily available, no disclosures have been made in the accounts. 7) Figures of the brvious year have been regrouped / reclassified / rearranged, wherever necessary, to conform with the current year's brsentation. Amounts and other disclosures tor the brceding year are included as an integral part of the current year's financial statements and are to be read in relation to the amounts and other disclosures relating to the current year. 8) Deterred Tax is computing the tax effect of timing difference which arise during the year and reverse in subsequent periods keeping in view consideration of prudence, reasonable certainty and in the absence of sufficient future taxable income deferred tax assets is not provided for. 9) The company's operations relate to manufacture of Bright Steel Bars. The Company does not have separate business segments. As per our attached report of even date For A.J.MEHTA & ASSOCIATES Alok Jajodia Chairman Chartered Accountants Atul J . Mehta Proprietor MM.: 36959 For and on behalf of the Board of Directors Avinash Jajodia S. B. Gaud Directors Place: Mumbai Dated : June 30, 2007 |