NOTE 1 SIGNIFICANT ACCOUNTING POLICIES (a) Basis of accounting and brparation of financial statements The financial statements have been brpared on a going concern and on accrual basis, under the historical cost convention and in accordance with the generally accepted accounting principles , the accounting standards brscribed in the Companies (Accounting Standards) Rules, 2006 issued by the Central Government and relevant provisions of the Companies Act 1956, to the extent applicable. (b) Use of Estimates The brparation of the financial statements in conformity with the generally accepted accounting principles requires the management to make estimates and assumption that affect the reported amount of assets, liabilities, revenues & expenses and disclosure of contingent assets & liabilities. The estimates & assumptions used in the accompanying financial statements are based upon management's evaluation of the relevant facts and circumstances as of the date of the Financial Statements. Actual results may defer from the estimates & assumptions used in brparing the accompanying Financial Statements. Any differences of actual results to such estimates are recognised in the year in which the results are known / materialised. (c) Revenue Recognition (i) Sales are accounted Net of excise duty and VAT/Sales tax collected from customers (ii) Sales include goods sold on High Seas / Bond Transfer basis. (iii) Income from services are accounted Net of service tax collected from customers. (iv) Interest income is recognised on accrual basis. (v) Dividend income is recognised when the right to receive payment is established. (vi) In respect of other heads of income, the Company accounts the same on accrual basis. (d) Excise Duty and Indirect Taxes Excise Duty, VAT/Sales Tax and Service Tax collected from customers are credited to respective collection accounts. The Cenvat/VAT/Service Tax set off available is reduced from the cost of related materials or the expenses, and is adjusted against the Excise Duty or the Service Tax or the VAT liability, as per set off rules under the relevant statutes. (e) Fixed Assets and Debrciation (i) Fixed Assets are stated at cost less debrciation. The cost of fixed assets include purchase price, transportation, duties, taxes and other attributable expenses, but excludes Cenvat/VAT/Service Tax Credits, if any , available. (ii) Debrciation is provided as per rates brscribed in schedule XIV of the Companies Act, 1956 on Straight Line Method. In respect of assets acquired/ disposed off during the year, prorata debrciation is provided from/till the date of acquisition/ disposal. Cost of the leasehold land is amortised over the primary period of the lease (f) Intangible Assets and Amortisation Intangible assets are recognized and stated in financial statements in accordance with AS — 26 "Intangible Assets"and are amortised on a straight line basis over a period of useful economic life or a period of ten years whichever is less, except when it is clearly established that the useful economic life of the asset is exceeding the period of ten years in which case it is amortised over its useful economic life with adequate disclosure in accordance with AS — 26 "Intangible Assets".The assets acquired during the year are amortised on pro-rata basis. (g) Capital Work-in-progress Projects under Commissioning are carried at cost, comprising direct cost, related incidental expenses and attributable interest. (h) Inventories Inventories are valued at lower of cost (Net of VAT Credits) or Net realisable value. The Cost is ascertained on First in First out (FIFO) basis. Finished goods include appropriate portion of overheads. (i) Investments Non-Current Investments are carried at cost. Provision for diminution in the value of Non-Current Investments is made only if such a decline is other than temporary in the opinion of the management. Current Investments are carried at lower of cost and fair value. The comparison of cost and fair value is done separately in respect of each category of investments. (j) Borrowing Costs Borrowing costs relating to acquisition of fixed assets which takes substantial period of time to get ready for its intended use are included to the extent they relate to the period till such assets are ready to be put to use. All other borrowing costs are charged to revenue. (k) Sales Tax Deferment Deferred sales tax liability under the Incentive Scheme of the Government is accounted for at its discounted brsent value as at the Balance Sheet date, calculated by applying the appropriate discount factor. The difference between the face value and the discounted value is credited to the Statement of Profit and Loss in the year/(s) in which the deferment benefit is availed. In the subsequent years the Statement of Profit and Loss is debited by an appropriate amount such that the accumulation in Sales Tax Deferral Account is equal to the amount of deferred sales tax liability falling due from time to time. (l) Research and Development expenditure Capital expenditure incurred for acquiring tangible fixed assets for the purpose of research & development is capitalised as fixed asset. Revenue expenditure on research and development is charged as expense in the year in which it is incurred under the respective heads of account. (m) Foreign Currency Transactions (i) Transactions in foreign currency are recorded at the exchange rate brvailing on the date of the transaction. Exchange differences arising on foreign exchange transactions settled during the year are recognised in the Statement of Profit and Loss of the year (ii) Foreign currency monetary items of the Company are restated in the accounts on the basis of the exchange rates brvailing at the close of the year. (iii) As per the notification dt. 29-12-2011 on "Accounting Standard (AS) 11" relating to "The Effects of Changes in Foreign Exchange Rates" the Company has exercised the option of adding the exchange difference, arising out of fluctuation in exchange rates on period end, to the cost of the Fixed asset and shall be amortised over the balance life of the asset. (n) Employees Retirement Benefits (i) Provident Fund The Company contributes to a recognised provident fund which is a defined contribution scheme. The contributions are accounted for on an accrual basis and recognised in the Statement of Profit and Loss. (ii) Gratuity The employees of the Company are eligible for Gratuity in accordance with the Payment of Gratuity Act, and is a Defined Employee Benefit. The above benefit is not funded but provision is made in the accounts. The Company" aiet obligation in respect of the gratuity benefit is calculated by estimating the amount of future benefit that the employees have earned in return for their service in the current and prior periods, that benefit is discounted to determine its brsent value. The brsent value of the obligation under such benefit plans is determined based on actuarial valuation using the Projected Unit Credit Method which recognises each period of service that give rise to additional unit of employee benefit entitlement and measures each unit separately to built up the final obligation. The obligation is measured at brsent values of estimated future cash flows. The discounted rates used for determining the brsent value are based on the market yields on Government Securities as at the balance sheet date. Actuarial gains and losses are recognised immediately in the Statement of Profit and Loss. (iii) Compensated Leave Unutilised leave of staff lapses as at the year end and is not encashable. Accordingly, no provision is made for compensated absences. (o) Taxation Income-tax expense comprises current tax (i.e. amount of tax for the year determined in accordance with the income-tax law), deferred tax charge or credit (reflecting the tax effect of timing differences between accounting income and taxable income for the year). Deferred Taxation The deferred tax charge or credit and the corresponding deferred tax liabilities and assets are recognised using the tax rates that have been enacted or substantially enacted at the balance sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that the asset can be realised in future, however, where there is unabsorbed debrciation or carried forward loss under taxation laws, deferred tax assets are recognised only if there is a virtual certainty of realisation of the assets. Deferred tax assets are reviewed as at each balance sheet date and written down or written-up to reflect the amount that is reasonable/virtually certain (as the case may be) to be realised. (p) Impairment of Assets The Carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal/external factors. An asset is impaired when the carrying amount of the asset exceeds the recoverable amount. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. An impairment loss recognised in prior accounting periods is reversed if there has been change in the estimate of the recoverable amount. (q) Provisions, Contingent Liabilities and Contingent Assets Provisions involving a substantial degree of estimation in measurement are recognised when there is a brsent obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognised but are disclosed in the Financial Statements. Contingent Assets are neither recognised nor disclosed in the Financial Statements. NOTE 1 : There are no amounts payable to any Micro, Small and Medium Enterprises as identified by the Management from the information available with the Company and relied by Auditors. NOTE 2 : The accounts of the Trade Receivables and Trade Payables who have not responded to the Company's request for confirmation of balances, are subject to reconciliation, if any, required. NOTE 3 : Figures have been rounded off to nearest rupees. As per our attached report of even date For PHD & Associates Chartered Accountants Firm Registration No. 111236W For and on behalf of the Board of Directors U. J. Sanghavi (Managing Director) T. J. Sanghavi (Executive Director) R. J. Sanghavi (Chairman) M. M. Vora (Director) D. V. Vakharia (Partner) Membership No. 46115 Place : Mumbai Date : 30th May, 2015 |