Accounting Policies of Laffans Petrochemicals Ltd. Company

Mar 31, 2025

B.2 Summary of significant Accounting Policies
a Property, plant and equipment

All items of property, plant and equipment are stated at cost (i.e. cost of acquisition or construction) less
accumulated depreciation/accumulated impairment. Such cost includes purchase price, including import
duties and other non-refundable taxes or levies and any directly attributable cost of bringing the asset to
its working condition for its intended use.

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are
included in profit or loss within other gains/(losses).

Depreciation and Amortisation:

Depreciation on Property, Plant and Equipment is provided using the Straight Line Method based on
the estimated useful lives of the assets and is charged to the Statement of Profit and Loss as per the
requirement of Schedule II of the Companies Act, 2013.

Impairment

At Balance Sheet date, an assessment is done to determine whether there is any indication of impairment
in the carrying amount of the Company’s assets. If any such indication exists, the asset’s recoverable
amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset exceeds
its recoverable amount.

An assessment is also done at each Balance Sheet date whether there is any indication that an impairment
loss recognised for an asset in prior accounting periods may no longer exist or may have decreased. If
any such indication exists the asset’s recoverable amount is estimated. The carrying amount of the fixed
asset is increased to the revised estimate of its recoverable amount but so that the increased carrying
amount does not exceed the carrying amount that would have been determined had no impairment loss
been recognised for the asset in prior years. A reversal of impairment loss is recognised in the Statement
of Profit and Loss for the year.

After recognition of impairment loss or reversal of impairment loss as applicable, the depreciation charge
for the fixed asset is adjusted in future periods to allocate the asset’s revised carrying amount, less its
residual value (if any), on Written Down Value basis over its remaining useful life.

b Revenue Recognition

I. The revenue is recognized as per contract note of sale of Arbitrage, in case of sale of services on
completion of Job and in case of trading, on raising of invoice and transfer of material to the party.

II. Other income is recognized on accrual basis

III. Dividend is recognized when the right to receive payment is established by the Balance sheet date.
c Investments and other financial assets

(i) Classification

The company classifies its financial assets in the following measurement categories:

- those to be measured subsequently at fair value (either through other comprehensive income, or
through Profit or loss), and

- those measured at amortised cost.

The classification depends on the company’s business model for managing the financial assets and
the contractual terms of the cash flows.

For assets measured at fair value, gains and losses will either be recorded in profit or loss or other
comprehensive income. For investments in debt instruments, this will depend on the business model
in which the investment is held. For investments in equity instruments, this will depend on whether
the company has made an irrevocable election at the time of initial recognition to account for the
equity investment at fair value through other comprehensive income.

(ii) Measurement

At initial recognition, the company measures a financial asset at its fair value plus, in the case of a
financial asset not at fair value through profit or loss, transaction costs that are directly attributable
to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value
through profit or loss are expensed in Profit or Loss A/c.

Changes in the fair value of financial assets at fair value through profit or loss are recognised in other
gain/ (losses) in the statement of profit and loss. Impairment losses (and reversal of impairment
losses) on equity investments measured at FVOCI are not reported separately from other changes in
fair value.

Equity Instruments

The company subsequently measures all equity investments at fair value. Where the company’s
management has elected to present fair value gains and losses on equity investments in other
comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit
or loss. Dividends from such investments are recognised in profit or loss as other income when the
company’s right to receive payments is established.

Changes in the fair value of financial assets at fair value through profit or loss are recognised in other
gain/(losses) in the statement of profit and loss.

(iii) Impairment of financial assets

The company assesses on a forward looking basis the expected credit losses associated with its
assets carried at amortised cost and FVOCI debt instruments. The impairment methodology applied
depends on whether there has been a significant increase in credit risk.

(iv) Derecognition of financial assets

A financial asset is derecognised only when:

‘- The company has transferred the rights to receive cash flows from the financial asset or

‘- retains the contractual rights to receive the cash flows of the financial asset, but assumes a
contractual obligation to pay the cash flows to one or more recipients.

Where the company has transferred an asset, the company evaluates whether it has transferred
substantially all risks and rewards of ownership of the financial asset. In such cases, the financial
asset is derecognised. Where the company has not transferred substantially all risks and rewards of
ownership of the financial asset, the financial asset is not derecognised.

(v) Income recognition
Dividend

Dividends are recognised in profit or loss only when the right to receive payment is established, it is
probable that the economic benefits associated with the dividend will flow to the company, and the
amount of the dividend can be measured reliably.

d Transactions in Foreign Currency

Foreign currency transactions are translated into the functional currency using the exchange rates at
the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation of monetary assets and liabilities denominated in foreign currencies
at year end exchange rates are generally recognised in profit or loss.

Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the statement
of profit and loss, within finance costs. All other foreign exchange gains and losses are presented in the
statement of profit and loss on a net basis within other gains/(losses).

e Trade receivables

Judgements are required in assessing the recoverability of overdue trade receivables and determining
whether a provision against those receivables is required. Factors considered include the credit rating of
the counterparty, the amount and timing of anticipated future payments and any possible actions that can
be taken to mitigate the risk of non-payment.

f Employee Benefits

(a) Short-term obligations

Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled
wholly within 12 months after the end of the period in which the employees render the related
service are recognised in respect of employees’ services up to the end of the reporting period and
are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are
presented as current employee benefit obligations in the balance sheet.

(b) Post-employment obligations
i. Defined benefit plans

• Gratuity scheme

Gratuity is accounted on estimate basis and charged to Profit and Loss account on accrual
basis. However as per Ind AS-19 Gratuity has been provided on actuarial valuation, which
is not followed in accordance with Ind AS-19 “Employee Benefit”

g Income tax

The income tax expense or credit for the period is the tax payable on the current period’s taxable income
based on the applicable income tax rate for each jurisdiction (in accordance with the Income Tax Act,
1961) adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and
to unused tax losses.

The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognised
using the tax rates that have been enacted or substantively enacted by the Balance Sheet date.

Deferred tax assets are recognised for all deductible temporary differences, unused tax losses and
unabsorbed depreciation (as per taxation laws) only if it is probable that future taxable amounts will be
available to utilise those temporary differences and losses.

Deferred income tax is provided on temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the financial statements.

Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items
recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in
other comprehensive income or directly in equity, respectively.

The Company has thus disclosed the Income Tax Assets/ Liabilities on a net basis as the same is settled
within the same tax jurisdiction, which is in line with Ind AS 12.

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Mar 31, 2015

A) Basis of Accounting:

i) Financial statements are prepared under the historical cost convention in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 1956.

ii) The Company adopts the accrual concept in the preparation of accounts unless otherwise stated.

b) Use of Estimates:

The presentation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual result and estimates are recognized in the period in which the results are known/ materialized.

c) Fixed Assets

Fixed Assets are stated at cost of acquisition less depreciation and impairment of asset. The Company Capitalizes all costs relating to acquisitions and installations of fixed assets till the date of Commissioning and starting of commercial production.

d) Depreciation:

Depreciation on fixed assets is being provided on straight Line Method at the method prescribed under Schedule II of the Companies Act, 2013. Till 31st March 2014, the Depreciation was provided on straight Line Method at the rates and method prescribed under Schedule XIV of the Companies Act, 1956.

e) Inventories:

Inventories of Commodity Arbitrage is valued at Cost.

Inventories of trading items of chemicals and API, is valued at cost and market value whichever is lower.

f) Revenue Recognition:

I. The revenue is recognized as per contract note of sale of Arbitrage, in case of sale of services on completion of Job and in case of sale of trading, on raising of invoice and transfer of material to the party.

II. Other income is recognized on accrual basis.

III. In conformity with generally accepted accounting principles, Income from Growth FMP Investments are recognized on redemption.

IV Dividend is recognized when the right to receive payment is established by the Balance Sheet date.

g) Sales:

Sale comprises of the trading in Commodities Arbitrage and trading in chemicals and API.

h) Investments:

Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments.

On initial recognition, all investments are measured at cost. The cost comprises purchase price and directly attributable acquisition charges such as brokerage, fees and duties.

Current investments are carried in the financial statements at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of long term investments.

On disposal of an investment, the difference between the carrying amount and the net disposal proceeds is charged to the statement of profit and loss.

i) Foreign Currency Transaction:

The foreign currency transaction involving foreign exchange on revenue accounts are accounted at the exchange rates prevailing on the date of transaction. Foreign currency remained unsettled at the year-end are translated at the year-end rate and the difference is charged to profit & loss account.

j) Retirement Benefit Scheme:

Employer's Contribution to P.F. has been charged to P & L A/c. and deposited with concerned authority.

Gratuity is accounted for on estimate basis and charged to P & L account on accrual basis. However as per AS-15 issued by Institute of Chartered Accountant of India, Retirement benefit to be provided on the basis of actuarial valuation but the same is not implemented by the company.

k) Borrowing Cost:

Borrowing cost incurred in relation to the acquisition, construction of assets are capitalized as the part of the cost of such assets up to the date when such assets are ready for intended use. Other borrowings cost are charged as an expense in the year in which these are incurred.

l) Taxes on Income:

Tax expense comprises current and deferred tax. Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current income tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit and loss.

Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. 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 and deferred tax liabilities are offset, if a legally enforceable right exists to set-off current tax assets against current tax liabilities and the deferred tax assets and the deferred tax liabilities related to the taxes on income levied by same governing taxation laws. 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. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.

Minimum alternate tax (MAT) paid in a year is charged to the statement of profit and loss as current tax. The Company recognizes MAT credit available as an asset only to the extent that there is convincing evidence that the Company will pay normal income tax during the specified period, i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the Company recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternative Tax under the Income-tax Act, 1961.

m) Impairment of Assets:

An assets is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged for when an assets is identified as impaired. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.

n) 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 the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.

o) Contingent Liability :

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle an obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements. The Details are as under:

i) Sales Tax Liability of Rs. 1,01,13,369 for the year 2008-09 (P.Y. Rs.1,01,13,369) against which appeal is pending

ii) Income Tax Liability for A.Y. 2009-10 Rs.78,60,520/- (P.Y. 78,60,520/-) Against which appeal is pending.

iii) Income Tax Liability for A.Y. 2008-09 Rs.7,69,746/- (P.Y. 7,69,746/-) Against which appeal is pending.

iv) Income Tax Liability for A.Y. 2009-10 Rs.1,65,808/- (P.Y. 1,65,808/-) Against which appeal is pending.

v) Income Tax Liability for A.Y 2012-13 Rs...9,11,22,060/- against which Appeal is pending.

p) Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. Nil (P.Y. Nil).

q) Auditors remuneration

Audit Fees 1,50,000 (1,00,000)

Tax Audit Fees 50,000 (65,000)

Other matters 2,00,000 (1,60,000)

Service Tax 49,440 ( 40,170)

4,49,440 (3,65,170)

r) VALUE OF IMPORTS ON CIF BASIS In Rs.

Trading Material 22,69,740.00 ( 19,89,220.00)

s) Expenditure in foreign Currency In Rs.

Commission 0.00 (0.00)

Foreign Traveling 0.00 (14,75,850.00)

t) Earning in foreign currency (Rs in lacs)

F.O.B Value of exports 0.00 (0.00)

u) Sundry Debtors, Sundry Creditors & advances are subject to confirmation by the respective parties. Necessary Adjustments in account will be made in the year in which discrepancy, if any, may be noticed. In case of payment receivable from NSEL, an amount of Rs.,1,12,69,300/- (P.Y. Rs.4,50,77,202/-) has been written off during the year. The Balance amount shown as receivable in the Balance Sheet, from NSEL, in the opinion of management is recoverable.

v) Sundry Loan & Advances and other assets are, in the opinion of management stated at the amount realizable in the ordinary course of business and provision for all known and determined liabilities are adequate and not in excess of the amounts reasonably required.

w) Earnings per Share.

Net Profit available for equity share holders Rs. (-)3,59,327

Weighted Average No. equity Shares 80,00,000

Basic & Diluted Earning per Share (Rs.) (-)0.04

( Equity Share of face value of Rs. 10 each)

x) Related Parties Disclosures:

List of related parties with whom transaction have been taken place and Relationships:

Name of the related party Relationship

Sandeep Seth ) Key Management Personnel

Jaideep Seth ) Director

Anisha Seth ) Director

Transactions during the year with related parties:

Expenditure

Payment to and provisions

Key Management Personnel Directors Remuneration Rs. 20,33,133 (20,73,436)

Rent Rs. 24,00,000 (24,00,000)

Director Directors Remuneration Rs.12,00,000 (4,83,500)

y) Previous year figures have been regrouped/ reclassified wherever necessary.

z) Figures in to bracket pertains to previous year.

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Mar 31, 2014

A) Basis of Accounting:

i) Financial statements are prepared under the historical cost convention in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 1956.

ii) The Company adopts the accrual concept in the preparation of accounts unless otherwise stated.

b) Use of Estimates:

The presentation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual result and estimates are recognized in the period in which the results are known/ materialized.

c) Fixed Assets

Fixed Assets are stated at cost of acquisition less depreciation and impairment of asset. The Company Capitalizes all costs relating to acquisitions and installations of fixed assets till the date of Commissioning and starting of commercial production.

d) Depreciation:

Depreciation on fixed assets is being provided on straight Line Method at the rates prescribed under Schedule XIV of the Companies Act, 1956.

e) Inventories:

Inventories of Commodity Arbitrage is valued at Cost.

Inventories of trading items of chemicals and API, is valued at cost and market value whichever is lower.

f) Revenue Recognition:

I. The revenue is recognized as per contract note of sale of Arbitrage, in case of sale of services on completion of Job and in case of sale of trading, on raising of invoice and transfer of material to the party.

II. Other income is recognized on accrual basis.

III. In conformity with generally accepted accounting principles, Income from Growth FMP Investments are recognized on redemption.

IV. Dividend is recognized when the right to receive payment is established by the Balance Sheet date.

g) Sales:

Sale comprises of the trading in Commodities Arbitrage and trading in chemicals and API.

h) Investments:

Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments.

On initial recognition, all investments are measured at cost. The cost comprises purchase price and directly attributable acquisition charges such as brokerage, fees and duties.

Current investments are carried in the financial statements at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of long term investments.

On disposal of an investment, the difference between the carrying amount and the net disposal proceeds is charged to the statement of profit and loss.

i) Foreign Currency Transaction:

The foreign currency transaction involving foreign exchange on revenue accounts are accounted at the exchange rates prevailing on the date of transaction. Foreign currency remained unsettled at the year-end are translated at the year-end rate and the difference is charged to profit & loss account. However there is no such transaction during the year.

j) Retirement Benefit Scheme:

Employer''s Contribution to P.F. has been charged to P & L A/c. and deposited with concerned authority.

Gratuity is accounted for on estimate basis and charged to P & L account on accrual basis. However as per AS-15 issued by Institute of Chartered Accountant of India, Retirement benefit to be provided on the basis of actuarial valuation but the same is not implemented by the company.

k) Borrowing Cost:

Borrowing cost incurred in relation to the acquisition, construction of assets are capitalized as the part of the cost of such assets up to the date when such assets are ready for intended use. Other borrowings cost are charged as an expense in the year in which these are incurred.

l) Taxes on Income:

Tax expense comprises current and deferred tax. Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current income tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit and loss.

Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. 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 and deferred tax liabilities are offset, if a legally enforceable right exists to set-off current tax assets against current tax liabilities and the deferred tax assets and the deferred tax liabilities related to the taxes on income levied by same governing taxation laws. 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. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.

Minimum alternate tax (MAT) paid in a year is charged to the statement of profit and loss as current tax. The Company recognizes MAT credit available as an asset only to the extent that there is convincing evidence that the Company will pay normal income tax during the specified period, i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the Company recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternative Tax under the Income-tax Act, 1961.

m) Impairment of Assets:

An assets is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged for when an assets is identified as impaired. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.

n) 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 the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.

o) Contingent Liability :

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle an obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements. The Details are as under:

i) Sales Tax Liability of Rs. 1,01,13,369 for the year 2008-09 (P.Y. Rs.1,01,13,369) against which appeal is pending

ii) Income Tax Liability for A.Y. 2009-10 Rs.78,60,520/- (P.Y. 78,60,520/-) Against which appeal is pending.

iii) Income Tax Liability for A.Y. 2008-09 Rs.7,69,746/- (P.Y. 7,69,746/-) Against which appeal is pending.

iv) Income Tax Liability for A.Y. 2009-10 Rs.1,65,808/- (P.Y. 1,65,808/-) Against which appeal is pending.

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Mar 31, 2013

A) Basis of Accounting:

i) Financial statements are prepared under the historical cost convention in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 1956.

ii) The Company adopts the accrual concept in the preparation of accounts unless otherwise stated.

b) Use of Estimates:

The presentation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual result and estimates are recognized in the period in which the results are known/ materialized.

c) Fixed Assets

Fixed Assets are stated at cost of acquisition less depreciation and impairment of asset. The Company Capitalizes all costs relating to acquisitions and installations of fixed assets till the date of Commissioning and starting of commercial production.

d) Depreciation: ''

Depreciation on fixed assets is being provided on straight Line Method at the rates prescribed under Schedule XIV of the Companies Act, 1956.

e) Inventories:

Inventories of Commodity Arbitrage is valued at Cost.

f) Revenue Recognition:

I. The revenue is recognized as per contract note of sale of Arbitrage and in case of sale of services on completion of Job.

II. Other income is recognized on accrual basis.

III. In conformity with generally accepted accounting principles, Income from Growth FMP Investments are recggnized on redemption.

g) Sales: »

Sale comprises of the trading in Commodities Arbitrage.

h) Investments:

Current Investments are valued at cost or market value whichever is lower.

Long-term investments are valued at cost. However provision for diminution is made, if the same is permanent in nature.

i) Foreign Currency Transaction:

The foreign currency transaction involving foreign exchange on revenue accounts are accounted at the exchange rates prevailing on the date of transaction. Foreign currency remained unsettled at the year-end are translated at the year-end rate and the difference is charged to profit & loss account. However there is no such transaction during the year.

j) Retirement Benefit Scheme:

Employer''s Contribution to P.F has been charged to P & L A/c. and deposited with concerned authority. Gratuity is accounted for on estimate basis and charged to P & L account on accrual basis. However as per

AS-15 issued by Institute of Chartered Accountant of India, Retirement benefit to be provided on the basis of actuarial valuation but the same is not implemented by the company.

k) Borrowing Cost:

Borrowing cost incurred in relation to the acquisition, construction of assets are capitalized as the part of the cost of such assets up to the date when such assets are ready for intended use. Other borrowings cost are charged as an expense in the year in which these are incurred.

1) Taxes on Income:

Current tax is determined* as the amount of tax payable in respect of taxable income for the financial year ending 31st March, Deferred tax is recognized, subject to consideration of prudence in respect of deferred tax assets, on timing difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more periods.

m) Impairment of Assets:

An assets is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged for when an assets is identified as impaired. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.

n) 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 the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.

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Mar 31, 2012

A) Basis of Accounting:

i) Financial statements are prepared under the historical cost convention in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 1956. ii) The Company adopts the accrual concept in the preparation of accounts unless otherwise stated.

b) Use of Estimates:

The presentation of financial statements requires estimates and assumptions to be made that affect the re- ported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual result and estimates are recognized in the period in which the results are known/ materialized.

c) Fixed Assets

Fixed Assets are stated at cost of acquisition less depreciation and impairment of asset. The Company Capi- talizes all costs relating to acquisitions and installations of fixed assets till the date of Commissioning and starting of commercial production.

d) Depreciation:

Depreciation on fixed assets is being provided on straight Line Method at the rates prescribed under Sched- ule XIV of the Companies Act, 1956.

e) Inventories:

Components are valued at cost. Raw Materials, Consumable and Packing materials are valued at lower of cost and net realizable value at first in first out basis. Semi Finished goods are valued at cost of materials and labour together with relevant factory overhead. Finished goods are valued at the lower of cost and net realiz- able value; cost includes material cost, direct labour and allocable overheads.

f) Revenue Recognition:

I. The revenue is recognized on dispatch of material to customers or on completion of Job.

II. Other income is recognized on accrual basis.

g) Sales:

Sale comprises amounts invoiced for goods sold net of excise duty, sales tax, returns and rebates.

h) Excise Duty:

Liability of Excise duty on finished goods accounted as and when they are cleared from the factory premises.

i) Modvat Benefit:

Modvat benefit is accounted on accrual basis on purchase of materials and appropriated against pay- ments of excise duty on clearance of the finished goods.

j) Investments:

Current Investments are valued at cost or market value whichever is lower.

Long-term investments are valued at cost. However provision for diminution is made, if the same is permanent in nature.

k) Foreign Currency Transaction:

The foreign currency transaction involving foreign exchange on revenue accounts are accounted at the ex- change rates prevailing on the date of transaction. Foreign currency remained unsettled at the year-end are translated at die year-end rate and the difference is charged to profit & loss account.

I) Retirement Benefit Scheme:

Employer s Contribution to P.F. has been changed to P & L A/c. and deposited with concerned authority.

Gratuity is accounted for on estimate basis and charged to P & L account on accrual basis. However as per AS-15 issued by Institute of Chartered Accountant of India, Retirement benefit to be provided on the basis of actuarial valuation but the same is not implemented by the company.

m) Borrowing Cost:

Borrowing cost incurred in relation to the acquisition, construction of assets are capitalized as the part of the cost of such assets up to the date when such assets are ready for intended use. Other borrowings cost are charged as an expense in the year in which these are incurred.

n) Taxes on income:

Current tax is determined as the amount of tax payable in respect of taxable income for the financial year ending 31st March, Deferred tax is recognized, subject to consideration of prudence in respect of deferred tax assets, on timing difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more periods.

o) Impairment of Assets:

An assets is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impair- ment loss is charged for when an assets is identified as impaired. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.

p) 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 the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.

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Mar 31, 2010

A) Basis of Accounting:

i) Financial statements are prepared under the historical cost convention in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 1956. ii) The Company adopts the accrual concept in the preparation of accounts unless otherwise stated.

b) Use of Estimates:

The presentation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual result and estimates are recognized in the period in which the results are known/ materialized.

c) Fixed Assets

Fixed Assets are stated at cost of acquisition less depreciation and impairment of asset. The Company Capitalizes all costs relating to acquisitions and installations of fixed assets till the date of Commissioning and starting of commercial production.

d) Depreciation:

Depreciation on fixed assets is being provided on straight Line Method at the rates prescribed under Schedule XIV of the Companies Act, 1956.

e) Inventories:

Components are valued at cost. Raw Materials, Consumable and Packing materials are valued at lower of cost and net realizable value at first in first out basis. Semi Finished goods are valued at cost of materials and labour together with relevant factory overhead. Finished goods are valued at the lower of cost and net realizable value; cost includes material cost, direct labour and allocable overheads.

f) Revenue Recognition:

I, The revenue is recognized on dispatch of material to customers or on completion of Job.

II. Other income is recognized on accrual basis.

g) Sales:

Sale comprises amounts invoiced for goods sold net of excise duty, sales tax, returns and rebates.

h) Excise Duty:

Liability of Excise duty on finished goods accounted as and when they are cleared from the factory premises. No provision is made in the accounts for goods manufactured and lying in factory premises. However the effect of the same in Profit & Loss account is Nil.

i) Modvat Benefit:

Modvat benefit is accounted on accrual basis on purchase of materials and appropriated against payments of excise duty on clearance of the finished goods.

j) Investments:

Current Investments are valued at cost or market value whichever is lower. Long-term investments are valued at cost. However provision for diminution is made, if the same is permanent in nature.

k) Foreign Currency Transaction:

The foreign currency transaction involving foreign exchange on revenue accounts are accounted at the exchange rates prevailing on the date of transaction. Foreign currency remained unsettled at the year-end are translated at the year-end rate and the difference is charged to profit & loss account.

I) Retirement Benefit Scheme:

Employers Contribution to P.F. has been charged to P & L A/c. and deposited with concerned authority.

Gratuity is accounted for on estimate basis and charged to P & L account on accrual basis. However as per AS- 15 issued by Institute of Chartered Accountant of India, Retirement benefit to be provided on the basis of actuarial valuation but the same is not implemented by the company. m) Borrowing Cost:

Borrowing cost incurred in relation to the acquisition, construction of assets are capitalized as the part of the cost of such assets up to the date when such assets are ready for intended use. Other borrowings cost,are charged as an expense in the year in which these are incurred.

n) Taxes on Income:

Current tax is determined as the amount of tax payable in respect of taxable income for the financial year ending 31st March, Deferred tax is recognized, subject to consideration of prudence in respect of deferred tax assets, on timing difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more periods.

o) Export benefits :-

Duty free imports of raw materials under advance license for import and export policy are matched with the exports made against the said licenses and the net benefit / obligation has been accounted by making suitable adjustments in raw material consumption. .

p) Impairment of Assets:

An assets is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged for when an assets is identified as impaired. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.