Accounting Policies of Blossom Industries Ltd. Company

Mar 31, 2014

1.1 Basis of Preparation of Financial Statements:

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under Section 211 (3C) of the Companies Act, 1956 ("the 1956 Act") (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 ("the 2013 Act") in terms of General Circular 15/2013 dated 13 September, 2013 of the Ministry of Corporate Affairs) and the relevant provisions of the 1956 Actj 2013 Companies Act, as applicable. The financial statements have been prepared on accrual basis under the historical cost convention except for categories of fixed assets acquired before I April, 2000, that are carried at revalued amounts. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.

2.2 Use of Estimates:

The preparation of the financial statements in conformity with the generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Examples of such estimates include provisions for doubtful debts, employee benefits, assessment of income taxes. The estimates and underlying assumptions are reviewed on an ongoing basis. Difference between actual results and estimates are recognized in the periods in which the results are known/materialised.

2.3 Inventories:

Items of inventories are measured at lower of cost and net realisable value. Costs of inventories comprise all cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Cost of stores and spares, raw materials, packing material, work-in-progress and finished goods is determined on first in first out basis.

2.4 Cash and cash equivalents (for purposes of Cash Flow Statement):

Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

2.5 Cash Flow Statement:

Cash flows are reported using the indirect method, whereby profit / (loss) before tax is adjusted for the effects of transactions of non- cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

2.6 Borrowing Cost:

Borrowing cost 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 a substantial period of time to get ready for its intended use or sale. All other borrowing cost are charged to revenue.

2.7 Tangible Fixed Assets:

Fixed assets are carried at cost less accumulated depreciation / amortisation and impairment losses, if any. The cost of fixed assets comprises its purchase price net of any trade discounts and rebates, any import duties and other taxes (other than those subsequently recoverable from the tax authorities), any directly attributable expenditure on making the asset ready for its intended use, other incidental expenses and interest on borrowings attributable to acquisition of qualifying fixed assets up to the date the asset is ready for its intended use. They are stated at historical cost or amounts substituted on revaluation.

Fixed assets retired from active use and held for disposal are stated at lower of their book value and realizable value and shown separately under other current assets.

The Company had revalued freehold land that existed on I " April, 2000. Increase in the net book value on such revaluation is credited to Revaluation reserve. The revaluation was based on a valuation made by an independent valuer in the year 1999-2000.

2.8 Intangible Assets:

Intangible assets are recognized only if it is probable that future economic benefits that are attributable to the assets will flow to the enterprise and the cost of asset can be measured reliably. Intangible Assets are stated at cost of acquisition less accumulated amortisation.

2.9 Depreciation and Amortisation : .

Depreciation on plant and machineries is provided on written down value basis and on all other fixed assets on straight line method basis at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956, except for depreciation on building taken over from the high court receiver on 28-03-2000, which has been provided on the value determined by the approved valuers for their residual useful life i.e.( 14 years) considering the requirements of Schedule XIV of the Companies Act, 1956. Depreciation on assets retired from active use is provided up to the date of such retirement. Computer software is amortised over a period of 5 years.

2.10 Impairment of Assets:

The aggregate carrying value of assets is reviewed at each Balance Sheet date for impairment. If any such indication exists, the recoverable amount of the assets is estimated in order to determine the extent of the impairment. Where it is not possible to estimate the recoverable amount of individual assets, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. The recoverable amount is the greater of the net selling price and value in use. Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor. When there is indication that an impairment loss recognized for an asset or cash-generating unit in earlier accounting periods no longer exist or may have decreased, such reversal of impairment loss is recognized in the Statement of Profit and Loss, except in case of revalued assets.

2.11 Employee Benefits:

a) Defined Contribution Plan:

Company''s Contribution paid/payable for the year to Defined Contribution plans are charged to the Statement of Profit and Loss based on the amount of contribution required to be made and when services are rendered by the employees.

b) Defined Benefit Plan:

Company''s liabilities towards Defined Benefit Schemes are determined using the Projected Unit Credit Method, Actuarial valuations under the Projected Unit Credit Method are carried out at the Balance Sheet date. Actuarial gains and losses are recognised in the Statement of Profit and Loss in the period of occurrence of such gains and losses. Past service cost is recognised immediately to the extent of benefits are vested, otherwise it is amortised on straight-line basis over the remaining average period until the benefits become vested.

c) Short-term employee benefits:

Short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised undiscounted during the period employee renders service. These benefits include annual bonus and exgratia.

d) Long-term employee benefits:

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognized as a liability at the present value of the define benefit obligation as at the Balance Sheet date less the fair value of the plan assets out of which the obligations are expected to be settled.

2.12 Foreign Currency Transactions:

Initial recognition:

Transactions in foreign currencies entered into by the Company are accounted at the exchange rates prevailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction.

Measurement of foreign currency monetary items at the Balance Sheet date:

Foreign currency monetary items (other than derivative contracts) of the Company outstanding at the Balance Sheet date are restated at the year-end rates.

Treatment of exchange differences:

Exchange differences arising on settlement/restatement of short-term foreign currency monetary assets and liabilities of the Company are recognised as income or expense in the Statement of Profit and Loss.

Accounting of Derivative contracts:

The Company enters into derivative contracts in the nature of forward contracts with an intention to hedge its firm commitments.

These forward contracts are marked-to-market and losses are recognised in the Statement of Profit and Loss. Gains arising on the same are not recognised, until realised, on grounds of prudence.

2.13 Revenue Recognition:

a. Sale of goods: Revenue on sale of products is Recognized when the products are dispatched to the customers, all significant contractual obligations have been satisfied and the collection of the resulting receivables is reasonably expected.

b. Other Income: Interest income is accounted on accrual basis. Dividend income is accounted for when the right to receive it is established.

2.14 Income Taxes:

Current tax is determined as the amount of tax payable in respect of taxable income for the year.

Minimum Alternate tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognized as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company.

Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantially enacted as at the reporting date. Deferred tax liabilities are recognised for all timing differences. Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recognised only if there is virtual certainty that there will be sufficient future taxable income available to realise such assets. Deferred tax assets are recognised for timing differences of other items only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realised. Deferred tax assets are reviewed at each Balance Sheet date for their realisability.

2.15 Provisions, Contingent Liabilities and Contingent Assets: .

Provisions involving substantial degree of estimation in measurement are recognised 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 recognised but are disclosed in the notes. Contingent Assets are neither recognised in-the financial statements nor disclosed in the financial statements.

(ii) Terms/Rights attached to Equity Shares

The Company has only one class of equity shares having a par value of Rs 3 per share. Each equity shareholder is entitled to one vote per share.

In the event of the liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after the distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

As per the terms of the Inter corporate loan, the same will be repaid as and when excess funds are available with the Company. The rate of interest on the loan is 12% per annum. Khemani Distilleries Private Limited has confirmed that the loan is not repayable for at least 12 months from 31 st March, 2014.

(i) Balance with banks indude deposits amounting to Rs 8,500,000/- (As at 31 st March, 2013 Rs 2,325,347/-) having maturity period less than or equal to 3 months.

(ii) Balance with banks indude deposits amounting to Rs 600,000/- (As at 31 st March, 2013 Rs 500,000/-, margin money amounting to 7 Nil /- (As at 31 st March, 2013 Rs 251,137/-) and fixed deposits lodged as security deposits aggregating Nil- (As at 31 st March, 2013 Rs 313,764/ having maturity period between 3 to 12 months.

(iii) Balance with banks include margin monies amounting to Rs 1,025,843/- (As at 31 st March, 2013 Rs 100,000/-) having maturity pferiod more than 12 months.

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Mar 31, 2013

1.1 Basis of Preparation of Financial Statements:

The financial statements are prepared as a going concern under historical cost convention on an accrual basis and comply on all material respects with the Generally Accepted Accounting Principles in India and the relevant provisions of the Companies Act, 1956. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year except for certain fixed assets which have been revalued.

1.2 Use of Estimates:

The preparation of the financial statements in conformity with the generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Examples of such estimates include provisions for doubtful debts, employee benefits, and assessment of income taxes. The estimates and underlying assumptions are reviewed on an ongoing basis. Difference between actual results and estimates are recognized in the periods in which the results are known/materialised.

1.3 Inventories:

Items of inventories are measured at lower of cost and net realisable value. Costs of inventories comprise all cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Cost of stores and spares, raw materials, packing material, work-in-progress and finished goods is determined on first in first out basis.

1.4 Borrowing Cost:

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 a substantial period of time to get ready for its intended use or sale. All other borrowing costs are charged to revenue.

1.5 Tangible Fixed Assets:

Fixed assets are recorded at cost of acquisition or construction (including incidental expenses). They are stated at historical cost or amounts substituted on revaluation.

Fixed assets retired from active use and held for disposal are stated at lower of their book value and realizable value and shown separately under other current assets.

1.6 Intangible Assets:

Intangible assets are recognized only if it is probable that future economic benefits that are attributable to the assets will flow to the enterprise and the cost of asset can be measured reliably. Intangible assets are stated at cost of acquisition less accumulated amortisation.

1.7 Depreciation and Amortisation:

Depreciation on plant and machineries is provided on written down value basis and on all other fixed assets on straight line method basis at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956, except for depreciation on building taken over from the high court receiver on 28-03-2000, which has been provided on the value determined by the approved valuers for their residual useful life i.e.(14 years) considering the requirements of Schedule XIV of the Companies Act, 1956. Depreciation on assets retired from active use is provided up to the date of such retirement. Computer software is amortised over a period of 5 years.

1.8 Impairment of Assets:

The carrying values of assets are reviewed at each Balance Sheet date for impairment. If any indication of impairment exists, the recoverable amount of such assets is estimated and impairment is recognised, if the carrying amount of these assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor. When there is indication that an impairment loss recognised for an asset in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognised in the Statement of Profit and Loss, except in case of revalued assets.

1.9 Cash flow statement:

Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

1.10 Employee Benefits:

a) Defined Contribution Plan:

Company''s Contribution paid/payable for the year to Defined Contribution plans are charged to the Statement of Profit and Loss.

b) Defined Benefit Plan:

Company''s liabilities towards Defined Benefit Schemes are determined using the Projected Unit Credit Method. Actuarial valuations under the Projected Unit Credit Method are carried out at the Balance Sheet date. Actuarial gains and losses are recognised in the Statement of Profit and Loss in the period of occurrence of such gains and losses. Past service cost is recognised immediately to the extent of benefits are vested, otherwise it is amortised on straight- line basis over the remaining average period until the benefits become vested.

c) Short-term employee benefits:

Short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised undiscounted during the period employee renders service. These benefits include annual bonus and exgratia.

d) Long-term employee benefits:

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognized as a liability at the present value of the define benefit

Obligation as at the Balance Sheet date less the fair value of the plan assets out of which the obligations are expected to be settled.

1.11 Foreign Currency Transactions:

Transactions in foreign currencies are recognised at the prevailing exchange rates on the transaction date. Realised gains and losses on settlement of foreign currency transactions are recognised in the Statement of Profit and Loss. Monetary items denominated in foreign currency are restated using the exchange rates prevailing at the date of the balancesheet, and the resulting net exchange difference is recognized in the Statement of Profit and Loss. In case of monetary items which are covered by forward contracts, the difference between the year-end rate and the rate on the date of the contract is recognized as an exchange difference and the premium/discount paid on such forward contracts has been recognized over the life of the contract.

1.12 Revenue Recognition:

a. Sale of goods: Revenue on sale of products is recognized when the products are dispatched to the customers, all significant contractual obligations have been satisfied and the collection of the resulting receivables is reasonably expected.

b. Other Income: Interest income is accounted on accrual basis. Dividend income is accounted for when the right to receive it is established.

1.13 Income Taxes:

Current tax is determined as the amount of tax payable in respect of taxable income for the year.

Minimum Alternate tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognized as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company.

Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantially enacted as at the reporting date. Deferred tax liabilities are . recognised for all timing differences. Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recognised only if there is virtual certainty that there will be sufficient future taxable income available to realise such assets. Deferred tax assets are recognised for timing differences of other items only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realised. Deferred tax assets are reviewed at each Balance Sheet date for their realisability.

1.14 Provisions, Contingent Liabilities and Contingent Assets:

Provisions involving substantial degree of estimation in measurement are recognised 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 recognised but are disclosed in the notes. Contingent Assets are neither recognised in the financial statements nor disclosed in the financial statements.

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Mar 31, 2012

1.1 Basis of Preparation of Financial Statements:

The financial statements are prepared as a going concern under historical cost convention on an accrual basis and comply on all material respects with the Generally Accepted Accounting Principles in India and the relevant provisions of the Companies Act, 1956. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year except for certain fixed assets which have been revalued.

1.2 Use of Estimates:

The preparation of the financial statements in conformity with the generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Examples of such estimates include provisions for doubtful debts, employee benefits, assessment of income taxes. The estimates and underlying assumptions are reviewed on an ongoing basis. Difference between actual results and estimates are recognized in the periods in which the results are known/materialised.

1.3 Inventories:

Items of inventories are measured at lower of cost and net realisable value. Costs of inventories comprise all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Cost of stores and spares, raw materials, packing material, work-in-progress and finished goods is determined on first in first out basis.

1.4 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 a substantial period of time to get ready for its intended use or sale. All other borrowing costs are charged to revenue.

1.5 Tangible Fixed Assets:

Fixed assets are recorded at cost of acquisition or construction (including incidental expenses). They are stated at historical cost or amounts substituted on revaluation.

Fixed assets retired from active use and held for disposal are stated at lower of their book value and realizable value and shown separately under other current assets.

1.6 Intangible Assets:

Intangible assets are recognized only if it is probable that future economic benefits that are attributable to the assets will flow to the enterprise and the cost of asset can be measured reliably. Intangible Assets are stated at cost of acquisition less accumulated amortisation.

1.7 Depreciation and Amortisation:

Depreciation on plant and machineries is provided on written down value basis and on all other fixed assets on straight line method basis at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956, except for depreciation on building taken over from the high court receiver on 28-03-2000, which has been provided on the value determined by the approved valuers for their residual useful life i.e.(14 years) considering the requirements of Schedule XIV of the Companies Act, 1956. Depreciation on assets retired from active use is provided up to the date of such retirement. Computer software is amortised over a period of 5 years.

1.8 Impairment of Assets:

The carrying values of assets are reviewed at each Balance Sheet date for impairment. If any indication of impairment exists, the recoverable amount of such assets is estimated and impairment is recognised, if the carrying amount of these assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor. When there is indication that an impairment loss recognised for an asset in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognised in the Statement of Profit and Loss, except in case of revalued assets.

1.9 Cash flow statement:

Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past of future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

1.10 Employee Benefits:

a) Defined Contribution Plan:

Company's Contribution paid/payable for the year to Defined Contribution plans are charged to the Statement of Profit and Loss.

b) Defined Benefit Plan:

Company's liabilities towards Defined Benefit Schemes are determined using the Projected Unit Credit Method. Actuarial valuations under the Projected Unit Credit Method are carried out at the Balance Sheet date. Actuarial gains and losses are recognised in the Statement of Profit and Loss in the period of occurrence of such gains and losses. Past service cost is recognised immediately to the extent of benefits are vested, otherwise it is amortised on straight- line basis over the remaining average period until the benefits become vested.

c) Short-term employee benefits:

Short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised undiscounted during the period employee renders service. These benefits include annual bonus andexgratia.

d) Long-term employee benefits:

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognized as a liability at the present value of the define benefit obligation as at the Balance Sheet date less the fair value of the plan assets out of which the obligations are expected to be settled.

1.11 Foreign Currency Transactions:

Transactions in foreign currencies are recognised at the prevailing exchange rates on the transaction date. Realised gains and losses on settlement of foreign currency transactions are recognised in the Statement of Profit and Loss.

Monetary items denominated in foreign currency are restated using the exchange rates prevailing at the date of the balance sheet, and the resulting net exchange difference is recognized in the Statement of Profit and Loss. In case of monetary items which are covered by forward contracts, the difference between the year-end rate and the rate on the date of the contract is recognized as an exchange difference and the premium/discount paid on such forward contracts has been recognized over the life of the contract.

1.12 Revenue Recognition:

Revenue on sale of products is recognized when the products are dispatched to the customers, all significant contractual obligations have been satisfied and the collection of the resulting receivables is reasonably expected.

1.13 Income Taxes:

Current tax is determined as the amount of tax payable in respect of taxable income for the year.

Minimum Alternate tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognized as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company.

Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantially enacted as at the reporting date. Deferred tax liabilities are recognised for all timing differences. Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recognised only if there is virtual certainty that there will be sufficient future taxable income available to realise such assets. Deferred tax assets are recognised for timing differences of other items only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realised. Deferred tax assets are reviewed at each Balance Sheet date for their realisability.

1.14 Provisions, Contingent Liabilities and Contingent Assets:

Provisions involving substantial degree of estimation in measurement are recognised 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 recognised but are disclosed in the notes. Contingent Assets are neither recognised in the financial statements nor disclosed in the financial statements.

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Mar 31, 2011

A. REVENUE RECOGNITION

(i) Revenues/ Incomes and Costs/ Expenditures are generally accounted on accrual basis as they are earned or incurred.

(ii) Sales are recognized on the date of dispatch of materials to customers. Services are recognized on completion.

(iii)Revenue recognition in respect of price escalation is carried out in the year of settlement of claims / bills.

(iv) Dividend income from investment is accounted, when the right to receive is established.

(v)Duty draw back and other benefits receivable on eligible export of goods manufactured are shown under "Other Income" as per rates applicable thereon.

B. FIXED ASSETS

(i) Fixed Assets other than those which have been revalued are stated at cost which includes all direct expenses including attributable borrowing cost incurred up to the date of installation of assets less accumulateddepreciation (other than "Leasehold Land" where no depreciation is charged).

(ii) Revalued assets are shown at the revalued cost less accumulated depreciation as per the Accounting policy no. C (ii).

(iii) Discarded fixed assets are de-capitalized and included under inventories at 5% of value of assets being estimated realizable value.

(iv) Advance paid towards the acquisition of fixed assets outstanding as of each date balance sheet date and the cost of fixed assets not ready for use before such date are disclosed under capital work-in- progress.

C. DEPRECIATION

(i) Depreciation on Fixed Assets (Other than revalued assets) is provided on Straight Line Method in accordance with the rates specified under Schedule XIV to the Companies Act, 1956.

(ii) Depreciation on revalued assets is calculated on their respective revalued amount on Straight Line Method over

the balance useful life as determined by the valuers or the balance remaining useful life as per Schedule - XIV whichever is lower.

(iii) Leasehold land is not amortized since the period of lease is 99 years.

(iv) Items costing Rs. 5000/- or less are fully depreciated in the year of purchase.

(v) Depreciation on additions to assets and on sale/ discard of assets is calculated pro-rata from the date of such additions or up to the date of such sale/ discard, as the case may be.

(vi) The charge over and above the depreciation calculated on the original cost of the revalued assets is transferred from Fixed Asset Revaluation Reserve to Profit and Loss Account and shown as a deduction from Revaluation Reserve.

D. BORROWING COST :

Borrowing costs relating to the acquisition/ construction of qualifying assets are capitalized until the time all substantial activities necessary to prepare the qualifying assets for their intended use are complete. 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 revenue.

E. INVESTMENT

Long Term investments are carried at cost less provision, if any, for permanent diminution in value of such investments. Current investments are carried at lower of cost and market value.

F. INVENTORIES

(i) Stock of Raw Materials,Components and stores are valued at lower of cost and net realizable value . Cost is arrived at on FIFO Basis, excluding CENVAT paid on purchases.

(ii)Stock of Materials-in-Process and Finished Goods are valued at lower of cost and net realizable value.Cost excludes CENVAT paid on inputs but includes excise duty payable on completion of manufacture of the Finished Goods.

G. FOREIGN CURRENCY TRANSACTION

(i) Receipts and Payments are recorded at actual rates prevailing on the date of transaction.

(ii) Balances in the form of Current Assets and Current Liabilities (including for procurement of Fixed Assets) in foreign currency, outstanding at the close of the year, are converted (in Indian Currency) at the appropriate rates of exchange prevailing on the date of Balance Sheet and the resultant loss or gain is taken to exchange variation account which gets charged in or credited to the Profit and Loss Account.

(iii) Forward Exchange Contracts not intended for trading or speculation purpose : The premium or discount arising at the inception of forward exchange contracts is amortized as expenses or income over the life of the respective contracts. Exchange differences on such contracts are recognized in the statement of profit and loss on the period in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognized as income or expense for the year.

H. RESEARCH AND DEVELOPMENT

Revenue expenditure including overheads on Research and Developments are charged off as an expense through the natural heads of account in the year in which incurred. Expenditure which results in the creation of capital assets is taken to fixed assets and depreciation is provided on such assets as applicable.

1. EMPLOYEE BENEFITS

(i) Short Term Employee Benefits:

All employee benefits payable wholly within twelve months of rendering service are classified as short term employees benefits. Benefits such as salaries, wages, short term compensated absences, etc and the expected cost of bonus, ex-gratia are recognized in the period in which the employees rendered the related service.

(ii) Defined Contribution Plans.Provident Fund, Superannuation Fund and Employees State Insurance Scheme are defined contribution plans. The contribution paid/ payable under the schemes is recognized during the period in which the employees renders the related services.

(iii) Defined Benefits Plans

a) Gratuity on account of services gratuity is covered under Gratuity-cum-Life Assurance Scheme of Life Insurance Corporation of India. Annual premium paid for the scheme is charged to Profit and Loss Account.

b) Provision for leave encashment benefit is done on the basis of actuarial valuation.

J. LIQUIDATED DAMAGES

Liquidated damages are accounted only when finally agreed upon and settled with the parties.

K. TAXATION :

Income Tax provision comprises Current tax and Deferred Tax charge or credit. The Deferred Tax assets and Deferred Tax Liabilities are calculated by applying tax rate and tax laws that have been enacted or substantially enacted by the Balance Sheet date. Deferred tax assets arising from timing differences are recognized to the extent there is a reasonable certainty that the assets can be realized in future.

L. IMPAIRMENT OF ASSETS

(a) The Company has one product which is manufactured in and sold from its factories located at Bhubaneswar and Vadodara and accordingly entire Company is treated as Cash Generation Unit for carrying out Impairment Test.

(b) Estimated future net inflows are made on the basis of estimated growth in volumes considering the expected growth of power industry based on current trends and the rise in input and other costs on past experiences.

M. PROVISIONS, CONTINGENT LIABILITIES & CONTIGENT ASSETS.

(a) The Company recognizes a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation.

(b) Liabilities contingent upon happening of future event are disclosed by way of a note in the accounts. Claims against the Company where a demand has been raised by any authority or disputed in arbitration are recognized as Contingent Liability, if contested.

(c) Contingent assets are not recognized.

(d) Provision is made regarding disputed statutory levies only when the appeal is decided by the Appellate Tribunal.

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Mar 31, 2010

Basis of preparation of financial statements:

The financial statements have been prepared under the historical cost convention in accordance with the generally accepted accounting principles in India and the provisions of the Companies Act, 1956, except for certain fixed assets which have been revalued.

Use of Estimates:

The preparation of the financial statements in conformity with the generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Differences between actual results and estimates are recognized in the period in which the results are known/ materialize.

Inventories:

Items of inventories are measured at lower of cost and net realisable value. Costs of inventories comprise all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Cost of stores and spares, raw materials, packing material, work-in-progress and finished goods is determined on first in first out basis.

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 a substantial period of time to get ready for its intended use or sale. All other borrowing costs are charged to revenue.

Tangible Fixed assets:

Fixed assets are recorded at cost of acquisition or constructions (including incidental expenses). They are stated at historical cost or amounts substituted on revaluation.

Fixed assets retired from active use and held for disposal are stated at lower of their book value and realizable value and shown separately under the current assets.

Intangible Assets and amortisation:

Intangible assets are recognised only if it is probable that future economic benefits that are attributable to the assets will flow to the enterprise and the cost of asset can be measured reliably. Intangible assets are stated at cost of acquisition less accumulated amortisation. Computer software is amortised over a period of 5 years.

Depreciation:

Depreciation on plant and machineries is provided on written down value basis and on all other fixed assets on straight line method basis at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956, except for depreciation on building and plant and machineries taken over from the high court receiver on 28-03-2000, which has been provided on the value determined by the approved valuers for their residual useful life considering the requirements of schedule XIV of the Companies Act, 1956. Depreciation on assets retired from active use is provided up to the date of such retirement.

Employee benefits:

a) Defined Contribution Plan:

Companys Contribution paid/ payable for the year to Defined Contribution retirement benefit plan is charged to Profit and Loss account.

b) Defined Benefit Plan:

Companys liabilities towards Defined Benefit Schemes are determined using the Projected Unit Credit Method. Actuarial valuations under the Projected Unit Credit Method are carried.out at the Balance Sheet date. Actuarial gains and losses are recognised in the Profit and Loss account in the period of occurrence of such gains and losses. Past service cost is recognised immediately to the extent of benefits are vested, otherwise it is amortised on straight-line basis over the remaining average period until the benefits become vested.

c) Short - term employee benefits:

Short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised undiscounted during the period employee renders services. These benefits include annual bonus or exgratia.

Foreign currency transactions:

Transactions in foreign currencies are recognised at the prevailing exchange rates on the transaction date. Realised gains and losses on settlement of foreign currency transactions are recognised in the Profit and Loss Account.

Monetary items denominated in foreign currency are restated using the exchange rates prevailing at the date of the Balance Sheet, and the resulting net exchange difference is recognized in the Profit and Loss Account. In case of monetary items which are covered by forward contracts, the difference between the year end rate and the rate on the date of the contract is recognized as an exchange difference and the premium/ discount paid on such forward contracts has been recognised as income/ expense over the life of the contract.

Revenue recognition:

Revenue on sale of products is recognized when the products are dispatched to the customers, all significant contractual obligations have been satisfied and the collection of the resulting receivables is reasonably expected.

Income taxes:

Deferred tax assets and liabilities are measured using the tax rates which have been enacted or substantively enacted at the Balance Sheet date. Deferred tax expense or benefit is recognized, subject to consideration of prudence, on timing differences being the difference between taxable jncome and accounting income that originate in one period and are capable of reversing in one or more subsequent periods.

Deferred tax assets are recognized for all deductible timing differences and are carried forward to the extent there is reasonable certainty that sufficient taxable profit will be available to realize these assets. In the event of unabsorbed depreciation and carry forward of losses, deferred tax assets are recognized only to the extent that, there is a virtual certainty that sufficient taxable income will be available to realize these assets. At each Balance Sheet date, the Company reassesses unrecognized deferred tax assets to the extent they become reasonably certain or virtually certain or realization as the case may be.

Impairment of Assets:

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the Profit and Loss Account in the year in which an asset is identified as impaired. The impairment loss recognised in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

Operating Leases:

Assets taken on lease under which all risks and rewards of ownership are effectively retained by the lessor are classified as operating lease. Lease payments under operating leases are recognised as expenses on accrual basis in accordance with the respective lease agreements.

Provisions, contingent liabilities and contingent assets:

Provisions involving substantial degree of estimation in measurement are recognised 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 recognised but are disclosed in the notes. Contingent Assets are neither recognised in the financial statements nor disclosed in the financial statements.