11. Provisions and Contingent Liabilities:
A provision is recognised if, as a result of past event, the Company has a present legal obligation that can beestimated reliably and it is probable that an outflow of economic benefit will be required to settle the obligation.Provisions are determined by the best estimate of outflow of economic benefits required to settle the obligation atthe reporting date. Where no reliable estimate can be made, a disclosure is made as contingent liability. Adisclosure for a contingent liability is also made when there is a possible obligation or a present obligation thatmay, but probably will not, require an outflow of resources. Where there is possible obligation or presentobligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.
12. Earnings Per Share:
Basic Earnings per share is computed by dividing the net profit after tax by the weighted average number of equityshares outstanding during the period. Diluted earnings per share is computed by dividing the net profit after taxby the weighted average number of shares considered for deriving basic earnings per share and also the weightedaverage number of equity shares that could have been issued upon conversion of all dilutive potential equityshares. The diluted potential equity shares are adjusted for the proceeds receivable had the shares been actuallyissued at fair value which is the average market value of the outstanding shares. Dilutive potential equity sharesare deemed converted as at the beginning of the period, unless issued at a later date. Dilutive potential equityshares are determined independently for each period presented.
13. Operating Leases
Lease where the Lessor effectively retains substantially all the risks and benefits of ownership of the leased term,are classified as operating lease. Operating lease payments are recognized as an expense in the Profit and LossAccount on a straight-line basis.
14. Cash and Cash Equivalents:
Cash and cash equivalents comprise cash and cash deposits with banks. The Company considers all highly liquidinvestments with an original maturity at a date of purchase of three months or less and that are readily convertibleto known amounts of cash to be cash equivalents. Other deposits with bank represent investments with an originalmaturity at a date of purchase between 3 months and 12 months.
15. Foreign Currency Transactions
In preparing financial statements of the company, transactions in currencies other than the functional currency arerecorded at the rate of exchange Prevailing on the date of transaction. At the end of each reporting period, monetaryitems denominated in foreign currencies are retranslated at the rates prevailing at the end of reporting period. Non¬monetary items carried at fair value that are denominated in foreign currencies are retranslated at the ratesprevailing on the date when the fair value was determined. Exchange differences arising on the settlement ofmonetary items, and on retranslation of monetary items are included in the statement of profit and loss for theperiod Exchange differences arising on retranslation on non-monetary items carried at fair value are included in
statement of profit and loss for the period except for differences arising on the retranslation of non-monetary itemsin respect of which gains and losses are recognised directly in other comprehensive income.
16. Inventories
Stock of Raw Materials, components and other stocks are valued at Cost (FIFO Basis) (net off CENVAT & GSTwherever applicable) Finished products including traded goods and work-in-process are valued at lower of costor net realizable value.
17. Borrowing Cost
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which areassets that necessarily take Substantial period of time to get ready for their intended for use. Other income earnedon the temporary investment of specific borrowing pending their expenditure on qualifying assets is deductedfrom the borrowing costs eligible for capitalisation.