a) Basis of Accounting:
The financial statements are prepared under historical cost convention,
on a going concern basis, in accordance with the applicable accounting
standards prescribed in the Companies (Accounting Standards) Rules,
2006 issued by the Central Government, and relevant provisions of the
Companies Act, 1956.
b) Use of Estimates:
The preparation of financial statements requires management to make
certain estimates and assumptions that affect the amounts reported in
the financial statements and notes thereto. Differences between actual
results and estimates are recognized in the period in which they
c) Fixed Assets:
Fixed Assets are stated at cost less accumulated depreciation. The cost
of assets comprises of purchase price and directly attributable cost of
bringing the assets to working condition for its intended use including
borrowing cost and incidental expenditure during construction incurred
upto the date of commissioning.
i. Assets acquired after 30th June'' 1978 are depreciated on the
straight-line basis at the rates prescribed under Schedule XIV of the
Companies Act, 1956. Certain items of Plant and Machinery pertaining to
Industrial Machinery Division have been depreciated on a Straight-line
basis @ 6.33% and 9.50%, as the case may be, based on the estimated
useful life of the respective assets, as determined by the approved
ii. Assets acquired up to 30th June 1978 have been depreciated on the
written down value basis at the rates prescribed under Schedule XIV of
the Companies Act, 1956.
iii. Assets costing Rs.5,000/- or less are fully depreciated in line
with Schedule XIV of the Companies Act, 1956.
iv. Software is amortised over 5 year on Straight Line Method
Long Term Investments are valued at costs. Provision for diminution in
value of investments is made if, in the opinion of the management, the
diminution is of a permanent nature. Current Investments are valued at
lower of cost or fair value.
Raw materials Finished Goods and Work-in-progress are valued at lower
of cost or net realizable value. Cost is determined on a weighted
average basis. Work-in-Progress is carried at lower of cost and net
realizable value. Stores & Spare parts are carried at cost, less
provision for obsolescence if any.
g) Revenue Recognition:
i. Sales are recognized at the time of transfer of title in goods.
Sales value is inclusive of excise duty but exclusive of sales tax.
ii. Services are net of service tax. Revenue from services is
recognized when services are rendered and related costs are incurred.
iii. Interest is recognized on time proportion basis.
iv. Dividend is recognized, at the time when they are declared.
h) Foreign Currency Transaction:
i. Foreign currency transactions are accounted at the rates prevailing
on the date of transaction.
ii. Monetary Assets and Liabilities denominated in foreign currencies
are translated at the exchange rate ruling on the Balance Sheet date.
Any gains or losses arising due to exchange differences at the time of
translation or settlement are accounted for in the Profit and Loss
i) Employee Benefits:
i. Defined Contribution plan: Retirement benefits in the Provident
Fund, Family Pension Fund and Superannuation Scheme, which are defined
contribution schemes, are charged to the Profit and Loss account of the
year when the contributions accrue.
ii. Defined Benefit Plan: The Liability for Gratuity, a defined benefit
obligation, is accrued and provided for on the basis of actuarial
valuation as at the balance Sheet date.
iii. Other Long Term Benefits: Long term compensated absences are
provided on the basis of an actuarial valuation as at the Balance Sheet
date. Actuarial gains and losses comprising of adjustment and the
effects of changes in actuarial assumptions are recognized in the
Profit and Loss account for the year as income or expense.
Provision for current tax is made after taking into consideration
benefits admissible under the provisions of Income Tax Act, 1961.
Deferred Tax resulting from timing difference between book and
taxable profit is accounted for using the tax rates and laws that have
been enacted or substantively enacted as on the Balance Sheet date. The
deferred tax asset is recognized and carried forward only to the extent
there is reasonable certainty / virtual certainty as the case may be,
that the asset will be realized against future taxable profits.
k) Impairment of Assets:
At each Balance sheet date, the management reviews the carrying amount
of its assets and goodwill included in each Cash generating Unit to
determine whether there is any indication that those assets were
impaired. If any such indication exists, the recoverable amount of the
asset is estimated in order to determine the extent of impairment loss.
Recoverable amount of an asset is the higher of an asset''s net selling
price and value in use. In assessing value in use, the estimated future
cash flows from the continuing use of the asset and from its disposal
are discounted to their present value using a pre-tax discount rate
that reflects the current market assessments of time value and the
risks specific to the asset. Reversal of impairment loss is recognized
immediately as income in the profit and loss account.
l) Operating Lease Granted:
Lease arrangements where the risk and rewards incident to the ownership
of an asset substantially vest with the lessor, are recognized as
operating lease. Lease rentals under operating lease are recognized in
profit and loss account on a straight- line basis.
m) Accounting for Provisions, Contingent Liabilities and Contingent
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 to Accounts. Contingent assets are neither recognized nor
disclosed in the financial statements.