1 Basis of Accounting
The Financial Statements are prepared under the historical cost
convention, on the accrual basis of accounting and comply with the
provisions of Companies Act, 1956, accounting principles generally
accepted in India and Accounting Standards issued by The Institute of
Chartered Accountants of India (ICAI) to the extent applicable. There is
change in Accounting policy of the company in the current year in order
to comply with the requirement of Revised Schedule VI. Operating Cycle
of the company is less than 12 months , hence period of twelve months
has been considered as the operating cycle of the company and the same
is considered for bifurcation of current & non current items. In order
to comply with the Revised Schedule VI, previous years'' figures have
been regrouped/reclassified .
2 Revenue Recognition
a) Sales including export sales and trading sales are recognized when
goods are dispatched from the factory and are recorded at net of
shortages, claims settled, rate differences, rebate allowed to
b) Export Sales are booked at the rate on the date of transaction and
the resultant gain or loss on realization or on translation is
accounted as Foreign Exchange Rate Fluctuation and is dealt with in
the statement of Profit and Loss Account.
3 Fixed Assets and Depreciation
Fixed assets, other than Plant & Machinery, are valued and stated at
cost less accumulated depreciation calculated on the basis of Written
Down Value Method on prorata basis and at the rates prescribed in
Schedule XIV to the Companies Act, 1956. In case of Plant & Machinery,
depreciation has been provided on Straight Line Method (SLM) basis.
Depreciation of 96,613/- has been debited to Revaluation Reserve
Account out of total depreciation of 12,70,026/-.
Inventories of Raw Materials, Stores and Spares, Packing material,
Coal, Goods in process and Finished goods are stated at Cost or Net
Realizable Value whichever is lower, as certified by Management. Cost
comprises of cost of purchases, cost of conversion and other costs
incurred in bringing the inventories to their present location and
condition. Costing formula used is First-in-First-out (FIFO).
Investments are classified as Long Term Investments. Long term
investments are stated at Cost. Provision is made for diminution in the
value of Long term Investments to recognize a decline, if any other
than temporary in nature.
6 Use of Estimates
The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amount of assets,
liabilities, revenue and expenses and disclosure of contingent
liabilities on the date of financial statements. The recognition,
measurement, classification or disclosure of an item or information in
the financial statements has been made relying on these estimates.
7 Impairment of Assets
Consideration is given at each Balance Sheet date to determine whether
there is any indication of impairment of the carrying amounts of the
Company''s assets. If any indication exists, an asset''s recoverable
amount is estimated. An impairment loss is recognized wherever the
carrying amount of an assets exceeds its recoverable amount. The
recoverable amount is the greater of the net selling price and value in
8 Employee Benefits
a) Short term employee benefits are recognized as an expense at
undiscounted amount in the Profit & Loss Account of the year in which
the related service is rendered.
b) Post employment and other long term employee benefits are recognized
as an expense in the Profit & Loss Account in the year of payment.