1. BASIS OF PRESENTATION
The Accounts have been prepared under the historical cost convention in
accordance with applicable Accounting Standards except where otherwise
stated. Revenue is recognised and expenses accounted on accrual basis
except in the following cases, where income/expenditure have been
accounted for on receipt/payment basis on account of uncertainties:
a) Expenses during warranty period.
b) Claims on account of duty drawback and insurance.
c) Capital subsidy and subsidy received on Installation of D.G.Set.
2. FIXED ASSETS
a) Fixed Assets are stated at cost less accumulated depreciation.
b) These are capitalised at acquisition cost Including directly
attributable cost, such as freight, insurance and specific installation
charges, for bringing the asset to its working condition for Intended
c) Upgradation expenditure other than towards normal wear/tear and upkeep relating to existing fixed assets
is added to the cost of the
asset where it increases the performance/life of the fixed asset.
d) Internally manufactured/constructed fixed assets are capitalised at
material cost and excise duty.
e) Fixed Assets acquired under hire purchase schemes are capitalised at
their principal value and the interest implicit in the hire rentals is
charged off as Revenue expense.
f) When fixed assets are sold or discarded, their cost and accumulated
depreciation are removed from the accounts and any gain or loss resulting from their disposal is included in
the Profit and Loss Account.
3. EXPENDITURE DURING CONSTRUCTION PERIOD
Expenditure during construction period is included under Capital Work- in-Progress and the same is
allocated/apportioned to fixed assets on commencement of commercial production.
4. INVENTORY VALUATION
a) Inventories have been valued as follows:
Raw Materials & Components : At cost
Work-in-Progress : At estimated cost
Finished Goods & Goods : At cost or market value
Purchased for Resale whichever is lower.
b) Cost of Raw Materials & Components is arrived at on FIFO basis. Cost
of Finished Goods and Work-in-Progress is determined by considering
material, labour, related overheads and all interest.
c) Cost of machinery spares and other store materials,not being material, is charged off to consumption at
the time of purchase of such
5. REVENUE RECOGNITION
a) Revenues from the sales of goods are recognised upon passage of title to the customers which generally
coincides with their delivery.
b) Premium on Special import Licence (SIL) has been accrued in the
accounts on the basis of application for grant of SIL filed till the
preparation of accounts. The premium has been considered on the basis
of prevailing market rates.
6. RESEARCH AND DEVELOPMENT
Expenditure on Research & Development, such as cost of materials and
other costs, are charged to Profit & Loss Account in the period in which they are incurred. Assets used
specifically for development purposes are added to fixed assets and depreciation thereon is charged at the
rates applicable to similar class of assets.
7. FOREIGN EXCHANGE TRANSACTIONS
Foreign currency transactions relating to purchase and sale of goods
and services are recorded at the rates prevailing at the time of settlement of the transactions during the
accounting year. Current assets and current liabilities remaining unsettled at the close of the
accounting year are converted at the year end rates. All exchange
differences arising from conversion are included in the Profit & Loss
Account except those arising on liabilities for acquisition of fixed
assets, which are capitalised. Where the Company has entered into forward exchange contracts, the difference
between the contracted rate
and the rate applicable at the date of transaction is recognised over
the life of the contract.
8. EXCISE DUTY & CUSTOMS DUTY
Customs duty on materials lying in bonded warehouse/ports and excise
duty on finished goods lying in the factory premises in the bonded
warehouse on the last date of the accounting year is not accrued. However, this treatment does not have any
impact on the profits of the
9. RETIREMENT BENEFITS
a) Provident Fund is accrued each year in terms of contracts with the
employees, with contributions to the fund, which is administered by the
trustees of independently constituted trust recognised by the income Tax Authorities.
b) The Company has taken Gratuity and Superannuation policies with Life
Insurance Corporation of India (LIC) and has contributed to the said funds, amount equivalent to the
contributions made by such funds to LIC.
c) Liability on account of leave standing to the credit of employees at
the year end as ascertained on the basis of last drawn salary of the
respective employees is provided for in the accounts as against leave
encashment benefits being accounted on cash basis upto the earlier
The Company provides for depreciation on the Fixed Assets on straight
line method at the rates applicable at the time of addition/installation of the assets as per Schedule XIV
to the Companies Act, 1956, except on leased assets and lease hold improvements which is depreciated over
primary period of lease.
11.MISCELLANEOUS EXPENDITURE/DEFERRED REVENUE EXPENDITURE
a) The Company follows the policy of treating the expenditure, the
benefits of which accrue to the Company over an extended period, as
deferred revenue expenditure and amortises such expenditure over such
period, for which the Company expects the benefits to accrue.
b) Debenture Issue and Rights Issue expenses are written off against
share premium over a period of five years.
12. CONTINGENCIES AND EVENTS OCCURRING AFTER THE BALANCE SHEET DATE
Accounting for contingencies (gains and losses) arising out of contractual obligations are made only on the
basis of mutual acceptance. Events occurring after the date of balance sheet are considered upto the date of
finalisation of accounts, wherever material.