1. System of Accounting:
The Company follows mercantile system of accounting and recognizes
income and expenditure on an accrual basis. Financial Statements are
based on historical cost. These costs are not adjusted to reflect the
impact of the changing value in purchasing power of money. These
statements have been prepared to comply in material aspects with
applicable accounting principles in India, mandatory Accounting
Standards notified by the Companies (Accounting Standards) Rules, 2006
and the relevant provisions to the Companies Act, 1956.
2. Revenue Recognition:
Sale of goods is recognized on shipment or dispatch to customer.
Service Income is considered on accrual basis.
3. Fixed Assets and Depreciation:
Fixed assets are stated at cost of acquisition or construction less
depreciation. Cost comprises the purchase price and other attributable
costs, including interest and finance costs incurred till the asset is
Capital work-in-progress includes the cost of fixed assets that are
not ready for their intended use, advances paid to acquire fixed
assets and the cost of assets not put to use before the balance sheet
Depreciation is provided on the written down value method.
Depreciation pertaining to the incremental values of assets revalued is
adjusted against Revaluation Reserve.
Depreciation is provided at the rates and in manner laid down in
Schedule XIV to the Companies Act, 1956. Leasehold Lands are amortized.
Items costing Rs. 5,000 or less are fully depreciated in the year of
From Financial year 2006-07 Cenvat credit is availed on fixed asset
purchases of Rs.50, 000 and above.
Goodwill is written off over a period of five financial years in line
with AS-14 and AS-26
Stocks of raw materials, components, dies and moulds are stated at cost
and are valued on weighted average cost basis. Goods in bonded
warehouse and in transit are valued at costs.
Finished goods are stated at cost or selling prices whichever is lower.
Goods in process are stated at cost based on technical estimates /
evaluation of the state of completion of individual work order. Cost
of goods in process and finished goods include, Material Costs, Labour,
Factory Overheads and related administrative expenses.
6. Sundry Debtors and Advances:
Specific debts and advances in respect of which certain amounts are
identified as irrecoverable are written off.
Income tax comprises current tax and deferred tax charge or release.
The deferred tax charge or credit is recognized using current tax
rates. Deferred tax assets are recognized only to the extent there is
reasonable certainty of realization in future. Such assets are reviewed
as at each Balance Sheet date to reassess realization.
8. Foreign Exchange Transactions:
Realised gains and losses on foreign exchange transaction are
recognised in the Profit and Loss Account. Assets and liabilities are
translated at the year end exchange rates.
9. Research and Development costs:
Research and Development cost of revenue nature is written off in the
year in which it is incurred and expenditure resulting in development
of enduring know-how is capitalised.
10. Employee Benefits:
Provident Fund benefit to employees is provided for on accrual basis
and charged to Profit and Loss Account of the year. Gratuity is
considered accrued and accounted for as per actuarial valuation done by
LIC under its Group Gratuity Scheme (subject to Note No). 25 (8) (ii)
stated above Leave Encashment is considered accrued and accounted for
based on actuarial valuation report.