(i) Accrual method of accounting is followed with regard to all the
transactions except the insurance claims which are accounted for on cash
(ii) Sales are inclusive of excise duty but exclusive of sales tax.
(iii) Inventories are valued as under :
a. Raw Material - at cost
b. Stores, Spare Parts & Fuel - at cost
c. Work - in - proses & Finished goods at lower of cost or net
realisable value. Cost includes manufacturing overhead, general &
Administrative expenses, depreciation & interest.
(iv) Deferred Revenue/ Miscellaneous Expenditure are being amortised
over a period of ten years.
(v) Fixed Assets :
(a) Fixed assets are stated at their cost of acquisition which includes
expenses incurred on acquisition, construction and/or installation.
Fixed assets consisting of land, building and plant & machinery were
revalued by an approved valuer as on 31st March 1993 and accordingly a
sum of Rs. 23,32,82,490/- was credited to Revaluation Reserve by debting
to respective assets.
(b) Depreciation has been provided for at the rates prescribed in
schedule xiv of the Companies Act 1956 (as amended) on straight line
method except in case of major part of plant machinery (excluding
electrical installations) costing Rs. 22,3,15,700/- where it has been
provided for on machine hour rate basis, as was done during previous
period. As a result depreciation stands reduced by Rs. 1,40,07,519/-
for the current period and Rs. 1,78,00,591/- for the previous period.
In respect of the amount added on revaluation of assets, depreciation
has been calculated as per method given above. Such additional charges
amounting to Rs. 1,65,14,125/- (Rs. 1,39,09,298/-) on account of
revaluation have been withdrawn from the Revaluation Reserve and
credited to Profit & Loss Account.
c. Revaluation of individual machinery as on 31.03.93 were not available
in the Valuer's Report, and as a consequence, the same have been taken
in the books of accounts on Pro-rata basis and depreciation has been
(vi) Gratuity is accounted for on accrual basis as per the provisions of
Payment of Gratuity Act.
(vii) There has been in the accounting policy followed by the company
regarding the effect of foreign currency fluctuation which was accounted
for on cash basis till previous period. During the period, the same has
been accounted for on accrual basis. Had there been no change in the
accounting policy, secured loans and Plant & Machinery would have been
stated lower by Rs. 3,70,07,492/- each.