i. Basis of Accounting
The Accounts of the Company are prepared under the historical cost
convention and in accordance with applicable accounting standards
except where otherwise stated.
In preparation of Financial Statements, fundamental accounting
assumption of going concern has been followed except in case of
Nanjangud, Thane and Rajpura Units.
For recognition of income and expenses, Accrual basis of Accounting is
followed except in following cases where accounting has been done on
cash basis because of uncertainty involved :
a) Insurance and other claims receivable.
b) interest income on overdue debts (to the extent not certain of
c) Fuel Escalation Charges payable to Electricity Board.
ii. Revenue Recognition
Revenue from the sale of goods including manufactured products is
recognised upon passage of title to the customer, which generally
coincides with delivery.
iii. Fixed Assets
Fixed Assets are stated at cost less accumulated depreciation. The cost
of an asset comprises its purchase price and any directly attributable
cost of bringing the asset to working condition for its intended use.
Expenditure for additions, improvements and renewals are capitalised
and expenditure for maintenance and repairs are charged to the Profit
and Loss Account. When 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
Depreciation is provided on straight-line method in terms of Section
205(2)(b) of the Companies Act, 1956. The rates of depreciation
considered are on the following basis
a) On Fixed Assets installed up to 31st December 1987, the rates
corresponding to the rates applicable under the Income Tax Rules in
force at the time of acquisition/purchase of respective assets.
b) On Fixed Assets installed on and from 1st January 1988 onwards, at
the rates and in the manner specified in Schedule XIV to the Companies
Long Term Investments are stated at cost. Provision for loss on account
of diminution in the value of investments is made, wherever required.
vi. Inventories :
a) Inventories are valued as follows :
- Stores & Spare Parts and Raw Materials - At yearly weighted average
cost or net realisable value, whichever is lower.
- Goods under Process and Finished Goods - At cost or net realisable
value, whichever is lower. Cost for this purpose includes material,
labour and an appropriate portion of overheads.
- Waste & Scrap - At estimated realisable value.
vii. Retirement Benefits
The Company has a policy of providing for gratuity liability on the
basis of actuarial valuation and contributing the same to the Gratuity
Fund which meets gratuity liability of employees of the Company as and
when it arises. Leave encashment liability, has been provided on the
basis of actuarial Valuation. (Refer Note No. 7 in Schedule 23)