i) BASIS OF ACCOUNTING:
The financial statements are prepared under the historical cost
convention in accordance with the generally accepted accounting
principles in India and the provisions of the Companies Act, 1956,
except for certain fixed assets, which are revalued.
ii) USE OF ESTIMATES
The preparation of financial statements requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of financial statements and the reported amount
of revenues and expenses during the reporting year. Difference between
the actual results and estimates are recognized in the period in which
the results are known/ materialized.
iii) REVENUE RECOGNITION:
Revenue from the sale of goods is recognized on the passing of title to
the customers, which generally coincides with the dispatch. Interest
Income is accrued on time proportion basis over the period of loan/
iv) LEASE TRANSACTIONS:
Lease Rentals from assets taken on lease are accounted for in terms of
the guidance note on accounting for leases issued by The Institute of
Chartered Accountants of India as the lease agreement were entered in
to prior to 1st April 2001.
v) FIXED ASSETS:
Fixed Assets are stated at cost net of Modvat / Cenvat / value added
tax and includes amounts added on revaluation, less accumulated
depreciation and impairment loss, if any. All costs, including
financing costs till commencement of commercial production, net charges
of foreign exchange contracts and adjustments arising from exchange
rate variations attributable to the fixed assets are capitalized
vi) DEPRECIATION / AMORTISATION:
a) Depreciation on Fixed Assets is provided on ‘Straight Line Method''
in terms of Section 205(2)(B) of the Companies Act, 1956 on the
i) On Fixed Assets installed upto 30th June 1987 - at the rates
corresponding to the rates applicable under Income-tax Rules in force
at the time of acquisition/purchase of the respective assets.
ii) On Fixed Assets installed from 1st July 1987 onwards - at the rates
specified in Schedule XIV to the Companies Act, 1956 as amended from
time to time on a prorata basis except revalued assets on which
depreciation is provided on the remaining useful life of the assets.
b) Depreciation on the amount of additions to fixed assets on account
of exchange difference is provided over the remaining life of such
c) Cost of Leasehold land is amortized over a primary period of lease.
vii) BORROWING COST:
Borrowing costs that are attributable to acquisition of qualifying
assets are capitalized as part of the total cost of the Assets.
Long-term investments are stated at cost / book value unless there is
diminution other than temporary, in the value of investments, in which
case, investments are stated at fair values.
ix) VALUATION OF INVENTORIES:
Inventories are valued as follows: :
Stores, Spares, etc. : At Weighted Average Cost
Raw Materials, Components, etc. : At Cost on specific identification
or net realizable value whichever is lower.
Scrap : At Estimated Realizable Value
Work in Progress & Finished Goods/ Finished Jobs : At Estimated Cost or
Net Realizable Value, whichever is lower
x) FOREIGN CURRENCY TRANSACTIONS:
Transactions arising in foreign currencies are converted at the rates
closely approximating the rates ruling on the transaction dates. All
monetary assets and liabilities at the year / period end are reinstated
at the closing exchange rates. All exchange rate differences arising
from conversion in terms of the above are charged to Profit & Loss
xi) EMPLOYEE BENEFITS:
(i) Short-term employee benefits are recognized as an expense in the
profit and loss account of the year in which the related service is
(ii) Post employment and other long-term employee benefits are
recognized as an expense in the profit and loss account for the year in
which the employee has rendered services. The expense is recognized at
the present value of the amount payable determined using actuarial
valuation techniques. Actuarial gains and losses in respect of post
employment and other long-term benefits are charged to the profit and
xii) PROVISION FOR CURRENT AND DEFERRED TAX:
Provision for current tax is made after taking into consideration
benefits under the provisions of the Income tax Act, 1961. Deferred tax
resulting from “timing difference” between book and taxable profit is
accounted for using the tax rates and laws that are enacted or
substantively enacted as on the balance sheet date. The deferred tax
asset is recognized and carried forward only to the extent that there
is a reasonable certainty that the assets will be realized in future.
xiii) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent liabilities are not recognized but are disclosed in the
Notes. Contingent Assets are neither recognized nor disclosed in the
xiv) IMPAIRMENT OF FIXED ASSETS:
If the carrying amount of fixed assets exceeds the recoverable amount
on the reporting date, the carrying amount is reduced to the
recoverable amount. The recoverable amount is measured as the higher of
the net selling price or the value in use determined by the present
value of estimated future cash flows.
xv) SHARE ISSUE EXPENSES:
Issue expenses are adjusted against the Share Premium.