The financial statements are prepared under the historical cost
convention in accordance with applicable accounting standard and
requirement of the Companies Act, 1956.
b) BASIS OF ACCOUNTING :
The company follows the Mercantile system of Accounting.
C) FIXED ASSETS:
i) Fixed Assets are stated at cost of acquisition and subsequent
improvements including taxes, freight and other incidental expenses
related to acquisition, installation and foundation less accumulated
depreciation (other than leasehold land where no depreciation is
ii) Costs of fixed assets are net of CENVAT to be set off against
excise payable on sales, irrespective of actual set-of during the year
iii) Leasehold land will be written off, in the year in which the
respective lease period expires.
i) Depreciation on fixed assets has been provided on SLM method as per
rates specified in AMENDED SCHEDULE-XIV of the Companies Act, 1956 vide
Notification No. GSR: 758(2) dated 16-12-1992 on pro-rata basis.
The inventories are valued as under:
i) Stores, Spare parts & Packing material at cost;
ii) Work-in-progress at cost;
iii) The Raw Material has been valued at Lower cost plus expenses or
net r ealizable Value.
f) IMPORTS EXCISE CENVAT:
i) The purchase cost of raw material & other expenses have been
considered net of cenvat remaining unabsorbed at the year ending;
ii) Costs of fixed assets are net of cenvat, as the said cenvat is to
be set off against excise duties payable in sales.
iii) Value of import includes duties, freight, clearing charges,
expenses incidental to acquisition. iv) Increase/ decrease in rupee
liability at the end of the year in respect of money borrowed for
purchase or construction of fixed assets consequent to fluctuation in
exchange rates are treated as addition/ deduction to the fixed assets.
g) SALES & EXPORTS:
Sales are net of sales rejections for the year under review but
inclusive of excise duty and sales tax. Rejection quantity of the
period under review is not incorporated in Quantitative detail of
Production. Sales rejection of the earlier period is charged to profit
& loss account as sales rejection & shown separately. h) EXCISE
Total excise collected, irrespective of net pa /merit in PLA after
adjustment of cen vat, has been considered to work out net income.
Excise and service tax credit receivable are considered as per books of
accounts but irrespective of actual claims lodged with revenue
j) WAGES & SALARIES:
Includes PF contribution from employer, salaries to trainees &
Provision for current tax is made on the basis of estimated taxable
income for the period in accordance with the provisions of the income
Tax Act, 1961. Deferred tax is recognized, subject to consideration of
prudence, on timing di fferences between taxable income and accounting
income for the period that originate in one period and are capable
reversal in one or more subsequent periods.
I) FOREIGN CURRENCY TRANSACTIONS:
Transactions in foreign currencies are recognized at the prevailing
exchange rates on the date of transaction and difference, if any, on
realization date is charged to Profit & Loss Account under the head
Exchange difference account. Unrealized gains and losses on settlement
of f oreign currency transactions realized after the year-end are
recognized in the Profit and Loss Account at the rate prevailing at the
year end. Foreign currency transactions relating to acquisition of
fixed assets are adjusted in the cost of the fixed assets.
m) IMPAIRMENT OF ASSETS:
As per the opinion of the management, there being no indication of
impairment of assets, no loss has been recognized on impairment of
n) RETIREMENT BENEFITS :
i) Contributions to employees Provident F und remitted to statutory
authority are charged to revenue.
ii) Gratuity benefits wherever applicable are covered by policies taken
with the L.I.C. The premium paid under the scheme is charged to
revenue. However, the company had made provision for gratuity as per
actuarial valuation as required by Accounting Standard -15. iii)
Liability on leave encashment to employees are provided on actuarial
Valuation Report as required by Accounting Standard -15.
o) PRELIMINARY EXPENSES :
Preliminary expenses are written off in five equal installments.
Preliminary expenses on public issue are written off in five equal
installments from the year in which Proceeds from the public Issue has
p) PREOPERATIVE EXPENSES (SEZ PROJECT)
Revenue and financial expenses incurred and to be incurred upto
commencement of commercial production on SEZ projects is to be
capitalized and will be allocated to the fixed assets on the
commencement of the commercial production in SEZ project.