i) Basis of Accounting: The accounts of the company are prepared under
the historical cost convention and in accordance with the applicable
accounting standards, except where otherwise stated. For recognition of
Profit or Loss, mercantile system of accounting is followed except in
the following cases where accounting is done on payment/receipt basis:
a) Leave with wages & salary
b) Rebate/claim on sales & purchases
c) Legal and Professional Charges.
ii) Fixed Assets: Fixed assets acquired during the year are stated at
cost of acquisition inclusive of all incidental expenses and any
attributable cost for bringing the assets to its working condition and
exclusive of CENVAT Credit on Capital Account.
iii) Depreciation: The depreciation of fixed assets has been provided
on Straight Line Method as per the rates prescribed in Schedule XIV to
the Companies Act, 1956. Depreciation on additions/deletions during the
year has been provided on Pro-rata basis. No amount has been written
off in respect of leasehold land as grant of lease is for a long
iv) Investments: Investments are held for long term hence are stated at
cost. In compliance with AS- 13 where there is a decline of permanent
nature in the carrying amounts of long-term investments, the resultant
reduction is charged to the profit & loss statement.
v) Inventories : Inventories are valued on the following basis:
Raw Materials - At cost
Finished Goods - At lower of cost or net realisable value
Semi Finished Goods - At estimated cost
Trading Goods - At cost
Stores, Spares & Packing
Materials - At cost
Scrap & Waste - At net realisable value
Stocks of Finished Goods are inclusive of excise duty.
vi) Gratuity: The management has decided to adopt cash basis of
accounting for gratuity liability, hence no provision has been made for
accrued liability in the accounts of the company.
vii) Foreign Currency Transactions: Transactions in foreign exchange
are accounted for at exchange rates prevailing on the date on which the
transaction takes place. Gains and Losses arising out of fluctuations
in exchange rates, relating to the fixed assets, are adjusted to the
carrying amount of fixed assets and in other cases transferred to
viii) Excise Duty: The excise duty in respect of finished goods is
included as part of inventory. The amount of cenvat credit, in respect
of material consumed for sale is deducted from cost of materials
ix) Taxation: The provision for Taxation is ascertained on basis of
assessable profit Computed in accordance with the provision of Income
Tax Act, 1961. The company has not created deferred tax asset in
absence of virtual certainty, supporting convincing evidence as per
AS-22 Accounting for Taxes on Income issued by the Institute of
Chartered Accountants of India.