1. HISTORICAL COST CONVENTION
The accounts have been prepared on the historical cost basis in
accordance with the requirements of the applicable mandatory Accounting
Standards issued by the Institute of Chartered Accountants of India and
the relevant provision of the Companies Act, 1956.
2. FIXED ASSETS AND DEPRECIATION
Fixed assets are stated at cost of acquisition. Cost comprises the
purchase price and any attributable cost of bringing the asset to its
working condition for its intended use and includes pre-operative
expenses and financing costs attributable to construction or
acquisition of fixed assets upto the period when the assets are ready
to be put to commercial use.
Fixed assets held for disposal are stated at estimated Net Realisable
Value. Depreciation is provided on the straight-line basis at the
rates and in the manner specified in Schedule XIV to the Companies Act,
1956 except revalued Land & Building acquired on amalgamation, which is
charged on the basis of useful life assessed by the approved valuer.
Leasehold land is amortized over the lease period.
Fixed Assets costing upto Rs. 5,000 each are depreciated fully in the
year of purchase. (Also refer to notes 11 and 13 below)
Goodwill arising on amalgamation is amortized over a period of five
years in accordance with Accounting Standard -14 on Accounting for
Amalgamations issued by the Institute of Chartered Accountants of
Other Intangible Assets are recognised if it is probable that the
future economic benefit attributable to the assets will flow to the
enterprise and the assets can be measured reliably in accordance with
Accounting Standard - 26 on Intangibles issued by the Institute of
Chartered Accountants of India.
The depreciation amount of such intangible asset is allocated on a
straight line basis over the estimated useful life of the asset. The
amortisation period and method would be reviewed at the end of the each
Cost related to ERP software licences are capitalized and amortised on
a straight line basis over a period of three years.
Revenue Grant is recognised as income over the period necessary to
match them on a systematic basis to the cost which it is intended to
compensate. Where grant relates to an asset, its value is deducted in
arriving at the carrying amount of the related asset.
Inventories are stated at lower of cost and net realizable value. Cost
is determined on a weighted average basis. Cost of Work-in-Progress and
Finished Goods includes an appropriate portion of allocable overheads.
Provision for obsolescence is made wherever necessary.
6. REVENUE RECOGNITION
Revenue from sales is recognized on completion of sales of goods.
Maintenance service charges are invoiced at the time of sale of goods,
and are recognized as revenue over the maintenance period.
Sales are stated net of trade discounts, sales return, delivery charges
and sales tax.
7. RETIREMENT AND RELATED EMPLOYEE BENEFIT
Gratuity and leave encashment are provided for as per actuarial
valuation as at the year end.
Provision for the estimated liability in respect of warranty is made in
the year in which the revenues are recognised, based on technical
evaluation and historical cost.
9. FOREIGN CURRENCY TRANSACTIONS
Transactions in foreign currency are recorded at the exchange rate
prevailing on the date of the transaction.
Exchange differences arising on foreign currency transactions settled
during the year are recognised in the Profit and Loss Account for the
year, other than exchange differences relating to the liabilities for
the acquisition of fixed assets that are adjusted to the cost of
related fixed assets. All monetary items denominated in the foreign
currency are translated at exchange rates prevailing on the balance
sheet date. The resultant exchange differences are recognised in the
Profit and Loss Account for the year, other than exchange difference
related to the liabilities for acquisition of fixed assets that are
adjusted to the cost of fixed assets.
In the case of forward contract, the difference between the forward
rate and the exchange rate on the date of the transaction is recognised
in the Profit and Loss Account over the life of the contract, except in
the case of liabilities relating to the acquisition of fixed assets,
which are adjusted to the carrying cost of fixed assets.
10. RESEARCH AND DEVELOPMENT
Equipment purchased for research and development is capitalized when
commissioned, and included in the gross block of fixed assets. Revenue
expenditure on research and development is charged in the year in which
it is incurred.
11. ACCOUNTING FOR LEASES
Where the company is a lessee
Operating Leases: Rentals in respect of all operating leases are
charged to the Profit & Loss account.
Finance Leases: Rentals in respect of all finance leases entered before
1 st April, 2001 are charged to the Profit & Loss account.
In accordance with Accounting Standard-19 on Accounting for Leases
issued by the Institute of Chartered Accountants of India, assets
acquired under finance lease on or after 1st April, 2001, are
capitalised at the lower of their fair value and present value of the
minimum lease payments and are disclosed as `Leased Assets'.
Tax Expense, comprising current tax and deferred tax, is made on the
basis of the results of the year.
In accordance with Accounting Standard 22 - `Accounting for Taxes on
Income' issued by the Institute of Chartered Accountants of India,
deferred tax assets arising from temporary timing differences are
recognized to the extent there is a reasonable certainty that the
assets can be realized in the future.
13. BORROWING COST
Borrowing costs that are directly attributable to the acquisition,
construction or production of an qualifying asset are capitalised as
part of the cost of that asset. Other borrowing costs are recognised as
an expense in the period in which they are incurred.