A. System of Accounting
The Financial Statements are prepared on accrual basis of accounting
and in accordance with the Standard on Accounting notified by the
Companies (Accounting Standard) Rules, 2006 and referred to in section
211 (3C) of the Companies Act, 1956 except for certain fixed assets
which have been revalued.
B. Fixed Assets and Depreciation
I. Fixed Assets
Fibre, Resin and Preforms Divisions.
Fixed Assets are stated at cost / revalued amount less depreciation.
Cost comprises of Cost of acquisition, cost of improvements and any
attributable cost of bringing the asset to condition for its intended
use. Interest on loans taken for the procurement of specific assets
accrued upto the date of acquisition/ installation of the said assets
is capitalised along with the cost of the assets.
Depreciation has been provided on Plant and Machinery and Research and
Development facilities on straight line basis and on other assets on
written down value basis at the rates specified in Schedule XIV of the
Companies Act, 1956 as amended from time to time. Certain Plants have
been treated as continuous process Plants based on technical and other
evaluation. However, higher rate of depreciation has been provided on
certain Plant and Machinery ranging from 6.75% -12.50% compared to
5.28% of Schedule XIV rate, based on technical evaluation. The total
accumulated depreciation is restricted up to 95% of the Gross Block
Resin and Preforms Divisions:
Depreciation has been provided on all assets on straight line basis at
the rates specified in Schedule XIV of the Companies Act, 1956 as
amended from time to time. However, higher rate of depreciation has
been provided on certain Plant and Machinery ranging from 6.75%-12.50%
compared to 5.28% of Schedule XIV rate, based on technical evaluation.
The total accumulated Depreciation is restricted up to 95% of the Gross
Investments are classified into current and long term investments.
Current investments are stated at the lower of cost and fair value,
Long term investments are stated at cost. A provision for diminution is
made to recognise a decline, other than temporary, in value of long
Income on Investments:
Dividend income is accounted when right to receive payment is
Inventories are valued as under:
Raw Materials, Packing Materials, Stores and Spares: at Cost (Weighted
average method) Materials-in-transit and Semi Finished Goods: at Cost.
(Weighted average method)
Finished Goods: at lower of cost or net realisable value. (Weighted
Traded items: at lower of cost or net realisable value. (Weighted
Sale of goods is recognised en despatch to customers. Sales include
amounts recovered towards excise duty, but exclude amounts recovered
towards sales tax.
F. Export Incentives
Export Incentives are accounted on an accrual basis.
G. Foreign Currency Transactions
Transactions in foreign currencies are recorded at current rates except
transactions covered by forward contracts.
Assets and Liabilities denominated in foreign currency are restated at
the year end rates. All exchange gains and losses except those relating
to acquisition of fixed assets which are adjusted to the carrying cost
of such assets, are accounted for in the Profit and Loss Account.
H. Research and Development
Revenue expenditure on Research and Development is charged as an
expense in the year in which they are incurred. Capital expenditure is
shown as an addition to Fixed Assets.
Expenditure incurred on development of new products are amortised over
a period of 10 years.
I. Employee Benefits
(i) Defined Contribution Plan
Company''s contributions paid /payable during the year to Superannuation
Fund, ESIC and Labour Welfare Fund are recognised in the Profit and
Loss Account. There are no other obligations other than the
contribution payable to the respective trust/fund. Company''s
Contribution towards Superannuation and ESIC is based on a percentage
of salary which is made to an approved fund.
(ii) Defined Benefit Plan
Company''s Contribution towards Provident Fund is based on a percentage
of salary which is made to an approved fund.
Company''s Contribution towards Gratuity is made to an approved fund as
per actuarial valuation certificate obtained from an actuary which is
determined using projected unit credit method.
(iii) Short term compensated absences are provided as per actuarial
valuation certificate obtained from an actuary which is determined
using projected unit credit method.
(iv) Long term employee benefit
Long term compensated absences are provided as per actuarial valuation
certificate obtained from an actuary which is determined using
projected unit credit method.
(v) Actuarial gains / losses are immediately taken to profit and loss
account and are not deferred.
J. Deferred Revenue Expenses:
Voluntary Retirement Scheme related payments are amortised over a
period of 5 years.
K. Taxes on Income
(a) Current Tax: Provision for Income Tax is determined in accordance
with the provision of Income Tax Act, 1961.
(b) Deferred Tax Provision: Deferred Tax is recognised on timing
differences between the accounting income and the taxable income for
the year and quantified using the tax rates and laws enacted or
subsequently enacted on the Balance Sheet date. Deferred Tax Assets
are recognised and carried forward to the extent that there is a
reasonable certainty that sufficient future taxable income will be
available against which such deferred tax assets can be realised.