A. System of Accounting
(a) The Company follows the mercantile system of accounting and recognises income and expenditure on accrual
basis and for this purpose, certain items of income such as insurance claims, overdue interest from debtors
etc., have been considered to the extent the amount is ascertainable/ accepted by the parties.
(b) Financial statements are based on historical cost. These costs are
not adjusted to reflect the impact of the changing value in the purchasing power of money.
B. Fixed Assets and Depreciation
(a) Fixed Assets
Fixed Assets are stated at cost of acquisition except for Land,
Buildings and Plant and Machinery acquired prior to 1st April, 1990,
which are stated in the book of account at replacement cost as on 31st
March, 1991 as certified by the Chartered Engineers.
(b) Depreciation and Amortisation
(I) Leasehold Land
Premium on Leasehold Land has been amortised over the period of lease.
(II) Other Fixed Assets
Depreciation has been provided
(a) In respect of additions to Buildings and Plant and Machinery upto
31st March, 1993 on straight line basis in accordance with Section 205
(2)(b) of the Companies Act, 1956 at the rates arrived at by
recomputing the specified period pursuant to the amendment in the rates
of depreciation in Schedule XIV to the Companies Act, 1956 and by
allocating the unamortised value over the remaining part of the
recomputed specified period.
(b) In respect of additions to Buildings and Plant and Machinery after
31st March, 1993 on straight line basis in accordance with Section
205(2)(b) of the Companies Act, 1956 at the rates specified in Schedule
XIV to the Companies Act, 1956.
(c) In respect of all other Fixed Assets, on written down value basis
in accordance with Section 205 (2) (a) of the Companies Act, 1956 at
the rates specified in Schedule XIV to the Companies Act, 1956.
(III) Depreciation on additions to/deletions from the Fixed Assets
during the year has been provided on pro-rata basis with reference to
the month of addition/deletion of the assets except for additions, made
after 31st March. 1993, whose actual cost does not exceed Rs. 5,000,
which have been fully written off.
Stocks of stores and packing materials and raw materials are valued at
cost as determined on First In First Out basis. Work in process is
valued at cost while finished goods are valued at lower of cost or net
realisation value, and for this purpose, cost is determined on
absorption costing basis.
D. Accounting of Raw Material Consumption
Duty free imports of raw materials under Advance Licence for Imports as
per the Import and Export Policy are matched with the exports made
against the said licences and the benefit/obligation is accounted by
making suitable adjustments in raw material consumption.
E. Retirement Benefits
Annual contribution towards the gratuity liability is funded with Life
Insurance Corporation of India in accordance with their gratuity
F. Foreign Currency Transactions
Transactions in foreign currency are recorded by applying the exchange
rate at the date of the transaction or at a standard rate. Monetary
items denominated in foreign currency remaining unsettled at the end of
the year are reported using the closing rate. Exchange difference
arising as a result of the above are recognised as income or expenses
in the Profit and Loss Account.
G. Research and Development Costs
Research and Development Costs (other than cost of fixed assets
acquired) are charged as an expense in the year in which they are
incurred and are reflected under the appropriate heads of account.
H. Leases Assets
Rentals and all other expenses in respect of leased assets are treated
as revenue expenditure.
Investments are stated at cost.
J. Amortisation of Expenses
Preliminary Expenses and Share Issue Expenses are amortised over a
period of ten years.