a) Accounting Concepts
The accounts are prepared under historical cost convention in
accordance with generally accepted accounting principles and applicable
b) Use of Estimates
Estimates and assumptions made by Management in the preparation of
Financial Statements have a bearing on reported amounts of Financial
Results, Assets & Liabilities and the disclosure of Contingent
Liabilities. Actual results could differ from those estimates. Any
revision to accounting estimate is recognized prospectively.
c) Revenue Recognition
Revenue is recognized and expenditure is accounted for on their
accrual. Excise duty recovery from customer is deducted from Gross
Turnover .Excise duty differential between closing and opening stock of
excisable goods is included under other expenses. Revenue from
domestic sale is recognized on delivery to the carrier, when risk and
rewards of ownership pass on to the customer.
Revenue from Export sales is recognized when risk and rewards are
passed on to the customer in accordance with the terms of the contract.
Dividend income is recognized when the right to receive payment is
Other items of income are recognized when there is no significant
uncertainty as to measurability or collectability.
d) Fixed Assets
Fixed Assets are stated at cost less depreciation. Cost includes, taxes
and duties (but does not include taxes and duties for which CENVAT /
VAT credit is available), freight and other direct or allocated
expenses and interest and finance charges on related borrowings during
Any income earned during construction period is netted against cost of
The assets, with the exception of plant and machinery, are depreciated
on written down value basis. Plant and Machinery are depreciated on
straight-line method. Depreciation is provided in accordance with
Schedule XIV of the Companies Act 1956.
Inventories are stated at lower of cost and net realizable value. Cost
includes all costs of purchase, cost of conversion and other costs
incurred in bringing the Inventories to their present location and
condition net off CENVAT/VAT credit entitlement. The cost is arrived on
weighted average basis. Tools cost is written off over a period of
Long term investments are stated at cost. Any diminution in the value
of Long term investments is charged to Profit and Loss Account, if such
a decline is other than temporary in the opinion of the Management.
h) Research and Development Expenditure
Expenditure incurred on Scientific Research, other than Capital
Expenditure, are written off to revenue in the year when they are
incurred. Capital Expenditure is added to the Cost of Fixed Assets and
i) Employee Benefits
Short term Employee benefits are charged at the undiscounted amount to
Profit and Loss account in the year in which related service is
Contributions to defined contribution schemes towards retirement
benefits in the form of provident fund and super annotation fund for the
year are charged to profit and loss account as incurred.
Liabilities in respect of defined benefit plans are determined based on
actuarial valuation made by an independent actuary using Projected Unit
Credit Method as at the balance sheet date. Actuarial gains or losses
are recognized immediately in the profit and loss account. Obligation
for leave encashment is recognized in the same manner.
Other Terminal benefits are recognized as an expense as and when
incurred, j) Provision, Contingent Liabilities and Contingent Assets
Provisions are recognized when there is a present obligation as a
result of a past event it is probable that an outflow of resources will
be required to settle the obligation and in respect of which reliable
estimate can be made. Contingent Liabilities are disclosed, in the
notes on Accounts, unless the possibility of any outflow in settlement
is remote, contingent assets are neither recognized nor disclosed.
k) Taxes on Income
Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the provisions of Income Tax Act,
1961. Deferred Tax is recognized, on timing difference, being the
difference between taxable income and accounting income that originate
in one period and are capable of reversal in one or more subsequent
periods. Deferred Tax assets in respect of unabsorbed depreciation and
carry forward of losses are recognized if there is virtual certainty
that there will be sufficient future taxable income available to
realize such losses.
I) Foreign Exchange Transactions
Transactions in foreign exchange are initially recognized at the rates
prevailing on the dates of transactions.
Premium or discount arising at the inception of forward contract is
amortized as income or expense over the life of the contract. Exchange
difference on such contract is recognized in the reporting period in
which exchange rates change.
Foreign Currency Liabilities/ assets at the close of the year are
restated, adopting the contracted/year-end rates, as applicable.
Resultant exchange difference is recognized as income or expense in
m) Insurance Claims
Insurance claims are accounted on the basis of claims lodged and
accepted, n) Borrowing Costs Borrowing Costs that are directly
attributable to the acquisition, construction or production of
qualifying assets are capitalized as part of the cost of that asset.
Other borrowing costs are recognized as an expense in the period in
which they are incurred.
o) Impairment of Assets
Impairment loss, if any, is provided to the extent the carrying amount
of assets exceeds their recoverable amount.
p) Earnings per share
Earnings per share is calculated by dividing the net profit or loss for
the year attributable to equity shareholders by the weighted average
number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
q) Segment Reporting
The accounting policies adopted for segment reporting are in line with
the accounting policy of the company.
Revenue and expenses are identified to segments on the basis of their
relationship to the operating activities of the segment. Revenue,
expenses, assets and liabilities which relate to the enterprise as a
whole and are not allocable to segments on a reasonable basis have been
included under unallowable.
There are no inter segment revenue and therefore their basis of
measurement does not arise.
The Company enters into Futures Contracts in Silver to hedge the price
risk consistent with its Risk Management Policy. The Company does not
use these contracts for speculative purpose.
Losses in respect of the Futures Contracts as at the Balance Sheet
date are charged to Statement of Profit and Loss by marking them to
market, while gains are ignored.
The Rupee Term Loan including current maturities (Vide Note No 10) are
secured by First charge on movable and immovable fixed assets of the
Lead Acid Battery Facility and Second charge on all other existing
movable and immovable fixed assets of the Company.