a) Basis of Preparation of Financial Statements
The financial statements are prepared and presented under the
historical cost convention, on the accrual basis of accounting and in
accordance with the provisions of the Companies Act, 1956 (''the Act''),
and the accounting principles generally accepted in India and comply
with the accounting standards prescribed in the Companies (Accounting
Standards) Rules, 2006 issued by the Central Government, in
consultation with the National Advisory Committee on Accounting
Standards, to the extent applicable.
The financial statement are prepared and presented in the form set out
in Part I and Part II of Revised Schedule VI of the Act, so far as they
are applicable thereto.
b) Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles in India (Indian GAAP) requires
management to make estimates and assumptions that affect the reported
amount of assets, liabilities, revenues and expenses and disclosure of
contingent liabilities on the date of the financial statements. The
estimates and assumptions used in the accompanying financial statements
are based upon management''s evaluation of the relevant facts and
circumstances as of the date of financial statements which in
management''s opinion are prudent and reasonable. Actual results may
differ from the estimates used in preparing the accompanying financial
statements. Any revision to accounting estimates is recognised
prospectively in current and future periods.
c) Fixed Assets / Intangible Assets
i) Fixed assets are carried at cost of acquisition less depreciation.
Cost of fixed assets includes interest of directly related loans upto
the date of commissioning/installation.
ii) Expenditure during construction period incurred on the projects
under implementation are treated as pre-operative expenses pending
allocation to the assets and are included under Capital Work-in-
Progress. These expenses are apportioned to fixed assets on
commencement of commercial production. Capital Work-in-Progress is
stated at the amount expended upto the date of Balance Sheet.
iii) Intangible assets are recognized if it is probable that the future
economic benefits that are attributable to the assets will flow to the
Company and cost of the assets can be measured reliably.
i) Depreciation on fixed assets is provided on written down value in
the manner and at the rates as per schedule XIV of the Companies Act,
ii) Technical know-how is amortized from the year in which commercial
production commences on the written down value method.
iii) Leasehold Land is amortised over the period of lease.
e) Valuation of Inventories
Cost of inventories have been computed to include all cost of
purchases, cost of conversion and other costs incurred in bringing the
inventories to their present location and conditions.
i) Raw material is valued at cost or net realisable value whichever is
lower. Cost is calculated by applying the weighted average method.
ii) Work-in-progress, Finished Goods and Stock-in-Trade are valued at
cost or net realisable value whichever is lower.
iii) Scrap is valued at estimated selling price.
iv) Stores and Spares are valued at cost. Tools and Instruments are
valued at book value.
f) Revenue Recongnition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
Net operational income comprises of sale of goods and reconditioning,
repairing and servicing income.
Sale of goods is recognised on despatch to customers. Sale are stated
net of Sales Tax. Sales excludes captive consumption of materials.
Interest income is accounted on accrual basis.
g) Foreign Currency Transactions
i) Transaction denominated in foreign currency are recorded at the rate
of exchange prevailing at the time of transaction.
ii) Current Liabilities / Assets not covered by forward contract are
stated at the rates ruling at the year end and any exchange difference
arising on such transaction is dealt with in the Statement of Profit
iii) Transactions completed during the year are adjusted at the
h) Research and Development
Research and Development expenditure of revenue nature is charged to
revenue and capital expenditure is treated as fixed assets.
i) Retirement and Other Employee Benefits
i) Provident Fund is a defined contribution scheme established under
State Plan. The contributions to the scheme are charged to Profit &
Loss Account in the year when the contributions to the funds are due.
ii) Superannuation Fund is a defined contribution scheme and
contribution to the scheme are charged to the Profit & Loss Account in
the year when contributions are made in respect of employees covered
under the scheme. The scheme is funded with Life Insurance Corporation
iii) The Company provides for gratuity, a defined benefit retirement
plan (Gratuity Plan) covering all employees. The Gratuity Plan provides
a lumpsum payment to vested employees, at retirement or termination of
employment, an amount based on the respective employee''s last drawn
salary and the years of employment with the Company. The liability in
respect of employees is provided and contributed to Life Insurance
Corporation of India under Group Gratuity (Cash Accumulation) Scheme
a) In case of Chairman cum Managing Director and Executive Vice
Chairperson, in whose cases the additional Gratuity liability in
accordance with their terms of appointment, is provided in the books.
b) In case of Nashik and Dehradun Division it is provided on the basis
of actuarial valuation.
iv) The Company has other long term employee benefits in the form of
Leave Encashment. The liability in respect of Leave Encashment is
provided for on the basis of actuarial valuation made at the end of the
Financial Year. The aforesaid Leave Encashment is not funded.
v) The undiscounted amount of short term employee benefits expected to
be paid in exchange for the services rendered by the employees is
recognised during the period when the employee renders the services.
vi) Terminal Benefits:
Compensation to employees who have opted for retirement under the
Voluntary Retirement Scheme and termination of services of the
employees by the Company is charged to Profit & Loss account in the
year on actual basis.
vii) Actuarial gains / losses are recognised immediately to the Profit
& Loss account.
j) Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period.