1.1 BASIS OF PREPARATION OF FINANCIAL STATEMENTS
These accounts are prepared on the historical cost basis and on the
accounting principles of a going concern. Accounting policies not
specifically referred to otherwise are consistent and in consonance
with the generally accepted accounting principles. The company has
adopted mercantile system of accounting and all income and expenditure
are treated on accrual basis unless otherwise stated herein below. All
Accounting standards issued by the Govt. of India are followed.
All assets and liabilities have been classified as current or
non-current as per the Company’s normal operating cycle and other
criteria set out in the revised Schedule VI to the Companies Act, 1956.
Based on the nature of products and the time between the acquisition of
assets for processing and their realization in cash and cash
equivalents, the Company has ascertained its operating cycle as 12
months for the purpose of current-noncurrent classification of assets
1.2 FIXED ASSETS
Fixed Assets are stated at cost inclusive of all incidental expenses
and net of taxes recoverable less accumulated depreciation.
Depreciation (on assets in use) has been provided for on straight line
method (for proportionate period of use) in accordance with the rates
of Schedule XIV of the Companies Act,1956.
1.4 VALUATION OF INVENTORIES
Inventories of Raw Materials, Work-in-Progress and Stores and Spare
Parts are at or below cost. Finished goods, if any are valued at cost
or net estimated realizable value whichever is lower. Valuation of
Inventory is in line with Accounting Standard (AS-2) issued by the
Institute of Chartered Accountants of India. For valuation purpose,
FIFO basis has been adopted. Cost has been calculated with reference to
cost incurred by the company to bring the inventory to its present
condition and locations.
The Company has adopted Accounting Standard-22 (AS-22) as to
‘Accounting for Taxation on Income’ issued by the Institute of
Chartered Accountants of India. Deferred Tax Assets are recognized only
if there is virtual certainty as to its realization.
1.6 BORROWING COST
Borrowing costs attributable to acquisition and construction of assets
are capitalized as a part of the cost of such assets up to the date of
commissioning of qualifying asset. Other borrowing costs are charged to
Statement of Profit & Loss.
1.7 RECOGNITION OF INCOME AND EXPENDITURE
Items of Income and Expenditure are accounted for on the accrual basis
except otherwise stated in the notes to accounts in Part (B) of this
1.8 SALES & OTHER REVENUE
(a) Gross sales are inclusive of Excise Duty and net of rebates and
(b) Income in respect of renting of immovable property/ warehousing
services is recognized in terms of the respective agreements on accrued
1.9 EMPLOYEE BENEFITS
(a) Liability is computed on the basis of actuarial valuation of the
gratuity and earned leave as on the Balance Sheet date, as per
Accounting Standard- 15 (Revised).
(b) Employer’s contribution to Provident Fund and ESI is charged to
revenue on accrual basis.
1.10 IMPAIRMENT OF ASSETS
The Company in accordance with the Accounting Standard 28 (AS-28) in
respect of impairment of Assets issued by the Institute of Chartered
Accountants of India has adopted the practice of assessing at each
Balance Sheet date whether there is any indication that an asset may be
impaired and if any impairment exists, then the Company provides for
the loss for impairment of Assets after estimating the recoverable
amount of the assets.
1.11 PROVISIONS, CONTINGENT LIABILITY AND CONTINGENT ASSETS
The Company recognizes a provision when there is a present obligation
as a result of past event that probably requires an outflow of
resources and a reliable estimate can be made of the amount of the
obligation. Contingent liabilities are not recognised but are disclosed
in the notes on accounts. Contingent Assets are neither recognised nor
disclosed in the financial statements.