1 System of Accounting
The financial statements of the company have been prepared to comply
with all material aspects of the applicable Accounting Principles in
India, the Accounting Standards issued by The Institute of Chartered
Accountants of India and the relevant provision of the Companies Act,
1956. The financial statements have been prepared under the historical
cost convention and on the basis of going concern.
2 Fixed Assets & Depreciation a Cost of Fixed Assets
All Fixed Assets are valued at cost/revalued cost net of cenvat credit
wherever eligible. Cost includes all expenses and borrowing cost
attributable to the project till the date of commercial production /
put to use.
b Depreciation /Amortisation
Depreciation is provided on straight line method at the rates specified
in schedule XIV of the Companies Act 1956 on pro rata basis and the
assets having the value upto Rs.5000 have been depreciated at the rate
of 100%. Lease hold Land is amortised over the period of lease. The
policy of company is to provide depreciation on the Buildings , Plant &
Machinery and Other Fixed assests from the date of commercial
production/ put to use.
c Intangible Assets (Other Assets)
Cost of product development for which the company becomes entitled to a
Patent or DMF filed with regulatory authorities is recognised as other
assets. The policy of company is to amortise such assets acquired upto
31-03-2008 on straight-line basis in five subsequent years and those
acquired after 31.3.2008 and onwards in eight subsequent years from the
year in which these are acquired.
3 Borrowing Costs
Borrowing costs that are directly attributable to the
acquisition,construction of qualifying assets have been capitalised as
part of cost of assets. Other Borrowing costs are recognised as an
expense in the period in which they are incurred
Inventories are valued as under : Stores & Spares are valued at cost.
Raw Materials are valued at cost on FIFO basis.
Work in Process is valued at estimated cost basis or net realisable
value whichever is less.
Finished Goods are valued at cost or net realisable value whichever is
less and is inclusive of excise duty and all expenditure directly
attributable to production.
5 Recognition of Income and Expenditure
Sales are recognised when goods are supplied and are recorded net of
rebates and sales tax but inclusive of excise duty. Expenses are
accounted for on accrual basis.
6 Foreign Currency Transactions
Transactions in foreign currencies are recorded at the exchange rates
prevailing at the date of the transactions. The gain or loss arising
from forward transactions have been stated on prorata basis over the
terms of the contract. Foreign currency denominated current assests &
current liablities are translated at year end exchange rates. The
resulting gain or loss is recognised in the Profit& Loss Account.
In translating the financial statement of representative foreign
offices for incorporation in main financial statements, the monetary
assets and liabilties are translated at the closing rates non monetary
assets and liabilities are translated at exchange rates prevailing at
the dates of the transactions and income and expenses items are
converted at the yearly average rate.
7 Commodity Exchange Transactions
Commodity Exchange Transaction are recorded at the commodity exchange
rate prevaling on the transaction date. Contracts remaining outstanding
at the year end have been recorded as per year end rate and resultant
profit and loss arising from outstanding contracts are recognised
accordingly in the profit and loss account.
8 Retirement Benefits
The retirement benefits of the employees include Gratuity ,Provident
Fund & Leave Encashment . The gratuity is funded through the Group
Gratuity Policy with Life Insurance Corporation of India and the
contribution to the fund is based on actuarial valuation carried out
yearly as at 31st March. Contirbution to the provident fund is provided
on accrual basis. The leave encashment is provided on the basis of
employees entitlement in accordance with company''s rules.
9 Employees Stock Option Scheme
The accounting value of stock options representing the excess of the
market price on the date of grant over the exercise price of the shares
granted under Employees Stock Option Scheme of the Company, is
amortised as Deferred Employees Compensation on a straight-line basis
over the vesting period in accordance with the SEBI [Employee Stock
Option Scheme and Employee Stock Purchase Scheme] Guidelines, 1999 and
Guidance Note 18 on Share Based Payments issued by the ICAI.
10 Current & Deferred Tax
The provision for current tax is made at the actual rate applicable for
the income of the year as given under the Income Tax Act, 1961. However
deferred tax is made at the rate applicable to the subsequent financial
MAT Credit Entitlement is shown under the Current Assets in the Balance
Sheet. The same will be charged to profit & loss account in coming
years as per the provisions of Section 115JB of Income Tax Act, 1961.
11 Contingent Liabilities
The company has made the provision when there is a present obligation
as a result of a past event where the outflow of economic resources is
probable and a reliable estimate of the amount of obligation can be
made. Contingent Liabilities, barring frivolous claims, are disclosed
and those liablities which are possible of maturing are provided for.
12 Government Subsidy
The policy of company is to account for the Government Subsidy on
actual receipt basis.
13 Export Incentives
a) Obligation / entitlements on account of Advance Licences Scheme for
import of raw materials are not accounted for but given by way of note.
b) Export incentives are treated as income on export under DEPB & other
post export incentive schemes and the same is offset & treated as
expenditure in the year of import/utilisation of license.
Long Term Investements are being valued at cost Current Investments are
carried at lower of cost & fair value,determined on an individual
15 Impairement of Assets
Management periodically assesses using external and internal sources
where there is an indication that an asset may be impaired. An
impairment occurs where the carrying value exceeds the present value of
future cash flows expected to arise from the continous use of the
assets and its eventual disposal. The impairment loss to be accounted
for is determined as the excess of the carrying amount over the higher
of the asset''s net sales price or present value.
16 Other Accounting Policies
Accounting Policies not specifically referred to are in accordance with
generally accepted accounting principles.