1. Basis of Accounting
The Financial Statements have been prepared on accrual basis in
accordance with the generally accepted accounting norms, except
insurance claims, which are accounted when accepted by the insurance
2. Revenue Recognition
Sales are recognised at the point of despatch of goods to the customers
and include excise duty but exclude Sales Tax and other levies.
3. Fixed Assets
(a) Fixed Assets including Assets for Research and Development other
than Land are accounted at Cost Less Depreciation and impairment loss,
(b) Assets acquired under Hire Purchase Agreements / Financial Lease
Agreements are capitalised to the extent of their Principal Value,
while Hire charges / Finance charges on Lease are charged to revenue in
the years in which they are payable.
(c) Depreciation is provided on Straight Line Method in accordance with
the rates as per Schedule XIV of the Companies Act, 1956 as amended
from time to time.
(d) Application Software, Die and Core and New Product Development are
amortised over a period of 3 years. Technical know-how fee is amortised
over a period of 5 years.
(e) Borrowing Costs, if any are capitalised as part of qualifying fixed
assets when it is probable that they will result in future economic
benefits. Other borrowing costs are expensed.
Investments are categorised into Long Term and Current Investments.
Long Term Investments are normally valued at cost, unless there is a
permanent fall in value. Current Investments are valued at cost or
Market Value whichever is lower. Dividend on Investments is accounted
as and when the right to receive the payment is established.
5. Trade Receivable
Trade Receivable amount is exclusive of the value of Bills Discounted,
the liability for which is disclosed under Contingent
6. Excise Duty
Excise Duty on goods manufactured is accounted only at the time of
removal of goods from the factory except in respect of year end
inventory of finished goods, excise duty is included as part of
7. Foreign Currency Transactions
(a) Foreign Currency Transactions are recognised in the books at the
exchange rates prevailing on the date of transaction.
(b) In the case of Current Assets/Liabilities the difference (Gain or
Loss) between the actual payment and the amount recognised in the books
is accounted as Exchange Gain or Loss. Where the transaction is not
settled within the year, profit/loss arising on the restatement at the
year-end rates is recognised as exchange gain or loss in the profit and
(c) In case of Depreciable Capital assets having long term foreign
currency monetary arrangement the Company opts to add or deduct the
exchange differences to the cost of the depreciable capital assets and
depreciate it over the balance life of the asset. In case of other long
term foreign currency monetary items the company opts to accumulate the
exchange differences in a foreign currency monetary translation
difference account which are amortised over the balance period of
such long term asset or liability not beyond 31st March 2011, by
recognition as income or expense in each of such periods.
8. Employee Benefits
1. Defined Contribution Plan
The Company''s Provident Fund Scheme, Superannuation Scheme and ESI
plans are Defined Contribution Plans and the Company''s contribution
paid/payable is recognised as expense in the Profit and Loss Account
during the period in which the employees render the related service.
2. Defined Benefit Plan / Other long term employee benefits
(a) The Company''s Gratuity and Long-Term compensated absences are
Defined Benefit Plans / other long term employee benefits respectively.
The Company''s liability towards Gratuity are determined using the
Projected Unit Credit Method which recognises each period of service as
giving rise to additional unit of Employee Benefit Entitlement. The
Gratuity scheme is operated through Group Gratuity Scheme of LIC.
(b) The Gratuity liabilities are provided based on Actuarial Valuation
certified by LIC. Actuarial gains and losses are charged to Profit and
(c) Long term compensated absences are provided for based on
independent Actuarial valuation. Actuarial gains and losses are
charged to Profit and Loss account.
3. Short term employee benefits are recognised as an expense at the
undiscounted amount in the year in which the employee render the
services/vesting period of the benefit.
9. Impairment of Assets
An asset is treated as impaired when the carrying cost of assets
exceeds its recoverable value. An impairment loss is charged to the
profit and loss account in the year in which an asset is identified as
impaired. The impairment loss recognized in prior accounting period is
reversed if there has been a change in the estimate of recoverable
10. Provision, Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement
are recognised when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent liabilities are not recognised but are disclosed in the
notes. Contingent Assets are neither recognised nor disclosed in the
11. Product Warranty Expenses
Product Warranty expenses are accounted based on the claims received
and accepted during the year and estimates in accordance with the
warranty policy of the company.