1. Accounting Concepts:
The Company follows the mercantile system of accounting and recognises
income and expenditure on accrual basis. These accounts are prepared on
historical cost basis and on the accounting principle of going concern.
Accounting policies not specifically referred to otherwise are
consistent and in consonance with generally accepted accounting
2. Fixed Assets:
Fixed Assets are stated at their original cost which includes cost of
acquisition, construction/installation & pre-operative expenses as
3. Impairment of Fixed Assets:
As per the requirement of AS - 28 on each Balance Sheet impairment loss
is recognised in case carrying amount of Fixed Assets exceeds its
When there is indication that impairment loss recognised in prior
accounting periods no longer exist or have decreased, same have been
reversed to the extent it does not exceed the carrying amount that
would have been determined (net of depreciation) had no impairment loss
has been recognised in prior years.
4. Expenditure during construction period:
Expenditure during the construction period is allocated to the
respective assets on completion of construction/erection.
5 Depreciation and Amortisation:
a) Depreciation is provided as per Straight Line Method at rates
prescribed in Schedule XIV of the Companies Act, 1956 on prorata basis
with reference to the month of addition/disposal.
b) Depreciation on addition/adjustment in value of fixed assets due to
foreign exchange fluctuation is provided on the residual life of the
c) Leasehold land is amortised over the period of lease.
d) Share Issue Expenses are amortised equally in ten years.
6. Valuation of Inventories:
Inventories are valued at the lower of cost and net realisable value
except waste/scrap which is valued at net realisable value. The cost
is computed on weighted average/actual basis. Finished goods and
process stock include cost of conversion and other costs incurred in
bringing the inventories to their present location and condition.
Obsolete defective and unserviceable stocks are duly provided for.
7. Retirement Benefits:
Liability in respect of Gratuity to Employees is provided on the basis
of actuarial valuation as per Group Gratuity Cash Accumulation Scheme
of Life Insurance Corporation of India. Liability in respect of leave
encashment benefit is provided on actuarial basis.
8. Foreign Currency Transactions:
Foreign Currency Assets and Liabilities are stated at the rates
prevailing ruling at the year end. Exchange differences relating to
fixed assets are adjusted in the cost of the asset. Any other exchange
differences are dealt with in the profit and loss account.
Sales are inclusive of Excise Duty and net of sales returns.
10. Research & Development:
Revenue expenditure on research and development is charged against the
profit of the year in which it is incurred. Capital expenditure on
research and development is shown as an addition to fixed assets.
11. Taxes on Income:
Tax liability is estimated considering the provisions of the Income Tax
Act, 1961. Deferred Tax is recognised subject to the consideration of
prudence, on timing differences, 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
asset is recognised and carried forward only to the extent there is
reasonable certainty that the assets will be adjusted in future;
12. Government Grants:
(a) Government Grants are accounted for where it is reasonably certain
that the ultimate collection will be made.
(b) Government Grants of the nature of project subsidy are credited to
(c) Government Grants of the nature of revenue such as export incentive
are credited to Profit & Loss A/c.
13. Borrowing Cost:
Interest and other cost attributable to acquisition or construction of
qualifying fixed assets are capitalised. All other borrowing costs are
charged to revenue.
14. Contingent Liabilities:
Contingent Liabilities are not provided but disclosed by way of notes