I. Significant accounting policies of the Company are :
(a) Sales :
Sales are net of discounts allowed and are accounted for on despatch of
products. Sales include excise duty.
(b) Accounting of Claims and subsidies :
(i) Insurance Claims receivable are accounted for on the basis of
Surveyors Report depending on the merits of the case. Claims payable
are accounted for at the time of acceptance.
(ii) Claims raised by Government Authorities regarding taxes and duties
which are disputed by the Company are accounted based on the legality
of each claim. Adjustment, if any, are made in the year in which
disputes are finally settled.
(c) Retirement Benefits : Retirement benefits to employees are provided
(i) Gratuity ; Gratuity payable to employees is provided for by payment
to Gratuity Trust Fund on the basis of amount determined by Life
Insurance Corporation of India under Group Gratuity Scheme.
(ii) Superannuation : Superannuation payable to certain employees is
provided by payment to Superannuation Trust Fund as per Superannuation
(iii) Companys Contributions Paid/Payable to Provident Fund is
charged to Profit & Loss Account.
(iv) The Company extends the benefits of encashment of leave to its
employees while in service as well as on retirement. However it does
not have any defined Retirement Benefit Scheme in this behalf. Though
encashment is at the discretion of the management for the leave
accumulated while in services, as well as on retirement, it is provided
for during the year.
(d) Fixed Assets:
(i) Fixed Assets including assets purchased on Hire Purchase basis and
are stated at cost of acquisition except Land & Buildings which were
revalued in the year 1982 on the basis of market value and stated at
(ii) Depreciation has been calculated on the assets of the Company on
straight line basis at the rates specified in schedule XIV of the
Companies Act, 1956, as revised from time to time.
(iii) An amount representing difference between depreciation on
revalued assets and original cost of assets is transferred from
Revaluation Reserve to Profit & Loss Account.
(iv) Payments for acquisition of know-how is capitalised to the
relevant asset account and depreciation is provided as and when it is
put to use.
Investments are stated at cost and income thereon is accounted for on
(f) Research & Development:
R&D expenditure of revenue nature is charged to Profit & Loss Accont.
Capital expenditure is capitalised in the year in which it is incurred
and depreciation is provided on such assets as applicable.
Raw Materials and components are stated at weighted average cost.
Work-in-progress is valued at cost and Finished Goods are valued at
lower of cost or market value.
Pattern Tools are valued at cost net of amortisation.
(h) Deferred Revenue Expenditure : Compensation, Gratuity, Leave
Encashment for the employees retired under the Voluntary Retirement
Scheme is treated as deffered revenue expenditure to be amortised over
a period of five year commecing with the year of payment.
(i) Contingent Liabilities:
Contingent Liabilities are disclosed after careful evaluation of the
facts and legal aspects of the matter involved.