(a) Accounts are maintained on accrual basis. Claims/Refunds not
ascertainable with reasonable certainty are accounted for on settlement
(b) Fixed Assets are stated at cost adjusted by revaluation of certain
(c) Expenditure during construction/erection period is included under
Capital Work-in-Progress and allocated to the respective fixed assets
on completion of construction/ erection.
(d) (i) Foreign currency transactions are recorded at exchange rates
prevailing on the date of transaction.
Monetary assets and liabilities in foreign currencies as at the Balance
Sheet date are translated at exchange rate prevailing at the year end.
Premium or discount in respect of forward contracts covered under AS 11
(revised 2003) is recognized over the life of contract. Exchange
differences arising on actual payments/ realizations and year end
translations including on forward contracts are dealt with in Statement
of Profit and Loss except foreign exchange loss/gain on reporting of
long-term foreign currency monetary items used for depreciable assets,
which are capitalized. Non Monetary Foreign Currency items are stated
(ii) In accordance with Announcement issued by the Institute of
Chartered Accountants of India all outstanding derivatives except
covered under AS 11 (revised 2003) are marked to market on Balance
Sheet date and loss, if any, is recognized in Statement of Profit and
Loss, and gains are ignored.
(e) Long term investments are stated at cost. Provision for diminution
in the value of long term investments is made only if such a decline is
other than temporary in the opinion of the management. The current
investments are stated at lower of cost and quoted/fair value computed
category-wise. When investment is made in partly convertible debentures
with a view to retain only the convertible portion of the debentures,
the excess of the face value of the non-convertible portion over the
realisation on sale of such portion is treated as a part of the cost of
acquisition of the convertible portion of the debenture. Income in
respect of securities with long-term maturities is accounted for as per
(f) Inventories are valued at the lower of cost and net realisable
value (except scrap/ waste which are valued at net realisable value).
The cost is computed on weighted average basis. Finished Goods and
Process Stock include cost of conversion and other costs incurred in
bringing the inventories to their present location and condition.
(g) Export incentives, Duty drawbacks and other benefits are
recognized in the Statement of Profit and Loss. Project subsidy is
credited to Capital Reserve.
(h) Revenue expenditure on Research and Development is charged to
Statement of Profit and Loss in the year in which it is incurred and
capital expenditure is added to Fixed Assets.
(i) Borrowing cost is charged to Statement of Profit and Loss except
cost of borrowing for acquisition of qualifying assets which is
capitalised till the date of commercial use of the asset.
(j) (i) Depreciation on Buildings, Plant & Machinery, Railway Siding
and Other Assets of all Units is provided as per straight line method
considering the rates in force at the time of respective additions of
the assets made before 02.04.1987 and on additions thereafter at the
rates and in the manner specified in Schedule XIV of the Companies Act
1956. Continuous Process Plants as defined in Schedule XIV have been
considered on technical evaluation. Depreciation on additions due to
exchange rate fluctuation is provided on the basis of residual life of
the assets. Depreciation on assets costing up to Rs. 5000/- and on
Temporary Sheds is provided in full during the year of additions.
(ii) Depreciation on the increased amount of assets due to revaluation
is computed on the basis of the residual life of the assets as
estimated by the valuers on straight-line method.
(iii) Leasehold Land is being amortised over the lease period.
(k) An asset is treated as impaired when the carrying cost of assets
exceeds its recoverable amount. An impairment loss is charged to the
Statement of Profit and Loss when an asset is identified as impaired.
Reversal of impairment loss recognised in prior periods is recorded
when there is an indication that the impairment losses recognised for
the assets no longer exist or have decreased. Post impairment,
depreciation is provided on the revised carrying value of the asset
over its remaining useful life.
(l) Employee Benefits:
(i) Defined Contribution Plan
Employee benefit in the form of Superannuation Fund is considered as
defined contribution plan and charged to the Statement of Profit and
Loss in the year when the contribution to the respective fund is due.
(ii) Defined Benefit Plan
Retirement benefits in the form of Gratuity is considered as defined
benefit obligation and provided for on the basis of an actuarial
valuation, using the projected unit credit method, as at the date of
The Provident Fund Contribution is made to trust administered by the
trustees. The interest rate to the members of the trust shall not be
lower than the statutory rate declared by the Central Government under
Employees'' Provident Fund and Miscellaneous Provision Act, 1952. Any
shortfall, if any, shall be made good by the Company.
(iii) Other long-term benefits
Long term compensated absences are provided for on the basis of an
actuarial valuation, using the projected unit credit method, as at the
date of Balance Sheet.
Actuarial gain/losses, if any, are immediately recognized in the
Statement of Profit and Loss.
(m) Lease rentals in respect of assets taken on finance lease are
accounted for in reference to lease terms.
(n) Expenditure incurred against which benefit is expected to flow
into future periods, are treated as Deferred Revenue Expenditure and
charged to Revenue Account over the expected duration of benefit.
Share issue expense is charged to Securities Premium Reserve in the
year of issue. ECA Premium on loans is to be amortised over the tenure
(o) Intangible Assets are being recognised if the future economic
benefits attributable to the asset are expected to flow to the
company and the cost of the asset can be measured reliably. The same
are being amortised over the expected duration of benefits.
(p) Current tax is the amount of tax payable on the estimated taxable
income for the current year as per the provisions of Income Ta x Act,
1961. Deferred tax assets and liabilities are recognised in respect of
current year and prospective years. Deferred tax assets are recognised
on the basis of reasonable certainty / virtual certainty as the case
may be, that sufficient future taxable income will be available
against which the same can be realised.
(q) 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.
(r) Premium on redemption of preference shares is accounted for in the
year of redemption.