The Accounts are prepared under the historical cost convention and in
accordance with generally accepted accounting practices. The financial
statements are prepared to comply in all respects with the Accounting
Standards notified under section 211 (3C) of the Companies Act, 1956
and all the relevant provisions thereof.
b) USE OF ESTIMATES
The preparation of financial statements requires the management of the
Company to make judgments, estimates and assumptions that affect the
reported balance of assets and liabilities, revenues and expenses and
disclosures relating to the contingent liabilities and commitments. The
management believes that the estimates used in preparation of the
financial statements are prudent and reasonable. The judgments,
estimates and underlying assumptions are made with the management''s
best knowledge of the business environment and are reviewed on an
ongoing basis. However, future results could differ from these
estimates. Any revision to these accounting estimates is recognised
prospectively in the current and future periods.
C) TANGIBLE FIXED ASSETS
Fixed Assets are stated at cost, net of Cenvata/AT, less accumulated
depreciation. Cost of acquisition of fixed assets is inclusive of
directly attributable cost of bringing the assets to their working
condition for the intended use and interest on borrowings till the date
of commissioning of the assets.
d) INTANGIBLE ASSETS
Intangible assets are stated at cost of acquisition less accumulated
amortization. All costs including borrowing costs, if any, on specific
borrowings utilized for financing the assets till its usage are
e) BORROWING COSTS
Borrowing Costs, that are directly attributable to the acquisition or
construction of assets, that necessarily take a substantial period of
time to get ready for its intended use, are capitalised as part of the
cost of qualifying asset when it is possible that they will result in
future economic benefits and the cost can be measured reliably.
f) DEPRECIATION AND AMORTISATION
Depreciation is written off in accordance with the provisions of
Schedule XIV of the Companies Act, 1956 as follows:
i) Under Straight line method in respect of Plant and Machinery of Wind
ii) Under Written down value method on the remaining assets of the
iii) The intangible assets, being Computer Software is amortized over a
period of 5 years on Straight Line Method.
Non-current Investments are stated at cost and income thereon is
accounted for on accrual. Provision towards decline in the value of
long term investments is made only when such decline is other than
i) Finished Goods are valued at lower of cost or net realizable value.
ii) Cost of Work-in-Progress and Finished Goods includes appropriate
portion of overheads etc., and excise duty wherever applicable.
iii) Raw Materials, Stores and Spares are valued at cost using weighted
iv) Work-in-Progress, Raw Materials, Stores, Spares, Material in
Transit, are valued at cost except where the net realizable value of
the finished goods they are used in is less than the cost of finished
goods and in such an event, if the replacement cost of such materials
etc., is less than their book values, they are valued at replacement
v) By-products and scrap are valued at net realizable value.
vi) Dedicated machinery spares which can be used only in connection
with an item of fixed assets and whose use is expected to be irregular
are amortized over the estimated useful life of the principal assets.
i) REVENUE RECOGNITION
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the company and the revenue can be
i) Revenue from sale of products is recognised when the risks and
rewards of ownership are transferred to the buyer under the terms of
the contract which usually coincide on the dispatch of goods to the
customer or when they are unconditionally appropriated under the terms
ii) Sales include excise duty and Service charges recovered and are
stated net of trade discounts and sales tax.
iii) Revenue realized on processing charges is booked based on
agreements/arrangements with the concerned parties.
iv) Power consumed in other units is accounted at market price.
v) Interest on investments and deposits is booked on a time proportion
basis taking into account the amounts invested and the rate of
vi) Dividend income is accounted for in the year in which the right to
receive the payment is established.
j) TAXES ON INCOME
Current tax is determined as per the provisions of Income Tax Act, 1961
in respect of taxable income for the year. Deferred tax liability is
recognized, subject to the consideration of prudence on timing
differences, being the difference between taxable incomes and
accounting income that originate in one period and are capable of
reversal in one or more subsequent periods.
Deferred tax assets arising on account of brought forward losses and
unabsorbed depreciation as per Income Tax laws are recognized only when
there is virtual certainty supported by convincing evidence that such
assets will be realized. Deferred tax assets arising on other temporary
differences are recognized only if there is a reasonable certainty of
k) SEGMENT REPORTING
The accounting policies adopted for segment reporting are in line with
the accounting policies of the Company with the following additional
policies for segment reporting.
Inter segment revenue has been accounted for based on the market
Revenue and expenses have been identified to segments on the basis of
their relationship to the operating activities of the segment. Revenue
and expenses which relate to the enterprise as a whole and are not
allocable to segments on a reasonable basis, have been included under
l) RETIREMENT BENEFITS
The Company provides retirement benefits in the form of Provident Fund,
Superannuation and Gratuity etc.,
Contribution to Provident Fund, a defined contribution scheme, is made
at the prescribed rates to the Provident Fund Commissioner and is
charged to the Statement of Profit and Loss. There is no other
obligation other than the contribution payable.
Gratuity, a defined Benefit scheme is covered by a Group Gratuity cum
Life Assurance policy with LIC. Annual contribution to the fund as
determined by LIC is expensed in the year of contribution. The short
fall between the accumulated funds available with LIC and liability as
determined on the basis of actuarial valuation is provided for as at
the year end. The actuarial valuation is done as per the Projected Unit
Credit method. Actuarial gains/losses are immediately taken to
Statement of Profit and Loss.
The liability in respect of compensated absences due or expected to be
availed within one year from the balance sheet date is recognized on
the basis of undiscounted value of estimated amount required to be
paid. Liability in respect of compensated absences becoming due or
expected to be availed more than one year after the balance sheet date
is estimated on the basis of actuarial valuation using projected unit
credit method at the end of each year.
Contribution to Superannuation Fund, a defined contribution scheme, is
made to the LIC as per arrangement with them.
m) RESEARCH & DEVELOPMENT EXPENDITURE
Revenue expenditure is charged to Profit & Loss Account and Capital
expenditure is added to the cost of Fixed Assets in the year in which
it is incurred.
n) FOREIGN EXCHANGE TRANSACTIONS
Transactions in foreign currency are initially accounted at the
exchange rate prevailing on the date of the transaction, and adjusted
appropriately, with the difference in the rate of exchange arising on
actual receipt/ payment during the year.
At each Balance Sheet date
i. Foreign currency monetary items are reported using the rate of
exchange on that date.
ii. Foreign currency non-monetary items are reported using the
exchange rate at which they were initially recognized.
o) IMPAIRMENT OF ASSETS:
An asset is treated as impaired when the carrying cost of the same
exceeds its recoverable amount. An impairment loss is charged to the
Statement of Profit and Loss 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 amount.
p) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Provisions are recognised only when there is a present obligation as a
result of past events and when a reliable estimate of the amount of
obligation can be made. Provisions are not discounted to their present
value and are determined based on the best estimate required to settle
the obligation at the reporting date. These estimates are reviewed at
each reporting date and adjusted to reflect the current best estimates.
Contingent liability is disclosed for (i) Possible obligation which
will be confirmed only by future events not wholly within the control
of the Company or (ii) Present obligations arising from past events
where it is not probable that an outflow of resources will be required
to settle the obligation or a reliable estimate of the amount of the
obligation cannot be made. The company does not recognise contingent
liabilities but the same are disclosed in the Notes.
Contingent assets are not recognised in the financial statements since
this may result in the recognition of income that may never be