1. Basis of Accounting
a) The financial statements have been prepared under the historical
cost convention in accordance with the generally accepted accounting
principles and the provisions of the Companies Act,1956 as adopted
consistently by the Company.
b) The Company generally follows accrual system of accounting and
recognises significant items of income and expenditure on accrual
2. Fixed Assets
a) Fixed Assets are stated at their original cost of acquisition
including all related expenses of acquisition and installation.
b) Depreciation is provided on Straight Line Method at the rates
prescribed under Schedule XIV to the Companies Act, 1956 from the month
the assets are put to use.
c) Leasehold land is amortised, over the period of lease. Computer
Software acquired is to be amortised over a period of five years on
Straight Line Basis.
a) Inventories (other than scrap) are valued at lower of cost or net
The cost of inventories is computed on weighted average basis except
Trading goods the cost for which is calculated on first in first out
basis. The cost of Finished Goods and Stock-in-Process include cost of
conversion and other cost incurred in bringing the inventories to their
present location and condition.
b) Scrap is valued at net realisable value.
Long Term Investments are carried at cost. Provision for diminution is
made to recognise a decline, other than temporary, in the value of long
term investments, scrip wise. Current Investments are valued at lower
of cost or fair value, category wise. Cost of investments include
acquisition cost such as brokerage, stamp duty etc.
a) Sale of goods is recognised at the time of transfer of substantial
risk and rewards of ownership to the buyer for a consideration.
b) Sales is inclusive of Excise Duty and net of Sales Tax and Trade
6. Employee benefits
a) Short-term employee benefits are recognized as an expense at the
undiscounted amount in the Profit & Loss Account of the year in which
the related service is rendered.
b) Post employment and other long term employee benefits are recognized
as an expense in the Profit & Loss Account for the year in which the
employee has rendered services. The expense is recognized at the
present value of the amount payable determined as per actuarial
valuations. Actuarial gains and losses in respect of long term employee
benefits are recognized in the Profit and Loss account.
7. Research & Development
Revenue expenditure pertaining to research and development is charged
to revenue in the year in which it is incurred. Capital Expenditure on
Research & Development is shown as addition to Fixed Assets.
8. Foreign Currency Transactions
a) Transactions in Foreign Currency are initially recorded at the
Exchange Rate at which the transactions are carried out.
b) Monetary items are translated at Exchange Rate prevailing at the
The difference in translation of monetary items and realised gains and
losses on foreign exchange transactions are recognised in the Profit
and Loss Account.
c) Forward exchange contracts entered into for hedging purposes are
accounted for separately from the underlying transactions. The premium
or discount on forward exchange contract is amortized over the period
of the respective contract.
9. Insurance Claims
Insurance claims are recognized when the amount thereof can be
reasonably ascertained and the claim is likely to be received.
10. Deferred Revenue Expenditure
Payment to employees under employees separation scheme are amortized
equally over a period of five years.
11. Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognized in respect of obligations where, based on the
evidence available, their existence at the Balance Sheet date is
Contingent liabilities are shown by way of Notes on Account in respect
of obligations where, based on the evidence available, their existence
at the Balance Sheet date is considered not probable.
Contingent assets are not recognized in the Accounts.
12. Taxes on Income
Current tax is determined as the amount of tax payable in respect of
taxable income for the year. Deferred tax is recognized, subject to
consideration of prudence in respect of deferred tax assets, on timing
difference, 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.
13. Government Grant
Government Grant received on Capital Account is shown as Capital
14. 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