i. Accounting Convention
The financial statements have been prepared under Historical Cost
Convention on the basis of going concern and in accordance with the
accounting standards referred to in Section 211 (3C) of the Companies
Act, 1956, wherever applicable.
ii. Fixed Assets & Depreciation
a) Fixed Assets are stated at original cost net of tax / duty credits
availed, if any, less accumulated depreciation, accumulated
amortization and cumulative impairment. Costs include pre-operative
expenses and all expenses related to acquisition and installation of
the assets concerned.
b) Own manufactured assets are capitalized at cost including an
appropriate share of overheads.
c) Depreciation on Plant and Machinery, Motor Cars, Trucks and Vans has
been provided on straight-line method at the rates specified in the
Schedule XIV of the Companies Act, 1956. Depreciation on tools and
dies are provided on the basis of useful life as determined by the
Depreciation in respect of other assets has been calculated on written
down value method as per the rates specified in Schedule XIV of the
Companies Act, 1956.
Based on technical opinion, windmill is considered as a continuous
process plant and depreciation is provided at the rate applicable
there to,on straight line method.
d) As at each balance sheet date, the carrying amount of assets is
tested for impairment so as to determine;
i) the provision for impairment loss, if any, required or;
ii) the reversal, if any, required for impairment loss recognised in
previous periods. Impairment loss is recognised when the carrying
amount of an asset exceeds its recoverable amount.
iii. Valuation of Inventories
a) Inventories are valued at lower of cost and estimated net realizable
value. Cost is arrived at on weighted average basis.
b) Excise Duty is added in the Closing Inventory of Finished Goods.
c) The basis of determining cost for various categories of inventories
are as follows:
i) Raw Materials, Packing Materials and Stores and spares : Weighted
ii) Finished Goods and Work-in-Progress :Cost of Direct, Material,
Labour and other Manufacturing overheads.
iv. Revenue Recognition
a) The company generally follows the mercantile system of accounting
and recognizes income and expenditure on an accrual basis except those
with significant uncertainties.
b) Sale of goods is recognized when the risk and rewards of ownership
are passed on to the customers, which is generally on despatch of
c) Claims made by the company and those made on the company are
recognized in the Profit and Loss Account as and when the claims are
v. Foreign Currency Transactions
a) Foreign currency transactions are recorded at exchange rates
prevailing on the date of such transaction.
b) Foreign currency assets and liabilities at the -year end are
realigned at the exchange rate prevailing at the year end and
difference on realignment is recognized in the Profit & Loss account.
vi. Research and Development
Revenue expenditure on Research and Development is charged under
respective heads of account.
Capital expenditure on research and development is included as part of
fixed assets and depreciated on the same basis as other fixed assets.
vii. 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 benefits which are defined
benefit plans are recognized as an expense in the Profit & Loss Account
for the year in which the employee has rendered service. The expense is
recognized based on the present value of the obligation determined in
accordance with Revised Accounting Standard 5 on Employee Benefits.
Actuarial gains & losses are charged to the Profit & Loss Account.
c) Payments to defined contribution schemes are charged as expense as
and when incurred.
d) Termination benefits are recognized as an expense as and when
viii. Borrowing Costs
Borrowing costs attributable to the acquisition or construction of
qualifying assets are capitalized as part of such assets. All other
borrowing costs are charged to revenue. A qualifying asset is an asset
that necessarily requires substantial period of time to get ready for
its intended use or sale.
ix. Taxes on Income
Current tax on income for the period is determined on the basis of
taxable income and tax credits computed in accordance with the
provisions of the Income Tax Act, 1961 and based on the expected
outcome of assessment / appeals. Deferred tax is recognized on timing
differences between the accounting income and the taxable income for
the year and quantified using the tax rates and laws enacted or
substantively enacted as on the Balance Sheet date.
Deferred tax assets are recognized and carried forward to the extent
that there is a reasonable certainty that sufficient future income will
be available against which such deferred tax assets can be realised.
x. Cash Flow Statement
Cash Flow Statement has been prepared in accordance with the indirect
method prescribed in
Accounting Standard 3 issued by the Institute of Chartered Accountants
Leases are classified as finance or operating leases depending upon the
terms of the lease agreements. Assets held under finance leases are
recognised as assets of the Company on the date of acquisition and
depreciated over their estimated useful lives. Finance costs are
treated as period cost using effective interest rate method and are
expensed accordingly. Rentals payable under operating leases are
expenses as incurred.
xii. CENVAT/Service Tax
CENVAT credit on materials purchased / services availed for production
/ input services are taken into account at the time of purchase. CENVAT
credit on purchase of capital items wherever applicable are taken into
account as and when the assets are acquired. The CENVAT credits so
taken are utilized for payment of excise duty on goods manufactured /
Service tax on Output services. The unutilized CENVAT credit is carried
forward in the books.
xiii. 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. 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. Contingent assets are not recognised in the financial
statements since this may result in the recognition of income that may
never be realized.
xiv. Accounting Standards
Accounting Standards prescribed under Section 211 (3c) of the Companies
Act, 1956, have been followed wherever applicable.