i) Basis of Preparation of Financial Statements
The financial statements are prepared on a historical cost convention
on the accrual basis and materially comply with the accounting standard
notified by Companies (Accounting Standards) Rules, 2008 and relevant
provisions of the Companies Act, 1956.
ii) Fixed Assets
Fixed assets are stated at cost of acquisition less accumulated
depreciation. All costs including financial costs till commencement of
commercial production are capitalized. In case of net charges arising
from exchange rate variations relating to borrowings attributable to
the fixed assets were capitalized till 31.03.2005 and on revision of
Accounting standard 11 The Effects of Changes in Foreign Exchange
Rates (Revised 2003) the same are being charged to Statement of Profit
Depreciation on fixed assets (excluding intangible assets) of the
Company is provided on straight-line method at the rates and in the
manner specified in schedule XIV of the Companies Act, 1956, so as to
write-off 95% of the original cost of the assets, except depreciation
on incremental cost arising on account of translation of foreign
currency liabilities for fixed assets capitalized upto 31.03.2005,
which is being amortized over the residual life of the assets. The
company has, on the basis of technical opinion, treated the Plant &
Machinery as continuous process plant and charged the depreciation
accordingly. Depreciation on intangible assets is provided on
straight-line method, equivalent to cost of assets over a period of 10
a) Inventories are valued at the lower of cost or net realizable value.
Net realizable value is the estimated selling price in the ordinary
course of business less the estimated cost of completion and selling
expenses. Cost in respect of raw material and store & spares parts are
computed on FIFO basis. Cost in respect of process and finished goods
are computed on weighted average basis method. Finished goods and
process stock includes cost of conversion and other costs incurred in
acquiring the inventory and bringing them to their present location and
b) Waste is valued at estimated net realizable value.
v) Excise Duty
In view of the excise duty exemption route adopted by the Company from
13.07.2004 vide notification no. 30/2004 - dated 09.07.2004 of Central
Excise Act, 1944 Exemption to specified goods of public interest, the
Company does not have obligation for payment of excise duty from that
vi) Revenue Recognition
a) Sales are shown inclusive of export benefits, job receipts and are
net of returns, discount, rebates and claims.
b) Export benefits are recognized in the Profit & Loss account when the
right to receive credit as per the terms of the scheme is established
in respect of the exports made.
vii) Borrowing Cost
Borrowing costs, which are attributable to acquisition or construction
of qualifying assets, are capitalized as part of cost of such assets
till such assets are ready for its intended use. A qualifying asset is
one, which necessarily takes substantial period of time to get ready
for intended use. All other borrowing costs are charged to revenue.
viii) Retirement Benefits
a) The Employee and Company make monthly fixed contribution to
Government of India employee''s provident fund equal to a specified
percentage of the covered employee''s salary, provision for the same is
made in the year in which services are rendered by the employee.
b) The Liability of gratuity to employees, which is a defined benefit
plan, is determined on the basis of actuarial valuation based on
projected unit credit method. Actuarial gain/loss in respect of the
same is charged to the profit and loss account.
c) Leave encashment benefits to eligible employees has been ascertained
on actuarial basis and provided for. Actuarial gain/loss in respect of
the same is charged to the profit and loss account.
ix) Foreign Currency Transactions/Exchange Fluctuation
a) Monetary transactions related to foreign currency are accounted for
at the equivalent rupee converted at the rates prevailing at the time
of respective transactions and outstanding in respect thereof are
translated at year end rates except for the debts which are doubtful of
b) Non-monetary foreign currency items are carried at cost.
x) Provisions, Contingent Liabilities and Contingent Assets.
Provisions involving substantial degree of estimation in measurement
are recognized 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 recognized but are disclosed in the
notes on financial statement. Contingent assets are neither recognized
nor disclosed in the financial statement.