1. Method of Accounting
Company generally maintains its accounts on accrual basis, except in
case of certain items of Income/Expenditure where recovery/payment is
uncertain. Accordingly, estimated benefits against exports remaining to
be utilised / liability for duty free raw materials excess utilised as
at the end of the year has been accounted for in arriving at the
consumption of raw materials.
2. Inventory Valuation
(a) Stores, Spares Parts and Loose Tools At weighted average cost.
(b) Raw Materials At weighted average cost.
(c) Finished Goods Lower of Cost or net realisable value.
(d) Goods-in-process Lower of Cost or net realisable value.
(e) Scrap and Wastage At estimated selling price.
In respect of Finished goods and Goods in process, the cost is
determined by considering '' material, related labour & overheads and
Plant and Machinery on straight-line method and other Fixed Assets on
reducing balance method at the rates specified in Schedule XIV of the
Companies Act, 1956. Plant and Machinery are depreciated to the extent
of 95% of its gross value considering the shelf life of 18 years.
Sales comprise sale of goods, net of trade discount and include excise
duty but exclude goods dispatched pending for retirement where the
titles of the goods remain with the company till retirement of
5. Fixed Assets
All Fixed Assets are stated at cost less depreciation. Interest on
borrowed funds attributable to acquisition of Fixed Assets and revenue
expenses incurred prior to installation are capitalised as part of
assets cost. Own manufactured assets are capitalised at cost including
6. Research & Development
Revenue expenditure on research and development is charged as expense
in the year in '' which it is incurred. Capital expenditure on
research and development is shown as an addition to fixed assets.
Investments are stated at Cost. In respect of investment of a long-term
nature (including in subsidiaries), provision is made for any
diminution in the value wherever it is permanent in nature.
8. Foreign Exchange Transactions
Foreign currency transactions are accounted at exchange rates
prevailing on the date of transaction. Current Assets and Liabilities
denominated in foreign currency as at the Balance Sheet date are
reconverted at rates prevailing at the year-end and the resultant net
gains or losses are adjusted in the Account.
9. Retirement Benefits
Retirement benefits are dealt with in the following manner:
a) Contributions to Provident Fund are accounted on accrual basis with
corresponding contribution to recognised funds for staff on actual
b) Provision for Gratuity liability is made on the basis of actuarial
valuation, with corresponding contribution to recognised fund for staff
on actual duty.