1.1 Accounting System
1] The company follows the mercantile system of accounting and
recognizes income and expenditure on accrual basis.
2] Financial statements are based on historical cost. These costs are
not adjusted to reflect impact of changing value In the purchasing
power of money.
1.2 Revenue Recognition
Sale of goods is recognized on shipment or dispatch to customer, sale
of goods on Consignment basis is recognized on sale of the relative
goods by consignee.
1.3 Fixed Assets and Depreciation
1] Fixed Assets are stated at cost less depreciation. Cost comprises
cost of acquisition or construction and other attributable costs.
Administrative Expenses and interest up to the date of commencement of
production are capitalized in proportion of cost of major assets.
2] Expenditure on leasehold land is amortized over the period of its
Investments are stated at cost.
Stocks of raw materials, packing materials, stores, spares and fuel are
stated at cost and are valued on FIFO basis. Goods in transit in bonded
warehouse are valued at costs incurred till the year end. Goods in
process are stated at estimated cost ascertained by reducing gross
margin, if any from the estimated selling price. Finished goods are
valued at cost or selling price whichever is lower, wherein cost
includes material costs, labour and Factory overheads.
1.6 Sundry Debtors, Advances and Deposits
Balances considered irrecoverable are written off and those considered
doubtful are provided for.
Contingent Liabilities are disclosed in the accounts by way of giving
note and giving nature of liability and its quantum , if ascertained.
1.8 Deferred Revenue Expenses
Revenue expenses of a substantial magnitude which are expected to
benefit for some years in future are charged to Profit & Loss Account
over numbers of years considering relative benefit of the expenditure.
2 Retirement benefits.
Retirement benefits to employees are provided for by payments to
provident fund and by payment of gratuity on retirement of employees
after putting in qualifying years of service.
Taxes include current taxes and deferred taxes. Current tax, based on
tax payable in respect of taxable income for the year.
4. In view of uncertainty of realization, no provision for deferred
tax asset has been made in the accounts.
5. We have complied with the Auditing and Accounting Standard - 22 (
Initial Engagement - Opening Balances) issue by the Institute of
Chartered Accountants of India, in respect of verification of opening
balances as stated in the previous years certified balance sheet by the