1. Basis of Accounting:
The financial statements have been prepared on the basis of historical
costs under the accrual system of accounting and applicable Accounting
Standards notified by the Companies (Accounting Standards) Rules, 2006
and are in accordance with the requirements of the Companies Act, 1956.
2. Valuation of Inventories:
Inventories are valued at Lower of Cost and Net Realisable Value. Cost
comprises all cost of purchase, cost of conversion and other costs
incurred in bringing the inventories to their present location and
condition. The cost is arrived at on First In First Out (FIFO) basis.
Due allowance is estimated and made for defective and obsolete items,
wherever considered necessary.
Investments, being long term, are stated at cost; where there is a
decline, other than temporary, the resultant reduction in carrying
amount is charged to the Profit and Loss Account.
4. Valuation of Fixed Assets:
a. All the Fixed Assets are capitalised at cost (Net of refundable
duties) inclusive of all expenses relating to the acquisition and
installation of fixed assets and include borrowing costs attributable
to such assets, upto the date the asset is put to use.
b. Fixed Assets except Freehold Land are valued at cost less
depreciation. Freehold Land is shown at its Original Cost.
c. Impairment Loss is provided to the extent the carrying amount of
assets exceeds their recoverable amount. Recoverable amount is the
higher of an asset''s net selling price and its value in use. Value in
use is the present value of estimated future cash flows expected to
arise from the continuing use of an asset and from its disposal at the
end of its useful life. Net selling price is the amount obtainable from
the sale of an asset in an arm''s length transaction between
knowledgeable, willing parties, less the costs of disposal.
5. Borrowing Costs:
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalised as part of the cost
of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for intended use. All other
borrowing costs are charged to the Profit and Loss Account in the year
in which they are incurred.
a. Except for items on which 100% depreciation rates are applicable,
depreciation is provided on Straight Line Method on pro-rata basis as
i. In respect of the items of Fixed Assets existing on the date on
which the amended Schedule XIV came into force:
The specified period of the life of the asset is recomputed by applying
to the original cost, the revised rate of depreciation as prescribed in
Schedule XIV of the Companies Act, 1956. Thereafter, depreciation
charge is calculated by allocating the unamortized value of the asset
over the remaining part of the recomputed specified period. For
calculating remaining part of the recomputed specified period, only
completed years of useful life of the existing assets have been taken
into account and fraction of the useful life already expired has been
ii. In respect of other items of Fixed Assets:
Depreciation is provided at the rates as prescribed in Schedule XIV of
the Companies Act, 1956.
b. While applying the revised rates as per Schedule XIV of the
Companies Act, 1956, continuous process plants as defined therein have
been taken on technical assessment and depreciation is provided
7. Foreign Currency Transactions :
a. Foreign currency transactions are recorded at the conversion rates
prevailing on the date of transactions.
b. The exchange differences arising on the settlement of transactions
are recognised as the gains or losses in the period in which they
c. Monetary items i.e. items to be received or paid in Foreign
Currencies, are translated at the exchange rates prevailing at the
Balance Sheet date or at the Forward Contract rates, wherever such
contracts have been entered into and resultant gains / losses are
recognised in the Profit and Loss Account.
8. Revenue Recognition:
Revenue from sale of goods is recognized when the significant risks and
rewards of ownership of goods are passed to the buyer. Dividends are
recorded when the right to receive payment is established. Interest
Income is recognized on time proportion basis. Rent and service
receipts are accounted for on accrual basis in term of agreement with
parties except in cases where ultimate collection is considered
9. Employee Benefits:
a. The Company''s Contribution in respect of Provident Fund is
charged to the Profit and Loss Account;
b. Provision for Gratuity to employees and Leave Encashment are
charged to the Profit and Loss Account on the basis of actuarial
a. Assets Leased out are charged to depreciation as per Accounting
Standard 6 issued by the institute of Chartered Accountants of India.
b. Lease Income is recognized in Profit and Loss Account on accrual
a. In accordance with Accounting Standard 22 - Accounting for Taxes on
Income (AS-22), notified by the Companies (Accounting Standards) Rules,
2006, the deferred tax for timing differences is accounted for using
the tax rates and laws that have been enacted or substantively enacted
by the balance sheet date.
b. Deferred tax assets arising from timing differences are recognised
only on consideration of prudence.
12. Provisions, Contingent Liabilities and Contingent Assets
A provision is recognized when the Company has a present obligation as
a result of a past event and it is probable that an outflow of
resources embodying economic benefits would be required to settle the
obligation, and in respect of which a reliable estimate can be made.
Provisions are not discounted to their present value and are determined
based on best estimates required to settle the obligation at the
balance sheet date. Provisions are reviewed at each balance sheet date
and are adjusted to reflect the current best estimation. A contingent
liability is disclosed unless the possibility of an outflow of
resources embodying the economic benefits is remote or a reliable
estimate of the amount of obligation cannot be made.