(1) Basis of preparation of Financial Statements:
The financial statements have been prepared under the historical cost
convention in accordance with the generally accepted accounting
principles and the provisions of the Companies Act, 1956.
The Company follows the accrual system of accounting and recognises
Income and expenditure on accrual basis.
Accounting policies not referred to otherwise are consistent with the
Generally Accepted Accounting Principles.
(2) Fixed Assets:
Fixed Assets are stated at cost of acquisition or construction and
includes amounts added/ reduced on revaluation less accumulated
depreciation. Impairment losses have been accounted as per the
mandatory Accounting Standards issued by The Institute of Chartered
Accountants of India as applicable and the relevant provisions of The
Companies Act, 1956.
Borrowing costs for acquisition or construction of a qualifying asset
and revenue expenses incurred (including expenses on test runs and
experimental production) for the period prior to the commencement of
commercial production are capitalised proportionately as part of the
asset cost in respect of machineries put to use.
(a) Depreciation on fixed assets other than lease-hold land is provided
on straight-line method at the rates and in the manner specified in
Schedule XIV to the Companies Act, 1956.
(b) Depreciation on additions/deductions during the year has been
provided on pro-rata basis with reference to the month of addition/
(c) Effective from 01.10.2003, the Leasehold land is amortized over the
balance period of unexpired lease period in equal installments.
The leasehold land was acquired on 1.8.1989 for 30 years period at a
premium of Rs. 599,678/-. Accordingly, the premium paid for acquiring
the lease hold rights on the said leasehold land are being written off
over the balance unexpired life of the lease.
(4) Expenditure during construction period:
As per the consistent accounting policy all expenditure related to the
project construction/ implementation and income arising out of project
activities and funds related to the project are capitalized and
allocated to the respective fixed assets.
Long-term investments are valued at cost subject to reduction made for
diminution in value-that is other than temporary in nature.
In accordance with the revised Accounting Standard (AS-2), Inventories
are valued at lower of cost or net realizable value after providing for
obsolescence, if any.
(a) Raw materials, stores, spares, consumables and construction
materials: At lower of cost or net realizable value
(b) Materials in process: At lower of cost or net realizable value
(c) Finished Goods: At lower of cost or net realizable value.
(7) Retirement Benefits:
Defined Contribution Plan
The Companys liability towards Employees Provident Fund scheme
administered by the Employees Provident Fund Scheme, Govt, of India is
considered as Defined Contribution Plan. The Companys contributions
paid/payable towards these defined contribution plan is recognized as
expense in the Profit and Loss Account during the period in which the
employees rendered the related service.
Defined Benefit Plan
Companys liabilities towards gratuity and leave encashment if any are
considered as Defined
Benefit Plans. The present value of the obligations towards gratuity is
determined based on actuarial valuation using the projected unit credit
method. As regards the Leave encashment, it is calculated on the
actual balance leave of each employee on the year-end. Provision of Rs.
6,34,424 is accordingly made for leave encashment during the current
year. This is done on the same basis as in the last accounting period.
(8) Transactions of foreign currency items:
Transactions in foreign currency are recorded at the rate of exchange
in force at the date of transaction. Foreign currency assets and other
liabilities other than for financing fixed assets are stated at the
rate of exchange prevailing at the year-end and resultant gains/losses
are recognized in the capital work in progress. Foreign currency loans
for financing fixed assets (other than those where the company is
protected against exchange fluctuations) are accounted for at the rate
of exchange prevailing at the year end and the resultant exchange
difference is adjusted to the cost of assets.
(9) Government Grants:
(a) Revenue grants are recognized in the Profit & Loss account.
(b) Capital Grants relating to specific fixed assets are shown under
(10) Provision for taxation:
No provision for taxation is made as the profits and gains of units set
up in North Eastern State are tax free under the Income Tax Act 1961
and the company has also incurred losses during the year.
(11) Events occurring after the Balance Sheet Date:
In term of Corporate Debt Restructuring Scheme, the Company has issued
8% Optionally Cumulative Convertible Debentures amounting to Rs. 57.52
Crore to the Financial Institution, Banks and Insurance Companies on
23rd March, 2011.
(12) Revenue Recognition:
(a) Sales are recognized on dispatch to customers and are net of
returns, discounts and sales tax.
(b) Other Income and Expenditure are recognized and accounted on