i. Fixed Assets
a) Fixed Assets are stated at historical cost of acquisition or
construction and includes amounts added on account ol revaluation of
Fixed Assets less accumulated depreciation.
b) Expenditure incurred on Product Development is treated as an
Intangible Asset to be amortised over a period of 5 years using the
Straight Line Method.
ii. Depreciation on Fixed Assets
a) Depreciation has been provided on the Straight Line Method in
accordance with the provisions of Section 205 (2) (b) of the Companies
Act, 195.6, at the rates and in the manner specified in Schedule XIV to
the said Act.
b) Depreciation for the year/period is provided on revalued cost of
assets and is charged to Fixed Assets as revalued.
c) Depreciation has been provided at 5.28% on: . .
i) Furnaces, Conveyor Belts and Washing Machines installed at Kalwe
Unit and forming part of heat treatment process and operations for High
Tensile Fcisteners manufactured by the Company; and
ii) Furnaces, Nitrogen Gas Plant, Pickling Furnace and Boiler installed
at Mahad Unit and forming part of annealing-and pickling process for
wire coils (raw materials) purchased by the Company/by considering
these machines as continuous process plant as defined in Schedule XIV
to the Companies Act, 1956.
iii. Investments (Long Term)
Long Term Investments are carried at cost, after providing for any
diminution in value, if such diminution is other than temporary in
a) Raw Materials: At cost on First In First Out basis.
b) Finished Goods and Work-in-Progress:
Finished Goods and Work-in-Progress at cost or market value, whichever
is lower. Cost is determined on the basis of absorption costing method.
Market value is based on available market price/quotation.
c) Tools: Tools which are actually consumed during the year/period are
amortised over a period of 5 years.
d) Obsolete items of stocks are valued at Nil.
v. Provision for Bad and Doubtful Debts and Advances
Provision is made for Doubtful Debts and Advances which are considered
irrecoverable in the opinion of the Management. vi. Retirement
Provision for Gratuity is made @ 8.33% on Annual Salary which includes
Basic Salary,. Dearness Allowance and Adhoc Allowance. . - .
b) Provident Fund:
Liability is provided on the basis of contribution as required under
vii. Leave Salary
Liability towards Leave Salary is provided during the year/period only
in respect of those employees who have left the Company and where
settlement with them is duly made.
viii. Foreign Currency Transactions
Transactions in Foreign Currency are accounted at the exchange rate
prevailing on the date of the transactions. Any exchange gains or
losses arising out of subsequent fluctuations are accounted in the
Financial Statements as per Accounting Standard -11. In respect of
Foreign Currency Loans taken, for Fixed Assets, exchange gains or.
losses are deducted from/added to Fixed Assets as per Schedule VI to
the Companies Act, 1956.
ix. Premium on Redemption of Debentures
Premium payable on redemption of Debentures is accounted as and when
x. Revenue Recognition
a) Sales are recognised when there is reasonable certainty and
substantial risk and reward of ownership is transferred.
b) Interest on delayed payments from Customers is accounted as and when
xi. Deferred Taxes
Deferred Tax resulting from timing differences between Book and Tax
Profits is accounted for under the liability method, at the current
rate of Tax, to the extent that the timing differences are expected to
Deferred Tax Assets are recognised and carried forward to the extent
that there is reasonable certainty that sufficient future taxable
income will be available against which such Deferred Tax Assets can be
xii. Contingent Liabilities
Contingent Liabilities, if any, are disclosed in the Notes on Accounts.
Provision is made in the Accounts in respect of those contingencies
which are likely to materialise into liabilities after the year end
till the approval of the Accounts by the Board of Directors and which
have material effect on the position stated in the Balance Sheet.