1. Basis of preparation of Financial Statements
a) The financial statements have been prepared under historical cost
convention, in accordance with the generally accepted accounting
principles and the provision of the Companies Act, 1956 as adopted
consistently by the Company.
b) Accounting policies not specifically referred to otherwise are
consistent with the generally accepted accounting principles followed
by the Company.
c) The preparation of financial statements requires estimates and
assumption to be made that effect the reported amount of assets and
liabilities on the date of financial statements and the reported amount
of revenue and expenses during the reporting period .The Difference
between the actual and estimate are recognized in the period in which
results are known/materialized.
2. Fixed Assets and Depreciation
a) Fixed assets stated at cost of acquisition or construction or less
accumulated depreciation. All costs, including financial cost till
commencements of commercial production, net charges on Foreign Exchange
Contracts and adjustments arising from exchange rate variations
relating to specific borrowings attributable to the fixed assets are
b) Depreciation on fixed assets provided on straight-line method at the
rates prescribed by Schedule XIV of the Companies Act, 1956.
C) Leasehold Improvements are written off over the period of lease.
3. Foreign Exchange Transaction
Transactions denominated in foreign currencies are normally recorded at
the exchange rate prevailing at the time of the transaction.
Outstanding balances are valued at the rate prevailing on the Balance
The Investments are stated at cost. Provision for diminution in the
value of long-term investments is made only if such a decline is other
than temporary in the opinion of the management.
The inventories are valued as follows:
a) Raw materials, Stores, Spares and Stock in transit are valued at
b) Stock in process is valued at cost.
c) Finished goods are valued at cost or market value whichever is
Sales include Inter-division transfers, related services, and Taxes.
7. Government Grants & Subsidies
a) The government grants received are accounted in the year of receipt.
b) Interest subsidy on term loans under TUF scheme is provided on
accrual basis only to the extent of certainty of receipt & filling of
claim in respect thereof.
8. Customs and Excise Duty
Custom Duty is accounted for as and when paid on the clearance of the
goods for home consumption.
9. Employees Retirement and other benefits
a) The contribution of the Company towards Provident Fund and Employee
State Insurance, which are, defined contributions plans are charged to
b) The Employee''s Gratuity and Leave Encashment are the company''s
defined benefit plan. The present value of the obligation under such
defined benefit plan is determined based on Acturial Valuation using
the Projected Unit Credit Method.
10. Contingent Liabilities
Contingent liabilities are not provided for and are disclosed by way of
11. Inter Divisional Transfers
Inter divisional transfers of goods and services for internal use of
captive consumption in plant located at different places/states are
shown as contra items in the Profit and Loss Account to reflect the
true economical value of the production inter-se the divisions. Any
unrealized profit on unsold stocks is ignored while valuing
inventories. This accounting treatment has no impact on the profit of
12. Provisions for Current and Deferred Tax
Provision for current tax is made after taking into consideration
benefits admissible under the provisions of the Income-tax Act, 1961.
Deferred tax resulting from timing difference between book and
taxable profit is accounted for using the tax rates and laws that have
been enacted or substantively enacted as on the balance sheet date. The
deferred tax assets is recognized and carried forward only to the
extent that there is a reasonable and virtual certainty that the assets
will be realised in future.
13. Borrowing Cost
Borrowing cost incurred in relation to the acquisition, constriction of
assets are capitalized as the part of cost of such assets up to date
which such assets are ready for intended use. Other borrowing costs are
charged as an expense in the year in which they are incurred.
14. Impairment of Assets
An asset is treated as impaired when the carrying cost of asset exceeds
its recoverable value. An impairment loss is charged to Profit and Loss
Account in the year in which an asset is identified as impaired. The
impairment loss recognized in prior accounting periods is reversed if
there has been a change in the estimate of recoverable amount.
15. Lease Rentals :
Lease Rentals for assets taken on operating lease are recognized as on
expenses in Profit and Loss Account over the lease term on accrual