1) Accounting Convention:
The accounts have been prepared in accordance with the historical cost
convention (except for specifically excluded treatment of accounts
referred to in B 16(a) under accrual basis of accounting as per Indian
GAAP Accounts and disclosures thereon comply with the Accounting
Standards specified in Companies (Accounting Standard) Rules, other
pronouncements of ICA!. provisions of the Companies Act, 1956 and
guidelines issued by SEBI as applicable.
Preparation of financial statements in conformity with generally
accepted accounting principles, requires estimates and assumption to be
made, that affect reported amounts of assets and liabilities on the
date of financial statements and reported amount of revenues and
expenses during the reported period. Actual results could differ from
these estimates and differences between the actual results and
estimates are recognized in the period in which results are known /
2) Revenue Recognition:
Revenue on sales is recognized when risk and rewards of ownership of
products are passed on to customers, which are generally on dispatch of
goods. Incomes from services are recognised when services are rendered.
Sales are net of discounts, sales tax and returns; excise duty
collected on sales is shown by way of deduction from sales. Dividend
income is recognized when right to receive dividend is established and
there is no uncertainty as to its reliability. Revenue in respect of
other income is recognised when a reasonable certainty as to its
3) Fixed Assets:
Fixed assets are recorded at cost of acquisition or construction net of
Cenvat credit wherever eligible. Cost includes all expenses related to
acquisition or construction, including attributable borrowing cost on
Fixed assets, which are not in use or are held for disposal, are stated
at cost less accumulated depreciation or at net realizable value,
whichever is lower.
The cost of fixed assets not ready for their intended used before such
days are disclosed under Capital Work-in-Progress.
Advances paid towards the acquisition of Fixed Assets outstanding at
each Balance Cheet date are disclosed under Long-Term Loans and
4) Impairment of Assets:
The carrying amounts of assets are reviewed at each balance sheet date,
if there is an indication of impairment based on the internal and
An asset is treated as impaired when the carrying cost of the asset
exceeds its recoverable amount. An impairment loss, if any, is charged
to the Profit and Loss Account in the year in which the asset is
identified as impaired. Reversal of impairment loss recognized in prior
years in recorded when there is an indication that impairment loss
recognized for the asset no longer exists or has been decreased.
5) Expenditure during Construction and Expenditure on New Projects:
In case of new Projects and in case of substantial modernization /
Expansion at existing units of the Company, all pre-operating
expenditure specifically for the project, incurred up to the date of
installation, is capitalized and added pro-rata to the cost of fixed
i) Depreciation is provided on Straight Line method at the rates
specified in Schedule XIV of the Companies Act, 1956.
ii) Premium on leasehold land and improvement to leasehold premises are
being written off over the period of lease.
Long term investments are stated at cost of acquisition. Provision for
diminution in value, is made only if, in the opinion of management such
a decline is other than temporary. Investments in foreign currency are
stated at cost by converting at exchange rate prevailing at the time of
acquisition / remittance.
Investment in Subsidiaries and Joint Ventures are held for long term
and valued at cost reduced by diminution of permanent nature therein,
No profit or losses of subsidiaries are accounted for.
Items of inventories are measured at lower of cost and net realizable
value after providing for obsolescence, if any. Cost of inventories
comprises of cost of purchase, cost of conversion and other costs
including manufacturing overheads incurred in brining them to their
respective present location and condition. Cost of raw materials,
stores and spares, packing materials, trading and other products are
determined on First In First Out basis (FIFO).
Scraps are valued at net realizable value.
9) Provisions, Contingent Liabilities and Contingent Assets:
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent Liabilities are not recognized but are disclosed in the
notes. Contingent Assets are neither recognized nor disclosed in the
10) Taxes on Income:
I. Current Tax Provision
Provision for Current Tax is made on the basis of estimated taxable
income for the current accounting year and in accordance with the
provisions of the Income Tax Act, 1961.
Minimum Alternate Tax (MAT) eligible for set-off in subsequent years
(as per tax laws), is recognized as on asset by way of credit to the
Profit and Loss Account only if there is convincing evidence of its
realization. At each Balance Sheet date, the carrying amount of MAT
Credit Entitlement receivable is reviewed to reassure realization.
II. Deferred Tax Provision
Deferred tax asset or liability is recognized for timing differences
between the profit as per financial statements and the profit offered
for income tax, based on tax rates that have been enacted or
substantively enacted at the Balance Sheet date. Deferred tax assets
are recognized only if there is virtual certainty that sufficient
future taxable income will be available, against which they can be
11) Foreign Currency Transactions:
a) Transactions in foreign currencies are recognized at rate of
overseas currency ruling on the date of transactions. Gain / Loss
arising on account of rise or fall in overseas currencies vis-a-vis
reporting currency between the date of transaction and that of payment
is charged to Profit & Loss Account.
b) Receivables / payables (excluding for fixed assets) in foreign
currencies are translated at the exchange rate ruling at the year end
date and the resultant gain or loss, is accounted for in the Profit &
c) Increase / decrease in foreign currency loan on account of exchange
fluctuation are debited / credited to Profit and Loss Account.
d) Impact of exchange fluctuation is separately disclosed in notes to
12) Employee Benefits:
Defined Contribution Plan
Contribution to provident fund and ESIC is accounted on accrual basis.
Defined Benefit Plan:
Gratuity liability is covered under the Gratuity-cum-lnsurance Policy
of Life Insurance Corporation of India (LIC). The present value of the
obligation is determined based on an actuarial valuation. Actuarial
gains and losses arising on such valuation are recognized immediately
in the Profit and Loss Account. The amount funded by the Trust
administered by the Company under the aforesaid Policy, is reduced from
the gross obligation under the defined benefit plan, to recognize the
obligation on a net basis.