SIGNIFICANT ACCOUNTING POLICIES:
A) Basis of Preparation of Financial Statements :
i) The Company generally follows mercantile system of accounting and
recognises significant items of income and expenditure on accrual
B) Fixed Assets and Depreciation :
i) Fixed Assets are stated at cost less accumulated depreciation. All
costs till commencement of commercial production, interest on term
loans for the entire period of loans and net changes on foreign
exchange adjustments from exchange rate variations relating to
borrowings attributable to the fixed assets are capitalised.
ii) Depreciation is provided on Plant and Machinery, Building,
Electricity and Water Installation of SLM as per the rates specified
in Schedule XIV to the Companies Act, 1956 as amended vide
notification No. GSR 756 dated 16 Dec., 93 issued by the Deptt. of
Company Affairs. The current rate of depreciation have been applied
on the old as well as new assets for the current period. Depreciation
on Furnitures, Fixture, Office Equipments, Electricity Equipments and
Vehicles is provided on WDV as per rates specified in Schedule XIV of
the Companies Act, 1956. Miscellaneous/Sundry Assets valuing up to
Rs. 5000/- each are fully depreciated in the year of purchase.
C) Foreign Currency Transactions :
Transactions denominated in foreign currencies are normally recorded
at the exchange rate prevailing at the time of the transaction.
Monetary items denominated in foreign currencies at the year end are
translated at year end rates. Non monetary foreign currency items are
carried at cost.
Any income or expenses on account of exchange difference either on
settlement or on translation is recognised in the Profit and Loss
Account except in cases where they relate to the acquisition of fixed
assets in which case they are adjusted to the carrying cost of such
D. Investments :
Long term investments are carried at cost and current investments are
carried at lower of cost and quoted/fair value.
E. Inventories :
a) Raw materials stores, spares, tools and materials in transit are
valued at cost.
b) Work in process is valued at estimated cost.
c) Finished goods are valued at lower of cost or net realisable value
and stock of scrap is valued at estimated realisable value.
Sales comprise excise duty net of discounts. Excise duty has been
accounted for on the basis of payments made in respect of goods
cleared only. Sales are recognised on despatches to parties.
G. Employee Retirement Benefits:
Company's contribution to provident funds and superannuation fund are
charged to profit and loss account. Gratuity and leave encasement
benefit at the time of retirement are charged to profit and loss
account on the basis of estimation followed consistently. However
actuarial valuation of the liability has not been done.
H. Preliminary, Capital issues and Deferred Revenue Expenses :
Preliminary, Capital Issues and Deferred Revenue expenses are
amortised over a period of ten years.
I. Research and Development Expenses :
Research and development costs (other than cost of fixed assets
acquired) are charged as an expenses in the year in which they are
J. Leases :
Lease rentals are expensed with reference to lease terms.