a) The financial statements are prepared in accordance with Indian
Generally Accepted Accounting Principles (GAAP) under the historical
cost convention on the accounting principles of a going concern and the
Company follows mercantile system of accounting and recognizes income
and expenditure on accrual basis except those with significant
uncertainties. GAAP comprises mandatory accounting standards issued by
the Institute of Chartered Accountants of India (ICAI), the
provisions of the Companies Act, 1956 and guidelines issued by the
Securities and Exchange Board of India. Accounting policies have been
consistently applied except where a newly issued accounting standard is
initially adopted or a revision to an existing accounting standard
requires a change in accounting policy hitherto in use.
b) The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the
reported amount of assets, liabilities, revenues and expenses and
disclosure of contingent liabilities on the date of financial
statements. The recognition, measurement, classification or disclosure
of an item or information in the financial statements is made relying
on these estimates. Any revision to accounting estimates is recognized
2) FIXED ASSETS
a) All fixed assets are stated at cost (net of CENVAT / Value Added
Tax) less accumulated depreciation and impairment loss, if any.
Expenditure during construction period in respect of new project/
expansion is allocated to the respective fixed assets on their being
ready for intended use.
b) In accordance with AS 28 on ''Impairment of Assets'' issued by The
Institute of Chartered Accountants of India, where there is an
indication of impairment of the Company''s assets related to cash
generating units, the carrying amounts of such assets are reviewed at
each balance sheet date to determine whether there is any impairment.
The recoverable amount of such assets is estimated as the higher of its
net selling price and its value in use. An impairment loss is
recognized is recognized in the Profit & Loss Accounts whenever the
carrying amount of such assets exceeds its recoverable amount.
Investments are either classified as current or long-term based on the
management''s intention at the time of purchase. Long-term investments
are carried at cost and provision is made to recognize any decline,
other than temporary, in the value of such investments. Current
investments are valued at the lower of the cost and fair value and
provision is made to recognize any decline in the carrying value.
Inventories are valued at lower of cost and estimated net realizable
value except scrap which is valued at net realizable value. Cost is
determined on First-in-First Out basis.
The cost in case of finished goods and semi-finished goods includes
cost of purchase, cost of conversion and other costs incurred in
bringing the inventories to their present location and condition.
5) REVENUE RECOGNITION
Revenue is recognized when the property and all the significant risks
and rewards of ownership are transferred to the buyer and no
significant uncertainty exists regarding the amount of consideration.
Local sales are inclusive of excise duty and sales tax.
Dividend income on investments is accounted for when the right to
receive the payment is established.
Interest income is recognized using time proportion method.
6) BORROWING COST
Borrowing Costs directly attributable to acquisition and construction
of qualifying assets are capitalized as a part of the cost of such
asset upto the date when such asset is ready for its intended use.
Other borrowing costs are charged to Profit & Loss Account.
Depreciation is provided on Straight Line Method at the rates and in
the manner prescribed in Schedule XIV to the Companies Act, 1956 read
with relevant circulars issued from time to time by the Department of
Individual assets costing less than Rs. 5,000 are depreciated in full
in the year of acquisition.
Depreciation on additions / deletions of assets during the year is
provided on pro-rata basis.
8) EMPLOYEE BENEFITS
a) Provident Fund Provident Fund is a defined contribution scheme and
the contributions are charged to the Profit and Loss Account as
b) Gratuity Gratuity is a defined benefit retirement plan and being
accounted for on cash basis.
c) Liability for leave encashment is accounted for on cash basis.
9) FOREIGN CURRENCY TRANSACTIONS
Transactions denominated in foreign currency are recorded at the rate
of exchange in force at the date of transactions. Gain and loses
resulting from settlement of such transactions and from the transaction
of monetary assets and liabilities denominated in foreign currencies
are recognised in Profit and Loss Account.
Premium in respect of forward foreign exchange contract is recognised
over the life of the contracts. With respect to foreign exchange
contracts entered into for highly probable future transactions or firm
commitments, mark to market losses, if any, is recognized at the
Balance Sheet date in view of the principle of prudence enunciated in
AS - 1.
Income tax expenses comprise current tax (i.e., amount of tax for the
year determined in accordance with the income tax law) and deferred tax
charges or credit (reflecting the tax effects of timing differences
between accounting income and taxable income of the year).
The deferred tax charge or credit and the corresponding deferred tax
liabilities or assets are recognized using the tax rates that have been
enacted or substantively enacted by the balance sheet date. Deferred
tax on assets are recognized and carried forward only if there is a
virtual / reasonable certainty of realization of such assets in near
future and are reviewed for their appropriateness of their respective
carrying value at each balance sheet date.
Tax credit is recognized in respect of Minimum Alternate Tax (MAT) paid
in terms of Section 115JAA of the Income Tax Act, 1961 based on
convincing evidence that the Company will pay normal tax within the
statutory time frame and the same is reviewed at each Balance Sheet
11) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
A provision is made based on a reliable estimate when it is probable
that an outflow of resources embodying economic benefits will be
required to settle an obligation. Contingent liabilities, if any are
disclosed in the notes to accounts and are determined based on the
management perception that these liabilities are not likely to
materialize. Contingent assets are not recognized or disclosed in the