1. BASIS OF PREPARATION OF FINANCIAL STATEMENT
The financial statements are prepared on historical cost convention
basis in accordance with the generally accepted accounting principles
and the accounting standards referred to in section 211(3C) of the
Companies Act, 1956.
2. RECOGNITION OF INCOME AND EXPENDITURE
The company generally follows mercantile system of accounting and
recognizes significant items of Income & Expenditure on accrual basis
except those sums which are not reasonably certain of realisation are
recognized on cash basis.
3. FIXED ASSETS
The gross block of Fixed Assets is stated at cost of
acquisition/construction less CENVAT Credit available thereon,
including indirect cost related to construction and interest and
financial costs, if any, related to their acquisition/construction till
such assets are put to use.
4. EXPENDITURE DURING CONSTRUCTION PERIOD
Expenditure directly related to particular fixed assets are capitalised
to those fixed assets. All indirect expenses are allocated to various
fixed assets on reasonable basis. This is done once the construction
and erection work is completed, pending which the accumulated amount is
disclosed as capital work-in-progress etc.
5. IMPAIRMENT OF ASSETS
The carrying amount of assets are reviewed at each balance sheet date
on value in use basis to assess whether they are recorded in excess of
their estimated recoverable amount. If carrying value exceeds the
estimated recoverable amount, assets are written down to their
estimated recoverable amount.
a. Depreciation on fixed assets is calculated, at the rates specified
in Schedule XIV of the Companies Act, 1956 on the Straight Line Method
on assets which have been installed and put to use.
b. The cost of lease hold land has not been amortized over the period
of the lease, since the lease is for a long period of 99 years intended
to be renewed on the expiry of the stipulated period.
7. VALUATION OF INVENTORY
a. Raw Material including : at cost (on average cost basis) or net
realisable value, whichever is lower. Processed Ash
b. Stores & Spare Parts : at cost (on average cost basis) or net
realisable value, whichever is lower.
c. Finished Goods : at cost or net realisable value, whichever is
d. Goods in Process : at approximate cost of inputs and manufacturing
cost depending on stage of completion.
e. Stock in Transit : at cost or net realisable value, whichever is
f. The raw material consumed and the inventory of raw material are
valued on the basis of purchase cost net of excise duty, therefore,
CENVAT Credit in respect of raw material not consumed but lying in
stock is shown in Balance Sheet as CENVAT Credit receivable under the
head of Advances.
g. The excise duty on stock of finished goods lying in bonded
warehouse is included in valuation of closing stock of finished goods.
h. The excise duty paid on stock of finished goods cleared but remained
unsold has been treated as expenditure and included in valuation of
closing stock of finished goods.
8. RETIREMENT BENEFITS
a. Contribution to Provident Fund are made on monthly basis and
charged to revenue accordingly.
b. Provision for encashement of leave is accounted for the
arithmetical valuation on the assumption that such benefits are payable
to all employees at the end of the financial year.
c. The accruing liability of Gratuity is covered by Employees Group
Gratuity Scheme of the Life Insurance Corporation of India and premium
accounted for the year of accrual. Provision for Gratuity payments to
the Gratuity fund is based on actuarial valuation.
9. FOREIGN CURRENCY TRANSACTIONS
Foreign currency transaction are accounted at exchange rates on the
date transactions take place. Premium on forward cover contract in
respect of import of raw materials is charged to Profit and Loss
Account over the period of Contract. Amounts payable and receivable in
foreign currency as at the Balance Sheet date not covered by forward
contracts are reinstated at the applicable exchange rates prevailing on
that date. All exchange differences arising on revenue transactions,
not covered by forward contracts, are charged to Profit and Loss
Tax expense / (Tax saving) is the aggregate of current year tax and
deferred tax charged/ (or credited) to the Profit and Loss Account of
a. Current tax is the provision made for income tax liability on the
profits for the year ended 31st March,2008 in accordance with the
provisions of Income Tax Act, 1961.
b. Deferred tax is recognized, on timing differences, being the
differences resulting from the recognition of items in the financial
statements and in estimating its current income tax provision.
c. Deferred tax assets are recognized only to the extent that there is
virtual certainty supported by convincing evidence and on there, to the
extent that there is reasonable certainty of their realisation.
d. Deferred tax assets and liabilities are measured using the tax
rates and the tax laws that have been enacted or substantially enacted
at the balance sheet date.
11. BORROWING COSTS
Borrowing Cost are charged to revenue except in cases where costs
relate to qualifying assets in which case such costs are capitalised as
a part of cost of respective assets till the date they are put to their
12. IMPORT OF RAW MATERIAL
Assessment of Custom Duty on imported raw material has been computed by
custom department on provisional valuation basis and accounted in books
of accounts accordingly, pending report of custom approved laboratory.
Variations in custom duty, if any, are accounted for in the year of
Payments made against import of raw material and expenditure incurred
towards this, but material not received at the factory site, has been
considered as advance against raw material.
13. EARNINGS PER SHARE (EPS)
The earnings considered in ascertaining the Companys EPS comprises the
net profit after tax and includes the post tax effect of any extra
ordinary items. The number of shares used in computing Basic EPS is the
weighted average number of shares outstanding during the year.
14. CONTINGENT LIABILITIES
All liabilities have been provided for in the accounts except
liabilities of a contingent nature, which have been disclosed at their
estimated value in the notes on accounts.
15. MISCELLANEOUS EXPENDITURE
Public Issue expenditure will be amortized over a period of ten years
from the year 2000-2001 in which expansion has been completed.