1 System of Accounting
Unless otherwise stated hereunder the financial accounts of the Company
have been drawn up on historical cost convention and on accrual basis.
2 Use of Estimates
The preparation of financial statement requires management to make
certain estimates and assumptions that affect the amounts reported in
the financial statements and notes thereto. Differences between actual
results and estimates are recognised in the period in which they are
Sales are net of taxes and sales returns but inclusive of excise duty
and exchange rates fluctuations.
4 Fixed Assets
Fixed Assets are capitalised at cost of acquisition and subsequent
improvements thereto including taxes, duties etc other than Cenvat
credit wherever applicable. Freight & other incidental expenses related
to acquisition and installation are added to cost. In case of write-up
due to revaluation are shown at such higher amount.
i) Depreciation on all assets has been charged by written down value
method in accordance with the rates and manner specified in Schedule
XIV to the Companies Act, 1956.
ii) In respect of revalued assets, the incremental depreciation
attributable to the Revaluation is transferred to Revaluation Reserve.
Inventories have been valued as follows -
Raw Materials : At cost *
Finished Goods : At lower of the cost and net realisable value **
Work in Progress : At cost *
Stores, Tools & Other Materials : At cost *
* The cost has been arrived at by using ''FIFO'' method.
** The cost of finished goods has been determined by considering
standard conversion cost.
7 Impairment of Assets
The Company determines whether there is any indication of impairment of
the carrying amount of the company''s assets. The recoverable amount of
such assets are estimated, if any indication exists, and impairment
losses recognised wherever the carrying amount of the assets exceeds
its recoverable amount.
8 Employees'' Benefits
Company''s contribution to Provident Fund and Family Pension Fund are
charged to profit & loss account.
Provision for Gratuity and Leave Encashment benefits, in respect of
employees governed by Indian rules and regulations is made on the basis
of actuarial valuation as at the end of the year in confirmity with the
Acccoutning standard-15 (Revised) issued by the Institute of Chartered
Accountants of India and the provision for leave encashment (including
long term leave) in respect of employees at foreign branches is made as
per law prevalent in foreign country.
Contribution to Employee Group Gratuity Trust for the current year are
charged to Profit & Loss account and for the past years are adjusted in
the Provision for Gratuity a/c.
9 Foreign Currency Translations
a Foreign Currency Transactions
Transactions in foreign currency are accounted for at the exchange
rates prevailing at the date of transaction. Gains and losses resulting
from the settlement of such transactions and from the translation of
monetary assets and liabilities denominated in foreign currency are
recognised in the profit and loss account. Exchange differences arising
on account of monetary liabilities related to fixed assets are adjusted
in the cost of assets. Bank Guarantee in foreign currency are
translated at the exchange rate prevailing at the year end.
b Foreign Branch Operation''s Translations
The activities of the Foreign Branches are an integral part of the
operations of the company and hence the foreign branch financial
statements are translated in accordance with accounting standard
applicable to Integral Foreign Operation as given under:
i) Income & Expenditure items by applying to the foreign currency
amount, the exchange rate at the date of transaction.
The rate used is an average rate for calendar month and used for all
transaction occurring during that calendar month.
ii) Fixed Assets at the exchange rate prevailing on the date of
iii) Depreciation on the fixed assets in Indian rupees, which are
reported using the exchange rate at the date of transaction.
iv) Inventories related to stocks transfer from reporting enterprise
are shown at the cost of reporting enterprises plus expenses incurred
to bring the material at the shelf of foreign branch''s warehouse and
local bought out inventories are translated at the exchange rate
prevailing at year end.
v) Other current assets and liabilities are converted at the exchange
rates prevailing at the year end.
vi) The exchange difference on translation of Foreign Branch financial
statements are recognised in profit & loss account.
10 Research & Development
Revenue expenditure pertaining to research and development is charged
to revenue in the year in which it is incurred. Capital Expenditure is
treated as forming part of Fixed Assets.
11 Government Grants
i) Revenue grants are accounted for in Profit & Loss Account.
ii) Capital grants other than relating to specific fixed assets are
credited to Capital Reserve.
12 Miscellaneous Expenditure
Public Issue Expense, Deferred Revenue Expenses & other expenses on
intangible assets are recognised & amortised as per the Accounting
Standard no. 26 on Intangible Assets issued by the Institute of
Chartered Accountants of India.
13 Borrowing Cost
Interest and other costs in connection with borrowing of funds to the
extent related / attributed to the acquisition / construction of
qualifying fixed assets are capitalised upto the date when such assets
are ready for its intended use and other borrowing cost are charged to
Profit and Loss Account.
14 Provision for Deferred and Current 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 asset is recognised and carried forward only to the extent
that there is a reasonable certainty that the assets will be realised