1. Basis of Preparation of Financial Statements:
The financial statements are prepared on an accrual basis under
historical cost convention in accordance with the General Accepted
Accounting Principles (GAAP) and in compliance with the applicable
Accounting Standards specified in the Companies (Accounting Standards)
Rules, 2006 notified by the Central Government in terms of section 211
(3C) of the Companies Act, 1956.
2. Fixed Assets:
Fixed assets are stated at cost net of cenvat / value added tax and
includes amounts added on revaluation, less accumulated depreciation
and impairment loss. All costs, including financing costs till the
asset is put to use are capitalised. Assessment of indication of
impairment of an asset is made at the year-end and impairment loss, if
any, is recognized.
Depreciation on Assets (other than those given on lease) is provided at
rates specified in Schedule XIV of the Companies Act, 1 956 under the
Straight Line Method.
Depreciation on leased assets is provided by the Straight Line Method
at rates specified in Schedule XIV of the Companies Act, 1956 or at a
rate resulting in amortisation of the depreciable value of the asset
over the primary lease period, whichever is higher.
Additions, consequent to the revaluation, are depreciated with
reference to the remaining useful life of each asset, as determined by
the valuer. Such depreciation is adjusted against transfer of
equivalent amount from Revaluation Reserve to Profit & Loss Account.
Depreciation is provided after considering impairment of assets.
Depreciation for fixed assets given to employees as per contractual
obligations is provided at the rate of 20% p.a which is higher than the
rates as per schedule XIV.
Exchange differences on such contracts are recognised in the Profit and
Loss Account in the year in which the exchange rate changes.
Profit or loss arising on cancellation or renewal of such forward
exchange contracts are recognised as income or expense for the year.
Investments are considered as long-term investments and are accordingly
stated at cost. Provision against diminution in value is made, only if,
considered other than of temporary nature as per criteria laid down by
the Board of Directors.
Stores & Spares are valued at cost less provision, if any. Raw /
Packing materials, work-in-process and finished goods are valued at
lower of cost or net realisable value. Stock of scrap is valued at net
realisable value. The cost of material is arrived on First in First out
6. Revenue Recognition:
a) Sales and Related Income
Sales are recognised at the point of despatch of goods, at the agreed
rates net off discounts & rebates. Adjustments arising out of price
variation claims are accounted on acceptance of claims by customers.
Export benefits are accounted in the year of export.
b) Revenue from contracts
Revenue from Contracts is recognised on the percentage of completion
method as soon as services are rendered.
c) Interest and Other Income are accounted on accrual basis except
those sums, which are not reasonably certain of realisation, are
recognised on cash basis.
7. Hedging Transactions:
As per the accounting policies adopted by the Company, the gain or loss
on settlement of the hedge contract is adjusted in sales/purchase as
the case may be, in the period in which transactions of sales/purchase
is accounted. On each balance sheet date the outstanding contract are
marked to market and the difference is transferred to hedging reserve
account, as per accounting provision in Accounting Standard-30 for
hedge of highly probable transactions/firm commitments.
8. Employee Benefits:
a) Defined Contribution Plan
Contribution to defined Contribution Scheme such as Provident Fund,
Superannuation, Employee State Insurance Contribution and Labour
Welfare Fund are charged to Profit and Loss account as and when
b) Defined Benefit Plan/ Long term Compensated Absences
The companys liability towards gratuity and compensated absences is
determined on the basis of year end actuarial valuation done by
independent actuary. The actuarial gains or losses determined by the
actuary are recognised in the Profit and Loss Account as income or
Current tax is determined as the amount of tax payable in respect of
estimated taxable income for the period. Deferred tax is recognised,
subject to the consideration of prudence, on timing differences
resulting from the recognition of items in the financial statements and
in estimating current income tax provision. The carrying amount of
deferred assets/liabilities is reviewed at each balance sheet date.