a) Accounting Convention
The financial statements are prepared under the historical cost
convention, on accrual basis in accordance with the generally accepted
accounting principles in India, the Accounting Standards issued by the
Institute of Chartered Accountants of India and the applicable
Accounting standards notified under Section 211 (3c) of the Companies
b) Fixed Asset
(i) Fixed Assets are stated at cost less accumulated depreciation. Cost
includes all expenses related to acquisition and installation of the
(ii) Depreciation on Fixed Assets is being charged on straight-line
method at the rate prescribed under schedule XIV to the Companies Act,
(iii) Leased land value is not amortised in view of the long tenure of
unexpired lease period.
c) Inventories :
(i) Raw Material : At cost on FIFO
(ii) Finished Goods Lower of estimated cost or realizable
Cost comprises of material cost and
(iii) Semi Finished Goods : At estimated cost (Estimated cost comprises
: Cost and related direct overheads)
(iv) Scrap : At net realizable value
(v) Sundry Materials : At cost on FIFO basis
d) Asset Impairment
The Company reviews the carrying values of tangible and intangible
assets for any possible impairment at each balance sheet date. An
impairment loss is recognized when the carrying amount of an asset
exceeds its recoverable amount. In assessing the recoverable amount,
the estimated future cash flows are discounted to their present value
at appropriate discount rate.
Long-term investments are carried at cost. Provision for diminution, if
any, in the value of each long-term investment is made to recognize a
decline, other than that of a temporary nature. The fair value of a
long-term investment is ascertained with reference to its market value,
the investee''s assets and results and the expected cash flows from the
investments. Current investments are carried at lower of cost and fair
f) Provisions And Contingent Liabilities
Provisions are recognized in the accounts in respect of present
probable obligations, the amount of which can be reliably estimated.
Contingent Liabilities are disclosed in respect of possible obligations
that arise from past events but their existence is confirmed by the
occurrence or non-occurrence of one or more uncertain future events not
wholly within the control of the company.
g) Revenue Recognition
Sales are recognized when bills are raised and recorded net of
discounts, sales Taxes.
Income from dispatch of goods is recorded net of returns after trade
Dividend income is recognized when the right to receive the same is
Interest income is recognized on a time proportion basis.
h) Employee Benefits
Obligations pertaining to short term employee benefits are recognized
as cost in the period in which the employee renders the related
The cost of accumulating compensated absences is recognized in the
period in which such absences occur. The cost of '' accumulating
compensated absences is recognized in the period in which the employee
renders the service that increases his entitlement to future
The amount of contribution payable toward define contribution plan in
exchange for service rendered by an employee is recognized as a cost,
in the period in which such service was rendered. However if the said
contribution falls due 12 months after the period in which the employee
has rendered the related service, the amount of contribution to be
recognized as above is discounted at appropriate rate.
In case of defined benefit plans actuarial techniques are used to make
a reliable estimate of the amount of benefits that the employees has
earned in return for the services in the current and past period. These
estimates are based on certain actuarial assumption about demographic
and financial variable, which influence the cost of benefits.
The rate used to discount post-employment benefit obligation are
determined by reference to market yield at balance sheet date on
government bond of appropriate currency and term.
i) Taxed on Income
Provision for current tax is ascertained on the basis of the taxable
income for the year determined in accordance with the provision of
Income Tax Act, 1961.
Deferred tax is recognized on timing differences; being the difference
between the taxable incomes and accounting income that originate in one
period and are capable of reversal in one or more accounting periods.
Deferred tax assets subject to the consideration of prudence are
recognized and carried forward only to the extent that there is
reasonable certainty that sufficient difference at the year end and
based on the tax rate and laws enacted on substantially enacted on the
balance sheet date.
j) Foreign Currency Transactions
Transactions in foreign currency are recorded at the exchange rates
prevailing on the date of the transaction. Monetary Assets and
Liabilities denominated in foreign currency are translated at the
period end exchange rates. Exchange gain/losses are recognized in the
profit and loss account except for exchange differences related to
fixed assets, which are adjusted in the cost of the assets. Non
Monetary foreign currency items like investments in foreign
subsidiaries are carried at cost and expressed in Indian currency at
the rate of exchange prevailing at the time of making the original
k) Export Benefits /Incentives
Export benefits/Incentives on export are accounted on accrual basis
taking into Account the present realizable value of DEPB License.
Turnover includes Sale of goods, Scrap, Service Charges, and excludes
Export Incentives And Excise Duties, Sales Tax, Value Added Tax,
j) Miscellaneous Expenditure:
Share issue expenses are amortised equally over a period of Ten years