1. SYSTEM OF ACCOUNTING:
The company follows the mercantile system of accounting and generally
recognises income and expenditure on accrual basis except involving
significant uncertainty stated otherwise.
2. FIXED ASSETS AND DEPRECIATION:
(a) Fixed assets
i) Fixed Assets are stated at cost of acquisition, net of CENVAT,
Including any attributable cost for bringing the asset to its working
conditions for its intended use, less accumulated depreciation. Cost of
specific borrowing is capitalized and included in the cost of the Fixed
ii) Exchange difference on account of Foreign Exchange fluctuations is
adjusted in the carrying cost of the Fixed Assets.
Depreciation on Fixed Assets is provided on Straight Une Method (SLM)
at the rates specified in schedule XIV of the Companies Act, 1956,
except on Paper Making Machineries on which depreciation has been
provided on Written Down Value Method (WDV) at the rate specified in
the schedule XIV of the Companies Act, 1956.
(c) Depreciation on the assets added/disposed off during the year has
been provided on pro-rata basis with reference to the month of addition
(d) Capital work in progress includes all expenses incurred for
acquiring, erecting and commissioning of Fixed Assets including
interest on long term loans utilized for meeting capital expenditure
and incidental expenditure incurred. Capital work in progress also
includes capital advance.
(e) Expenditure during construction period is included under Capital
work in progress and the same is allocated to the respective Fixed
Assets on the completion of construction.
Investments are stated at cost, except where there is diminution in
value, other than temporary, in which case the carrying value is
reduced to recognize the diminution.
4. VALUATION OF INVENTORIES ;
(a) Raw Materials and Stores & Spares: at cost (Weighted Average Cost)
or net realizable value, whichever is lower
(b) Materials in process: at estimated cost or Net Realizable Value,
whichever is lower.
(c) Finished goods: at cost or net realizable value, whichever is
(d) Stock of shares: at cost or market value, whichever is lower.
(e) Stock in transit: at cost incurred to date.
5. RETIREMENT BENEFITS:
I) Gratuity: The company has taken a group gratuity insurance policy
with Life Insurance Corporation of India (DC) for future payment of
gratuity to the employees. The Company accounts for gratuity liability
equivalent to the premium amounts payable to the LIC every year, which
together with annual contribution to subsequent years would be
sufficient to cover the gratuity liability as and when it accrues for
II) Super Annuatlon: Contribution to super-annuation fund Is being paid
to Life Insurance Corporation of India, for certain employees.
III) The company accounts for leave encashment on Pay-as-
6. EXCISE AND CUSTOMS DUTY:
In view of the revised Guidance Note on Accounting Treatment for
Excise Duty issued by the Institute of Chartered Accountants of India
In respect of bonded goods, effective from 01.04.1999, which requires
that provision should be made for Excise/Customs
Duty liability in respect of bonded goods.
Excise Duty payable on production is accounted for at the time of
removal of goods from the factory premises. Customs Duty payable on
imports is accounted for at the time of clearance thereof.
a) CENVAT benefit availed on purchase of Fixed Assets is reduced from
the carrying cost of the respective assets.
b) CENVAT benefit availed on purchase of materials Is reduced from
carrying cost of the materials and the CENVAT receivable is credited to
Excise Duty Account.
8. EXPORT INCENTIVES:
The entitlement under Duty Entitlement Pass Book Scheme as per Exim
policy against the exports made by the company during the year is
recognized as Income for the year.
Income Tax comprises of the current year tax provision and the net
change in the deferred tax assets or liabilities in the year.
Therefore tax assets and/or liabilities are recognized for the future
tax consequences of timing (temporary) difference between the carrying
value of the assets and liabilities and then respective tax basis, and
operating losses carried forward. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable
Income in the year in which the timing difference are expected to be
received or settled.
10. EARNING PER SHARE
In accordance with the Accounting Standard - 20 (AS 20) Earning per
share issued by the Institute of Chartered Accountants of India, basic
earning per share is calculated using the weighted average, number of
shares, outstanding during the period.
11. BORROWING COST:
a) Borrowing costs, which are directly attributable to acquisition of
qualifying assets are capitalized as a part of cost of the assets.
b) All the other borrowing costs are charged to Profit and Loss Account
in the year in which they are incurred.
12. OTHER INCOME:
Dividend Income Is accounted on right to receive basis.
13. CONTINGENT LIABILITIES:
Contingent Liabilities, not provided for, are disclosed by way of