(a) ACCOUNTING CONVENTION :
The accounts are prepared on accrual basis under the historical cost
convention and in accordance with the applicable Accounting Standard in
India and the provisions of the Companies Act, 1956 except otherwise
(b) REVENUE RECOGNITION :
Revenue from sales is recognised on despatch of goods to the customers
and includes excise duty and sales tax thereon net of rebates and
discounts. Sales includes trading sales. Other Income by way of
interest, commission etc are accounted on accrual basis.
(c) FIXED ASSETS :
Fixed Assets are stated at cost less accumulated depreciation.
Expenditure on addition, improvement and renewal of Fixed Assets are
Capitalised at cost including financial and other costs till the
commencement of the commercial production less Credit of taxes and
duties availed on purchase of the relevant assets and impairment
losses, if any. Expenditure for repairs and maintenance are charged to
(d) DEPRECIATION :
Depreciation has been provided on straight line method at the rates and
in the manner prescribed under Schedule-XIV to the Companies Act,
1956 on prorata basis for the period of use of the assets. No
depreciation is provided on Credit of taxes and duty availed on
purchase of Capital Goods.
(e) INVESTMENTS :
Investments are stated at cost unless there is diminution of permanent
nature in value of the investments.
Inventories are valued as under :-
(a) Raw materials inventory are valued at cost on weighted average
basis. The cost does not include credit of taxes and duty availed on
purchase of inputs.
(b) Finished goods stock is valued at cost or net realisable value
whichever is lower inclusive of excise duty thereon.
(c) Stock of stores are valued at cost on FIFO basis.
(d) Stock of scraps and wastes are valued at estimated selling price
inclusive of excise duty thereon.
(g) EXCISE DUTY, VALUE ADDED TAX & SERVICE TAX:
Credit of taxes and duties on input is adjusted with the cost of
materials. Credit of taxes and duties on purchase of Capital Goods is
reduced from the cost of the assets and no depreciation is charged
Excise Duty paid includes excise duty on sale of finished goods and on
unsold stock inclusive of provision made for excise duty in respect of
stock of finished goods lying inside the factory. Credit of taxes &
duties on Input and Capital goods is set off against taxes and duties
payable on final product/services as per prevailing law.
(h) BORROWING COSTS :
Borrowing costs attributable to acquisition of fixed assets are treated
as part of cost of such assets and capitalised upto to the stage of
commercial production. All other financing costs including gain/loss on
account against Foreign Exchange Linked Loans are charged to revenue.
(i) MISCELLANEOUS EXPENDITURE :
Preliminary Expenses and Public Issue are amortised equally over a
period of 5 years.
(j) RETIREMENT BENEFITS ETC :
Companys contribution to Provident Fund are accounted for on accrual
basis. Provisions for gratuity to employees is estimated in terms of
The Payment of Gratuity Act, 1972. Provision for leave encashment is
made on the basis of contractual obligation.
(k) TAXES ON INCOME :
Tax on income for the current year is determined on the basis of
taxable income and current tax rate in accordance with the provisions
of Income Tax Act, 1961. Deferred taxes are charged/realised on timing
difference between the accounting income and the taxable income for the
year based on applicable tax rates and laws that have been enacted or
substantively enacted by the Balance Sheet date.
Contingent liabilities are not provided in the accounts but are
separately disclosed by way of Notes of accounts
(m) FOREIGN CURRENCY TRANSACTIONS :
The foreign currency transactions have been accounted at actual
(n) RESEARCH AND DEVELOPMENT EXPENDITURE :
Research and development costs are merged with the respective account
head and are not segregated.
(o) IMPAIRMENT OF ASSETS (AS-28):
The carrying cost of assets of cash generating units are reviewed by
Management for impairment when events or changes in circumstances
indicate that the carrying cost may not be recoverable. Provision for
loss impairment to be made and adjusted with the cost of assets only
when carrying cost of assets may exceeds the expected recoverable
amount or vice-versa.