a. The Accounts of the Company have been prepared under the Historical
cost convention in accordance with the generally accepted accounting
principles and the provisions of the Companies Act, 1956 as adopted
consistently by the company. The Company follows the Mercantile system
of accounting and recognizes significant items of Income and
Expenditure on accrual basis, except provident fund and employees state
insurance contributions, Bonus, interest due from trading advances to
sister concerns and interest due to NBFCs, which are accounted on
b. A Sale is net of excise, charity, cess and sales tax collected from
Fixed Assets are stated at acquisition cost less accumulated
The Company provides depreciation under the Straight line method at the
rates and in the manner prescribed by Schedule XIV of The Companies
Act, 1956 in respect of Assets acquired in Unit A after 31/03/93 and in
respect of all assets acquired in Unit B. However, in respect of
assets acquired in unit A prior to 31/03/93, the Company provides
depreciation under the Written Down Value method at the rates
prescribed under the Income Tax Rules, 1962.
However the company has obtained opinion from the certified engineer
relating to the residual useful life of the assets. Further during the
year the critical power position in Tamil Nadu TNEB has reduced demand
KVA by 30% resulting in lower utilization of the machineries. Taking
the above in to the consideration, the depreciation has been provided
on the plant and machinery at 60% of the prescribed rate under the
companies Act. Depreciation at normal rate will be higher by Rs. 49.27
The Company values its stock of Raw materials and Stores at Cost and
values its Finished Goods at Sales/ realizable value. The Process Stock
is valued at Average Cost
2. CONSIGNMENT SALES
The Company records sales to the extent of statements received from the
consignees in respect of stock of finished goods despatched to the
3. FOREIGN CURRENCY TRANSACTION.
Liability in Foreign Currency has been shown at cost incurred at the
time of the transaction. Any fluctuation in the liability arising out
of the exchange rates will be accounted for at the time of repayment
and hence no provision has been made for the difference.
4. RETIREMENT BENEFITS AS - 15
In respect of Unit A, all the employees except few staffs have opted
for Voluntary Retirement Scheme and hence in respect of the new
employees there is no gratuity liability. In respect of staffs in the
Unit A and employees of Unit B, gratuity is payable as and when the
employee leaves and the same is accounted on cash basis. However the
Company is taking necessary steps to obtain Actuarial valuation
certificate in respect of anticipated future gratuity liability.
b. LEAVE ENCASHMENT.
The Company normally allows its employees to utilize the leave and no
encashment leave has been demanded. In the event of leave entitlement
being en-cashable in future it will be accounted on payment basis.
However, as at the end of the year no employees have accumulated leave
c. PROVIDENT FUND
The Company deposits the Provident fund contribution under the
Employees Provident Fund Scheme run by the Government.
5. BORROWING COSTS - AS - 16.
The Company is following AS-16 with regard to the treatment of
borrowing costs. But there are no borrowing costs to be capitalized
during the year.