a) System of Accounting
i) Financial statements are based on historical cost and in accordance
with applicable accounting standards relevant to presentational
requirements of the Companies Act, 1956.
ii) The Company, generally, follows the mercantile system of accounting
and recognizes income and expenditure on accrual basis except those
with significant uncertainties.
b) Fixed Assets
Fixed Assets are stated at cost (net of Cenvat) less accumulated
Depreciation is provided in accordance with the rates prescribed in
schedule XIV of the Companies Act, 1956. at the straight line method in
respect of all assets (except plant & machineries) commissioned on or
after 1.4.1989. On Plant & Machineries depreciation is provided on
Written Down Value method.
In case of sale/disposal of assets, no depreciation is charged in the
year of such sale/ disposal. Depreciation on assets purchased/installed
during the year has been provided on pro-rata basis with reference to
the date of additions
d) Expenditure During the Period of Construction
All direct expenses during the period of construction and till the
completion of capital and modernization project including pre-operative
expenses and interest incurred during the said period are capitalized.
Investments are valued at cost of acquisition. Diminution in value is
Inventories are valued at cost or net realisable value whichever is
g) Sales & Excise Duty
Sales is net of Excise Duty charged to customers and rate differences,
returns and shortages.
h) Export Benefits / Incentive
Export benefits / incentives are accounted on accrual basis, i) Foreign
Export sales are accounted for at the rate of exchange considered by
the Customs for clearance purpose. Exchange differences on
realization/discounting of Bills of Foreign Exchange are recognized in
the Profit & Loss Account at the time of realization/ negotiation.
Payments made in foreign currency are recorded at the rate prevailing
on the date of payment.
The transactions in foreign currencies remaining outstanding at the end
of the year are translated at the exchange rate prevailing on the date
of the Balance Sheet.
j) Retirement Benefits
Contribution to Provident Fund is paid and charged to Profit & Loss
Account as incurred. Liability for Gratuity is estimated and provided
for. Liability for accrued leave is accounted for as and when paid, k)
Treatment for Prior Period and Extraordinary Items
i) All prior period items which arise in the current period as a result
of error or omission in the preparation of prior periods'' financial
statement are separately disclosed in the current statement of Profit &
ii) All extraordinary items, if any, i.e. income or expenditure which
arise from events or transactions which are distinct from the ordinary
activities of the Company and which are material, are separately
disclosed in the statement of accounts.
I) Amortization of Expenses
Share Issue expenses and Deferred Revenue expenses are amortized over a
period of ten years/eight years, respectively.
m) Research & Development
Revenue expenses on Research & Development are charged to respective
heads of expenses in the year in which it is incurred. Capital
expenditure, if any, are capitalized along with other assets and
depreciation is charged at the rates prescribed as per Companies Act,
n) Borrowing Cost
Borrowing cost other than on qualifying asset is charged to revenue