a) System of Accounting
The Financial statements are based on historical cost and on the basis
of a going concern concept. The Company follows Mercantile system of
Accounting and recognises income and expenditure on accrual basis.
b) Fixed Assets
Fixed Assets are stated at historical cost of acquisition including
installation and erection charges upto the date of commissioning of the
asset less accumulated depreciation.
i. In respect of Fixed Assets commissioned upto 31.12.1987 depreciation
is provided under SLM at the appropriate rates to amortise 95% of the
original cost of the Assets over the useful life of the assets.
ii. In respect of Fixed Assets commissioned on or after 01.01.1988, the
SLM rates prescribed under Schedule XIV of the Companies Act, 1956 have
iii. In respect of Assets grouped under `Canteen Amenities the value
of assets put into use are written off at 25% on SLM basis.
Sales are stated at Gross Invoice rates net of returns before charging
excise duty and sales tax and before allowing discounts.
e) Valuation of Inventories:
i. Finished Goods and Stock in process
Finished goods and Stock in process have been valued at lower of the
cost or realisable value as per accounting standards.
ii. Raw materials, Stores & Spares :
These are valued at weighted average cost method.
iii. Scrap :
These are valued at `net realisable value
f) Treatment of Retirement Benefits.
i. The Company is a member of LICs Group Gratuity Assurance Scheme and
therefore the liability towards Gratuity is provided at the year end on
the basis of Actuarial valuation provided by LIC of India.
ii. Liability towards Leave encashment is provided on the basis of
Actuarial valuation provided by an Actuary from the Current year.
iii. Ex-gratia to Employees retiring under Voluntary Retirement Scheme
is charged off in full in the year in which they are relieved from
g) Research & Development :
Revenue expenditure on Research & Development is written off in the
year in which it is incurred.
h) Foreign Exchange Transactions:
Transactions in foreign currency are recorded at exchange rates
prevailing on the date of transactions, Current assets, current
liabilities and foreign currency loans, outstanding at the year-end,
are translated at exchange rates applicable as of that date. The
resultant exchange gains and losses except those relating to
acquisition of fixed assets, which are adjusted to the cost of such
assets till they are fully depreciated, are accounted in the Profit and
i) Prior Period and Prepaid Items:
Expenses and Income of values more than Rs. 10,000 only are recognised
for prior period adjustment. Expenses of values more than Rs.5,000 only
are recognised for prepaid expenses & Outstanding expenses.
j) Technical knowhow fees:
Technical knowhow fees are being written off at 1/10th of the cost
incurred, each year.