a) Basis of accounting and preparation of financial statements
The financial statements are prepared on accrual basis and comply with
the Accounting Standards referred in Section 211(3C) of the Companies
b) Fixed assets
Fixed Assets are stated at cost of acquisition inclusive of freight,
duties and taxes and incidental expenses and adjusted by revaluation of
c) Depreciation and Amortization
Depreciation on fixed assets has been provided on written down value
method at the rates specified in Schedule XIV of the Companies Act,
Inventories are valued at the lower of weighted average cost and net
realizable value except waste / scrap which is valued at realizable
Finished goods and process stock include cost of conversion and other
costs incurred in bringing the inventories to their present location
and condition. Obsolete, defective and unserviceable inventories are
duly provided for.
e) Employee benefits
i) Retirement Benefits
The Company''s contributions to Provident Fund/Gratuity are charged
against revenue. The Gratuity Benefits are administered by a trust
formed for this purpose through the Group Gratuity Scheme of the LIC of
India and contributions are made on actuarial valuation basis.
ii) Leave Encashment Benefits
Employees of the Company are eligible for leave Encashment Benefit as
per rules of the Company. Provision for Leave Encashment is determined
accordingly and provided in the Accounts.
f) Deferred Tax:
The Company has accounted for Deferred Tax in accordance with the
Accounting Standard - 22 Accounting for taxes on Income issued by the
Council of the Institute of Chartered Accountants of India.
Accordingly, the deferred tax during the year for timing difference is
accounted using tax rates that have been enacted; the net difference
arising thereon is debited to Profit and Loss Account.
g) Revenue Recognition
Sales are recognized, net of returns and trade discount, on dispatch of
goods to customers, sales tax and value added tax are excluded.
h) Prior Period Items
Prior period items, if material, are separately disclosed in the Profit
and Loss account together with the nature and amount.
i) Foreign currency transactions
Foreign currency transactions are accounted for at the rate prevailing
on the date of transaction. Foreign currency monetary assets and
liabilities at the Balance Sheet date are restated at year-end rate.
j) Lease Accounting ''
Operating Leases: Leasing of assets whereby the lessor essentially
remains the owner of the asset classified as operating leases. The
payments made by the Company as lessee in accordance with operational
leasing contracts or rental agreements are expensed proportionally
during the lease or rental period respectively. Any compensation,
accordingly to agreement, that the lessee is obliged to pay to the
lessor if the leasing contract is terminated prematurely is expensed
during the period in which the contract is terminated.
k) Impairment of Assets
The carrying amounts of assets are reviewed at each balance sheet date
if there is an indication of impairment based on the internal and
An asset is treated as impaired when the carrying cost of the asset
exceeds its recoverable amount. An impairment loss, if any, is charged
to the Profit and Loss Account in the year in which the asset is
identified as impaired. Reversal of impairment loss recognized in prior
years is recorded when there is an indication that impairment loss
recognized for the asset no longer exists or has been decreased.