(1) Basis for Preparation of Accounts
The Accounts have been prepared to comply in all material aspects with
applicable accounting principles in India, the Accounting Standards
issued by the Institute of Chartered Accountants of India and the
presentational requirements of the Companies Act, 1956(the Act).
(2) Revenue Recognition
Sales are recognized when goods are supplied and are recorded net of
returns, trade discounts and sales tax but include, where applicable,
excise duty. It does not include inter divisional transfers. Income
from services rendered is accounted based on agreements / arrangements
with the concerned parties. Income in the form of export benefits is
accrued in the year the exports occur and is netted against the cost of
Expenses are accounted for on accrual basis and provision is made for
all known losses and liabilities.
Revenue expenditure on research and development is charged to revenue
in the year in which it is incurred.
Capital expenditure on research and development is shown as an addition
to fixed assets.
(4) Fixed Assets
Expenditure, which results in the creation of an asset with certain
limits on economic life and cost, is capitalized. For the above
purpose, expenditure on acquisition of technical know-how and cost of
design and drawings is considered as an asset under Plant, machinery
and equipments. Cost of an asset comprises its purchase price (net of
modvat, where the modvat is availed and utilized) and expenses
attributable to its acquisition including borrowing cost in respect of
qualifying assets. Depreciation is provided (except in case of lease
hold land which is amortised over forty years and cost of design and
drawings which is amortised over ten years) on the straight-line method
at the rates and in the manner specified in schedule XIV to the Act. No
depreciation is however provided in the year of disposal.
Inventories are valued at the lower of cost and estimated net
realizable value, and after making due provision for obsolescence and
other anticipated losses, wherever considered necessary. Cost includes
excise duty and customs duty (net of modvat), where applicable and
other costs incurred in bringing the inventories to their present
location and condition. Cost is ascertained in respect of (a) Raw
Materials, Components, Stores and Spares on FIFO basis and (b)
Work-in-Progress and Finished Goods under absorption costing method and
includes cost of conversion.
(6) Retirement Benefits
Contributions to defined contribution schemes such as provident fund
and pension fund are charged to the profit and loss account as
incurred. The Company also provides retirement benefits in the form of
gratuity and leave encashment, the liability for which is estimated and
provided for in the financial statements.
(7) Foreign Currency transaction / translation
Exchange differences relating to fixed assets are adjusted in the cost
of the asset. Any other exchange differences are dealt with in the
profit and loss account.
Claims against the Company not acknowledged as debts, will be disclosed
after a careful evaluation of the facts and legal aspects of the matter
involved. Claims made by the company will be accrued as income only in
the year the same is determined / accepted.