1) REVENUE RECOGNITION
a) Sales inclusive of Excise Duty but exclusive of VAT and Discounts
are accounted for at the time of handing over the goods to the
customers /carting agents/transporters.
b) Purchases (net of Discounts) are booked on the receipt of the goods
by the Company.
c) Other Revenues are recognized on accrual basis in accordance with
2) FIXED ASSETS
Fixed Assets are stated at cost, except Land and Buildings which were
revalued and are, therefore, stated at the revalued book values. Cost
includes interest on borrowing for creation of specific assets,
freight, duties, taxes and other incidental expenses up to the date of
the commissioning of the assets.
a) Depreciation on Fixed Assets is provided on the original
cost/revalued cost of the Asset at written down value except Plant &
Machinery on which depreciation is provided on Straight Line Method, at
the rates and in the manner prescribed in Schedule XIV of the Companies
b) Items of assets costing Rs. 5,000 or less are fully depreciated in
the year of acquisition.
c) Revalued Fan Factory Buildings - WDV Rates computed by taking the
residual revalue and estimated residual life as certified by valuers.
d) Tools and Dies (Included - Costing uptoRs. 2 Lacs-100% in the year
of acquisition. in Plant & Machinery) - Costing above Rs.2 Lacs -
1/3rd of the cost per annum
e) Difference between depreciation provided on the revalued Assets and
depreciation on the historical value thereof is transferred to
revaluation reserve and is shown as reduction from the calculated
4) INTANGIBLE ASSETS
Intellectual Property Rights have been depreciated @25% p.a. and cost
of EDP Software Licences @ 40% p.a. on WDV method.
5) INVENTORY VALUATION
The inventory of Finished Goods, Raw Materials & Components and Loose
Tools are valued at lower of cost or estimated realisable value. The
basis of determining cost of various categories of stocks are as
- Raw Materials and Components - Moving Weighted Average Rate (net of
CENVAT & VAT)
- Processed Stocks - Direct material costs, direct wages and
- Finished Goods - Manufactured - Direct material costs, wages,
appropriate overheads and Excise Duty. - Purchased - Weighted Moving
Average Price (net of VAT)
6) FOREIGN EXCHANGE TRANSACTIONS
Transactions in foreign currency are accounted at the rate prevalent on
the date of transactions. Foreign Currency Current Assets / Current
Liabilities are translated at the year end rates. The amount of
fluctuations whether gain or loss is disclosed in the Profit & Loss
7) EMPLOYEE LONG TERM BENEFITS
Liability towards gratuity and leave encashment is determined based on
the actuarial valuation as on Balance Sheet date.
Gratuity, Provident Fund, Superannuation Fund & Employee State
Insurance are accounted for on the basis of the contribution made to
the respective funds.
8) EXPORT BENEFITS
The value of the DEPB licenses against export entitlement are accounted
for on accrual basis.
9) BORROWING COSTS
Cost of borrowing is charged to revenue except the borrowings used for
creation of Fixed Assets prior to capitalisation.
10) PROVISION FOR TAXATION
Provision for Current Tax and Fringe Benefit Tax have been made as per
the provisions of Income Tax Act 1961 and adjustment for Deferred Tax
is made in accordance with Accounting Standard-22.
11) WARRANTY PROVISIONS
Provisions for Warranty Costs have been made on estimated basis.
12) CONTINGENT LIABILITIES
Liabilities, though contingent, are provided for if there are
reasonable prospects of such liabilities maturing. Other contingent
liabilities, barring frivolous claims, not acknowledged as debt, are
disclosed by way of note.