1. Significant Accounting Policies followed by the Company :
The accounts are prepared under the historical cost convention in
accordance with the provisions of the Companies Act, 1956 and
materially comply with mandatory Accounting Standards issued by The
Institute of Chartered Accountants of India except to the extent
disclosed in the notes below.
Sales comprise sale of goods, utilities and services.
The income is accounted for on accrual basis except claims, which are
accounted for on cash basis.
Expenses are accounted for on accrual basis.
e) Fixed Assets
All Fixed Assets are stated at historical cost less depreciation except
Land, Building and Plant & Machinery which have been revalued in the
year 1997 as per Note No.6.
i) The Company has been following the straight line method for
providing the depreciation.
ii) The depreciation has been calculated in accordance with circular
No.1/86 dated 21.08.1986 issued by the Company Law Board for the assets
acquired prior to 02.04.1987.
iil) The depreciation has been provided in accordance with the rates
and the manner specified in Schedule XIV of the Companies Act, 1956.
iv) The assets costing Rs.5,000/- or less acquired during the year are
depreciated at 100%.
v) Depreciation on Co-generation & Recovery Plant has been provided @
20% on the basis of technological evaluation from a Chartered engineer
& management's estimate of the balance useful life of these plants.
Consequent to this there is an additional charge for depreciation
during the year of Rs 3,59,47,907/-. Had there been no change, the
charge for the year would have been lower by a similar amount.
Inventories are valued at cost or net realizable value, whichever is
lower. The cost in respect of various items of inventory is computed as
In case of raw material, at weighted average cost plus direct expenses.
In case of stores & spares, at weighted average cost plus direct
In case of work-in process, at raw material cost plus conversion cost
depending upon the stage of completion.
In case of finished goods, at raw material cost plus conversion cost,
packing cost, excise duty and other overheads incurred to bring the
goods to their present condition & location.
Long term investments are carried at cost less provision, if any for
diminution in value, other than temporary.
Cenvat credit on excise duty paid goods, except on inputs, which are
used in the manufacturing of finished goods which do not attract excise
duty, is accounted for by reducing the cost price of the related goods.
j) Miscellaneous Expenditure
Preliminary expenses and share issue expenses are treated as deferred
expenditure and amortized equally over a period of ten years.
k) Retirement Benefits Gratuity
The Company has entered into an agreement with Smt Mayadevi Trust for
the discharge of the gratuity liability to the employees of the
Company. The employees of the Company have acquired membership of the
said Trust. The said Trust has taken a policy under group gratuity
scheme of LIC and the Company is contributing on monthly basis to the
Trust towards the payment of premium for such policy. The accrued
liability in respect of gratuity payable to employees is covered in the
The liability in respect of employees covered under the Scheme is
provided through a policy taken from Life Insurance Corporation of
India by Smt Mayadevi Trust. The premium paid for such policy on
monthly basis through the said Trust is treated as revenue expenditure.
Contribution to Provident Fund is made in accordance with the
provisions of the Employees Provident Fund (Miscellaneous Provisions)
Act, 1952 and is charged to revenue.