(i) Accounting Concepts
The accounts are prepared under the historical cost convention and on
the basis of going concern. All expenses and incomes to the extent
ascertainable are accounted for on mercantile basis unless otherwise
stated in accordance of Accounting Standard - 1 (i.e. Disclosure of
(ii) Fixed Assets
Fixed Assets are stated at historical cost (including expenses incurred
on putting them in use) less depreciation in accordance of Accounting
Standard -10 i.e. Accounting for Fixed Assets.
(iii) Depreciation (AS-G)
Depreciation has been provided on straight -line method and on single
shift basis at the rates specified in the schedule XIV of the Companies
The inventories are valued in accordance, with the revised Accounting
Standard-2 (AS- 2) Valuation of Inventories and the revised “
Guidance Note on Accounting Treatment for Excise Duty issued by the
Institute of Chartered Accountants of India. According the method of
valuation adopted are as under :-
(a) Stock Raw Material and Packing Material: - At cost price.
(b) Stock of Work in Progress: - At material cost plus apportioned
(c) Stock of Finished Goods: - At material cost plus apportioned
manufacturing overheads plus excise duty and other costs incurred in
bringing the inventories to their present location and condition or Net
Realisable value whichever is lower.
(d) Spares and consumables: - at cost.
(v) Investments (AS-13)
(a) Long term investments are stated at cost of acquisition, provision
for Diminution is made only to recognise a decline other than
temporary, if any, in the value of investments.
(b) Current investments are carried at lower of cost and fair market
(c) Dividends are accounted for as and when received.
(vi) Retirement Benefits (AS-15)
(a) A short term employees benefits are recognised as an expenses at
the undiscounted amount in the profit and loss accounts of the year in
which the related is rendered.
(b) Post employment and other long term employees benefits are
recognised as an expense in the profit and loss account for the year in
which the employees has rendered services. The expenses are recognised
at the present value of the amount payable determined using actuation
techniques. Actuarial gains and losses in respect of post employment
and other long term benefits are charged to profit and loss account.
(vii) Revenue Recognition (AS-9)
Sales of goods and services are recognised upon passage of the title to
the customer, which generally coincides with the delivery. Sale is net
of sale returns and excise duty.
(viii) Research and Development Costs
(a) Capital Expenditure on assets for research and development is
included in cost of fixed assets.
(b) The revenue expenditure incurred on research Et development up to
research phase comprising cost of materials consumed, salary Et wages
and other related costs, as identified have been charged to Profit Et
Loss account and expenditure on development phase in which the activity
converts the results to a marketable product doesn''t result in to any
intangible assets so expenses incurred are not capitalised but
otherwise charged to Profit Et Loss account in accordance with AS-26
(Accounting Standard on Intangible Assets).
(ix) Borrowing Costs (AS-1G)
Borrowing costs that are attributable to the acquisition or
construction of fixed assets are capitalised as part of costs of such
assets till such time as the assets is ready for its intended use. All
other borrowing costs are recognised as an expense in the period in
(x) Translation of Foreign Exchange Transactions (AS-11)
(a) Foreign exchange transactions in respect of import payments are
stated at the exchange rate prevailing at the time of transaction and
variation, if any, accounted for on the date of payment is squared
during the same accounting year.
(b) Monetary items denominated in foreign currencies remaining
unsettled at the year end if not covered by forward exchange contracts
are translated at year end rates.
(c) Any income / expense arising from foreign currency transactions is
dealt in the profit and loss account for the year except in cases where
they relate to acquisition of fixed assets in which case they are
adjusted in the carrying cost of such assets.
(xi) Income Tax
a) Current Tax: Provision is made for income tax based on the liability
as computed after taking credit for allowance and exemptions.
Adjustments in books are made only after the completion of the
(b) Deferred Tax: Consequent to the Accounting Standard 22 Accounting
for taxes on income the differences that result between the profit
offered for income tax and the profit as per the financial statement
are identified and thereafter a deferred tax liability is recorded for
timing differences, namely the differences that originate is one
accounting period and reverse in another. The tax effect is calculated
on the accumulated timing difference at the end of an accounting period
based on prevailing enacted regulations. Deferred tax assets are
recognised only if there is reasonable certainty that they will be
realised and are reviewed for the appropriateness of their respective
carrying value at each balance sheet date.
(c) MAT: Minimum Alternative Tax payable under the provisions of the
income tax Act, 1961 is recognised as an asset in the year in which
credit becomes eligible and is set off in the year in which the Company
becomes liable to pay income taxes at the enacted tax rates and shall
be reversed in the year in which it lapses.
(xii) Amortisation of Intangible Assets and Miscellaneous Expenditure
(a) Public issue expenses, Bond issue expenses and preliminary expenses
are amortised over a period of five years.
(b) Expenses relating to Patents Et Trademarks are written off in ten
(xiii) Provisions, Contingent Liabilities and Contingent Assets (AS-29)
Provisions involving substantial degree of estimation in management are
recognised when there is present obligation as a result of past events
and it is probable that there will be an outflow of resources.
Contingent Liabilities are not recognised but are disclosed in the
notes. Contingent Assets are neither recognised nor disclosed in the
(xiv) Impairment of Assets (AS-28)
An assets is treated as impaired when the carrying cost of assets
exceeds its recoverable value. An impairment loss is charged to the
profit Et loss account in the year in which an asset is identified as
impaired. The impairment loss recognised in prior accounting periods is
reversed if there has been a change in the estimate of recoverable
amount. Accounting policies not specially referred to are consistent
with generally accepted accounting principals.
(xv) Forward Exchange Contracts (AS-30)
A company may enter into a forward exchange contract or another
financial Instrument that is in substance a forward exchange contract,
Which are not intended for trading or speculation purposes, to
establish the amount of the reporting currency required or available at
the settlement date of the transaction. As per Generally Accepted
Accounting Principles in India any premiums or discount at the
inception of such a forward exchange contract are amortised over the
life of the contract and exchange difference on such contracts are
recognised in the statement of profit or loss in the reporting period.