a) Fixed assets are stated at acquisition cost which comprises of
purchase price, import duties, levies and any directly attributable
cost of bringing the asset to its working condition for its intended
use and also include an appropriate share of expenditure (including
cost of trial runs and finance charges) during construction /
installation. Income (if any) from trial runs are reduced from the
Project Cost. Fixed Assets required for Research & Development are
capitalized and depreciated in the like manner as other fixed assets of
the company. Intangibles assets are likewise stated at acquisition
Machinery Spares of the nature of capital spares/insurance spares are
capitalized separately at the time of their purchase whether procured
at the time of purchase of fixed asset concerned or subsequently, and
are allocated on a systematic basis over a period not exceeding the
useful life of the principal item i.e. the fixed asset to which they
relate . When the related fixed asset is either discarded or sold, the
written down value less disposal value, if any of the capital
spares/insurance spares is written off.
b) Depreciation on tangible assets is provided on straight-line method
at the rates as prescribed in Schedule XIV to the Companies Act, 1956.
Intangible assets are amortized over their useful life as estimated by
the management in accordance with AS-26. Depreciation on assets whose
actual cost do not exceed Rs. 5000 is depreciated at the rate of 100%.
c) Current investments are carried at lower of cost or fair value.
Long-term investments are carried at cost (except where in the opinion
of the Directors, there is a decline in value, other than temporary, in
which case appropriate provision is made for such reduction in value).
d) Inventories are valued at the lower cost and net realisable value.
Stock of samples, stores, sales promotional materials and stationery
are valued at cost. Cost is determined on FIFO basis.
e) Expenses incurred at premises taken on lease by the company on
modification / partitions etc to meet the company''s requirements are
expensed under repairs. Extensions / Additions are capitalised.
f) Prepaid expenses, which in the opinion of the management are not
material in nature, are not carried forward and are generally absorbed
in the year in which they are incurred.
g) Transactions during the year in foreign currencies are recorded at
the rate prevailing on the transaction date. Net exchange difference
arising on settlement of monetary items or on reporting the monetary
items at the closing rate are recognized as income or expense for the
h) All revenues, cost, assets and liabilities are recognised on accrual
basis. Income from manufacturing charges is recognized based on stage
of completion of manufacture. Excise duty payable on uncleared
finished goods is accounted when they fall due by clearance from the
i) Sales include excise duty and are net of discount and value added
j) Employee Benefits
a) Employee Benefits are recognised, measured and disclosed as per
Accounting Standard -15 (Revised 2005) - Employee Benefits.
b) The company relies on the actuarial valuation made by LIC using
Projected Unit Credit Method for measurement of obligation towards Post
Employment Benefits under Defined Benefit Plans such as Gratuity.
Actuarial gains or losses are recognised in the Profit & Loss Account.
c) Long term benefits such as earned leave are determined based on the
actual leave accumulated at the end of the year.
d) Termination Benefits are expensed in the year of termination of
e) The benefits are after taking into consideration actuarial gains or
k) Dividend on chits is being accounted on the basis of auction. Amount
foregone for prized chits is amortized over the period of the chit.
Unamortized balance is included under loans and advances.
I) Borrowing costs directly attributable to the acquisition of
construction of a qualifying asset are capitalised as a part of the
cost of the asset. A qualifying asset is one that necessarily takes
substantial period of time to get ready for intended use. All other
borrowing costs are charged to profit and loss account of the year in
which they are incurred.
m) Income tax expense comprises current tax (i.e. amount of tax for the
period determined in accordance with the Income tax law and deferred
tax charge or credit (reflecting the tax effects of timing difference
between accounting income and taxable income for the period). The
deferred tax charge or credit and corresponding deferred tax liability
or assets are recognised using the tax rates that have been enacted or
substantively enacted by the balance sheet date. Deferred tax assets
are recognised only to the extent there is reasonable certainty that
the assets can be realised in future; however where there is unabsorbed
depreciation or carried forward loss under taxation laws, deferred tax
assets are recognised only if there is a virtual certainty of
realization of such assets.
n) Provision is recognized for losses arising from claims, litigations,
assessments, fines, penalties, etc., when it is probable that a
liability has been incurred and the amount can be reasonably
ascertained / estimated.
o) The basic earnings (loss) per share is computed by dividing the net
profit or loss after tax attributable to equity shareholders for the
year by the weighted average number of equity shares outstanding during
the year. This is further adjusted for the effect of all dilutive
potential equity shares for calculating diluted earnings per share.
p) Disclosure of related party relationships are made when control
exists or where there have been related party transactions. For this
purpose, transactions which are carried out on the same terms and
conditions as applicable to the general public, such as acceptance of
Fixed Deposits and payment of interest thereon, are not considered as
related party transactions.
Assets acquired under finance leases are capitalized at the fair value
of the leased asset at the inception of the lease and included within
fixed assets. Such assets are depreciated as per the depreciation
policy for such assets stated in Note 1(b) above.
r) Impairment of Assets .
As at each Balance Sheet date, the carrying amount of assets is tested
for impairment so as to determine:
a. the provision for impairment loss, if any, required; or
b. the reversal, if any, required of impairment loss recognized in