| (a) Basis of Accounting
The accounts have been prepared on the basis of historical costs and in
accordance with applicable accounting standards except where otherwise
stated. For recognition of profits and losses, mercantile system of
accounting is followed, except certain expenditure and income which are
accounted for on its ascertainment or on cash basis, where it is not
possible to ascertain, with reasonable certainty, their quantum of
accruals.
(b) Fixed Assets
Fixed Assets are stated at cost less depreciation. Cost comprises of
the purchase price and any attributable cost of bringing the assets to
working condition for its intended use. Expenditure for additions,
improvements and renewals are capitalised and expenditure for
maintenance and repairs are charged to the Profit and Loss Account.
When assets are sold or discarded, their cost and accumulated
depreciation is removed from the account and any gain or loss,
resulting from their disposal, is included in the the statement of
Profit and Loss.
(c) Depreciation
Depreciation is provided using the Straight Line Method at the rates
and in the manner specified in Schedule XIV to the Companies Act, 1956.
Depreciation is provided on new Plant and Machinery as and from the
date it is put to its commercial use.
(d) Inventories
Inventories (other than Stores, Spares and Consumables and packing
materials) are valued at lower of cost or estimated net realisable
value. In the circumstances when the utility of goods is no longer as
great as its cost, due to evaporation and loss of weight, valuation is
done keeping in line with Accounting Standard AS-2 on Valuation of
Inventories issued by The Institute of Chartered Accountants of India.
The cost of inventories is arrived at on the following basis:
Raw materials - First in first out/annual average method.
WIP and finished goods -
Average cost of last quarter's production/average annual cost,
computed on full absorption costing method. In case of similar
items purchased and produced, valuation at the weighted average rate.
(e) Taxation
Deferred tax is recognised, subject to the consideration of prudence in
respect of deferred tax assets, on timing difference, being the
difference between taxable income and accounting income that originate
in one period and are capable of reversal in one or more subsequent
periods. Appropriate adjustments are made in reserves and surplus to
provide for Deferred Tax Liability.
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