| 1. FIXED ASSETS
These are stated at cost of acquisition inclusive of freight, duties,
taxes and incidental expenses of acquisition and reconditioning cost
incurred internally less accumulated depreciation. The cost includes
all pre-operative expenses relating to construction period capitalized
in earlier years.
Fixed Assets acquired out of Foreign Currency Loans are adjusted as to
original cost by any change in liability on realigning loans at the
exchange rates prevailing at Balance Sheet date.
2. DEPRECIATION
Depreciation on Assets is provided on straight-line method on Assets
acquired upto 15.12.1993 at rates prescribed in Schedule -XIV of the
Companies Act, 1956 and thereafter as per revised rates.
Insurance spares/stand by equipments are capitalized as part of the
mother assets arid are depreciated at the applicable rates.
3. INVENTORIES
Inventories of finished goods are valued at lower of cost or net
realizable value. Costs include all production and administration over
heads including interest on working capital.
Work-in-process is valued at cost of finished goods less estimated
expenses to be incurred to make these into finished goods.
Raw materials, Stores & spares and components are valued at cost; scrap
is valued at the estimated realizable value. Tools are carried at cost
and charged off when discarded. Finished Dies have been valued at Cost
plus Expenses incurred on sinking of Dies estimated on machine hours
consumed on various die sinking & other machines and charged off as and
when discarded.
4. FOREIGN CURRENCY LOANS
Foreign Currency Loans are realigned at the rates prevailing at Balance
Sheet date. The exchange difference is adjusted towards cost of fixed
assets acquired out of such loans.
Premium on foreign exchange forward contracts are recognized in the
profit and loss account over the life of contract. Any profit or loss
arising on cancellation of a forward contract is recognized as income
or expense for the period.
5. FINANCIAL & MANAGEMENT INFORMATION SYSTEM
To ensure that cost accounts are designed to adopt costing system
appropriate to the business carried out by the company incorporating
into its costing system, the basic tenets and principal of standard
costing, budgetary control and managerial costing as appropriate.
6. RESEARCH AND DEVELOPMENT
These are identified and carried to Deferred Revenue Expenditure to be
charged over a period of five years.
7. TAXATION
Current tax provision is made, taking into consideration the various
benefits / concessions to which company is entitled to as well as the
normal Tax provisions and the contentions of the company and also the
fact that certain expenditure becoming allowable on payment being made
before filing of the return of income. In accordance with Accounting
Standard 22-accounting for taxes on income, issued by the ICAI, the
deferred tax for timing differences between the book and tax profits
for the year is accounted for using tax rates and laws that have been
enacted or substantively enacted as of the balance sheet date.
Deferred tax assets (reviewed at each balance date) arising from timing
differences are recognized to the extent there is reasonable/virtual
certainty, as the case may be that assets can be realized in future.
8. REVENUE RECOGNITION
Sales and job work includes excise duty and adjustment made towards
goods return, price variations but exclude branch transfers and sales
tax
9. IMPAIRMENT OF FIXED ASSETS
In compliance with the accounting standard on the impairment of Assets
(AS-28) issued by the ICAI applicabl w.e.f. 01-04-2004, the company has
started identifying the assets which are subject to impairment test and
adjusted the same in the manner specified under the standard.
10. 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 debts, are
disclosed by way of note.
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