10 SALES

Sales are inclusive of trial run sales, excise duty and net of sales tax/ vat.

11 INVENTORY VALUATION

Inventories are valued at lower of cost or net realizable value except scrap which is valued at net realizable value. The cost is determined by using first-in-first-out (FIFO) method. Finished goods and work-in progress include costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Excise duty on closing stock of finished goods and scrap are accounted for on the basis of payments made in respect of goods cleared as also provision made for goods lying in the factory and included in the value of such stocks.

12 INCOME TAX

Provision for current income tax is made after taking credit for allowances and exemptions. In case of matters under appeal, due to disallowance or otherwise, provision is made when the said liabilities are accepted by the company.

In accordance with the Accounting Standard 22-Accounting for Taxes on income issued by Institute of Chartered Accountants of India, the deferred tax for timing differences between the book & tax profit for the period is accounted for using the tax rates and the tax laws that have been enacted or substantively enacted as of the balance sheet date.

Deferred tax assets arising from temporary timing difference are recognized to the extent there is virtual certainty that the asset will be realized in future. Provision for fringe benefit tax is made on fringe benefits taxable under the Income Tax Act, 1961.

13 BORROWING COST

Borrowing costs that are attributable to the acquisition or the construction of qualifying assets are capitalized as part of cost of such assets. 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 revenue.

14 MODVAT / CENVAT / VAT

Modvat/ Cenvat/ VAT claimed on capital assets is credited to assets / capital work in progress account. Modvat/ Cenvat/ VAT on purchase of raw materials and other materials are deducted from the cost of such materials.

15 CLAIMS

Claims receivable are accounted for depending on the certainty of receipt and claims payable are accounted at the time of acceptance.

16 PROPOSED DIVIDEND

Dividend as proposed by the Board of Directors is provided for in the books of account, pending approval at the Annual General Meeting.

17 RETIREMENT/POST RETIREMENT BENEFITS

1. Short term employee benefits are recognized as an expense at the undiscounted amount in the year in which related service is rendered.
2. The company has defined contribution plan for post retirement benefits, namely Employees Provident Fund scheme administered through provident fund commissioner.The company’s contribution is charged to revenue every year.
3. Company’s contribution to state plans namely Employees State Insurance Fund is charged to revenue every year.
4. The Company has defined benefits plans namely Leave encashment / Compensated absence and Gratuity, the liability for which is determined on the basis of Actuarial valuation at the end of the year. Gratuity Trust is administered through “Life Insurance Corporation of India”.
5. Termination benefits are recognized as an expense immediately.
6. Gain or Loss arising out of actuarial valuation are recognized immediately in the profit and loss account as income or expense.

18 PROVISIONS AND CONTINGENT LIABILITIES

Show cause notices issued by various government authorities are not considered as obligation. When the demand notice are raised against such show cause notice and are disputed by the company then these are classified as possible obligations.

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in notes.

19 FINANCIAL DERIVATIVE TRANSACTION

In respect of the Financial derivative contracts the premium /interest paid and profit/ loss on settlement is charged to Profit & Loss account. The contracts entered into are marked to market at year end and the resultant profit/ loss is charged to Profit & Loss account except where these relate to fixed assets in which case it is adjusted to the cost of fixed assets.