Home  »  Company  »  Gallantt Metal  »  Quotes  »  Accounting Policy
Enter the first few characters of Company and click 'Go'

Accounting Policies of Gallantt Metal Ltd. Company

Mar 31, 2014

(I) Basis of Preparation

The financial statements of the comapny have been prepared in accordance with the generally accepted accounting principles in India (Indian GAAP). The company has prepared these financial statement to comply in all material respects with the accounting standards notified under the Companies (Accounting Standard ) Rule, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statement have been prepared on an accural basis and under the historical cost convention.

(II) Revenue Recognition

(a) Sale of goods is recognized when they are invoiced to customers and are inclusive of excise duty, sales tax but exclusive of sales return and turnover discounts.

(b) Insurance, duty drawback and other claims are accounted for on receipt basis or as acknowledged by the appropriate authorities.

(III) Use of estimates

The preparation of financial statements in confirmity with generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenue and expenses during the reporting period. Differences between actual results and estimates are recognised in the period in which the results are known / materialised.

(IV) Fixed Assets

(a) Fixed Assets are stated at cost of acquisition/installation less accumulated depreciation (other than ''Freehold Load'' where no depreciation is charged ). The cost of assets comprises of purchase price and directly attributable cost of bringing the assets to working condition for its intended use.

(b) All expenses incurred for acquiring, erecting and commissioning of the fixed assets including interest on loan utilized for meeting capital expenditure and incidental expenditures incurred during the implementation of the project are shown under "Capital Work in Progress. The advance given for acquiring fixed assets is also shown along with the "Capital Work in Progress".

(V) Depreciation and Amortisation

(a) Depreciation on fixed assets has been provided on straight line method (SLM) at the rates and manner prescribed under Schedule XIV to the Companies Act, 1956 of India.

(b) Preliminary expenses are amortized over a period of 5 years from the date of transaction.

(VI) Investments

Investments are classified into current and Long -term investment. Current Investments are stated at lower of cost and fair market value. Long Term Investments are stated at cost after deducting provision, if any, for diminution in value considered to be other than temporary in nature.

(VII) Impairment

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value being higher of value in use and net selling price. An impairment loss is recognized as an expense in the Profit and Loss Account in the year in which an asset is impaired. The impairment loss recognized in prior accounting period is reversed if there has been an improvement in recoverable amount.

(VIII) Earning per share

Basic and Diluted Earnings per shares are calculated by dividing the net profit attributable to the ordinary shareholders by the weighted average number of ordinary shares outstanding during the year.

(IX) Borrowing Cost

Borrowing Costs that are directly attributable to the acquisition or construction of Qualifying Assets are capitalized as part of cost of such assets. Other Borrowing Costs are charged as expense in the year in which these are incurred.

(X) Valuation of Inventories

Inventories of Raw Materials, work -in -Progress, Stores and Spares, Goods in transit, Finished Goods are stated ''at cost or net realisable value, whichever is lower''.Cost comprises all cost of purchase, cost of conversion and other cost incurred in bringing the inventories to their present location and condition. The excise duty in respect of closing inventory of finished goods is included as part of finished goods. Cost formula used are First -in -First -out.

(XI) Excise Duty & Custom Duty

Excise duty in respect of finished goods lying in the factory premises and Custom duty on goods lying in customs bonded warehouse are provided for and included in the valuation of inventory.

(XII) Foreign Currency Transaction

(a) All transactions in foreign currency are recorded at the rate of exchange prevailing on the date when the relevant transaction take place.

(b) Monetary items denominated in foreign currency at the year end are restated at the year end rates. Any income or expenses on account of exchange differences either on settlement or on translation is recognized in the Profit and Loss account except in cases where they relate to acquisition of fixed assets in which case they are adjusted to the carrying cost of such assets.

(c) The premium or discount arising at the inception of forward exchange contract is amortized and recognized as an expenses / income over the life of the contract. Exchange differences on such contracts, except the contracts which are long -term foreign currancy monetary items, are recognized in the statement of profit and loss in the period in which the exchange rate change. Any gain / loss arising on forward contracts which relate to acquisition of fixed assets is recognized to the carrying cost of such assets.

(XIII) Taxation

(a) Provision for current tax is made after taking in to consideration benefits admissible under the provisions of the Income Tax Act, 1961, Deffered tax resulting from "timing difference" between taxable and accounting income is accounted for using the tax rates and law that are enacted or substantively enected as on the balance sheet date. Defferd tax assets is recognised and carried forward only to the extent that there is virtual certainty that the assets will be realised in future

(b) Minimum Alternate Tax (MAT) is recognised as an asset only to the extent that there is convincing evidence that the company will pay normal income tax during the specified period. In the year in which the company recognises MAT credit as an asset in accordance with the Guidance Note issued by the" ICAI", the said asset is created by way of credit to the Profit & Loss Account and shown as "MAT Credit Entitlement". The Company reviews the "MAT Credit Entitlement" asset at each reporting date and writes down the asset to the extent company does not have convincing evidence that it will pay normal tax during the specified period.

(XIV) Employee Benefits

(a) The company contributes to the employee''s provident fund maintained under the Employees Provident Fund Scheme of the Central Government and the same is charged to the Profit & Loss Account. The company has no obligation, other than the contribution payable to the provident fund.

(b) The company operates defined benefit plan for gratuity for its employees. The cost of providing benefits under this plan is determined on the basis of actuarial valuation at each year end.using projected unit credit method.Actuarial gain and losses is recognized in the period in which they occur in the statement of profit and loss.

(XV) Provisions, Contingent Liabilities and Contingent Assets

A provision is recognized when there is a present obligation as a result of past event, that probably requires an outflow of resources and a reliable estimate can be made to settle the amount of obligation.These are reviewed at each year end and adjusted to reflect the best current estimates. Contingent liabilities are not recognised but disclosed in the financial statements. Contingent assets are neither recognised nor disclosed in the financial statements.

(XVI) Segment Reporting

(a) The company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the company as a whole.

(b) Inter -division transfer of power generated by Power Plant unit is transferred to other unit at approximate prevailing market price at which other unit purchase power from Paschim Gujarat Vij. Company Limited (A Government of Gujarat Enterprise).


Mar 31, 2013

(I) Basis of Preparation

The financial statements of the comapny have been prepared in accordance with the generally accepted accounting principles in India (Indian GAAP). The company has prepared these financial statement to comply in all material respects with the accounting standards notified under the Companies (Accounting Standard) Rule'' 2006 (as amended) and the relevant provisions of the Companies Act'' 1956. The financial statement have been prepared on an accural basis and under the historical cost convention.

(II) Revenue Recognition

(a) Sale of goods is recognized when they are invoiced to customers and are inclusive of excise duty'' sales tax but exclusive of sales return and turnover discounts.

(b) Insurance'' duty drawback and other claims are accounted for on receipt basis or as acknowledged by the appropriate authorities.

(III) Use of estimates

The preparation of financial statements in confirmity with generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenue and expenses during the reporting period. Differences between actual results and estimates are recognised in the period in which the results are known / materialised.

(IV) Fixed Assets

(a) Fixed Assets are stated at cost of acquisition/installation less accumulated depreciation (other than ''Freehold Load'' where no depreciation is charged ). The cost of assets comprises of purchase price and directly attributable cost of bringing the assets to working condition for its intended use.

(b) All expenses incurred for acquiring'' erecting and commissioning of the fixed assets including interest on loan utilized for meeting capital expenditure and incidental expenditures incurred during the implementation of the project are

shown under "Capital Work in Progress. The advance given for acquiring fixed assets is also shown along with the "Capital Work in Progress".

(V) Depreciation and Amortisation

(a) Depreciation on fixed assets has been provided on straight line method (SLM) at the rates and manner prescribed under Schedule XIV to the Companies Act'' 1956 of India.

(b) Preliminary expenses are amortized over a period of 5 years from the date of transaction.

(VI) Investments

Investments are classified into current and Long-term investment. Current Investments are stated at lower of cost and fair market value. Long Term Investments are stated at cost after deducting provision'' if any'' for diminution in value considered to be other than temporary in nature.

(VII) Impairment

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value being higher of value in use and net selling price. An impairment loss is recognized as an expense in the Profit and Loss Account in the year in which an asset is impaired. The impairment loss recognized in prior accounting period is reversed if there has been an improvement in recoverable amount

(VIII)Earning per share

Basic and Diluted Earnings per shares are calculated by dividing the net profit attributable to the ordinary shareholders by the weighted average number of ordinary shares outstanding during the year.

(IX) Borrowing Cost

Borrowing Costs that are directly attributable to the acquisition or construction of Qualifying Assets are capitalized as part of cost of such assets. Other Borrowing Costs are charged as expense in the year in which these are incurred.

(X) Valuation of Inventories

Inventories of Raw Materials'' work-in-Progress'' Stores and Spares'' Goods in transit'' Finished Goods are stated ''at cost or net realisable value'' whichever is lower''. Cost comprises all cost of purchasse'' cost of conversion and other cost incurred in bringing the inventories to their present location and condition. The excise duty in respect of closing inventory of finished goods is included as part of finished goods. Cost formula used are First-in-First-out.

(XI) Excise Duty & Custom Duty

Excise duty in respect of finished goods lying in the factory premises and Custom duty on goods lying in customs bonded warehouse are provided for and included in the valuation of inventory.

(XII) Foreign Currency Transaction

(a) All transactions in foreign currency are recorded at the rate of exchange prevailing on the date when the relevant transaction take place.

(b) Monetary items denominated in foreign currency at the year end are restated at the year end rates. Any income or expenses on account of exchange differences either on settlement or on translation is recognized in the Profit and Loss account except in cases where they relate to acquisition of fixed assets in which case they are adjusted to the carrying cost of such assets.

(c) The premium or discount arising at the inception of forward exchange contract is amortized and recognized as an expenses / income over the life of the contract. Exchange differences on such contracts'' except the contracts which are long -term foreign currancy monetary items'' are recognized in the statement of profit and loss in the period in which the exchange rate change. Any gain / loss arising on forward contracts which relate to acquisition of fixed assets is recognized to the carrying cost of such assets.

(XIII)Taxation

(a) Provision for current tax is made after taking in to consideration benefits admissible under the provisions of the Income Tax Act'' 1961'' Deffered tax resulting from "timing difference" between taxable and accounting income is accounted for using the tax rates and law that are enacted or substantively enected as on the balance sheet date. Defferd tax assets is recognised and carried forward only to the extent that there is virtual certainty that the assets will be realised in future.

(b) Minimum Alternate Tax (MAT) is recognised as an asset only to the extent that there is convincing evidence that the company will pay normal income tax during the specified period. In the year in which the company recognises MAT credit as an asset in accordance with the Guidance Note issued by the" ICAI"'' the said asset is created by way of credit to the Profit & Loss Account and shown as "MAT Credit Entitlement". The Company reviews the "MAT Credit Entitlement" asset at each reporting date and writes down the asset to the extent company does not have convincing evidence that it will pay normal tax during the specified period.

(XIV)Employee Benefits

(a) The company contributes to the employee''s provident fund maintained under the Employees Provident Fund Scheme of the Central Government and the same is charged to the Profit & Loss Account. The company has no obligation'' other than the contribution payable to the provident fund.

(b) The company operates defined benefit plan for gratuity for its employees. The cost of providing benefits under this plan is determined on the basis of actuarial valuation at each year end.using projected unit credit method.Actuarial gain and losses is recognized in the period in which they occur in the statement of profit and loss.

(XV) Provisions'' Contingent Liabilities and Contingent Assets

A provision is recognized when there is a present obligation as a result of past event'' that probably requires an outflow of resources and a reliable estimate can be made to settle the amount of obligation.These are reviewed at each year end and adjusted to reflect the best current estimates. Contingent liabilities are not recognised but disclosed in the financial statements. Contingent assets are neither recognised nor disclosed in the financial statements.

(XVI)Segment Reporting

(a) The company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the company as a whole.

(b) Inter-division transfer of power generated by Power Plant unit is transferred to other unit at approximate prevailing market price at which other unit purchase power from Paschim Gujarat Vij. Company Limited (A Government of Gujarat Enterprise).


Mar 31, 2012

(I) Basis of Preparation

The financial statements of the company have been prepared in accordance with the generally accepted accounting principles in India (Indian GAAP). The company has prepared these financial statement to comply in all material respects with the accounting standards notified under the Companies (Accounting Standard ) Rule, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statement have been prepared on an accural basis and under the historical cost convention.

(II) Revenue Recognition :

(a) Sale of goods is recognized when they are invoiced to customers and are inclusive of excise duty, sales tax but exclusive of sales return and turnover discounts.

(b) Insurance, duty drawback and other claims are accounted for on receipt basis or as acknowledged by the appropriate authorities.

(III) Use of estimates

The preparation of financial statements in confirmity with generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenue and expenses during the reporting period. Differences between actual results and estimates are recognised in the period in which the results are known / materialised.

(IV) Fixed Assets:

(a) Fixed Assets are stated at cost of acquisition/installation less accumulated depreciation (other than 'Freehold Loand' where no depreciation is charged). The cost of assets comprises of purchase price and directly attributable cost of bringing the assets to working condition for its intended use.

(b) All expenses incurred for acquiring, erecting and commissioning of the fixed assets including interest on loan utilized for meeting capital expenditure and incidental expenditures incurred during the implementation of the project are shown under "Capital Work in Progress. The advance given for acquiring fixed assets is also shown along with the "Capital Work in Progress".

(V) Depreciation and Amortisation:

(a) Depreciation on fixed assets has been provided on straight line method (SLM) at the rates and manner prescribed under Schedule XIV to the Companies Act, 1956 of India.

(b) Preliminary expenses are amortized over a period of 5 years from the date of transaction.

(VI) Investments:

Investments are classified into current and Long -term investment. Current Investments are stated at lower of cost and fair market value. Long Term Investments are stated at cost after deducting provision, if any, for diminution in value considered to be other than temporary in nature.

(VII) Impairment:

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value being higher of value in use and net selling price. An impairment loss is recognized as an expense in the Statement of Profit and Loss in the year in which an asset is impaired. The impairment loss recognized in prior accounting period is reversed if there has been an improvement in recoverable amount.

(VIII)Earning per share :

Basic and Diluted Earnings per shares are calculated by dividing the net profit attributable to the ordinary shareholders by the weighted average number of ordinary shares outstanding during the year.

(IX) Borrowing Cost:

Borrowing Costs that are directly attributable to the acquisition or construction of Qualifying Assets are capitalized as part of cost of such assets. Other Borrowing Costs are charged as expense in the year in which these are incurred.

(X) Valuation of Inventories :

Inventories of Raw Materials, work-in-Progress, Stores and Spares, Goods in transit, Finished Goods are stated 'at cost or net realisable value, whichever is lower'.Cost comprises all cost of purchasse, cost of conversion and other cost incurred in bringing the inventories to their present location and condition. The excise duty in respect of closing inventory of finished goods is included as part of finished goods. Cost formula used are First -in -First -out.

(XI) Excise Duty & Custom Duty

Excise duty in respect of finished goods lying in the factory premises and Custom duty on goods lying in customs bonded warehouse are provided for and included in the valuation of inventory.

(XII) Foreign Currency Transaction :

(a) All transactions in foreign currency are recorded at the rate of exchange prevailing on the date when the relevant transaction take place.

(b) Monetary items denominated in foreign currency at the year end are restated at the year end rates. Any income or expenses on account of exchange differences either on settlement or on translation is recognized in the Profit and Loss account except in cases where they relate to acquisition of fixed assets in which case they are adjusted to the carrying cost of such assets.

(c) The premium or discount arising at the inception of forward exchange contract is amortized and recognized as an expenses / income over the life of the contract. Exchange differences on such contracts, except the contracts which are long -term foreign currancy monetary items, are recognized in the statement of profit and loss in the period in which the exchange rate change. Any gain / loss arising on forward contracts which relate to acquisition of fixed assets is recognized to the carrying cost of such assets.

(XIII)Taxation :

(a) Provision for current tax is made after taking in to consideration benefits admissible under the provisions of the Income Tax Act, 1961, Deffered tax resulting from "timing difference"between taxable and accounting income is accounted for using the tax rates and law that are enacted or substantively enected as on the balance sheet date. Defferd tax assets is recognised and carried forward only to the extent that there is virtual certainty that the assets will be realised in future.

(b) Minimum Alternate Tax (MAT) is recognised as an asset only to the extent that there is convincing evidence that the company will pay normal income tax during the specified period. In the year in which the company recognises MAT credit as an asset in accordance with the Guidance Note issued by the"ICAI", the said asset is created by way of credit to the Profit & Loss Account and shown as "MAT Credit Entitlement". The Company reviews the "MAT Credit Entitlement"asset at each reporting date and writes down the asset to the extent company does not have convincing evidence that it will pay normal tax during the specified period.

(XIV) Employee Benefits:

(a) The company contributes to the employee's provident fund maintained under the Employees Provident Fund Scheme of the Central Government and the same is charged to the Statement of Profit & Loss. The company has no obligation, other than the contribution payable to the provident fund.

(b) The company operates defined benefit plan for gratuity for its employees. The cost of providing benefits under this plan is determined on the basis of actuarial valuation at each year end. using projected unit credit method. Actuarial gain and losses is recognized in the period in which they occur in the statement of profit and loss.

(XV) Provisions, Contingent Liabilities and Contingent Assets

A provision is recognized when there is a present obligation as a result of past event, that probably requires an outflow of resources and a reliable estimate can be made to settle the amount of obligation. These are reviewed at each year end and adjusted to reflect the best current estimates. Contingent liabilities are not recognised but disclosed in the financial statements. Contingent assets are neither recognised nor disclosed in the financial statements.

(XVI) Segment Reporting

(a) The company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the company as a whole.

(b) Inter-division transfer of power generated by Power Plant unit is transferred to other unit at approximate prevailing market price at which other unit purchase power from Paschim Gujarat Vij. Company Limited (A Government of Gujarat Enterprise).


Mar 31, 2011

A. Basis of Preparation of Financial Statement:

a) The financial statements have been prepared in compliance with all material aspects of the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India (ICAI) and relevant provision of the Companies Act, 1956 and in accordance with the generally accepted accounting principles in India.

b) The financial statements are based on historical cost and are prepared on accrual basis.

B. Revenue Recognition:

a) Sale of goods is recognized when they are invoiced to customers and are inclusive of excise duty, Sales Tax but exclusive of Sales Returns and turnover discount.

b) Revenue from Sale of electrical energy is accounted for at the rates in accordance with the provision of Power Sale Agreement executed between the Company and M/s Gujrat Urza Vikash Nigam Limited (undertaking of Government of Gujarat).

c) Insurance, duty drawback and other claims are accounted for on receipt basis or as acknowledged by the appropriate authorities.

C. Fixed Assets:

a) Fixed Assets are stated at their original cost of acquisition/installation less accumulated depreciation. The cost of assets comprises of purchase price and directly attributable cost of bringing the assets to working condition for its intended use.

b) Capital work in progress:

All expenses incurred for acquiring, erecting and commissioning of the fixed assets including interest on loan utilized for meeting capital expenditure and incidental expenditures incurred during the implementation of the project are shown under capital work in progress. The advance given for acquiring fixed assets is also shown along with capital work in progress.

D. Depreciation:

Depreciation on fixed assets has been provided on straight line method (SLM) at the rates and manner prescribed under Schedule XIV to the Companies Act, 1956 of India.

E. Preliminary Expenses:

Preliminary expenses are amortized over a period of 5 years from the date of transaction.

F. Investments:

a) Long Term Investments are carried at cost after deducting provision, if any, for diminution in value considered to be other than temporary in nature.

b) Current Investments are stated at lower of cost and fair market value.

G. Impairment:

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value being higher of value in use and net selling price. An impairment loss is recognized as an expense in the Profit and Loss Account in the year in which an asset is impaired. The impairment loss recognized in prior accounting period is reversed if there has been an improvement in recoverable amount.

H. Earning per share:

Basic and Diluted Earnings per shares are calculated by dividing the net profit attributable to the ordinary shareholders by the weighted average number of ordinary shares outstanding during the year.

I. Borrowing Cost:

Borrowing Costs that are directly attributable to the acquisition or construction of Qualifying Assets are capitalized as part of cost of such assets. Other Borrowing Costs are charged as expense in the year in which these are incurred.

J. Valuation of Inventories:

a) Raw materials, Stores & Spares and material in transit are valued at lower of cost and net realizable value. Costs of Inventories are ascertained on FIFO basis.

b) Work-in-progress is valued at cost which includes cost of inputs and other overheads upto the stage of completion.

c) Finished Goods are valued at lower of cost and net realizable value.

K. Inter-Division Transfers:

Inter-division transfer of Power generated by Power Plant Unit is transferred to other unit at approximate prevailing market price. The value of such inter-divisional transfer is netted off from sales and operational income and expenses under materials, manufacturing & others. This accounting treatment has no impact on the profits of the company.

Inter- divisional transfer of materials to fixed assets or vice versa is at prevailing market price.

L. Excise Duty, Sales Tax & Custom Duty:

i) The CENVAT credit available on purchase of raw materials and other eligible inputs is adjusted against excise duty payable on clearance of goods produced. The unadjusted CENVAT credit is shown under the head "Loans and Advances".

ii) The Company has the remission scheme on Sales Tax charged on sales for a period of ten years or total accumulated sales tax collected and refund of VAT claimed on material purchased upto Rs. 91.09 crore, whichever is earlier starting from the financial year 2005-06.

iii) Excise duty on closing stock of Finished Goods is considered for valuation of stocks of finished goods lying in the factories as on the Balance Sheet date.

iv) In terms of scheme provided by the Department of Central Excise, the Company has got the remission of excise duty by way of refund of the excise duty paid and the same is credited to the Profit & Loss Account as income of the Company.

v) Provision is made in the books of account for Custom Duty on Imported Items on arrival and lying in bonded warehouse and awaiting clearance.

M. Taxation:

a) Provision for current income tax is determined on the basis of the amount of tax payable on taxable Income for the year.

b) In accordance with Accounting Standard 22 on "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India, deferred tax liabilities and assets arE recognized at substantively enacted tax rate, subject to the consideration of prudence, on timing difference, being the difference between the taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. At each balance sheet date the Company re-assesses unrecognized deferred tax assets.

N. Foreign Currency Transaction:

a) Transactions in foreign currency are recorded at the rate of exchange prevailing on the date of transaction. Year end balance of foreign currency transaction is translated at the year end rates. Exchange differences arising on settlement/ conversion of monetary items are recognized as income or expense in the year in which they arise except in cases where they relate to acquisition of fixed assets in which case they are adjusted to the carrying cost of such assets.

b) The company uses foreign currency option/forward contract to hedge for managing its risk associated with foreign currency fluctuations relating to certain firm commitments. Transactions covered by option/forward contracts are settled on future dates are being adjusted on the date of settlement. Premium paid for hedging the Foreign Exchange Option contract is recognized as expense over the life of the contract.

0. Employee Benefits:

The company contributes to the employee's provident fund maintained under the Employees Provident Fund Scheme of the Central Government and the same is charged to the Profit & Loss Account. Provision for gratuity is made on the basis of actuarial valuation at the year end in conformity with the Accounting Standard -15.

P. Prior Period Items:

Prior period items are included in respective heads of accounts and material items are disclosed by way of notes on accounts.

0. Contingent Liabilities:

Contingent Liabilities are determined on the basis of available information and which are not provided for is disclosed by way of notes to the Accounts.


Mar 31, 2010

A. Basis of Preparation of Financial Statement

a) The financial statements have been prepared in compliance with all material aspects of the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India (ICAI) and relevant provision of the Companies Act, 1956 and in accordance with the generally accepted accounting principles in India.

b) The financial statements are based on historical cost and are prepared on accrual basis.

B. Revenue Recognition

a) Sale of goods is recognized when they are invoiced to customers and are inclusive of excise duty, Sales Tax but exclusive of Sales Returns and turnover discount.

b) Revenue from Sale of electrical energy is accounted for at the rates in accordance with the provision of Power Sale Agreement executed between the Company and M/s Gujrat Urza Vikash Nigam Limited (undertaking of Government of Gujarat).

c) Insurance, duty drawback and other claims are accounted for on receipt basis or as acknowledged by the appropriate authorities.

C. Fixed Assets

a) Fixed Assets are stated at their original cost of acquisition/installation less accumulated depreciation. The cost of assets comprises of purchase price and directly attributable cost of bringing the assets to working condition for its intended use.

b) Capital work in progress

All expenses incurred for acquiring, erecting and commissioning of the fixed assets including interest on loan utilized for meeting capital expenditure are shown under capital work in progress. The advance given for acquiring fixed assets is also shown along with capital work in progress.

D. Depreciation

Depreciation on fixed assets has been provided on straight line method (SLM) at the rates and manner prescribed under Schedule XIV to the Companies Act, 1956 of India.

E. Preliminary Expenses

Preliminary expenses are amortized over a period of 5 years from the date of transaction.

F. Investments

a) Long Term Investments are carried at cost after deducting provision, if any, for diminution in value considered to be other than temporary in nature.

b) Current Investments are stated at lower of cost and fair value.

G. Impairment

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value being higher of value in use and net selling price. An impairment loss is recognized as an expense in the Profit and Loss Account in the year in which an asset is impaired. The impairment loss recognized in prior accounting period is reversed if there has been an improvement in recoverable amount.

H. Earning per share

Basic and Diluted Earnings per shares are calculated by dividing the net profit attributable to the ordinary shareholders by the weighted average number of ordinary shares outstanding during the year.

I. Borrowing Cost

Borrowing Costs that are directly attributable to the acquisition or construction of Qualifying Assets are capitalized as part of cost of such assets. Other Borrowing Costs are charged as expense in the year in which these are incurred.

J. Valuation of Inventories

a) Raw materials, Stores & Spares and material in transit are valued at lower of cost and net realizable value. Costs of Inventories are ascertained on FIFO basis.

b) Work-in-progress is valued at cost which includes cost of inputs and other overheads upto the stage of completion.

c) Finished Goods are valued at lower of cost* and net realizable value.

* In the current year, Cost of finished goods does not include interest on borrowed fund charged to revenue, in conformity with the Accounting Standard – 2, whereas in the preceding years the same was included in cost of the Finished goods for the purpose of the valuation of inventories.

K. Inter-Division Transfers

Inter-division transfer of Power generated by Power Plant Unit is transferred to other unit at approximate prevailing market price. The value of such inter-divisional transfer is netted off from sales and operational income and expenses under materials, manufacturing & others. This accounting treatment has no impact on the profits of the company.

Inter- divisional transfer of materials to fixed assets or vice versa is at prevailing market price.

L. Excise Duty, Sales Tax & Custom Duty

i) The CENVAT credit available on purchase of raw materials and other eligible inputs is adjusted against excise duty payable on clearance of goods produced. The unadjusted CENVAT credit is shown under the head “Loans and Advances”.

ii) The Company has the remission scheme on Sales Tax charged on sales for a period of ten years or total accumulated sales tax collected and refund of VAT claimed on material purchased upto Rs. 91.09 crore, whichever is earlier starting from the financial year 2005-06.

iii) Excise duty on closing stock of Finished Goods is considered for valuation of stocks of finished goods lying in the factories as on the Balance Sheet date.

iv) In terms of scheme provided by the Department of Central Excise, the Company has got the remission of excise duty by way of refund of the excise duty paid and the same is credited to the Profit & Loss Account as income of the Company.

v) Provision is made in the books of account for Custom Duty on Imported Items on arrival and lying in bonded warehouse and awaiting clearance.

M. Taxation

a) Provision for current income tax is determined on the basis of the amount of tax payable on taxable Income for the year.

b) In accordance with Accounting Standard 22 on “Accounting for Taxes on Income” issued by the Institute of Chartered Accountants of India, deferred tax liabilities and assets are recognized at substantively enacted tax rate, subject to the consideration of prudence, on timing difference, being the difference between the taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. At each balance sheet date the Company re-assesses unrecognized deferred tax assets.

N. Foreign Currency Transaction

a) Transactions in foreign currency are recorded at the rate of exchange prevailing on the date of transaction. Year end balance of foreign currency transaction is translated at the year end rates. Exchange differences arising on settlement / conversion of monetary items are recognized as income or expense in the year in which they arise except in cases where they relate to acquisition of fixed assets in which case they are adjusted to the carrying cost of such assets.

b) The company uses foreign currency option to hedge to manage its risk associated with foreign currency fluctuations relating to certain firm commitments. Transactions covered by option contracts are settled on future dates are being adjusted on the date of settlement. Premium paid for hedging the Foreign Exchange Option contract is recognized as expense over the life of the contract.

O. Employee Benefits

The company contributes to the employees provident fund maintained under the Employees Provident Fund Scheme of the Central Government and the same is charged to the Profit & Loss Account. Provision for gratuity is made on the basis of actuarial valuation at the year end in conformity with the Accounting Standard - 15.

P. Prior Period Items

Prior period items are included in respective heads of accounts and material items are disclosed by way of notes on accounts.

Q. Contingent Liabilities

Contingent Liabilities are determined on the basis of available information and which are not provided for is disclosed by way of notes to the Accounts.

Find IFSC