DRIVIN G ROWTH - Dr. Reddy's

190
schedules
schedule N
NOTES TO THE ACCOUNTS (FOR THE PERIOD ENDED MARCH 31, 2002)
1. Significant accounting policies
1.1 Accounting conventions
The financial statements have been prepared on historical cost convention under the accrual basis of accounting except for
scrap sale proceeds. CST, TNGST and Central Excise Duty reimbrusement from Government is accounted on cash basis.
1.2 Fixed assets
Fixed assets are stated at cost less depreciation. Depreciation is calculated at the rates prescribed under straight line method
in schedule XIV of the Companies Act 1956.
1.3 Inventories
Raw materials, stores and spares and work-in-process are valued at weighted average cost. Finished goods are valued at cost
or net realisable value whichever is lower.
1.4 Foreign currency transactions
Foreign currency transactions are recognised in the books at the spot rate on the date of transaction; the difference between
the actual payment and the amount recognised in the books is charged to revenue in the case of current assets/liabilities and
adjusted to carrying cost in the case of fixed assets, where the transactions are not settled within the year, profit/losses arising
on the restatment at year-end rates are recognised in the Profit and Loss account if related to current assets/liabilities. Such
gains or losses in the case of transaction relating to fixed assets are adjusted in the carrying cost as already stated above.
1.5 Treatment of retirement benefits
Provision in respect of retirement benefits to employees is made on the basis that such benefits are payable at the end of the
accounting year except leave encashment. The liability towards leave encashment is not provided for and is accounted as and
when claimed.
1.6 Deferred revenue expenditure
Deferred revenue expenditure is amortised over the expected period of future benefits.
2. Contingenet liabilities not provided for
(Rs)
As at As at
March 31, 2002 March 31, 2001
i) Guarantee given by bank including L/Cs 9,737,341 1,349,500
ii) Bond executed in favour of customs/excise authorities 130,128,000 127,328,000
iii) Dividend on 15% redeemable preference shares 52,505,250 42,004,200
3. Claims against Company not acknowledged as debts 9,137,900 9,137,900
4. As the Company is a registered 100% Export Oriented Unit, it is subject to the fulfilment of export obligation and value addition
norms as per the Government of India policy. The period, within which the Company should have fulfilled the obligation, was to
expire on September 14, 2001. However, the Company has applied for and got an extension of such period for a further five years
from the Government of India.
5. 700,070, 15% cumulative redeemable preference shares of Rs. 100/- each are going to be redeemed on or before March 29, 2006
as per the resolution of the Board Meeting dated March 23, 2001.
6. Secured loans, packing credit facility is secured by a charge on all assets of the Company.
COMPACT ELECTRIC LTD. | FINANCIALS | ANNUAL REPORT 2001-2002