CURRENT ASSETS


Accounting Policies on inventories
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1.      Valuation of Inventories
        ------------------------

(a)     Raw  Maerials, Production Consumable  and Stores are valued at cost on
        weighted  average  basis  after  provided  for cost of obsolescence or
        depletion in value wherever applicable.

(b)     Finished goods are valued at lowe of cost and netealisable value. Cost
        for  this  purpose  included  direct materials, direct labour, factory
        administration and other overheads, interest on working capital  loans
        and excise duty.


2.      Inventories
        -----------


        Inventories  are  valued  at  cost  except  for  finished  goods   and
        by-products.  Finished  goods  are  valued  at lower of cost or market
        value  and  by-products  are  valud  at  net realisable value; cost is
        inclusive of any taxes or duties incurred.


3.      Valuation of Inventories
        ------------------------


        (a)     Raw  Materials and  Stores and Spares are valued at cost after
                providing  for  cost  of  obsolescence  or  depletion in value
                wherever applicable.

        (b)     Raw  materials  are  valued  considering  the value of related
                export benefits having accrued on exports of finished goods.

        (c)     Work-in-process  is  valued  at  or  below cost. Cost for this
                purpose   includes  cost   of   direct  labour,  factory   and
                administration overheads and interest on working capital.

        (d)     Finished  goods  are valued at lower of cost and net realisble
                value. Cost for this purpose incldes cost of direct materials,
                direct  labour,  factory,  administration and other overheads,
                interest on working capital loans; and excise duty in case  of
                finished goods meant for sale.

        (e)     Stock  of  Goods  traded-in is valued at lower of cost and net
                realisable value.

        (f)     Saleable Scrap is valued at net realisable value.


4.      Inventories
        -----------


        (i)     Raw materials are valued atcost.

        (ii)    Work in process is valued at estimated cost.

        (iii)   Finished  goods  are  valued at lower of cost or net realisble
                value (inclusive of Excise Duty).

        (iv)    Stores,  spares  and  loose  tools  are valued at cost (net of
                MODVAT credit).

        (v)     Scrap  and  machinery  for  disposal  are  valued at estimated
                realisable value.


5.      Stores  and  spares,  loose  tools,  raw-materials and raw material in
        transit are valued at `cost'. Finished  goods  and work-in-process are
        valued at "Cost or net realisable value, whichever is lower".

6.      Stock of tools lying with the  company was nearly  three times that of
        the yearly consumption.The excess investment in Tools have resulted in
        blockade of the scarce funds ofthe Corporation.

7.      In respect of tools and implements, the company has not reconciled the
        physical stocks with the books records.

8.      No stock register has been maintained for dies, tools  and accessories
        but have been  physically verified. 1/4 of dies, tools and accessories
        have been written off.

9.      The inventory of tools is  taken  at year end  and  is  valued  at  by
        writing off one fourth of the balance on the `tools' account.

10.     Goods-in-transit  when valued  at cost, includes  the charges incurred
        upto the stage at which the goods are in transit.

11.     Goods  in transit are valued at cost incurred upto the date of Balance
        Sheet.

12.     Valuation of stock in trade is as follows :

        (i)     Store spares, dyes and Chemicals and coal-at cost.

        (ii)    Raw material-at cost or market value whichever is lower.

        (iii)   Finished goods-packed  cloth and yarn-at  cost or market value
                whichever is lower.

        (iv)    Stocks  with  retail  shops-landed  cost  or  realisable value
                whichever is lower.

        (v)     Wast-at market rates.

13.     Scrap  obtained  during  the  year  and  sold is accounted at realised
        value. Unsold scrap stock is valued at the estimated price at the year
        end  and any difference  arising on sle is accounted as profit or loss
        on sale of scrap in the year of sale.

14.     Scrap generated  are reckoned on average selling price realised duirng
        the year and the closing stock of scrap at the year end also is valued
        at the said price.  The profit or loss on the sale of scrap represents
        the price realised during  the  year in excess of the value attributed
        to the stock at the beginning of the year.

15.     Consumable stores categorised separately with an annual consumption of
        less than Rs. _______/- per item are charged to revenue at the time of
        purchase. Quantity accounts of these stores are, however maintained.

16.     Stores  declared  surplus/unserviceable/redundant  are  transferred to
        salvage stores for disposaland are charged to revenue.

17.     Stock  of  Finished  Product/Stores  including Raw Materials and Spare
        parts  are  physically  verified  by  perpetual  inventory system. The
        shortage and damage items are appropriately adjusted in accounts.




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