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WHAT are the books to be kept by a company? This is specified in Section 209 of the Companies Act. Power is available to the Central Government, under Section 209(1)(d), to specify what particulars should be maintained - by class of companies engaged in production, processing, and so on - about utilisation of material, labour and other items of cost. Popularly called the cost accounting rules, these have been specified for about 40 industries, such as cycles, refrigerators and so on.

Through a recent communiqué, the Department of Company Affairs has brought out Cost Accounting Records (Plantation Products) Rules, 2002, and these would apply to tea and tea products, coffee and coffee products, and other commercial plantation products including seeds thereof. However, the rules would not apply to a company, if the aggregate value of machinery and plant installed therein, as on the last date of the preceding financial year, does not exceed limit as specified for a small-scale industrial undertaking under the provisions of Industries (Development and Regulation) Act, 1951; and the aggregate value of the turnover made by the company from sale or supply of all its products during the preceding financial year does not exceed Rs 10 crore.

Proper books of account are to be kept relating to utilisation of materials, labour and other items of cost. Details have been specified in Schedule annexed to the Rules. It is necessary that the books should make it possible to calculate the cost of production and cost of sales of products for every financial year. Record keeping has to be completed not later than 90 days from the close of the financial year. Statistical and other records should enable the company to exercise, as far as possible, control over the various operations and costs with a view to achieve optimum economies in cost.

These records shall also provide the necessary data required by the Cost Auditor to suitably report on all the points referred to in the Cost Audit (Report) Rules, 2001 as amended from time to time. Penalty for contravention would be as provided under sub-section (2) of Section 642 read with sub-sections (5) and (7) of Section 209 of Companies Act, 1956. (Notification No GSR685 (E) dated Oct 8, 2002)

D. Murali

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