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Accounting Policies of Asian Oilfield Services Ltd. Company

Mar 31, 2015

1 Corporate Information

Asian Oilfield Services Limited (the "Company") is a Public Limited Company domiciled in India and incorporated under the provisions of the Companies Act, 1956 and is listed on the Bombay Stock Exchange (BSE). The Company is a reservoir imaging company, offering a suite of geophysical services specializing in land and well seismic services. The portfolio of services include 2D and 3D seismic data acquisition, processing and interpretation, topographic survey, continuous core drilling for mineral and CBM exploration, wire-line logging and directional core drilling to target shallow horizons. In addition to the core services the Company also provides specialized high technology services to oil and gas companies for targeted applications. The Company possesses an experience of working in difficult terrains while respecting local socio-economic realities and environment. The Company has expanded its activities through its foreign subsidiaries to cater to the international markets. The Registered Office of the Company is located at 703, IRIS Tech Park, Tower-A, Sector-48, Sohna Road, Curgaon-122018 (Haryana).

A. Accounting Convention

The financial statements have been prepared on accrual basis under the historical cost convention in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013 ("the 2013 Act") / Companies Act, 1956 ("the 1956 Act"), as applicable. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year except for change in the accounting policy for depreciation as more fully described in Note 2 D. Based on the nature of services and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as twelve months for the purpose of current or non-current classification of asset and liabilities.

B. Use of Estimates

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialize.

C. Fixed Assets

Fixed assets are carried at cost less accumulated depreciation / amortization and impairment losses, if any. The cost of fixed assets comprises its purchase price net of any trade discounts and rebates, any import duties and other taxes (other than those subsequently recoverable from the tax authorities), any directly attributable expenditure on making the asset ready for its intended use, other incidental expenses and interest on borrowings attributable to acquisition of qualifying fixed assets up to the date the asset is ready for its intended use. Machinery spares which can be used only in connection with an item of fixed asset and whose use is expected to be irregular are capitalized and depreciated over the useful life of the principal item of the relevant assets. Subsequent expenditure on fixed assets after its purchase / completion is capitalized only if such expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance.

Fixed assets acquired in full or part exchange for another asset are recorded at the fair market value or the net book value of the asset given up, adjusted for any balancing cash consideration. Fair market value is determined either for the assets acquired or asset given up, whichever is more clearly evident. Fixed assets acquired in exchange for securities of the Company are recorded at the fair market value of the assets or the fair market value of the securities issued, whichever is more clearly evident.

Fixed assets retired from active use and held for sale are stated at the lower of their net book value and net realisable value and are disclosed separately.

Capital work-in-progress:

Projects under which tangible fixed assets are not yet ready for their intended use are carried at cost, comprising direct cost, related incidental expenses and attributable interest.

D. Depreciation and amortization

Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value. Depreciation on addition to / deduction from assets during the year is provided on pro-data basis.

Depreciation on tangible fixed assets has been provided on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013 except in respect of the following categories of assets, in whose case the life of the assets has been assessed as under based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers warranties and maintenance support, etc.:

Intangible assets are amortised over their estimated useful life on straight line method. The estimated useful life of the intangible assets and the amortization period are reviewed at the end of each financial year and the amortization period is revised to reflect the changed pattern, if any.

E. Intangible Assets and Amortization

Intangible assets are recorded at the consideration paid for acquisition of such assets and are carried at cost less accumulated amortization and impairment.

F. Inventories

Inventories of stores and consumables are stated at lower of cost and net realizable value. Inventories of mining business, being used/usable more than a period of 1 year is charged as consumption over its consumption/usage period on a pro-data basis. Mining inventory is estimated to be consumed /usable over 36 months from the procurement of such inventory. Cost is determined considering the cost of purchase and other costs incurred for acquisition and on the basis of first in first out method (FIFO).

C. Cash Flow

The Cash Flow Statement is prepared by the indirect method set out in Accounting Standard 3 on Cash Flow Statement and presents the cash flows by operating, investing and financing activities of the Company. Cash and cash equivalents presented in the Cash Flow Statement consists of Cash which comprises cash in hand and demand deposits with banks; Cash equivalents comprises of short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

H. Foreign Currency Transactions

i) Transactions denominated in foreign currencies are recorded at the exchange rates prevailing at the time of transaction.

ii) Monetary items denominated in foreign currencies at year end are restated at year end rates. In case of monetary items, which are covered by forward exchange contracts, the difference between the transactions rate and rate on the date of contract is recognized as exchange difference and the premium paid on forwards contracts is recognized over the life of the contract.

iii) Non-monetary foreign currency items are carried at cost.

iv) Exchange difference arising either on settlement or on translation of monetary items other than those mentioned above is recognized in the Statement of Profit and Loss.

I. Investments

Investments are classified into current and long term investments. Investments that are readily realizable and are intended to be held for not more than one year from the date, on which such investments are made, are classified as current investments. All other investments are classified as long-term investments. Long-term investments are stated at cost and any decline, other than temporary, in the value of long term investments is charged to Statement of Profit and Loss. Current investments are stated at lower of cost and market value determined on an individual investment basis. However, provision for diminution in the value is made to recognize a decline other than temporary in the value of the investments.

J. Employee Stock Option Scheme

In accordance with the Securities and Exchange Board of India guidelines, the excess of the market price of the shares, at the date of grant of option under the employee stock option scheme, over the exercise price is treated as employee compensation and the same is amortised over the vesting period of the stock options.

K. Employee Benefits

Employee benefits include provident fund, superannuation fund, employee state insurance scheme, gratuity fund, compensated absences, long service awards and post-employment medical benefits.

i. Defined contribution plans

The Company's contribution to provident fund, superannuation fund and employee state insurance scheme are considered as defined contribution plans and are charged as an expense based on the amount of contribution required to be made and when services are rendered by the employees.

ii. Defined benefit plans

Contributions to defined contribution retirement benefit schemes are recognised as an expense when employees have rendered services entitling them to contributions.

For defined benefit plans in the form of gratuity fund, the cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses are recognised in the Statement of Profit and Loss in the period in which they occur. Past service cost is recognised immediately to the extent that the benefits are already vested and otherwise is amortised on a straight-line basis over the average period until the benefits become vested.

The retirement benefit obligation recognised in the Balance Sheet represents the present value of the defined benefit obligation as adjusted for unrecognised past service cost, as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the present value of available refunds and reductions in future contributions to the schemes.

iii. Short-term employee benefits

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised during the year when the employees render the service. These benefits include performance incentive and compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service.

The cost of short-term compensated absences is accounted as under:

(a) in case of accumulated compensated absences, when employees render the services that increase their entitlement of future compensated absences; and

(b) in case of non-accumulating compensated absences, when the absences occur.

iv. Long-term employee benefits

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognised as a liability at the present value of the defined benefit obligation as at the balance sheet date less the fair value of the plan assets out of which the obligations are expected to be settled, if any.

L. CENVAT Credit

CENVAT Credit availed on capital goods are reduced from the cost of capital goods. CENVAT claimed on service is reduced from the cost of such services. The unutilized CENVAT balance is shown as asset in loans and advances.

M. Revenue Recognition

a. Services

Revenue from services is recognised in the period in which services are rendered on percentage completion method.

b. Interest

Revenue is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

c. Dividend

Revenue is recognised when the right to receive dividend is established by the balance sheet date.

N. Taxes on Income

Tax expense comprises of current income tax, deferred income tax charge/ (credit) for the year.

Current Tax:

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the applicable tax rates and the provisions of the Income Tax Act, 1961 and other applicable tax laws.

Provision for taxation is based on assessable income of the Company as determined under the provisions of the Income Tax Act, 1961. Advance taxes and provisions for current income taxes are presented in the balance sheet after off-setting advance taxes paid and income tax provisions arising in the same tax jurisdiction and the Company intends to settle the asset and liability on a net basis.

Deferred Tax:

Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax liabilities are recognised for all timing differences. Deferred tax assets are recognised for timing differences of items other than unabsorbed depreciation and carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realized. However, if there are unabsorbed depreciation and carry forward of losses and items relating to capital losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that there will be sufficient future taxable income available to realise the assets. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each balance sheet date for their reliability.

O. Borrowing Costs

Borrowing costs include interest, amortization of ancillary costs incurred and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Costs in connection with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are charged to the Statement of Profit and Loss over the tenure of the loan. Other borrowing costs are recognized as expense in the year in which they are incurred.

P. Earnings per share

Basic earnings per share is computed by dividing the profit/ (loss) after tax (including the post tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit/(loss) after tax (including the post tax effect of extraordinary items, if any) as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease the net profit per share from continuing ordinary operations. Potential dilutive equity shares are deemed to be converted as at the beginning of the period, unless they have been issued at a later date. The dilutive potential equity shares are adjusted for the proceeds receivable had the shares been actually issued at fair value (i.e. average market value of the outstanding shares). Dilutive potential equity shares are determined independently for each period presented. The number of equity shares and potentially dilutive equity shares are adjusted for share splits/ reverse share splits and bonus shares, as appropriate.

Q. Provisions, Contingent liabilities and Contingent Assets

A provision is recognised when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made.

Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the Notes. Contingent assets are not recognised in the financial statements.


Mar 31, 2014

A. Accounting Convention

The Financial Statements are prepared under historical cost convention on the accrual basis of accounting and in accordance with generally accepted accounting principles (GAAP) in India, the applicable Accounting Standards notified under section 211 (3C) of the Companies Act, 1956 and the relevant provisions thereof. All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in Revised Schedule VI of the Companies Act, 1956. Based on the nature of services and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as twelve months for the purpose of current or non-current classification of asset and liabilities.

B. Use of Estimates

The preparation of financial statements require management to make judgments, estimates and assumption, that affect the application of accounting policies and the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of these financial statement and the reported amount of revenues and expenses for the reporting period. Difference between the actual results and estimates are recognised in the period in which the results are known / materialized.

C. Fixed Assets and Depreciation

Fixed assets are stated at cost, less accumulated depreciation and impairments, if any. Direct costs are capitalized until fixed assets are ready for use. Capital work-in-progress comprises outstanding advances paid to acquire fixed assets and the cost of fixed assets that are not yet ready for use at the reporting date. Intangible assets are recorded at the consideration paid for acquisition of such assets and are carried at cost less accumulated amortization and impairment.

Depreciation on fixed assets is provided on straight-line method at the rates and the manner mentioned in the Schedule XIV of the Companies Act, 1956, where such rates are lower than the rates determined on the basis of management estimates of economic useful life of the asset. Depreciation on addition to / deduction from assets during the year is provided on pro-rata basis.

D. Intangible Assets and Amortization

Intangible assets are recorded at the consideration paid for acquisition of such assets and are carried at cost less accumulated amortization and impairment.

E. Inventories

Inventories of stores and consumables are stated at lower of cost and net realizable value. Inventories of mining business, being used/usable more than a period of 1 year is charged as consumption over its consumption/usage period on a pro-rata basis. Mining inventory is estimated to be consumed /usable over 36 months from the procurement of such inventory. Cost is determined considering the cost of purchase and other costs incurred for acquisition and on the basis of first in first out method (FIFO).

F. Cash Flow

The Cash Flow Statement is prepared by the indirect method set out in Accounting Standard 3 on Cash Flow Statement and presents the cash flows by operating, investing and financing activities of the Company. Cash and cash equivalents presented in the Cash Flow Statement consists of cash in hand, cheque in hand, bank balances and demand deposits in bank.

G. Foreign Currency Transactions

i) Transactions denominated in foreign currencies are recorded at the exchange rates prevailing at the time of transaction.

ii) Monetary items denominated in foreign currencies at year end are restated at year end rates. In case of monetary items, which are covered by forward exchange contracts, the difference between the transactions rate and rate on the date of contract is recognised as exchange difference and the premium paid on forwards contracts is recognised over the life of the contract.

iii) Non-monetary foreign currency items are carried at cost.

iv) Exchange difference arising either on settlement or on translation of monetary items other than those mentioned above is recognised in the Statement of Profit and Loss.

H. Investments

Investments are classified into current and long term investments. Investments that are readily realisable and are intended to be held for not more than one year from the date, on which such investments are made, are classified as current investments. All other investments are classified as long-term investments. Long-term investments are stated at cost and any decline, other than temporary, in the value of long term investments is charged to Statement of Profit and Loss. Current investments are stated at lower of cost and market value determined on an individual investment basis. However, provision for diminution in the value is made to recognize a decline other than temporary in the value of the investments.

I. Employee Stock Option Scheme

In accordance with the Securities and Exchange Board of India guidelines, the excess of the market price of the shares, at the date of grant of option under the employee stock option scheme, over the exercise price is treated as employee compensation and the same is amortised over the vesting period of the stock options.

J. Employee Benefits

i. Post-employment benefit plans

Contributions to defined contribution retirement benefit schemes are recognised as an expense when employees have rendered services entitling them to contributions.

For defined benefit schemes, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses are recognised in full in the profit and loss account for the period in which they occur. Past service cost is recognised immediately to the extent that the benefits are already vested, and otherwise is amortised on a straight-line basis over the average period until the benefits become vested.

The retirement benefit obligation recognised in the balance sheet represents the present value of the defined benefit obligation as adjusted for unrecognised past service cost, and as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to the present value of available refunds and reductions in future contributions to the scheme.

ii. Short-term employee benefits

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees is recognised during the period when the employee renders the service. These benefits include compensated absences such as paid annual leave, overseas social security contributions and performance incentives.

iii. Long-term employee benefits

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognised as an actuarially determined liability at the present value of the defined benefit obligation at the balance sheet date.

K. CENVAT Credit

CENVAT Credit availed on capital goods are reduced from the cost of capital goods. CENVAT claimed on service is reduced from the cost of such services. The unutilized CENVAT balance is shown as asset in loans and advances.

L. Revenue Recognition

a. Services

Revenue from services is recognised in the period in which services are rendered on percentage completion method.

b. Interest

Revenue is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

c. Dividend

Revenue is recognised when the right to receive dividend is established by the balance sheet date.

M. Taxes on Income

Tax expense comprises of current income tax, deferred income tax charge/ (credit) for the year.

Current Tax:

Provision for taxation is based on assessable income of the Company as determined under the provisions of the Income Tax Act, 1961. Advance taxes and provisions for current income taxes are presented in the balance sheet after off-setting advance taxes paid and income tax provisions arising in the same tax jurisdiction and the Company intends to settle the asset and liability on a net basis.

Deferred Tax:

Deferred tax expense or benefit is recognised on timing differences being the difference between taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.

In the event of unabsorbed depreciation and carry forward of losses, deferred tax assets are recognised only to the extent that there is virtual certainty that sufficient future taxable income will be available to realise such assets. In other situations, deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available to realise these assets.

The Company offsets deferred tax assets and deferred tax liabilities if it has a legally enforceable right and these relate to taxes on income levied by the same governing taxation laws.

N. Borrowing Costs

Borrowing costs that are attributable to the acquisition or construction of qualifying asset are capitalized as part of the cost of such asset up to the commencement of commercial operation. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. Other borrowing costs are recognized as expense in the year in which they are incurred.

Earnings per share

Basic earnings per share are calculated by dividing the net profit/(loss) for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. The weighted number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares that have changed the number of equity shares outstanding, without a corresponding change in resources.

Diluted earnings per share is calculated considering the effects of potential equity shares on net profits/(loss) after tax for the year and weighted average number of equity shares outstanding during the year.

O. Provisions, Contingent liabilities and Contingent Assets

Provision is recognised when the Company has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which reliable estimate can be made.

Provisions (excluding retirement benefits) are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are not recognised in the financial statements but disclosed in the notes. A contingent asset is neither recognised nor disclosed in the financial statements.


Mar 31, 2013

A. Accounting Convention

The Financial Statements are prepared under historical cost convention on the accrual basis of accounting and in accordance with generally accepted accounting principles (GAAP) in India, the applicable Accounting Standards notified under section 211 (3C) of the Companies Act, 1956 and the relevant provisions thereof. All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in Revised Schedule VI of the Companies Act, 1956. Based on the nature of services and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as twelve months for the purpose of current or non-current classification of asset and liabilities.

B. Use of Estimates

The preparation of financial statements require management to make judgments, estimates and assumption, that affect the application of accounting policies and the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of these financial statement and the reported amount of revenues and expenses for the reporting period. Difference between the actual results and estimates are recognised in the period in which the results are known / materialised.

C. Fixed Assets and Depreciation

Fixed assets are stated at cost, less accumulated depreciation and impairments, if any. Direct costs are capitalized until fixed assets are ready for use. Capital work-in-progress comprises outstanding advances paid to acquire fixed assets and the cost of fixed assets that are not yet ready for use at the reporting date. Intangible assets are recorded at the consideration paid for acquisition of such assets and are carried at cost less accumulated amortization and impairment.

Depreciation on fixed assets is provided on straight-line method at the rates and the manner mentioned in the Schedule XIV of the Companies Act, 1956, where such rates are lower than the rates determined on the basis of management estimates of economic useful life of the asset. Depreciation on addition to / deduction from assets during the year is provided on pro-data basis.

D. Intangible Assets and Amortization

Intangible assets are recorded at the consideration paid for acquisition of such assets and are carried at cost less accumulated amortization and impairment.

E. Inventories

Inventories of stores and consumables are stated at lower of cost and net realisable value. Inventories of mining business, being used/usable more than a period of 1 year is charged as consumption over its consumption/usage period on a pro-data basis. Mining inventory is estimated to be consumed /usable over 36 months from the procurement of such inventory. Cost is determined considering the cost of purchase and other costs incurred for acquisition and on the basis of first in first out method (FIFO)

F. Cash Flow

The Cash Flow Statement is prepared by the indirect method set out in Accounting Standard 3 on Cash Flow Statement and presents the cash flows by operating, investing and financing activities of the Company. Cash and cash equivalents presented in the Cash Flow Statement consists of cash in hand, cheque in hand, bank balances and demand deposits in bank.

G. Foreign Currency Transactions

i) Transactions denominated in foreign currencies are recorded at the exchange rates prevailing at the time of transaction.

ii) Monetary items denominated in foreign currencies at year end are restated at year end rates. In case of monetary items, which are covered by forward exchange contracts, the difference between the transactions rate and rate on the date of contract is recognised as exchange difference and the premium paid on forwards contracts is recognised over the life of the contract.

iii) Non monetary foreign currency items are carried at cost.

iv) Exchange difference arising either on settlement or on translation of monetary items other than those mentioned above is recognised in the Statement of Profit and Loss.

H. Investments

Investments are classified into current and long term investments. Investments that are readily realisable and are intended to be held for not more than one year from the date, on which such investments are made, are classified as current investments. All other investments are classified as long-term investments. Long-term investments are stated at cost and any decline, other than temporary, in the value of long term investments is charged to Statement of Profit and Loss. Current investments are stated at lower of cost and market value determined on an individual investment basis. However, provision for diminution in the value is made to recognize a decline other than temporary in the value of the investments.

I. Employee Stock Option Scheme

In accordance with the Securities and Exchange Board of India guidelines, the excess of the market price of the shares, at the date of grant of option under the employee stock option scheme, over the exercise price is treated as employee compensation and the same is amortised over the vesting period of the stock options.

J. Employee Benefits

Post-employment benefit plans

Contributions to defined contribution retirement benefit schemes are recognised as an expense when employees have rendered services entitling them to contributions.

For defined benefit schemes, the cost of providing benefits is determined using the Projected Unit Credit Method,with actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses are recognised in full in the profit and loss account for the period in which they occur. Past service cost is recognised immediately to the extent that the benefits are already vested, and otherwise is amortised on a straight-line basis over the average period until the benefits become vested.

The retirement benefit obligation recognised in the balance sheet represents the present value of the defined benefit obligation as adjusted for unrecognised past service cost, and as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to the present value of available refunds and reductions in future contributions to the scheme.

Short-term employee benefits

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees is recognised during the period when the employee renders the service. These benefits include compensated absences such as paid annual leave, overseas social security contributions and performance incentives.

Long-term employee benefits

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognised as an actuarially determined liability at the present value of the defined benefit obligation at the balance sheet date.

K. CENVAT Credit

CENVAT Credit availed on capital goods are reduced from the cost of capital goods. CENVAT claimed on service is reduced from the cost of such services. The unutilised CENVAT balance is shown as asset in loans and advances.

L. Revenue Recognition a. Services

Revenue from services is recognised in the period in which services are rendered on percentage completion method.

fa. Interest

Revenue is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

c. Dividend

Revenue is recognised when the right to receive dividend is established by the balance sheet date.

M. Taxes on Income

Tax expense comprises of current income tax, deferred income tax charge/ (credit) for the year.

Current Tax:

Provision for taxation is based on assessable profits of the Company as determined under the provisions of the Income Tax Act, 196. Advance taxes and provisions for current income taxes are presented in the balance sheet after off-setting advance taxes paid and income tax provisions arising in the same tax jurisdiction and the Company intends to settle the asset and liability on a net basis.

Deferred Tax:

Deferred tax expense or benefit is recognised on timing differences being the difference between taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.

In the event of unabsorbed depreciation and carry forward of losses, deferred tax assets are recognised only to the extent that there is virtual certainty that sufficient future taxable income will be available to realise such assets. In other situations, deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available to realise these assets.

The Company offsets deferred tax assets and deferred tax liabilities if it has a legally enforceable right and these relate to taxes on income levied by the same governing taxation laws.

N. Borrowing Costs

Borrowing costs that are attributable to the acquisition or construction of qualifying asset are capitalized as part of the cost of such asset up to the commencement of commercial operation. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. Other borrowing costs are recognized as expense in the year in which they are incurred.

O. Earnings per share

Basic earnings per share are calculated by dividing the net profit for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. The weighted number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares that have changed the number of equity shares outstanding, without a corresponding change in resources.

Diluted earnings per share is calculated considering the effects of potential equity shares on net profits after tax for the year and weighted average number of equity shares outstanding during the year.

P. Provisions, Contingent liabilities and Contingent Assets

Provision is recognised when the Company has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which reliable estimate can be made.

Provisions (excluding retirement benefits) are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are not recognised in the financial statements but disclosed in the notes. A contingent asset is neither recognised nor disclosed in the financial statements.


Mar 31, 2012

A. Accounting Convention

The financial statements are prepared under historical cost convention on the accrual basis of accounting in accordance with generally accepted accounting principles in India and the Accounting Standards notified under section 211 (3C) of the Companies Act, 1956 and relevant provisions of the Companies Act, 1956.

B. Use of Estimates

The preparation of financial statements require estimates and assumption to be made that affect the reported amount of assets and liabilities on the date of financial statement and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognised in the period in which the results are known / materialised.

C. Fixed Assets and Depreciation

All fixed assets are stated at cost of acquisition inclusive of inland freight, duties and taxes and incidental expenses related to acquisition less accumulated depreciation. Assessment of indication of impairment of an asset is made at the year end and impairment loss, if any, is recognised.

Depreciation on fixed assets is provided on Straight Line Method at the rates and the manner mentioned in the Schedule XIV of the Companies Act, 1956, where such rates are lower than the rates determined on the basis of management estimates of economic useful life of the asset. Depreciation on addition to / deduction from assets during the year is provided on pro-data basis.

D. Intangible Assets and Amortization

Intangibles are stated at cost of acquisition less accumulated amortization. Cost of computer software is being amortised over a period of six years.

E. Foreign Currency Transactions

Transactions in Foreign Exchange, other than those covered by forward contracts are accounted for at the exchange rate prevailing on the date of transactions. Exchange differences arising on foreign currency transactions settled during the year are recognised in the Profit and Loss Account.

Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date other than those covered by forward contracts are translated at the yearend rates. The resultant exchange differences are recognised in the profit and loss account. Non-monetary assets and liabilities are recorded at the rates prevailing on the date of the transaction.

F. Investments

Investments are classified into Current and Long Term investments. Long-term investments are stated at cost, less adjustment for any diminution, other than temporary, in the value thereof. Current investments are stated at lower of cost and market value.

G. Inventories

Inventories of stores and consumables are stated at lower of cost and net realisable value. Inventories of mining business being used/usable more than a period of 1 year is charged as consumption over its consumption/usage period on a pro-data basis. Mining inventory is estimated to be consumed /usable over 36 months from the procurement of such inventory. Cost is determined considering the cost of purchase and other costs incurred for acquisition and on the basis of first in first out method (FIFO)

H. Employee Stock Option Scheme

In accordance with the Securities and Exchange Board of India guidelines, the excess of the market price of the shares, at the date of grant of option under the Employee Stock Option Scheme, over the exercise price is treated as employee compensation and the same is amortised over the vesting period of the stock options.

I. Employee Benefits

i) Post-employment benefit plans

Contributions to defined contribution retirement benefit schemes are recognised as an expense when employees have rendered services entitling them to contributions.

For defined benefit schemes, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses are recognised in full in the profit and loss account for the period in which they occur. Past service cost is recognised immediately to the extent that the benefits are already vested, and otherwise is amortised on a straight-line basis over the average period until the benefits become vested.

The retirement benefit obligation recognised in the balance sheet represents the present value of the defined benefit obligation as adjusted for unrecognised past service cost, and as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to the present value of available refunds and reductions in future contributions to the scheme.

ii) Short-term employee benefits

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees is recognised during the period when the employee renders the service. These benefits include compensated absences such as paid annual leave, overseas social security contributions and performance incentives.

iii) Long-term employee benefits

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognised as an actuarially determined liability at the present value of the defined benefit obligation at the balance sheet date.

J. CENVAT Credit

CENVAT Credit availed on capital goods are reduced from the cost of capital goods. CENVAT claimed on service is reduced from the cost of such services. The unutilized CENVAT balance is shown as asset in loans and advances.

K. Revenue Recognition

a. Services

Revenue from services is recognised in the period in which services are rendered on percentage completion method.

b. Interest

Revenue is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

c. Dividend

Revenue is recognised when the right to receive dividend is established.

L. Taxes on Income

Tax expense comprises of current tax and deferred tax. Provision of current tax is made after taking into consideration benefits admissible under the provisions of the Income Tax Act, 1961.

Deferred tax expense or benefit is recognised on timing differences being the difference between taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.

In the event of unabsorbed depreciation and carry forward of losses, deferred tax assets are recognised only to the extent that there is virtual certainty that sufficient future taxable income will be available to realise such assets. In other situations, deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available to realise these assets.

Advance taxes and provisions for current income taxes are presented in the balance sheet after off-setting advance taxes paid and income tax provisions arising in the same tax jurisdiction and the Company intends to settle the asset and liability on a net basis.

The Company offsets deferred tax assets and deferred tax liabilities if it has a legally enforceable right and these relate to taxes on income levied by the same governing taxation laws.

M. Leases

Lease of assets under which all the risks and rewards of ownership are effectively retained by the lesser, are classified as operating leases. Lease payments under operating leases are recognised as an expense on a straight line basis over the period of lease.

N. Borrowing Costs

Borrowing costs are attributable to the acquisition of qualifying asset are capitalized as part of cost of such asset till such time as the asset is ready for its intended use. Other borrowing costs are recognized as expense for the period.

O. Earnings per share

Basic earnings per share are calculated considering the weighted average number of equity shares outstanding during the year.

Diluted earnings per share is calculated considering the effects of potential equity shares on net profits after tax for the year and weighted average number of equity shares outstanding during the year.

P. Provisions, Contingent liabilities and Contingent Assets

A provision is recognised when the Company has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which reliable estimate can be made.

Provisions (excluding retirement benefits) are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are not recognised in the financial statements but disclosed in the notes. A contingent asset is neither recognised nor disclosed in the financial statements.


Mar 31, 2011

1 Accounting Convention

The financial statements are prepared to comply in all material aspects with all the applicable accounting principles in India, the applicable accounting standards, notified under section 211(3C) of the Companies Act, 1956 and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared in accordance with historical cost convention.

2 Use of Estimates

The preparation of financial statements 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 revenues and expenses during the reporting period. Difference between the actual results and estimates are recognised in the period in which the results are known / materialised.

3 Fixed Assets and Depreciation

All fixed assets are stated at cost of acquisition less accumulated depreciation. Assessment of indication of impairment of an asset is made at the year end and impairment loss, if any, is recognised.

Expenditure on assets, other than plant and machinery and furniture hired out to employees and at camp offices, is charged to revenue.

Machinery spares that can be used only in connection with an item of fixed assets and their use is expected to be irregular are capitalised and amortised over a period of 15 months on straight line basis. Replacement of such spares is charged to revenue.

Depreciation is provided on the straight line method at the rates and in the manner specified in Schedule XIV of the Companies' Act, 1956, where such rates are not lower than the rates determined on the basis of management 's estimate of economic useful life of the asset. Depreciation on addition to / deduction from assets during the year is provided on pro- rata basis.

4 Intangibles

Intangible Assets are stated at cost of acquisition less accumulated amortisation. Cost of computer software is being amortised over a period of six years.

5 Foreign Currency Transactions

Foreign currency transactions are recorded at the exchange rate prevailing on the relevant date. The exchange difference resulting from the settled transactions is recognised in the profit and loss account. Year end balances of monetary items are restated at the year-end exchange rates and the resultant net gain or loss is adjusted in the profit and loss account.

Premium or discount on forward contract is amortised over the life of such contract and is recognised as income or expenses in the respective period.

6 Investments

Long term investment are stated at cost, less adjustment for any diminution, other than temporary, in the value thereof. Current investments are stated at lower of cost and market value.

7 Inventories

Inventories of spares and consumables is stated at lower of cost or net realisable value. Inventories of mining business being used/usable more than a period of 1 year is charged as consumption over its conusmption/usage period on a pro rata basis. Mining inventory is estimated to be consumed/usable over 36 months from the procurement of such inventory.

8 Retirement Benefits

a Defined Benefit Schemes

Short-term employee benefits are recognised as an expense at the undiscounted amount in the profit and loss account of the year in which the related service is rendered.

Post employment and other long term employee benefits are recognised as an expense in the profit and loss account for the year in which the employee has rendered services. The expense is recognized at the present value of the amount payable determined using actuarial valuation techniques. Actuarial gains and losses in respect of post employment and other long term benefits are charged to the profit and loss account.

b Defined Contribution Schemes

The contributions required in respect of Provident Fund Scheme maintained by the Company, are recognised in the profit and loss account on accrual basis.

9 CENVAT Credit

CENVAT credit availed on capital goods is reduced from the cost of the capital goods. CENVAT claimed on services is reduced from the cost of such services. The unutilised CENVAT balance is shown as asset in loans and advances.

10 Revenue Recognition a Services

Revenue from services are recognised in the period in which services are rendered on percentage completion method.

b Interest

Revenue is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

c Dividend

Revenue is recognised when the right to receive dividend is established.

11 Taxes on Income

Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income Tax Act, 1961. Deferred tax resulting from "timing differences" between taxable and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted as on the balance sheet date. The deferred tax asset is recognised and carried forward only to the extent that there is a virtual certainty that the asset will be realised in future.

12 Provisions, Contingent Liabilities and Contingent Assets

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 recognised but are disclosed in the notes. Contingent Assets are neither recognised nor disclosed in the financial statements.









 
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