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Accounting Policies of AYM Syntex Ltd. Company

Mar 31, 2014

I) Basis of preparation of financial statements

The financial statements of the Company have been prepared on going concern basis in accordance with generally accepted accounting principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all material respect with accounting standards notifed under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956 read with general circular 8/2014 dated 4 April 2014 issued by Ministry of Corporate Affairs. The financial statements have been prepared on accrual basis and under the historical cost convention. The accounting policies adopted in the preparation of financial statements are consistent with those of the previous year.

ii) Use of estimates

The preparation of the financial statements requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities as at the date of the financial statements and the reported amount of revenue and expenses of the year. The estimates and assumptions used in the accompanying financial statements are based upon management''s evaluation of the relevant facts and circumstances as of the date of the financial statements. The examples of such estimates include the useful life of the tangible and intangible assets, allowance for doubtful debts/advances, future obligations in respect of retirement benefit plan etc. Actual results could differ from those estimates and in such case the difference is recognised when known or materialised.

iii) Tangible and intangible assets

a) Tangible assets are stated at original cost of acquisition / installation (net of cenvat credit availed) net of accumulated depreciation, amortization and impairment losses except freehold land which is carried at cost. Cost includes cost of acquisition, construction and installation, taxes, duties, freight, other incidental expenses related to the acquisition, trial run expenses (net of revenue) and pre-operative expenses including borrowing costs incurred during pre-operational period.

b) Tangible assets which are not ready for their intended use on reporting date are carried as capital work-in-progress at cost, comprising direct cost and related incidental expenses.

c) Intangible assets are carried at cost, net of accumulated amortization and impairment loss, if any.

iv) Depreciation/amortization on tangible and intangible assets

a) Depreciation on tangible assets is provided on Straight Line Method at the rates prescribed in Schedule XIV to the Companies Act, 1956. Depreciation on both Partially Oriented Yarn (POY) and Bulk Continuous Filament Yarn (BCF) Plant and Machinery is charged as continuous process plant based on technical opinion taken by the Company/Expert.

b) Intangible assets are amortized on a straight-line basis over its expected useful life as estimated by the management.

v) Impairment of tangible and intangible assets

At each balance sheet date, the Company reviews the carrying amount of tangible and intangible assets to determine whether there is any indication that those assets suffered impairment loss. If any such indication exists, the recoverable amount of the assets is estimated in order to determine the extent of impairment loss. The recoverable amount is higher of the net selling price and value in use, determined by discounting the estimated future cash flows expected from the continuing use of the asset to their present value.

vi) Borrowing costs

Borrowing costs attributable to the acquisition or construction of qualifying assets are capitalized as part of cost of such assets. All other borrowing costs are charged to revenue.

vii) Revenue recognition

a) Revenue from sale of goods is recognized on transfer of significant risks and rewards of ownership to the customers, which is generally on dispatch of goods. Export Sales are accounted for on the basis of date of bill of lading. Gross Sales include excise duty and adjustments for price variations and is net of value added tax. Consignment sales are recognized on confirmation from consignee.

b) Export benefits: Duty Drawback, Focus Market and Focus Product are accounted on accrual basis.

c) Revenue from Services is recognized when the services are completed.

d) Dividend income is recognized when the right to receive the dividend is established.

e) Interest income is recognized on a time proportion basis taking into account outstanding amount and the applicable interest rate except interest income from customers which is accounted on receipt basis.

viii) Operating lease

Lease of assets under which all the risks and rewards of ownership are effectively retained by the lessor are classified as operating lease. Lease payments under operating leases are recognized as an expense on accrual basis in accordance with the respective lease agreements.

ix) Investments

a) Investments, which 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.

b) Long-term investments are valued at cost less provision for diminution other than temporary, in the value of such investments. Current investments are valued at lower of cost and fair value.

x) Inventories

Inventories are valued at lower of cost and net realizable value. The basis of determining cost for various categories of inventories is as follows:

a) Raw materials, Stores and spares, Colour and chemicals and Packing materials: Moving weighted average basis.

b) Goods-in-process – Cost of materials plus labour and other production overheads.

c) Finished goods – Cost of materials plus labour, production overheads and excise duty on such goods. xi) Accounting for taxes on income

a) Current tax is determined as the amount of tax payable in respect of taxable income for the year computed as per the provisions of the Income Tax Act, 1961.

b) Deferred tax is recognized subject to consideration of prudence, on timing difference, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods and measured using relevant enacted tax rates.

xii) Employee benefits

a) Short-term employee benefits are recognized as an expense at the undiscounted amount in the statement of Profit and loss of the year in which the related services are rendered.

b) Post employment and other long-term benefits are recognized as an expense in the statement of Profit and loss of the year in which the employee has rendered services. The expense is recognized at the present value of the amounts payable determined using actuarial valuation techniques. Actuarial gains and losses in respect of post employment and other long-term benefits are recognized in the statement of Profit and loss.

c) Payments to Defined contribution retirement benefit schemes are charged as expense as and when they fall due. xiii) Foreign currency transactions

a) Transactions in foreign currency are accounted at the exchange rate prevailing on the date of such transactions. Current monetary assets and liabilities are translated at the exchange rate prevailing at the reporting date. Non-monetary items are carried at cost.

b) In respect of forward contracts assigned to the foreign currency assets and liabilities as at balance sheet date, the proportionate premium / discount for the period up to the date of balance sheet is recognized in the statement of Profit and loss. The exchange difference measured by the change rate between the inception of forward contract and date of balance sheet is applied on foreign currency amount of the forward contract and is recognized in the statement of Profit and loss.

c) Gains or losses arising on remittance / translations at the year- end are credited / debited to the statement of Profit and loss except treatment as per amendment to AS-11 effective till 31 March 2020 (Refer note 37).

xiv) Earnings per share

Basic earnings per share is computed and disclosed using the weighted average number of equity shares outstanding during the year. Dilutive earnings per share is computed and disclosed using the weighted average number of equity and dilutive equity equivalent shares outstanding during the year, except when the results would be anti-dilutive.

xv) Provisions, contingent liabilities and contingent assets

a) Contingent liabilities are disclosed in respect of possible obligations that arise from past events but their existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events. A provision is made when it is probable that an outflow of resources embodying economic benefits will be required to settle an obligation and in respect of which a reliable estimate can be made. Provision is not discounted and is determined based on best estimate required to settle the obligation at the year end date.

b) Contingent Assets are not recognized or disclosed in the financial statements.

(a) Term loans from banks except (g) & (h) below, are secured by way of frst charge on immovable and movable assets of the Company, both present and future, ranking pari passu and also secured by second charge on current assets subject to prior charge in favour of banks for working capital facilites.

(b) Term loan of Rs. 1,239.57 lacs (Rs. Nil) from Central Bank of India carries interest @ 13.00% p.a.and is repayable in 28 quarterly instalments commencing from 28 February 2016.

(c) Term loan of Rs. 4,147.61 lacs (Rs. 3,007.03 lacs) from Industrial Development Bank of India carries interest @ 12.50 % p.a.and is repayable in 28 stepped-up quarterly instalments ranging from 2.50% to 4.75% per quarter of disbursed loan amount commencing from 01 April 2014.

(d) Converted rupee term loan of Rs. 105.88 lacs (Rs.526.30 lacs) from State Bank of Bikaner and Jaipur carries interest @ 13.50% p.a. and is repayable in single instalment on 15 April 2014.

(e) Rupee term loan of Rs. 1,130.32 lacs (Rs. Nil) from State Bank of Bikaner and Jaipur carries interest @ 13.50% p.a.and is repayable in 13 stepped-up quarterly instalments ranging from 3.06% to 5.10% of disbursed loan amount.

(f) Term loan of Rs. 885.54 lacs (Rs. 1,987.76 lacs) from State Bank of Bikaner and Jaipur carries interest @ LIBOR 4.00% p.a. and is repayable in 7 stepped-up quarterly instalments ranging from 5.10% to 5.73% of disbursed loan amount.

(g) Term loan of Rs. 1,500.00 lacs (Rs. Nil) from State Bank of Bikaner and Jaipur is secured by frst charge, ranking pari passu, by way of hypothecation of company''s raw materials, goods-in-process, fnished goods, stores, spares and book debts and second charge, ranking pari passu, on fixed assets (immovebale) of the company. It carries interest @ 13.50 % p.a.and is repayable in 6 quarterly instalments of Rs.250 lacs each starting from 31 December 2014.

(h) Converted rupee term loan of Rs. 625 lacs (Rs. 1,786.42 lacs) from State Bank of Bikaner and Jaipur is secured by frst charge ranking pari passu by way of hypothecation of company''s raw materials, goods-in-process, fnished goods, stores, spares, book debts and other current assets and second charge, ranking pari passu, on fixed assets (immoveable) of the company. It carries interest @ 12.50% p.a. and is repayable in 2 quarterly equal instalments of Rs. 312.50 lacs.

(i) Term loan of Rs. 4,341.22 lacs (Rs. 2,879.96 lacs) from Bank of Baroda, Dubai carries interest @ LIBOR 4.25% p.a. and is repayable in 28 quarterly instalments ranging from 2.5% to 4.75% of disbursed loan amount commencing from 30 June 2014.

Notes forming part of the financial statements

( Rs. in Lacs ) (j) Term loan of Rs. Nil (Rs. 92.47 lacs) from Bank of Baroda carrying interest @ 13.25% p.a. has been fully repaid during the year. (k) Term loan of Rs. Nil (Rs. 87.00 lacs) from State Bank of India carrying interest @ 14.15% p.a. has been fully repaid during the year.

(l) Term loan of Rs. Nil (Rs. 76.67 lacs) from State Bank of Bikaner and Jaipur carrying interest @ 13.90% p.a. has been fully repaid during the year.

(m) Buyer''s credit from bank of Rs. Nil (Rs.1,099.00 lacs) carrying interest @ LIBOR 2.50% p.a. has been fully repaid during the year.


Mar 31, 2013

I) Basis of preparation of financial statements

The financial statements are prepared in accordance with the Indian Generally Accepted Accounting Principles ("GAAP") as a going concern under the historical cost convention on an accrual basis and comply in all material aspects with accounting standards under section 211(3C), Companies (Accounting Standards) Rules, 2006, the provisions of Companies Act, 1956 and guidelines issued by the Securities and Exchange Board of India (SEBI).

ii) Use of estimates

The preparation of the financial statements requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities as at the date of the financial statements and the reported amount of revenue and expenses of the year. Actual results could differ from those estimates. Any revision of such accounting estimate is recognized prospectively in current and future periods.

iii) Tangible and intangible assets

a) Tangible assets are stated at original cost of acquisition / installation (net of cenvat credit availed) net of accumulated depreciation, amortization and impairment losses. Cost includes cost of acquisition, construction and installation, taxes, duties, freight, other incidental expenses related to the acquisition, trial run expenses (net of revenue) and borrowing cost incurred during pre-operational period.

b) Capital work-in-progress comprises cost of tangible assets and related expenses that are not yet ready for their intended use at the reporting date.

c) Cost of Software includes license fees, cost of implementation and system integration and capitalized as intangible assets in the year in which the relevant software is put to use.

iv) Depreciation/amortization on tangible and intangible assets

a) Depreciation on tangible assets is provided on Straight Line Method at the rates prescribed in Schedule XIV to the Companies Act, 1956. Depreciation on Partially Oriented Yarn (POY) Plant and Machinery is charged as continuous process plant based on expert''s opinion.

b) Software is amortized over a period of five years from the date of its use based on management''s estimate of useful life.

v) Impairment of tangible and intangible assets

At each balance sheet date, the Company reviews the carrying amount of tangible and intangible assets to determine whether there is any indication that those assets suffered impairment loss. If any such indication exists, the recoverable amount of the assets is estimated in order to determine the extent of impairment loss. The recoverable amount is higher of the net selling price and value in use, determined by discounting the estimated future cash flows expected from the continuing use of the asset to their present value.

vi) Borrowing costs

Borrowing costs attributable to the acquisition or construction of qualifying assets are capitalized as part of cost of such assets. All other borrowing costs are charged to revenue.

vii) Revenue recognition

a) Revenue from sale of goods is recognized on transfer of significant risks and rewards of ownership to the customers, which is generally on dispatch of goods. Export Sales are accounted for on the basis of date of bill of lading. Gross Sales include excise duty and adjustments for price variations and is net of value added tax. Consignment sales are recognized on confirmation from consignee.

b) Export benefits: Duty Drawback, Focus Market and Focus Product are accounted on accrual basis.

c) Revenue from Services is recognized when the services are completed.

d) Dividend income is recognized when the right to receive the dividend is established.

e) Interest income is recognized on a time proportion basis taking into account outstanding amount and the applicable interest rate.

viii) Operating lease

Lease of assets under which all the risks and rewards of ownership are effectively retained by the lessor are classified as operating lease. Lease payments under operating leases are recognized as an expense on accrual basis in accordance with the respective lease agreements.

ix) Investments

Investments intended to be held for more than a year, from the date of acquisition, are classified as long-term and are stated at cost. Provision for diminution in value of long-term investments is made to recognize a decline other than temporary in nature. Current investments are stated at cost or fair value, whichever is lower.

x) Inventories

Inventories are valued at lower of cost and net realizable value. The basis of determining cost for various categories of inventories is as follows:

a) Raw materials, Stores and Spares and Colour and Chemicals, Packing Materials: Moving weighted average basis.

b) Goods in process and finished goods – Cost of direct materials, labour and other manufacturing expenses.

c) Excise duty liabilty is included in the valuation of closing inventory of finished goods.

xi) Accounting for taxes on income

a) Current tax is determined as the amount of tax payable in respect of taxable income for the year computed as per the provisions of the Income Tax Act, 1961.

b) Deferred tax is recognized subject to consideration of prudence, on timing difference, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods and measured using relevant enacted tax rates.

xii) Employee benefits

a) Short- term employee benefits are recognized as an expense at the undiscounted amount in the statement of profit and loss of the year in which the related services are rendered.

b) Post employment and other long- term benefits are recognized as an expense in the statement of profit and loss of the year in which the employee has rendered services. The expense is recognized at the present value of the amounts payable determined using actuarial valuation techniques. Actuarial gains and losses in respect of post employment and other long-term benefits are recognized in the statement of profit and loss.

c) Payments to defined contribution retirement benefit schemes are charged as expense as and when they fall due.

xiii) Foreign currency transactions

a) Foreign exchange transactions are converted into Indian Rupees at the prevailing rate on the date of transactions. Current monetary assets and liabilities are translated at the exchange rate prevailing on the last day of the year. Non monetary items are carried at cost.

b) In respect of forward contracts assigned to the foreign currency assets and liabilities as at balance sheet date, the proportionate premium / discount for the period up to the date of balance sheet is recognized in the statement of profit and loss. The exchange difference measured by the change rate between the inception of forward contract and date of balance sheet is applied on foreign currency amount of the forward contract and is recognized in the statement of profit and loss.

c) Gains and losses on account of difference in foreign exchange rate on settlement / translation attributable to fixed assets (acquired prior to 1 April 2004) are adjusted to the carrying amount of the respective assets. In case of fixed assets acquired in foreign currency after 1 April 2004, the gains and losses on account of difference in foreign exchange rate on settlement / translation are recognized in the statement of profit and loss, except treatment as per amendment to AS-11 effective till 31 March 2020.

xiv) Provisions, contingent liabilities and contingent assets

a) Contingent liabilities are disclosed in respect of possible obligations that arise from past events but their existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events. A provision is made when it is probable that an outflow of resources embodying economic benefits will be required to settle an obligation and in respect of which a reliable estimate can be made. Provision is not discounted and is determined based on best estimate required to settle the obligation at the year end date.

b) Contingent assets are not recognized or disclosed in the financial statements.

xv) Earnings per share

Basic earnings per share is computed and disclosed using the weighted average number of equity shares outstanding during the year. Dilutive earnings per share is computed and disclosed using the weighted average number of equity and dilutive equity equivalent shares outstanding during the year, except when the results would be anti-dilutive.


Mar 31, 2012

I) Basis of preparation

The financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles ("GAAP") under the historical cost convention on an accrual basis and comply in all material aspects with accounting standards notified under section 211 (3C), Companies (Accounting Standards) Rules, 2006, the provisions of Companies Act, 1956.

ii) Use of estimates

The preparation of the financial statements requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities as at the date of the financial statements and the reported amount of revenue and expenses of the year. Actual results could differ from those estimates. Any revision of such accounting estimate is recognized prospectively in current and future periods.

iii) Tangible and intangible assets

a) Tangible fixed assets are stated at original cost of acquisition / installation (net of cenvat credit availed) net off accumulated depreciation, amortization and impairment losses. Cost includes cost of acquisition, construction and installation, taxes, duties, freight, other incidental expenses related to the acquisition, trial run expenses (net of revenue) and borrowing cost incurred during pre-operational period.

b) Capital work-in-progress comprises cost of fixed assets and related expenses that are not yet ready for their intended use at the reporting date.

c) Cost of Software includes license fees, cost of implementation and system integration and capitalized as intangible assets in the year in which the relevant software is put to use.

iv) Depreciation/amortization on tangible and intangible assets

a) Depreciation on tangible fixed assets is provided on Straight Line Method at the rates prescribed in Schedule XIV to the Companies Act, 1956. Depreciation on Partially Oriented Yarn (POY) Plant and Machinery is charged as continuous process plant based on expert's opinion.

b) Software is amortized over a period of five years from the date of its use based on management's estimate of useful life.

v) Impairment of tangible and intangible assets

At each balance sheet date, the Company reviews the carrying amount of fixed assets to determine whether there is any indication that those assets suffered impairment loss. If any such indication exists, the recoverable amount of the assets is estimated in order to determine the extent of impairment loss. The recoverable amount is higher of the net selling price and value in use, determined by discounting the estimated future cash flows expected from the continuing use of the asset to their present value.

vi) Borrowing costs

Borrowing costs attributable to the acquisition or construction of qualifying assets are capitalized as part of cost of such assets. All other borrowing costs are charged to revenue.

vii) Revenue recognition

a) Revenue from sale of goods is recognized on transfer of significant risks and rewards of ownership to the customers, which is generally on dispatch of goods. Export Sales are accounted for on the basis of date of bill of lading. Gross Sales include excise duty and adjustments for price variations and is net of value added tax. Consignment sales are recognized on confirmation from consignee.

b) Export benefits: Duty Entitlement Pass Book (DEPB), Focus Market and Focus Product are accounted on accrual basis.

c) Revenue from Services is recognized when the services are completed.

d) Dividend income is recognized when the right to receive the dividend is established.

e) Interest income is recognized on a time proportion basis taking into account outstanding amount and the applicable interest rate.

viii) Operating lease

Lease of assets under which all the risks and rewards of ownership are effectively retained by the lessor are classified as operating lease. Lease payments under operating leases are recognized as an expense on accrual basis in accordance with the respective lease agreements.

ix) Investments

Investments intended to be held for more than a year, from the date of acquisition, are classified as long-term and are stated at cost. Provision for diminution in value of long-term investments is made to recognize a decline other than temporary in nature. Current investments are stated at cost or fair value, whichever is lower.

x) Inventories

Inventories are valued at lower of cost and net realizable value. The basis of determining cost for various categories of inventories is as follows:

a) Raw materials, Stores and Spares and Colour and Chemicals, Packing Materials: Moving weighted average basis.

b) Goods in process and finished goods - Cost of direct materials, labour and other manufacturing expenses.

c) Excise duty liabilty is included in the valuation of closing inventory of finished goods.

xi) Accounting for taxes on income

a) Current tax is determined as the amount of tax payable in respect of taxable income for the year computed as per the provisions of the Income Tax Act, 1961.

b) Deferred tax is recognized subject to consideration of prudence, on timing difference, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods and measured using relevant enacted tax rates.

xii) Employee benefits

a) Short- term employee benefits are recognized as an expense at the undiscounted amount in the statement of profit and loss of the year in which the related services are rendered.

b) Post employment and other long- term benefits are recognized as an expense in the statement of profit and loss of the year in which the employee has rendered services. The expense is recognized at the present value of the amounts payable determined using actuarial valuation techniques. Actuarial gains and losses in respect of post employment and other long-term benefits are recognized in the statement of profit and loss.

c) Payments to defined contribution retirement benefit schemes are charged as expense as and when they fall due.

xiii) Foreign currency transaction

a) Foreign exchange transactions are converted into Indian Rupees at the prevailing rate on the date of transactions. Current monetary assets and liabilities are translated at the exchange rate prevailing on the last day of the year. Non monetary items are carried at cost.

b) In respect of forward contracts assigned to the foreign currency assets and liabilities as at balance sheet date, the proportionate premium / discount for the period up to the date of balance sheet is recognized in the statement of profit and loss. The exchange difference measured by the change rate between the inception of forward contract and date of balance sheet is applied on foreign currency amount of the forward contract and is recognized in the statement of profit and loss.

c) Gains and losses on account of difference in foreign exchange rate on settlement / translation attributable to fixed assets (acquired prior to 1 April 2004) are adjusted to the carrying amount of the respective assets. In case of fixed assets acquired in foreign currency after 1 April 2004, the gains and losses on account of difference in foreign exchange rate on settlement / translation are recognized in the statement of profit and loss, except treatment as per amendment to AS-11 effective till 31 March 2020.

xiv) Provisions, contingent liabilities and contingent assets

a) Contingent liabilities are disclosed in respect of possible obligations that arise from past events but their existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events. A provision is made when it is probable that an outflow of resources embodying economic benefits will be required to settle an obligation and in respect of which a reliable estimate can be made. Provision is not discounted and is determined based on best estimate required to settle the obligation at the year end date.

b) Contingent assets are not recognized or disclosed in the financial statements.

xv) Earnings per share

Basic earnings per share is computed and disclosed using the weighted average number of equity shares outstanding during the year. Dilutive earnings per share is computed and disclosed using the weighted average number of equity and dilutive equity equivalent shares outstanding during the year, except when the results would be anti-dilutive.


Mar 31, 2011

A) Basis of Accounting

The financial statements have been prepared under the Historical Cost Convention on accrual basis and in accordance with the generally accepted accounting principles (GAAP) and Accounting Standards as specified in Companies (Accounting Standards) Rules, 2006 as prescribed by the Central Government.

b) Use of Estimates

The preparation of the financial statements in accordance with the generally accepted accounting principles requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities as at the date of the financial statements and the reported amount of revenue and expenses of the year. Actual results could differ from those estimates. Any revision of such accounting estimate is recognized prospectively in current and future periods.

c) Fixed Assets

(i) Fixed assets are stated at original cost of acquisition / installation (net of cenvat credit availed) net of accumulated depreciation, amortization and impairment losses except freehold land which is carried at cost. The cost of fixed assets includes cost of acquisition, construction and installation, taxes, duties, freight, other incidental expenses related to the acquisition, trial run expenses (net of revenue) and borrowing cost incurred during pre- operational period.

(ii) Cost of Software includes license fees, cost of implementation and system integration and capitalized as intangible assets in the year in which the relevant software is put to use.

d) Depreciation

(i) Depreciation on fixed assets is provided on Straight Line Method at the rates prescribed in Schedule XIV to the Companies Act, 1956. Depreciation on POY Plant and Machinery is charged as continuous process plant based on expert's opinion.

(ii) Depreciation on the addition on account of increase/decrease in rupee liability on realignment of foreign currency Loan is provided prospectively.

(iii) Software is amortized over a period of five years from the date of its use based on management's estimate of useful life.

e) Impairment of Assets

If the carrying amount of fixed assets exceeds the recoverable amount on the reporting date, the carrying amount is reduced to the recoverable amount. The recoverable amount is measured as the higher of the net selling price and value in use determined by the present value of estimated future cash flows. An impairment loss is charged to the profit and loss account in the year in which an asset is identified as impaired.

f) Borrowing Costs

Borrowing costs attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. All other borrowing costs are charged to revenue.

g) Revenue Recognition

(i) Revenue from sale of goods is recognized on transfer of significant risks and rewards of ownership to the customers, which is generally on dispatch of goods. Export Sales are accounted for on the basis of date of bill of lading. Gross Sales include excise duty, exchange rate variations related to exports and is net of value added tax. Consignment sales are recognized on confirmation from consignee.

(ii) Export benefits are accounted on accrual basis.

(iii) Dividend income is recognized when the right to receive the dividend is unconditional.

h) Operating Lease

Lease of assets under which all the risks and rewards of ownership are effectively retained by the lessor have been classified as operating leases. Lease payments under operating leases are recognized as an expense on accrual basis in accordance with the respective lease agreement.

i) Investments

Investments intended to be held for more than a year, from the date of acquisition, are classified as long-term investments and are carried at cost. However, provision for diminution in value of long-term investments is made to recognize a decline other than temporary. Current investments are stated at cost or fair value whichever is lower.

j) Inventories

(i) Inventories are valued at lower of cost and Net Realizable value.

(ii) The basis for determining cost for various categories of inventories is as follows:

Work / Goods in Process : Cost of Direct Material, Labour and and Finished Goods other Manufacturing Overheads

Raw materials, Stores and Spares and : Moving weighted average basis Colour and Chemicals, Packing materials

(iii) Excise duty is added in the Closing Inventory of Finished Goods

k) Accounting for Taxes on Income

(i) Current tax is determined as the amount of tax payable in respect of taxable income of the year computed as per Income Tax Act, 1961.

(ii) Deferred tax is recognized subject to consideration of prudence, on timing difference, being the difference between taxable income and accounting income that originate in one period and is capable of reversal in one or more subsequent periods and measured using prevailing enacted or substantively enacted tax rates.

l) Employee Benefits

(i) Short term employee benefits are recognized as an expense at the undiscounted amount in the Profit and Loss account of the year in which the related service is rendered.

(ii) Post employment and other long term benefits are recognized as an expense in the profit and loss account of the year in which the employee has rendered services. The expense is recognized at the present value of the amounts 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.

(iii) Payments to defined contribution retirement benefit schemes are charged as expenses as and when they fall due.

m) Foreign Currency Transaction

(i) Foreign exchange transactions are converted into Indian Rupees at the prevailing rate on the date of transactions. Current monetary assets and liabilities are translated at the exchange rate prevailing on the last day of the year. Non monetary items are carried at cost.

(ii) In respect of forward contracts assigned to the foreign currency assets and liabilities as at balance sheet date, the proportionate premium / discount for the period up to the date of balance sheet is recognized in the profit and loss account. The exchange difference measured by the change rate between the inception of forward contract and date of balance sheet is applied on foreign currency amount of the forward contract and is recognized in the profit and loss account.

(iii) Gains and losses on account of difference in foreign exchange rate on settlement / translation attributable to fixed assets (acquired prior to 1 April 2004) are adjusted to the carrying amount of the respective assets. In case of fixed assets acquired in foreign currency after 1 April 2004, the gains and losses on account of difference in foreign exchange rate on settlement / translation are recognized in the profit and loss account, except treatment as per amendment to AS-11 effective till 31 March 2012 (Refer note 17(b)).

 
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