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Accounting Policies of Blue Bird (India) Ltd. Company

Mar 31, 2010

1. Basis of Accounting

The financial statements have been prepared to comply in all material respects with the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared underthe historical cost convention on an accrual basis. The accounting policies have been consistently applied by the Company.

2. Use of Estimates

The preparation of financial statements requires making certain estimates and assumptions necessary for reporting of amounts in the financial statements and notes thereto. Differences, if any, between actual and estimates are recognized in the period in which they materialize.

3. Fixed Assets

Fixed assets are stated at cost, less accumulated depreciation. Cost comprises of the purchase price and any attributable cost of bringing the asset to its working condition for its intended use. Financing costs related to acquisition of fixed assets are also included to the extent they relate to the period till such assets are ready to be put to use.

4. Depreciation/Amortisation

a. Depreciation is provided on fixed assets, under Straight Line Method at rates prescribed in Schedule XIV to the Companies Act, 1956. Depreciation on additions/deletions during the year is provided on pro-rata basis.

b. Premiums other expenditure on leasehold land is amortised over the period of lease.

5. Inventories

a. Raw Material, components, stores and spares and land (stock in trade) are valued at lower of cost or net realizable value. Cost is determined on First In First Out (FIFO) basis.

b. Work-in-progress in respect of construction activity is valued at cost. Cost includes land cost, direct materials and labour and a proportion of operating overheads including borrowing costs. In case work is completed for more than 25% of the total work in each case, work-in-progress is valued inclusive of estimated profit on percentage completion basis.

c. Finished goods are valued at lower of cost or net realizable value. Cost includes direct materials and labour and proportion of manufacturing overheads based on normal operating capacity. Net realizable value is the estimated selling price in the ordinary course of business.

d. Stock in Trade /transit is valued at cost.

6 Revenue Recognition

a. Sales are excluding duties and taxes, net of usual trade discounts. Revenue from sale of goods is recognized on the basis of dispatch of goods when ownership, risk & reward is transferred to the customers.

b. Sales of construction activity are excluding duties and taxes. Revenue from sale of property is recognized on transfer of ownership to the customers. Revenue from construction contracts is recognized on the basis of bills submitted on certification of work carried out.

c. Revenue from interest is recognized on time proportion basis.

7. Foreign Currency Transactions

a. Transactions denominated in foreign currencies are recorded at the exchange rate prevailing at the time of transaction.

b. Monetary assets and liabilities denominated in foreign currencies are translated into rupee currency at the year end. Non-monetary foreign currency assets are carried at cost.

c. Any gains or losses on account of exchange differences either on settlement or on transaction are recognized in the profit and loss account.

8. Retirement benefits and other employee benefits (AS -15)

Retirement benefits and other employee benefits in the form of Provident Fund and Gratuity are charged to Profit & Loss account of the year when the contribution to the respective fund is due.

9. Taxation

Tax expense comprises of both current and deferred taxes. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act. Deferred income taxes reflect the combined impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted at the balance sheet date. Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

10. Impairment Loss

As per Accounting Standard AS-28 Impairment of Assets effective from April 01, 2004, the Company assesses at each Balance Sheet date whether there is any indication that any asset may be impaired and if such indication exists, the carrying value of such asset is reduced to its recoverable amount and a provision is made for such impairment loss in the Profit and Loss Account.

11. Borrowing Costs

Borrowing Costs attributable to the acquisition and construction of the qualifying assets are capitalized as part of the cost of respective assets upto the date when such asset is ready for its intended use. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. Other borrowing costs are charged to Profit & Loss Account.

12. Earning Per Share

Basic Earning per share is calculated by dividing the net profit for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The Company has not issued any dilutive potential equity shares and accordingly, the basic earning per share and diluted earning per share are the same.

13. Provisions, Contingent Liabilities and Contingent Assets

A Provision is recognized when an enterprise 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 a reliable estimate can be made. Provisions are not discounted to their 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 if material are disclosed by way of notes to accounts. Contingent assets are not recognized.

Oct 21, 12:00 am
Oct 21, 4:14 pm
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