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Accounting Policies of EIH Ltd. Company

Mar 31, 2013

BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The Financial Statements are prepared on accrual basis under the historical cost convention (except where impairment is made and revaluation is carried out) on the basis of going concern and is in accordance with Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 pursuant to section 211 (3C) of the Companies Act, 1956.

USE OF ESTIMATES

In preparing the Financial Statements in conformity with accounting principles generally accepted in India, Management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as at the date of Financial Statements and the amounts of revenue and expenses during the reported period. Actual results could differ from those estimates. Any revision to such estimates is recognised in the period the same is determined.

PRIOR PERIOD ADJUSTMENTS, EXCEPTIONAL ITEMS, EXTRAORDINARY ITEMS AND CHANGES IN ACCOUNTING POLICIES

Prior period adjustments, exceptional items, extraordinary items and changes in accounting policies having material impact on the financial affairs of the Company are disclosed.

FIXED ASSETS

Tangible Assets are stated at cost of acquisition or construction and in case of revaluation of assets at revalued amounts net of impairment loss if any, less depreciation/amortisation. Cost represents direct expenses incured on acquisition or construction of the assets and the share of indirect expenses relating to construction allocated in proportion to the direct cost involved.

Assets acquired under lease are capitalised at the present value of minimum lease payments and are stated at the capitalised value net of accumulated depreciation.

Capital work-in-progress comprises the cost of fixed assets that are not yet ready for their intended use on the reporting date and materials at site.

Intangible Assets are stated at cost less accumulated amortisation and net of impairments, if any. An intangible asset is recognised if it is probable that the expected future economic benefits that are attributable to the asset will flow to the Company and its cost can be measured reliably. Intangible assets having finite useful lives are amortised on straight line basis over their estimated useful lives.

DEPRECIATION

Depreciation on fixed assets other than land, certain buildings on leasehold lands and leased vehicles and machinery is provided on "Straight Line Method" at the rates prescribed under Schedule XIV of the Companies Act, 1956. Certain fixed assets including leased vehicles and leased machinery, building installed on leasehold land (other than on perpetual lease) are depreciated over the lives of the respective leases or over the remaining lease period from the date of installation whichever is shorter. Vehicles acquired on lease are depreciated over their respective lease period or sixty months from the date of acquisition whichever is earlier. Long term Leasehold land (other than on perpetual lease) are depreciated over the balance period of lease, commencing from the date the land is put to use for commercial purposes. The additional depreciation on the increase in the value of assets due to revaluation is adjusted against Revaluation Reserve.

REVENUE RECOGNITION

- Revenue from hospitality services is recognised when the services are rendered and the same becomes chargeable. Revenue from sale of printed and other materials is recognised on despatch of materials. Revenue from Shop Licence Fee, Management and Marketing Fee included under "Other Services" is recognised on accrual basis as per terms of contract.

- Revenue from interest is accrued and recognised on time basis and determined by contractual rate of interest.

- Dividend income is stated at gross and is recognised when right to receive payment is established.

IMPAIRMENT OF ASSETS

Impairment is ascertained at each Balance Sheet date in respect of the Company''s fixed assets. An impairment loss is recognised whenever the carrying amount of an asset or cash generating unit exceeds its recoverable amount.

LEASES

In respect of assets acquired on or after 1st April, 2001, the same are capitalized at the lower of the fair value and present value of the minimum lease payments at the inception of the lease term. Lease payments are apportioned between the interest charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Interest component is charged to the Statement of Profit and Loss under Finance costs.

Operating lease payments are recognized as expenditure in the Statement of Profit and Loss on straight line basis, over the lease period.

INVESTMENTS

Investments held by the Company which are long term in nature are stated at cost unless there is any permanent diminution in value where provision for diminution is made on individual investment basis. Current investments are valued at cost or market price or fair value, whichever is lower. Earnings on investments are accounted for on accrual basis.

INVENTORIES

Inventories are valued at cost which is based on First-In-First-out method or net realisable value, whichever is lower. unserviceable/ damaged/discarded stocks and shortages are charged to the profit and Loss Account.

TRANSACTIONS IN FOREIGN CURRENCY

sales made in foreign currency are converted at the prevailing applicable exchange rate. Gain/Loss arising out of fluctuations in exchange rate is accounted for on realisation.

payments made in foreign currency including for acquiring investments are converted at the applicable rate prevailing on the date of remittance. Liability on account of foreign currency is converted at the exchange rate prevailing at the end of the year. Monetary items denominated in foreign currency are converted at the exchange rate prevailing at the end of the year.

revenue expenditure of all the overseas sales offices are converted at the average exchange rate for the year. Assets and liabilities other than Fixed Assets are converted at the exchange rate prevailing at the close of the accounting year and Fixed Assets are converted at the month-end exchange rate of the month of acquisition.

Foreign currency loans covered by forward contracts are realigned at the forward contract rates, while those not covered by forward contracts are realigned at the rates ruling at the year end. the differences on realignment is accounted for in the statement of profit and Loss.

EMPLOYEE BENEFITS

short term Employee Benefit is recognized as expense in the statement of profit and Loss of the year in which related service is rendered.

post employment and other Long term employee Benefits are provided in the Accounts in the following manner:

(i) Gratuity - Maintained as a defined benefit retirement plan and contribution is made to the Life Insurance Corporation of India, as per Company''s scheme. provision/ write back, if any, is made on the basis of the present value of the liability as at the Balance sheet date determined by actuarial valuation following projected unit Credit Method and is treated as liability under other Current Liability.

(ii) Leave encashment on termination of service - As per actuarial valuation as at the Balance sheet date following projected unit Credit Method.

(iii) provident Fund - provident Fund for most of the employees is a defined Contribution scheme, where the contribution is made to a Fund administered by the Government provident Fund Authority.

For a few employees, provident Fund, administered by a recognised trust, is a defined Benefit plan wherein the employee and the Company make monthly contributions. pending the issuance of Guidance Note from the Actuarial society of India, actuarial valuation is not carried out and the Company provides for required liability at year end, in respect of the shortfall, if any, upon confirmation from the trustees of such Fund.

BORROWING COST

Borrowing cost that is attributable to the acquisition / construction of fixed assets are capitalised as part of the cost of the respective assets. other borrowing costs are recognised as expenses in the year in which they arise.

SHARE ISSUE EXPENSES

share issue expenses are written off against the securities premium Account in accordance with section 78 of the Companies Act, 1956.

TAXES ON INCOME

Income-tax is accounted for in accordance with Accounting standard on ''Accounting for taxes on income'' notified under the Companies (Accounting standards) Rules, 2006.

Minimum Alternate tax (Mat) is accounted for in accordance with tax laws which give rise to future economic benefits in the form of tax credit against which future income tax liability is adjusted and is recognized as an asset in the balance sheet.

Deferred tax is provided and recognized on timing differences between taxable income and accounting income subject to prudential consideration. Deferred tax assets on unabsorbed depreciation and carry forward of losses are not recognized unless there is virtual certainity about availability of future taxable income to realize such assets.

PROPOSED DIVIDEND

Dividend recommended by the Board of Directors is provided for in the Accounts pending shareholders'' approval.

PROVISIONS CONTINGENT LIABILITES AND CONTINGENT ASSETS

provisions are recognized when there is a present legal or statutory obligation as a result of past events and where it is probable that there will be outflow of resources to settle the obligation and when a reliable estimate of the amount of the obligation can be made. Contingent Liabilities are recognized only when there is a possible obligation arising from past events due to occurrence or non- occurrence of one or more uncertain future events not wholly within the control of the Company or where any present obligation cannot be measured in terms of future outflow of resources or where a reliable estimate of the obligation cannot be made. obligations are assessed on an on going basis and only those having a largely probable outflow of resources are provided for.

Contingent Assets are not recognised in the Financial statements.


Mar 31, 2012

BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The Financial statements are prepared on accrual basis under the historical cost convention (except where impairment is made and revaluation is carried out) on the basis of going concern and is in accordance with Accounting standards notified by the Companies (Accounting standards) rules, 2006 issued by the Central Government in consultation with the National Advisory Committee on Accounting standards and relevant provisions of the Companies Act, 1956.

USE OF ESTIMATES

In preparing the Financial statements in conformity with accounting principles generally accepted in India, Management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as at the date of Financial statements and the amounts of revenue and expenses during the reported period. Actual results could differ from those estimates. Any revision to such estimates is recognised in the period the same is determined.

PRIOR PERIOD ADJUSTMENTS, EXCEPTIONAL ITEMS, EXTRAORDINARY ITEMS AND CHANGES IN ACCOUNTING POLICIES

Prior period adjustments, exceptional items, extraordinary items and changes in accounting policies having material impact on the financial affairs of the Company are disclosed.

FIXED ASSETS

Fixed Assets are stated at cost of acquisition or construction and in case of revaluation of assets at revalued amounts net of impairment loss if any, less depreciation/amortisation. Cost represents direct expenses incurred on acquisition or construction of the assets and the share of indirect expenses relating to construction allocated in proportion to the direct cost involved.

Assets acquired under lease are capitalised at the present value of minimum lease payments and are stated at the capitalised value net of accumulated depreciation.

Capital work-in-progress comprises the cost of fixed assets that are not yet ready for their intended use on the reporting date and materials at site.

DEPRECIATION

Depreciation on fixed assets other than land, certain buildings on leasehold lands and leased vehicles and machinery is provided on "straight Line Method" at the rates prescribed under schedule XIV of the Companies Act, 1956. Certain fixed assets including leased vehicles and leased machinery, building installed on leasehold land (other than on perpetual lease) are depreciated over the lives of the respective leases or over the remaining lease period from the date of installation whichever is shorter. Vehicles acquired on lease are depreciated over their respective lease period or sixty months from the date of acquisition whichever is earlier. Long term Leasehold land (other than on perpetual lease) are depreciated over the balance period of lease, commencing from the date the land is put to use for commercial purposes. the additional depreciation on the increase in the value of assets due to revaluation is adjusted against revaluation reserve.

REVENUE RECOGNITION

- Revenue from hospitality services is recognised when the services are rendered and the same becomes chargeable. revenue from sale of printing and other materials is recognised on despatch of materials. revenue from shop Licence Fee, Management and Marketing Fee included under "other services" is recognised on accrual basis as per terms of contract.

- Revenue from interest is accrued and recognised on time basis and determined by contractual rate of interest.

- Dividend income is stated at gross and is recognised when right to receive payment is established.

IMPAIRMENT OF ASSETS

Impairment is ascertained at each Balance sheet date in respect of the Company's fixed assets. An impairment loss is recognised whenever the carrying amount of an asset or cash generating unit exceeds its recoverable amount.

LEASES

In respect of assets acquired on or after 1st April, 2001, the same are capitalised at the lower of the fair value and present value of the minimum lease payments at the inception of the lease term. Lease payments are apportioned between the interest charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. interest component is charged to the profit and Loss account under interest and Finance charges.

Operating lease payments are recognised as expenditure in the statement of profit and Loss on straight line basis, over the lease period.

INVESTMENTS

Investments held by the Company which are long term in nature are stated at cost unless there is any permanent diminution in value where provision for diminution is made on individual investment basis. Current investments are valued at cost or market price or fair value, whichever is lower. Earnings on investments are accounted for on accrual basis.

INVENTORIES

inventories are valued at cost which is based on First-in-First-out method or net realisable value, whichever is lower. unserviceable/ damaged/discarded stocks and shortages are charged to the profit and Loss Account.

TRANSACTIONS IN FOREIGN CURRENCY

Sales made in foreign currency are converted at the prevailing applicable exchange rate. Gain/Loss arising out of fluctuations in exchange rate is accounted for on realisation.

Payments made in foreign currency including for acquiring investments are converted at the applicable rate prevailing on the date of remittance. Liability on account of foreign currency is converted at the exchange rate prevailing at the end of the year. Monetary items denominated in foreign currency are converted at the exchange rate prevailing at the end of the year.

Revenue expenditure of all the overseas sales offices are converted at the average exchange rate for the year. Assets and liabilities other than Fixed Assets are converted at the exchange rate prevailing at the close of the accounting year and Fixed Assets are converted at the month-end exchange rate of the month of acquisition.

Foreign currency loans covered by forward contracts are realigned at the forward contract rates, while those not covered by forward contracts are realigned at the rates ruling at the year end. the differences on realignment is accounted for in the statement of profit and Loss.

EMPLOYEE BENEFITS

Short term employee Benefit is recognised as expense in the statement of profit and Loss of the year in which related service is rendered.

Post employment and other Long term employee Benefits are provided in the Accounts in the following manner:

(i) Gratuity - Maintained as a defend benefit retirement plan and contribution is made to the Life insurance Corporation of India, as per Company's scheme. provision/ write back, if any, is made on the basis of the present value of the liability as at the Balance sheet date determined by actuarial valuation following projected unit Credit Method and is treated as liability under other Current Liability.

(ii) Leave encashment on termination of service - As per actuarial valuation as at the Balance sheet date following projected unit Credit Method.

(iii) Provident Fund - provident Fund for most of the employees is a defend Contribution scheme, where the contribution is made to a Fund administered by the Government provident Fund Authority.

For a few employees, provident Fund, administered by a recognised trust, is a defend Benefit plan wherein the employee and the Company make monthly contributions. Pending the issuance of Guidance Note from the Actuarial society of India, actuarial valuation is not carried out and the Company provides for required liability at year end, in respect of the shortfall, if any, upon confirmation from the trustees of such Fund.

BORROWING COST

Borrowing cost that is attributable to the acquisition / construction of fixed assets are capitalised as part of the cost of the respective assets. other borrowing costs are recognised as expenses in the year in which they arise.

SHARE ISSUE EXPENSES

Share issue expenses are written off against the securities premium Account in accordance with section 78 of the Companies Act, 1956.

TAXES ON INCOME

Income-tax is accounted for in accordance with Accounting standard on 'Accounting for taxes on income' notified pursuant to the Companies (Accounting standards) rules, 2006.

Minimum Alternate tax (MAT) is accounted for in accordance with tax laws which give rise to future economic benefits in the form of tax credit against which future income tax liability is adjusted and is recognised as an asset in the balance sheet.

deferred tax is provided and recognised on timing differences between taxable income and accounting income subject to prudential consideration. deferred tax assets on unabsorbed depreciation and carry forward of losses are not recognised unless there is virtual certainty about availability of future taxable income to realise such assets.

PROPOSED DIVIDEND

Dividend recommended by the Board of directors is provided for in the Accounts pending shareholders' approval.

PROVISIONS CONTINGENT LIABILITIES AND CONTINGENT ASSETS

provisions are recognised when there is a present legal or statutory obligation as a result of past events and where it is probable that there will be outflow of resources to settle the obligation and when a reliable estimate of the amount of the obligation can be made.

Contingent Liabilities are recognised only when there is a possible obligation arising from past events due to occurrence or non- occurrence of one or more uncertain future events not wholly within the control of the Company or where any present obligation cannot be measured in terms of future outflow of resources or where a reliable estimate of the obligation cannot be made. obligations are assessed on an on going basis and only those having a largely probable outflow of resources are provided for.

Contingent Assets are not recognised in the financial statements.

b) The Company has one class of equity shares having a par value of Rs. 2 per share. each share holder is eligible for one vote per share held and such dividend as proposed by the Board of directors, subject to the approval of the shareholders in the ensuing Annual General Meeting.

d) Out of the above shares of the company, 130,984,657 shares were issued as fully paid up Bonus shares by Capitalisation of securities premium Account in 2006-07.

e) 178,615,442 shares of face value Rs. 2 each have been alloted as fully paid up shares at a premium of Rs. 64 per share to the shareholders on rights basis during 2010-11.

Dividend of Rs. 1.10 per share (2011 - Rs. 0.90 per share) amounting to Rs.628.73 Million (2011 - Rs. 514.41 Million) has been recommended by the Board of directors. this dividend will be paid to the shareholders if approved at the forthcoming Annual General Meeting.

PARTICULARS OF TERM LOANS :

(i) Term Loan from ICICI Bank Limited carries interest at bank's base rate 2.5% repayable in 7 quarterly installments of Rs. 200 million each. repayment will be complete in December 2014.

(ii) The Finance Lease obligations are secured by hypothecation of vehicles taken under Lease. Repayments are done by equated monthly installment over 36 to 60 months.

PARTICULARS OF SECURITIES :

Term loan from ICICI Bank Limited is secured by way of equitable mortgage by deposit of title deeds in respect of the Company's hotel in delhi known as Maidens Hotel, ranking pari passu.

PARTICULARS OF SHORT TERM BORROWINGS :

Cash credit facilities are secured by way of hypothecation of all stock of inventories, book debts and other current assets of the company, both present and future, ranking pari passu. Cash Credit with united Bank of India is additionally secured by way of second charge in respect of the company's hotel in Kolkata known as the oberoi Grand. Cash Credit is repayable on demand and carries interest at floating rate linked to the base rates of the respective banks.

* others includes withholding and other taxes payable Rs. 177.64 Million (2011 - Rs. 227.35 Million)

* National savings Certifcates have been lodged with Government Authorities as security deposit.

* Inventories are valued at cost which is based on First-in-First-out method or net realisable value, whichever is lower.

EXCEPTIONAL ITEMS

Shortfall arising on final settlement of insurance claim for loss due to business interruption surplus arising on final settlement of insurance claim for damage profit on sale of property and Apartment

 
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