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Accounting Policies of Gallantt Ispat Ltd. Company

Mar 31, 2014

1) Disclosure of Accounting Policies (AS-1) :

a) Nature of Operation

Company is engaged in the business of manufacturing of iron & steel and agro products backed up by captive power plant through its factories located at Gallantt Estate, Sahjanwa, Sector-23, Gorakhpur Uttar Pradesh. Company procures its raw materials from various suppliers and coal used in the plants are purchased indigenously as well as imported from countries outside India. Manufactured goods are sold in domestic markets.

b) Accounting Concepts & Basis of Presentation

The financial statements are prepared in accordance with Generally Accepted Accounting Principles (GAAP) under the historical cost convention on the accrual basis. GAAP comprises mandatory accounting standards as specified in the Company (Accounting Standards) Rules 2006, the provisions of the Companies Act, 1956 and guidelines issued by the Securities and Exchange Board of India. Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use. The management evaluates all recently issued or revised accounting standards on an on-going basis. Where changes are made in presentation, the comparative figures of the previous year are regrouped and rearranged accordingly.

c) Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period end. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates.

2) Valuation of Inventories (AS-2) :

a) Stock of Raw Materials, Stores and spare parts are valued at cost. Costs of Inventories are ascertained on FIFO basis.

b) Stock of Finished goods and semi-finished goods are valued at cost or net realizable value whichever is lower.

c) Waste and scraps are accounted at estimated realizable value.

3) Cash Flow Statement (AS – 3) :

Cash flows are reported using indirect method, whereby profit before tax is adjusted for the effects of transactions of a non- cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flow from regular revenue generating, financing and investing activities of the Company is segregated.

Cash and cash equivalents in the balance sheet comprise cash at bank, cash/cheques in hand and short term investments with an original maturity of three months or less.

4) Contingencies And Events Occurring After Balance Sheet Date (AS -4) :

Disclosure of contingencies as required by the accounting standard is furnished in the Notes on accounts.

5) Net Profit Or Loss For The Period, Prior Period Items And Changes In Accounting Policies (AS –5) :

Net Profit or loss for the period and prior period items are shown separately in the Profit & Loss Account.

6) Depreciation (AS – 6) :

a) Depreciation on Fixed Assets is provided for on straight-line method in accordance with and generally at the rates specified in Schedule XIV to the Companies Act, 1956.

b) Depreciation in respect of additions to assets has been charged on pro rata basis with reference to the period of use of such assets. The provision for depreciation for multiple shifts has been made in respect of eligible assets on the basis of operation of respective units. In respect of continuous process plant, depreciation has been provided as per rates prescribed in Schedule XIV of the Companies Act, 1956. Amortization is provided on the Straight Line Method @ 16.21%.

7) Revenue Recognition (AS -9) :

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.

a) Sale of Goods : Sales are recognized and accounted for when they invoiced to customers and are net of excise duty, Commercial Tax (UP VAT) on dispatch of products to customers. Net Sales are shown after deducting Excise Duty which is disclosed at appropriate Places.

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

c) Dividends : Dividend from investment is recognized when the Company in which they are held declares the dividend and when the right to receive the same is established.

d) Insurance, duty drawback and other claims are accounted for on receipt basis or as acknowledged by the appropriate authorities.

8) Accounting For Fixed Assets (AS – 10) :

a) Fixed Assets are stated at their original cost of acquisition/installation less accumulated depreciation and net off subsidies, duties and taxes. The cost of assets comprises of purchase price and directly attributable cost of bringing the assets to working condition for its intended use.

b) Capital work in progress: All expenses incurred for acquiring, erecting and commissioning of the fixed assets including interest on loan utilized for meeting capital expenditure are shown under capital work in progress.

9) Accounting For The Effects In Foreign Exchange Rates (AS – 11) :

a) Transactions denominated in foreign currencies are normally recorded at the exchange rates prevailing at the time of the transactions.

b) Any income or expense on account of exchange difference either on settlement or on translation is recognised in the Profit and Loss account. However, in case of long term liabilities, where they relate to acquisition of fixed assets, the income or expense on account of exchange difference is adjusted to the carrying cost of such assets.

10) Accounting For Investments (AS – 13) :

Investments, being long term in nature, are valued at cost of acquisition. Adjustment for increase/decrease in the value of investments, if any, will be accounted for on realisation of the investments.

11) Employee Benefits (AS – 15) :

a) 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.

b) The Company contributes to the employee''s provident fund maintained under the Employees Provident Fund Scheme of the Central Government and the same is charged to the Profit & Loss Account. Provision for gratuity is made on the basis of actuarial valuation at the year end in conformity with the Accounting Standard -15.

12) Borrowing Costs (AS – 16) :

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset i s one that takes necessarily substantial period of time to get ready for its intended use. All other borrowing costs are charged as expense in the year in which these are incurred.

13) Segment Reporting (AS – 17) : a) Identification of Segments :

Primary Segment

Business Segment :

The Company''s operating businesses are organized and managed separately according to the nature of products, with each segment representing a strategic business unit that offers different products and serves different markets. The identified segments are Manufacturing & Sale of (a) Iron & Steel and allied products; (b) Agro Products like Atta, Suji, Maida, Bran etc., and (c) Power.

Secondary Segment

Geographical Segment :

The analysis of geographical segment is based on the geographical location of the customers. The geographical

segments considered for disclosure are as follows :

- Sales within India include sales to customers located within India.

- Sales outside India include sales to customers located outside India.

b) Allocation of Common costs :

Common allocable costs are allocated to each segment according to the ratio of their respective turnover to the total turnover.

c) Unallocated items :

The Unallocated Segment includes general corporate income and expense items, which are not allocated to any business segment.

14) Related Party Disclosures (AS – 18) :

Disclosure of related parties as required by the accounting standard is furnished in the Notes on accounts.

15) Earnings Per Share (AS – 20) :

Basic and Diluted Earnings per shares are calculated by dividing the net profit attributable to the ordinary shareholders by the weighted average number of ordinary shares outstanding during the year.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

16) Accounting For Taxes On Income (AS – 22) :

Provision for current income tax is determined on the basis of the amount of tax payable on taxable Income for the year.

The differences that result between the profit considered for income taxes and the profit as per the financial statements are identified, and thereafter a deferred tax asset or deferred tax liability is recorded for timing differences, namely the differences that originate in one accounting period and reverse in another, based on the tax effect of the aggregate amount being considered. The tax effect is calculated on the accumulated timing differences at the end of an accounting period based on prevailing enacted or substantially enacted regulations. Deferred Tax Assets are recognized only if there is reasonable certainty that they will be realized and are reviewed for the appropriateness of their respective carrying values at each balance sheet date. The income tax provision for the interim period is made based on the best estimate of the annual average tax rate expected to be applicable for the full fiscal year.

17) Interim Financial Reporting (AS – 25) :

The quarterly financial results are published in accordance with the requirements of listing agreements with stock exchanges.

18) Intangible Assets (AS – 26) :

a) Internally generated intangible asset under development stage is recognized when it is demonstrated that it is technically feasible to use the same and the cost incurred for developing the same is ascertained. Technical Know-how so developed internally is amortized on a straight- line basis over its estimated useful life.

b) Intangible assets acquired by payment e.g., Trade marks, Goodwill and Technical Know-how are disclosed at cost less amortization on a straight-line basis over its estimated useful life.

19) Excise Duty, Commercial Tax (Up Vat & CST) & Custom Duty :

a) The CENVAT credit available on purchase of raw materials and other eligible inputs is adjusted against excise duty payable on clearance of goods produced. The unadjusted CENVAT credit is shown under the head "Short Term Loans and Advances".

b) The Company is eligible for automatic conversion of UP VAT & CST Liability for a period of 15 years into interest free loan from State Government of Uttar Pradesh, which shall be repayable after 15 years.

20) Consumption Of Raw Materials, Stores & Spare Parts Etc.:

Raw Materials, Stores and spare parts etc., consumed are exclusive of (a) Excise Duty on inputs under Cenvat Scheme, (b) Service tax input credits, (c) Insurance Claims received (d) Entry Tax under Uttar Pradesh Local Sales Tax Act and (f) VAT Input Credit under State laws, wherever applicable.

21) Service Tax & Cess :

Various expenses are accounted for after deducting the input tax credit available in respect of Service Tax, Education Cess and Secondary & Higher Education Cess.

22) Preliminary Expenses :

Preliminary expenses are amortized over a period of 5 years.

23) Impairment :

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value being higher of value in use and net selling price. An impairment loss is recognized as an expense in the Profit and Loss Account in the year in which an asset is impaired. The impairment loss recognized in prior accounting period is reversed if there has been an improvement in recoverable amount.

24) Prior Period Items :

Prior period items, if any, are included in respective heads of accounts and material items are disclosed by way of notes on accounts.

25) Taxation :

a) Tax expenses comprise of income tax, corporate dividend tax, deferred tax including applicable surcharge and cess.

b) Income tax is computed using the tax effect accounting method, where taxes are accrued in the same period the related revenue and expenses arise. A provision is made for income tax annually, based on the tax liability computed, after considering tax allowances and exemptions. Provisions are recorded when it is estimated that a liability due to disallowances or other matters is probable.

c) Provision for deferred tax or credit for release thereof is accounted for as ascertained in accordance with principles stated hereinabove.

d) Tax on distributed profits payable in accordance with the provisions of section 115O of the Income Tax Act, 1961 is in accordance with the Guidance Note on "Accounting for Corporate Dividend Tax" regarded as a tax on distribution of profits and is not considered in determination of profits for the period.


Mar 31, 2013

A Basis of Preparation of Financial Statement:

a) The financial statements have been prepared in compliance with all material aspects of the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India (ICAI) and relevant provision of the Companies Act 1956 and in accordance with the generally accepted accounting principles in India.

b) The financial statements are based on historical cost and are prepared on accrual basis B Revenue Recognition:

a) Sale of goods is recognized when they are invoiced to customers and are net of excise duty'' Commercial Tax (UP VAT).

b) Insurance'' duty drawback and other claims are accounted for on receipt basis or as acknowledged by the appropriate authorities.

C Fixed Assets:

a) Fixed Assets are stated at their original cost of acquisition/installation less accumulated depreciation and net off subsidies duties and taxes. The cost of assets comprises of purchase price and directly attributable cost of bringing the assets to working condition for its intended use.

b) Capital work in progress:

All expenses incurred for acquiring'' erecting and commissioning of the fixed assets including interest on loan utilized for meeting capital expenditure are shown under capital work in progress. The advance given for acquiring fixed assets is also shown along with capital work in progress.

D Depreciation:

Depreciation on fixed assets has been provided on straight line method (SLM) at the rates and manner prescribed under Schedule XIV to the Companies Act'' 1956 of India. Intangible Assets are stated at cost of acquisition less accumulated amortization. Amortization is provided on the Straight Line Method @ 16.21%

E Preliminary Expenses:

Preliminary expenses are amortized over a period of 5 years F Investments:

a) Long Term Investments are carried at cost after deducting provision'' if any'' for diminution in value considered to be other than temporary in nature.

b) Current Investments are stated at lower of cost and fair value.

G Impairment:

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value being higher of value in use and net selling price. An impairment loss is recognized as an expense in the Statement of Profit and Loss in the year in which an asset is impaired. The impairment loss recognized in prior accounting period is reversed if there has been an improvement in recoverable amount.

H Earning per share:

Basic and Diluted Earnings per shares are calculated by dividing the net profit attributable to the ordinary shares by the weighted average number of ordinary shares outstanding during the year.

I Borrowing Cost:

Borrowing Costs that are directly attributable to the acquisition or construction of Qualifying Assets are capitalized as part of cost of such assets. Other Borrowing Costs are charged as expense in the year in which these are incurred.

J Valuation of Inventories:

a) Raw materials'' Stores & Spares and packing material are valued at cost. Costs of Inventories are ascertained on FIFO basis.

b) Work-in-progress is valued at cost which includes cost of inputs and other overheads up to the stage of completion.

c) Finished Goods are valued at lower of cost and net realizable value K Excise Duty'' Commercial Tax (UP VAT & CST) & Custom Duty :

a) "The CENVAT credit available on purchase of raw materials and other eligible inputs is adjusted against excise duty payable on clearance of goods produced. The unadjusted CENVAT credit is shown under the head "Short Term Loans and Advances".

b) The company is eligible for automatic conversion of UP VAT & CSAT Liability for a period of 15 years into interest free loan from State Government of Uttar Pradesh'' which shall be repayable after 15 years.

L Taxation:

a) Provision for current income tax is determined on the basis of the amount of tax payable on taxable Income for the year.

b) In accordance with Accounting Standard 22 on "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India'' deferred tax liabilities and assets are recognized at substantively enacted tax rate'' subject to the consideration of prudence'' on timing difference'' being the difference between the taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. At each balance sheet date the Company re-assesses unrecognized deferred tax assets.

M Foreign Currency Transaction:

Transactions in foreign currency are recorded at the rate of exchange prevailing on the date of transaction. Year end balance of foreign currency transaction is translated at the year end rates. Exchange differences arising on settlement / conversion of monetary items are recognized as income or expense in the year in which they arise except in cases where they relate to acquisition of fixed assets in which case they are adjusted to the carrying cost of such assets.

N Employee Benefits:

"The company contributes to the employee''s provident fund maintained under the Employees Provident Fund Scheme of the Central Government and the same is charged to the Profit & Loss Account. Provision for gratuity is made on the basis of actuarial valuation at the year end in conformity with the Accounting Standard -15."

O Prior Period Items:

Prior period itemsjf any'' are included in respective heads of accounts and material items are disclosed by way of notes on accounts.

P Contingent Liabilities:

Contingent Liabilities are determined on the basis of available information and which are not provided for is disclosed by way of notes to the Accounts.


Mar 31, 2012

A. Basis of Preparation of Financial Statement:

a) The financial statements have been prepared in compliance with all material aspects of the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India (ICAI) and relevant provision ofthe Companies Act, 1956 and in accordance with the generally accepted accounting principles in India.

b) The financial statements are based on historical cost and are prepared on accrual basis

B. Revenue Recognition :

a) Sale of goods is recognized when they are invoiced to customers and are net of excise duty, Commercial Tax (UP VAT).

b) Insurance, duty drawback and other claims are accounted for on receipt basis or as acknowledged by the appropriate authorities.

C. Fixed Assets:

a) Fixed Assets are stated at their original cost of acquisition/installation less accumulated depreciation and net off subsidies duties and taxes. The cost of assets comprises of purchase price and directly attributable cost of bringing the assets to working condition for its intended use.

b) Capital work in progress :

All expenses incurred for acquiring, erecting and commissioning of the fixed assets including interest on loan utilized for meeting capital expenditure are shown under capital work in progress. The advance given for acquiring fixed assets is also shown along with capital work in progress.

D. Depreciation :

Depreciation on fixed assets has been provided on straight line method (SLM) except in case of assets of Power Plant on which depreciation has been provided on Written Down Value method (WDV) at the rates and manner prescribed under Schedule XIV to the Companies Act, 1956 of India.

Intangible Assets are stated at cost of acquisition less accumulated amortization.

Amortization is provided on the Straight Line Method @ 16.21%

E. Preliminary Expenses:

Preliminary expenses are amortized over a period of 5 years

F. Investments:

a) Long Term Investments are carried at cost after deducting provision, if any, for diminution in value considered to be other than temporary in nature.

b) Current Investments are stated at lower of cost and fair value.

G. Impairment:

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value being higher of value in use and net selling price. An impairment loss is recognized as an expense in the Statement of Profit and Loss in the year in which an asset is impaired. The impairment loss recognized in prior accounting period is reversed if there has been an improvement in recoverable amount.

H. Earnings per share:

Basic and Diluted Earnings per shares are calculated by dividing the net profit attributable to the ordinary shareholders by the weighted average number of ordinary shares outstanding during the year.

I. Borrowing Cost:

Borrowing Costs that are directly attributable to the acquisition or construction of Qualifying Assets are capitalized as part of cost of such assets. Other Borrowing Costs are charged as expense in the year in which these are incurred.

J. Valuation of Inventories :

a) Raw materials, Stores & Spares and packing material are valued at cost. Costs of Inventories are ascertained on FIFO basis.

b) Work-in-progress is valued at cost which includes cost of inputs and other overheads up to the stage of completion.

c) Finished Goods are valued at lower of cost and net realizable value.

K. Excise Duty, Commercial Tax (UP VAT) & Custom Duty :

a) The CENVAT credit available on purchase of raw materials and other eligible inputs is adjusted against excise duty payable on clearance of goods produced. The unadjusted CENVAT credit is shown under the head "Loans and Advances".

b) The company is eligible for interest free loan from State Government of Uttar Pradesh of the equivalent amount of the VAT liability paid for 15 years which shall be repayable after 15 years.

L. Taxation:

a) Provision for current income tax is determined on the basis of the amount of tax payable on taxable Income for the year.

b) In accordance with Accounting Standard 22 on "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India, deferred tax liabilities and assets are recognized at substantively enacted tax rate, subject to the consideration of prudence, on timing difference, being the difference between the taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. At each balance sheet date the Company re-assesses unrecognized deferred tax assets.

M. Foreign Currency Transaction :

Transactions in foreign currency are recorded at the rate of exchange prevailing on the date of transaction. Yearend balance of foreign currency transaction is translated at the yearend rates. Exchange differences arising on settlement / conversion of monetary items are recognized as income or expense in the year in which they arise except in cases where they relate to acquisition of fixed assets in which case they are adjusted to the carrying cost of such assets.

N. Employee Benefits:

The company contributes to the employee's provident fund maintained under the Employees Provident Fund Scheme of the Central Government and the same is charged to the Statement of Profit & Loss. Provision for gratuity is made on the basis of actuarial valuation at the year end in conformity with the Accounting Standard -15.

O. Prior Period Items :

Prior period items, if any, are included in respective heads of accounts and material items are disclosed by way of notes on accounts.

P. Contingent Liabilities:

Contingent Liabilities are determined on the basis of available information and which are not provided for is disclosed by way of notes to the Accounts.


Mar 31, 2011

A. Basis of Preparation of Financial Statement:

a) The financial statements have been prepared in compliance with all material aspects of the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India (ICAI) and relevant provision of the Companies Act, 1956 and in accordance with the generally accepted accounting principles in India.

b) The financial statements are based on historical cost and are prepared on accrual basis.

B. Revenue Recognition:

a) Sale of goods is recognized when they are invoiced to customers and are net of excise duty, Commercial Tax (UP VAT).

b) Insurance, duty drawback and other claims are accounted for on receipt basis or as acknowledged by the appropriate authorities.

C. Fixed Assets:

a) Fixed Assets are stated at their original cost of acquisition/installation less accumulated depreciation and net off subsidies duties and taxes. The cost of assets comprises of purchase price and directly attributable cost of bringing the assets to working condition for its intended use.

b) Capital work in progress:

All expenses incurred for acquiring, erecting and commissioning of the fixed assets including interest on loan utilized for meeting capital expenditure are shown under capital work in progress. The advance given for acquiring fixed assets is also shown along with capital work in progress.

D. Depreciation:

Depreciation on fixed assets has been provided on straight line method (SLM) at the rates and manner prescribed under Schedule XIV to the Companies Act, 1956 of India.

E. Preliminary Expenses:

Preliminary expenses are amortized over a period of 5 years.

F. Investments:

a) Long Term Investments are carried at cost after deducting provision, if any, for diminution in value considered to be other than temporary in nature.

b) Current Investments are stated at lower of cost and fair value.

G. Impairment:

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value being higher of value in use and net selling price. An impairment loss is recognized as an expense in the Profit and Loss Account in the year in which an asset is impaired. The impairment loss recognized in prior accounting period is reversed if there has been an improvement in recoverable amount.

H. Earning per share:

Basic and Diluted Earnings per shares are calculated by dividing the net profit attributable to the ordinary shareholders by the weighted average number of ordinary shares outstanding during the year.

I. Borrowing Cost:

Borrowing Costs that are directly attributable to the acquisition or construction of Qualifying Assets are capitalized as part of cost of such assets. Other Borrowing Costs are charged as expense in the year in which these are incurred.

J. Valuation of Inventories:

a) Raw materials, Stores & Spares and packing material are valued at cost. Costs of Inventories are ascertained on FIFO basis.

b) Work-in-progress is valued at cost which includes cost of inputs and other overheads upto the stage of completion.

c) Finished Goods are valued at lower of cost and net realizable value. K. Excise Duty, Commercial Tax (UP VAT) & Custom Duty :

i) The CENVAT credit available on purchase of raw materials and other eligible inputs is adjusted against excise duty payable on clearance of goods produced. The unadjusted CENVAT credit is shown under the head "Loans and Advances".

ii) The company is eligible for interest free loan from State Government of Uttar Pradesh of the equivalent amount of the VAT liability paid for 15 years which shall be repayable after 15 years. L. Taxation:

(a) Provision for current income tax is determined on the basis of the amount of tax payable on taxable Income for the year.

(b) In accordance with Accounting Standard 22 on "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India, deferred tax liabilities and assets are recognized at substantively enacted tax rate, subject to the consideration of prudence, on timing difference, being the difference between the taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. At each balance sheet date the Company re-assesses unrecognized deferred tax assets.

M. Foreign Currency Transaction:

Transactions in foreign currency are recorded at the rate of exchange prevailing on the date of transaction. Year end balance of foreign currency transaction is translated at the year end rates. Exchange differences arising on settlement / conversion of monetary items are recognized as income or expense in the year in which they arise except in cases where they relate to acquisition of fixed assets in which case they are adjusted to the carrying cost of such assets.

N. Employee Benefits:

The company contributes to the employee's provident fund maintained under the Employees Provident Fund Scheme of the Central Government and the same is charged to the Profit & Loss Account. Provision for gratuity is made on the basis of actuarial valuation at the year end in conformity with the Accounting Standard -15.

0. Prior Period Items:

Prior period itemsjf any, are included in respective heads of accounts and material items are disclosed by way of notes on accounts.

P. Contingent Liabilities:

Contingent Liabilities are determined on the basis of available information and which are not provided for is disclosed by way of notes to the Accounts.


Mar 31, 2009

1.1 Basis of Accounting:

The financial statements have been prepared on accrual basis of accounting in accordance with the generally accepted accounting principles in India and the requirements of the Companies Act,1956 including the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India (ICAI) as referred to in Section 211 (3C) of the Companies Act, 1956.

1.2 Recognition of Revenue:

Sale of product is recognized when they are invoiced to customers and are net of sales return.

1.3 Fixed Assets:

a) Fixed Assets are stated at cost of acquisition less accumulated depreciation. The cost of assets is inclusive of all expenses but net of Value Added Tax.

b) Capital Work in Progress

All expenses incurred for acquiring, erecting and commissioning of the fixed assets including interest on loan utilized for meeting capital expenditure and incidental expenditure incurred during the implementation of the projects are shown under capital work in progress and are allocated/ will be allocated to the fixed assets on completion of the respective units. The advance given for acquiring fixed assets is also shown along with capital work in progress.

1.4 Depreciation:

Depreciation is provided on Straight Line method at the rates and in the manner Specified in Schedule XIV to the Companies Act, 1956 on pro-rata basis.

1.5 Impairment:

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value being higher of value in use and net selling price. Value in use is computed at net present value of cash flow expected over the balance useful life of the assets. An impairment loss is recognized as an expense in the Profit and Loss Account in the year in which an asset is impaired.

1.6 Investments:

a) Long term Investments are carried at cost after deducting provision, if any, for diminution in value considered to be other than temporary in nature.

b) Current Investments are stated at lower of cost and fair value.

1.7 Earning per share:

Basic and Diluted Earnings per shares are calculated by dividing the net profit attributable to the ordinary shareholders by the weighted average number of ordinary shares outstanding during the year.

1.8 Valuation of Inventories:

Raw Materials and Finished Goods are valued at lower of cost or net realizable value. Packing Materials are valued at cost. Cost of Raw Material is determined on FIFO basis and appropriate overheads are taken into account.

1.9 Taxation:

(a) Provision for current income tax is determined on the basis of tax payable in respect of taxable income for the year.

(b) In accordance with Accounting Standard 22 on "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India, deferred tax liabilities and assets are recognized at substantively enacted tax rate, subject to the consideration of prudence, on timing difference, being the difference between the taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

(c) Fringe benefit tax (FBT) is accounted for on the estimated value of fringe benefits for the period as per the related provision of the Income tax Act.

1.10 Foreign Currency Transaction:

Transactions in foreign currency are recorded at the rate of exchange prevailing on the date of transaction. Year end balance of foreign currency transaction is translated at the year end rates. Exchange differences arising on settlement / conversion of monetary items are recognized as income or expense in the year in which they arise except in cases where they relate to acquisition of fixed assets in which case they are adjusted to the carrying cost of such assets.

1.11 Employee Benefits:

Contribution to Provident Fund and Employee State Insurance Fund are accounted for on accrual basis and charged to Profit & Loss Account.

1.12 Borrowing Cost:

Finance Cost relating to borrowed funds for construction or acquisition of fixed assets incurred on projects is treated as pre-operative expenses and is allocated to the fixed assets on completion of respective units.

1.13 Prior Period Items:

Prior period items are included in the respective heads of accounts and material items are disclosed by way of notes to accounts.

1.14 Preliminary Expenses:

Preliminary Expenses shall be amortized over a period of five years starting from financial year 2009-10.

1.15 Contingent Liabilities:

Contingent Liabilities not provided for are reflected in Notes to Accounts.

 
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