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Accounting Policies of Garware Polyester Ltd. Company

Mar 31, 2015

A. Basis of presentation of Financial Statements

The financial statements are prepared under the historical cost convention modified by revaluation of fixed assets and in accordance with notified Accounting Standards by Companies (Accounting Standard) Rules, 2006 and relevant presentation requirements of the Companies Act, 2013. The company generally follows the mercantile system of accounting and recognizes significant items of income and expenditure on accrual basis.

B. Use Estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known / materialized.

C. Fixed Assets and Depreciation / Amortization

Fixed Assets are stated at cost net of MODVAT / CENVAT and includes amounts added on revaluation, less accumulated depreciation. Cost comprises of the purchase price and any directly attributable cost of bringing the assets to working condition for its intended use including interest and other incidental and trial run expenses up to the date of commercial production. Surplus on revaluation of assets is credited to Capital / Revaluation Reserve.

Depreciation / Amortization:

i) Tangible Assets:

Depreciation on Fixed Assets is provided as per useful life specified in Part C of Schedule II of the Companies Act, 2013.

No write-off is being made in respect of leasehold land.

ii) Intangible Assets:

Computer software @ 20% p.a.

D. Impairment of Assets

Impairment loss, if any, is provided to the extent, the carrying amount of assets exceeds their recoverable amount. Recoverable amount is higher of an asset's net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life.

E. Investments

Investments are considered as non-current investments and are stated at cost of acquisition. Market value of Quoted Investments at the date of the Balance Sheet is disclosed. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary in the opinion of the Management.

F. Inventories

i) Raw Materials and Packing Materials are valued at the lower of cost and net realizable value. Cost is determined on a moving weighted average basis. Cost includes the cost of purchase and other expenses directly attributable to their acquisition but excludes duties & taxes, which are subsequently recoverable from the taxing authorities.

ii) Stores and Spares are valued at cost computed on a moving weighted average basis. Cost includes the cost of purchase and other expenses directly attributable to their acquisition but excludes duties and taxes that are subsequently recoverable from the taxing authorities.

iii) Semi-finished goods including those held for captive consumption is valued at factory cost including depreciation.

iv) Finished goods are valued at the lower of cost and net realizable value. Cost includes direct material & labour cost and a proportion of manufacturing overheads.

v) Purchases of finished goods are valued at the lower of cost and net realizable value.

G. Foreign Currency Transactions

i) Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction or that approximates the actual rate at the date of the transaction.

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

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

iv) In respect of branch, which is integral foreign operations, all transactions are translated at rates prevailing on the date of transactions or that approximates the actual rate at the date of transactions. Branch monetary assets and liabilities are restated at the year-end rates.

v) The company has opted for accounting exchange rate differences arising on reporting of long term Foreign Currency Monetary Items in line with Companies (Accounting Standard) Amendment Rules, 2009 on Accounting Standard - 11 (AS-11) notified by Govt. of India on March 31,2009. Accordingly, the effect of exchange differences on Foreign Currency Loans of the company is accounted by addition or deduction to the cost of assets so far it relates to depreciable capital assets and in other cases by charging to statement of profit and loss as gain or loss on account of exchange difference.

vi) Investments in shares of foreign subsidiary company are expressed in Indian Currency at the rate of exchange prevailing at the time when the original investments were made.

H. Duties

Excise duty on finished goods and custom duty on imported materials has been accounted on the basis of payments made in respect of goods cleared as also provision made for goods lying in Bonded Warehouse.

I. Employee Benefits

i) Short Term Employee Benefits:

All benefits paid / payable wholly within 12 months of rendering the service are classified as short term. Benefits such as salaries, wages, short-term compensated absences, etc. and the expected cost of bonus, ex-gratia, medical, LTA are recognized undiscounted during the period in which the employee renders the related service and charged to statement of Profit and Loss.

ii) Defined Contribution Plans:

Company contributes Provident Fund in accordance with EPF Act, 1952 and ESIC Schemes in accordance with ESIC Act, 1948 under Government administered schemes, however certain employees are covered under the contributory plans with the trust "Garware Polyester Limited Office Staff & Officers Provident Fund". Contributions are accounted on accrual / paid basis and charged to statement of Profit & Loss.

iii) Defined Benefit Plans:

a. Liability towards Superannuation and Gratuity are covered by appropriate schemes with Life Insurance Corporation of India on accrual basis. Gratuity plans are determined by actuarial valuation by using the Projected Unit Credit method.

b. Leave encashment benefits are accounted on actuarial valuation basis.

J. Lease Rentals

Lease Rentals are accounted on accrual basis over the Lease Term as per the relevant Lease Agreements.

K. Research & Development

Revenue expenditure on Research and Development is charged out in the accounting year in which it is incurred. Expenditure, which results in creation of assets, is included in Fixed Assets and depreciation is provided on such assets as applicable.

L. Revenue Recognition:

i) Sale of Products

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 are accounted for inclusive of Excise Duty and VAT / Sales Tax (wherever not charged separately), and are net of discounts and returns.

ii) Export Benefits

Export entitlements under the Duty Draw Back Scheme / Other Schemes are recognized as income when the right to receive credit as per the terms of the scheme is established in respect of the exports made and where there is no significant uncertainty regarding the ultimate collection of the relevant export proceeds.

iii) Others

Revenue from services is recognised on rendering of services.

Dividend income is recognised when the right to receive payment is established.

Interest income is recognised on the time proportion basis.

M. Taxation

a) Deferred tax is recognized, subject to the consideration of prudence, on timing differences, 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.

b) Current tax is determined as the amount of tax payable in respect of taxable income for the period. The credit is taken as per entitlement for the tax liability provided under MAT based on taxable income as per the provisions of Income Tax Act, 1961.

N. Borrowing Cost

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to Profit and Loss account.

O. Measurement of EBITDA

The company has elected to present Earnings before Interest (Finance cost), Tax, Depreciation and Amortization (EBITDA) as a separate line item on the face of the Statement of Profit and Loss for the year. The company measures EBITDA on the basis of Profit / (Loss) from continuing operations.

P. Provisions, Contingent Liabilities & Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.

Q. Earnings Per Share

Earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting preference dividend and attributable taxes) by the weighted average number of equity shares outstanding during the year.


Mar 31, 2014

A. Basis of presentation of Financial Statements

The financial statements are prepared under the historical cost convention modifed by revaluation of fixed assets and in accordance with notifed Accounting Standards by Companies (Accounting Standard) Rules, 2006 and relevant presentation requirements of the Companies Act, 1956. The company generally follows the mercantile system of accounting and recognizes significant items of income and expenditure on accrual basis.

B. Use Estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known / materialized.

C. Fixed Assets and Depreciation / Amortization

Fixed Assets are stated at cost net of MODVAT / CENVAT and includes amounts added on revaluation, less accumulated depreciation. Cost comprises of the purchase price and any directly attributable cost of bringing the assets to working condition for its intended use including interest and other incidental and trial run expenses up to the date of commercial production. Surplus on revaluation of assets is credited to Capital / Revaluation Reserve.

Depreciation / Amortization :

i) Tangible Assets- On Capital Expenditure on R & D and Assets other than Plant & Machinery on Written Down Value method as per rates prescribed under Schedule XIV of the Companies Act, 1956.

On Plant & Machinery on Straight Line Method as per rates prescribed under Schedule XIV of the Companies Act, 1956. No write-off is being made in respect of leasehold land. Assets costing Rs. 5000/- or less are depreciated fully in the year of acquisition.

ii) Intangible Assets- Goodwill to be amortized at 1/5th per annum or as per the decision of Board of Directors. On Technical know-how / Product Development Expenses @ 1/6th per annum. On Copyright Expenditure @ 1/5th per annum. Computer Software @20% per annum.

D. Impairment of assets

Impairment loss, if any, is provided to the extent, the carrying amount of assets exceeds their recoverable amount. Recoverable amount is higher of an asset''s net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life.

E. Investments

Investments are considered as non-current investments and are stated at cost of acquisition. Market value of Quoted Investments at the date of the Balance Sheet is disclosed. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary in the opinion of the Management.

F. Inventories:

i) Raw Materials and Packing Materials are valued at the lower of cost and net realizable value. Cost is determined on a moving weighted average basis. Cost includes the cost of purchase and other expenses directly attributable to their acquisition but excludes duties & taxes, which are subsequently recoverable from the taxing authorities.

ii) Stores and Spares are valued at cost computed on a moving weighted average basis. Cost includes the cost of purchase and other expenses directly attributable to their acquisition but excludes duties and taxes that are subsequently recoverable from the taxing authorities.

iii) Semi-fnished goods including those held for captive consumption is valued at factory cost including depreciation.

iv) Finished goods are valued at the lower of cost and net realizable value. Cost includes direct material & labour cost and a proportion of manufacturing overheads. v) Purchase of fnished goods are valued at the lower of cost and net realizable value.

G. Foreign Currency Transactions

i) Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction or that approximates the actual rate at the date of the transaction.

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

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

iv) In respect of branch, which is integral foreign operations, all transactions are translated at rates prevailing on the date of transactions or that approximates the actual rate at the date of transactions. Branch monetary assets and liabilities are restated at the year end rates.

v) The company has opted for accounting exchange rate differences arising on reporting of Long Term Foreign Currency Monetary Items in line with Companies (Accounting Standard) Amendment Rules, 2009 on Accounting Standard 11 (AS-11) notifed by the Government of India on March 31, 2009. Accordingly, the effect of exchange differences on Foreign Currency Loans of the company is accounted by addition or deduction to the cost of assets so far it relates to depreciable capital assets and in other cases by charging to statement of profit and loss as gain or loss on account of exchange difference.

vi) Investments in shares of foreign subsidiary company are expressed in Indian Currency at the rate of exchange prevailing at the time when the original investments were made.

H. Duties

Excise duty on fnished goods and custom duty on imported materials has been accounted on the basis of payments made in respect of goods cleared as also provision made for goods lying in Bonded Warehouse.

I. Employee benefits:

i) Short Term Employee benefits:

All benefits paid / payable wholly within 12 months of rendering the service are classifed as short term. benefits such as salaries, wages, short-term compensated absences, etc. and the expected cost of bonus, ex-gratia, medical, LTA are recognized undiscounted during the period in which the employee renders the related service and charged to statement of profit and Loss.

ii) Defined Contribution Plans:

Company contributes Provident Fund in accordance with EPF Act, 1952 and ESIC Schemes in accordance with ESIC Act, 1948 under Government administered schemes, however certain employees are covered under the contributory plans with the trust "Garware Polyester Limited office Staff & officers Provident Fund". Contributions are accounted on accrual / paid basis and charged to statement of profit & Loss.

iii) Defined benefit Plans:

a. Liability towards Superannuation and Gratuity are covered by appropriate schemes with Life Insurance Corporation of India on accrual basis. Gratuity plans are determined by actuarial valuation by using the Projected Unit Credit method.

b. Leave encashment benefits are accounted on actuarial valuation basis.

J. Lease Rentals

Lease Rentals are accounted on accrual basis over the Lease Term as per the relevant Lease Agreements.

K. Research & Development

Revenue expenditure on Research and Development is charged out in the accounting year in which it is incurred. Expenditure, which results in creation of assets, is included in Fixed Assets and depreciation is provided on such assets as applicable.

L. Revenue Recognition i) Sale of products

Revenue is recognized to the extent that it is probable that the economic benefits will fow to the company and the revenue can be reliably measured are accounted for inclusive of excise duty and VAT / Sales Tax (wherever not charged separately), and are net of discounts and returns.

ii) Export benefits

Export entitlements under the Duty Drawback Scheme / other scheme are recognized as income when the right to receive credit as per the terms of the scheme is established in respect of the exports made and where there is no significant uncertainty regarding the ultimate collection of the relevant export proceeds.

iii) Others

Revenue from services is recognised on rendering of services.

Dividend income is recognised when the right to receive payment is established.

Interest income is recognised on the time proportion basis.

M. Taxation

a) Deferred tax is recognized, subject to the consideration of prudence, on timing differences, 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.

b) Current tax is determined as the amount of tax payable in respect of taxable income for the period. The credit is taken as per entitlement for the tax liability provided under MAT based on taxable income as per the provisions of Income Tax Act, 1961.

N. Borrowing Cost

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to profit and Loss account.

O. Measurement of EBITDA

The company has elected to present earnings before Interest (Finance cost), Tax, Depreciation and Amortization (EBITDA) as a separate line item on the face of the Statement of profit and Loss for the year. The company measures EBITDA on the basis of profit / (Loss) from continuing operations.

P. Provisions, Contingent Liabilities & Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.

Q. Earning per Share

Earnings per Share are calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting preference dividend and attributable taxes) by the weighted average number of equity shares outstanding during the year.


Mar 31, 2013

A. Basis of presentation of Financial Statements

The fnancial statements are prepared under the historical cost convention modifed by revaluation of fxed assets and in accordance with notifed Accounting Standards by companies (Accounting Standard ) Rules'' 2006 and relevant presentation requirements of the Companies Act'' 1956.

The company generally follows the mercantile system of accounting and recognizes signifcant items of income and expenditure on accrual basis.

B. Use of Estimates

The preparation of fnancial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the fnancial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known / materialized.

C. Fixed Assets and Depreciation / Amortization

Fixed Assets are stated at cost net of MODVAT / CENVAT and includes amounts added on revaluation'' less accumulated depreciation. Cost comprises of the purchase price and any directly attributable cost of bringing the assets to working condition for its intended use including interest and other incidental and trial run expenses up to the date of commercial production. Surplus on revaluation of assets is credited to Capital / Revaluation Reserve.

Depreciation / Amortization :

i) Tangible Assets- On Capital Expenditure on R&D and Assets other than Plant & Machinery on Written Down Value method as per rates prescribed under Schedule XIV of the Companies Act'' 1956.

On Plant & Machinery on Straight Line Method as per rates prescribed under Schedule XIV of the Companies Act'' 1956. No write-off is being made in respect of leasehold land. Assets costing Rs.5000/- or Less is depreciated fully in the year of acquisition. ii) Intangible Assets- Goodwill to be amortized at 1/5th per annum or as per the decision of Board of Directors. On Technical Know-how/Product Development Expenses @ 1/6th per annum. On Copyright Expenditure @ 1/5th per annum. Computer software @20% per annum.

D. Impairment of assets

Impairment loss'' if any'' is provided to the extent'' the carrying amount of assets exceeds their recoverable amount. Recoverable amount is higher of an asset’s net selling price and its value in use. Value in use is the present value of estimated future cash fows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life.

E. Investments

Investments are considered as non-current investments and are stated at cost of acquisition. Market value of Quoted Investments at the date of the Balance Sheet is disclosed. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary in the opinion of the Management.

F. Inventories:

i) Raw materials and packing materials are valued at the lower of cost and net realizable value. Cost is determined on a moving weighted average basis. Cost includes the cost of purchase and other expenses directly attributable to their acquisition but excludes duties & taxes'' which are subsequently recoverable from the taxing authorities.

ii) Stores and Spares are valued at cost computed on a moving weighted average basis. Cost includes the cost of purchase and other expenses directly attributable to their acquisition but excludes duties and taxes that are subsequently recoverable from the taxing authorities.

iii) Semi-fnished goods including those held for captive consumption is valued at factory cost including depreciation.

iv) Finished goods is valued at the lower of cost and net realizable value. Cost includes direct material & labour cost and a proportion of manufacturing overheads.

v) Purchase of fnished goods are valued at the lower of cost and net realizable value.

G. Foreign Currency Transactions

i) Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction or that approximates the actual rate at the date of the transaction.

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

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

iv) In respect of branch'' which is integral foreign operations'' all transactions are translated at rates prevailing on the date of transactions or that approximates the actual rate at the date of transactions. Branch monetary assets and liabilities are restated at the year end rates.

v) The company has opted for accounting exchange rate differences arising on reporting of long term Foreign Currency Monetary Items in line with Companies (Accounting Standard) Amendment Rules 2009 on Accounting Standard 11 (AS-11) notifed by Govt. of India on March 31'' 2009. Accordingly'' the effect of exchange differences on Foreign Currency Loans of the company is accounted by addition or deduction to the cost of assets so far it relates to depreciable capital assets and in other cases by charging to statement of proft and loss as gain or loss on account of exchange difference.

vi) Investments in shares of foreign subsidiary company are expressed in Indian Currency at the rate of exchange prevailing at the time when the original investments were made.

H. Duties

Excise duty on fnished goods and custom duty on imported materials has been accounted on the basis of payments made in respect of goods cleared as also provision made for goods lying in Bonded Warehouse.

I. Employee Benefts:

i) Short Term Employee Benefts:- All benefts paid / payable wholly within 12 months of rendering the service are classifed as short term. Benefts such as salaries'' wages'' short-term compensated absences'' etc and the expected Cost of Bonus'' Ex-Gratia'' Medical'' LTA are recognized undiscounted during the period in which the employee renders the related service and charged to statement of Proft and Loss.

ii) Defned Contribution Plans:

Company contributes Provident Fund in accordance with EPF Act'' 1952 and ESIC Schemes in accordance with ESIC Act'' 1948 under Government administered schemes'' however certain employees are covered under the contributory plans with the trust "Garware Polyester Limited Offce Staff & Offcers Provident Fund”. Contributions are accounted on accrual / paid basis and charged to statement of Proft & Loss.

iii) Defned Beneft Plans:

a) Liability towards Superannuation and Gratuity are covered by appropriate schemes with Life Insurance Corporation of India on accrual basis. Gratuity plans are determined by actuarial valuation by using the Projected Unit Credit method.

b) Leave encashment benefts are accounted on actuarial valuation basis.

J. Lease Rentals

Lease Rentals are accounted on accrual basis over the Lease Term as per the relevant Lease Agreements.

K. Research & Development

Revenue expenditure on Research and Development is charged out in the accounting year in which it is incurred. Expenditure'' which results in creation of assets'' is included in Fixed Assets and depreciation is provided on such assets as applicable.

L. Revenue Recognition

i) Sale of products:

Revenue is recognized to the extent that it is probable that the economic benefts will fow to the company and the revenue can be reliably measured are accounted for inclusive of excise duty and VAT/ sales tax (wherever not charged separately)'' and are net of discounts and returns.

ii) Export Benefts:

Export entitlements under the Duty Entitlement Pass Book (DEPB) scheme and duty drawback scheme / other scheme are recognized as income when the right to receive credit as per the terms of the scheme is established in respect of the exports made and where there is no signifcant uncertainty regarding the ultimate collection of the relevant export proceeds.

iii) Others

Revenue from services is recognised on rendering of services.

Dividend income is recognised when the right to receive payment is established.

Interest income is recognised on the time proportion basis.

M. Taxation

a) Deferred tax is recognized'' subject to the consideration of prudence'' on timing differences'' 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.

b) Current tax is determined as the amount of tax payable in respect of taxable income for the period. The credit is taken as per entitlement for the tax liability provided under MAT based on taxable income as per the provisions of Income Tax Act'' 1961.

N. Borrowing Cost:

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to Proft and Loss account.

O. Measurement of EBITDA

The company has elected to present earnings before interest (Finance cost)'' Tax'' Depreciation and amortization (EBITDA) as a separate line item on the face of the Statement of Proft and Loss for the year. The company measures EBITDA on the basis of Proft / (Loss) from continuing operations.

P. Provisions'' Contingent Liabilities & Contingent Assets:

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outfow of resources. Contingent Liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the fnancial statements.

Q. Earning per Share

Earnings per share are calculated by dividing the net proft or loss for the year attributable to equity shareholders (after deducting preference dividend and attributable taxes) by the weighted average number of equity shares outstanding during the year.


Mar 31, 2012

1. Basis of presentation of Financial Statements

The financial statements are prepared under the historical cost convention modified by revaluation of fixed assets and in accordance with applicable Accounting Standards and relevant presentation requirements of the Companies Act, 1956.

The company generally follows the mercantile system of accounting and recognizes significant items of income and expenditure on accrual basis.

2. Fixed assets and Depreciation / amortization

Fixed Assets are stated at cost net of MODVAT / CENVAT and includes amounts added on revaluation, less accumulated depreciation. Cost comprises of the purchase price and any directly attributable cost of bringing the assets to working condition for its intended use including interest and other incidental and trial run expenses up to the date of commercial production. When fixed assets were revalued, surplus on revaluation was credited to Capital / Revaluation Reserve Account.

Depreciation / Amortization is provided as follows:

– on technical know-how / product Development expenses @ 1/6th per annum.

– on Copyright expenditure @ 1/5th per annum

– on Capital expenditure on R&D and Assets other than plant and Machinery on Written Down Value method as per rates prescribed under Schedule XIV of the Companies Act, 1956.

– on plant and Machinery on Straight Line Method as per rates prescribed under Schedule XIV of the Companies Act, 1956, vide Notification GSR No.756(e) dated 16.12.1993.

– No write-off is being made in respect of leasehold land.

– Assets costing Rs.5000/- or Less is depreciated fully in the year of acquisition.

– Goodwill to be amortized at @ 1/5th per annum or as per the decision of Board of Directors.

3. Investments

Investments are considered as long term investments and are accordingly stated at cost of acquisition. Market value of Quoted investments at the date of the Balance Sheet is disclosed. provision for diminution in the value of long-term investments is made only if such a decline is other than temporary in the opinion of the Management.

4. Inventories:

i) Raw materials and packing materials are valued at the lower of cost and net realizable value. Cost is determined on a moving weighted average basis. Cost includes the cost of purchase and other expenses directly attributable to their acquisition but excludes duties and taxes, which are subsequently recoverable from the taxing authorities.

ii) Stores and Spares are valued at cost computed on a moving weighted average basis. Cost includes the cost of purchase and other expenses directly attributable to their acquisition but excludes duties and taxes that are subsequently recoverable from the taxing authorities.

iii) Semi-finished goods including those held for captive consumption is valued at factory cost including depreciation.

iv) Finished goods is valued at the lower of cost and net realizable value. Cost includes direct material and labour cost and a proportion of manufacturing overheads.

v) purchase of finished goods are valued at the lower of cost and net realizable value.

5. Foreign Currency Transactions

a) Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction or that approximates the actual rate at the date of the transaction.

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

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

d) The company has opted for accounting exchange rate differences arising on reporting of long term Foreign Currency Monetary items in line with Companies (Accounting Standard) Amendment Rules 2009 on Accounting Standard 11 (AS-11) notified by Govt. of India on March 31, 2009. Accordingly, the effect of exchange differences on Foreign Currency Loans of the company is accounted by addition or deduction to the cost of assets so far it relates to depreciable capital assets and in other cases by charging to statement of profit and loss as gain or loss on account of exchange difference.

e) Investments in shares of foreign subsidiary company are expressed in Indian Currency at the rate of exchange prevailing at the time when the original investments were made.

6. Duties

Excise duty on finished goods and custom duty on imported materials has been accounted on the basis of payments made in respect of goods cleared as also provision made for goods lying in Bonded Warehouse.

7. Employee Benefits:

a) Short term employee Benefits:- All benefits paid / payable wholly within 12 months of rendering the service are classified as short term. Benefits such as salaries, wages, short-term compensated absences, etc and the expected cost of bonus, ex-gratia, medical, LTA are recognized in the period in which the employee renders the related service and charged to profit and Loss Account.

b) Defined Contribution plans:

Company contributes provident Fund in accordance with EPF Act, 1952 and ESIC Schemes in accordance with ESIC Act,1948 under Government administered schemes, however certain employees are covered under the contributory plans with the trust "Garware polyester Limited office Staff and officers provident Fund". Contributions are accounted on accrual / paid basis and charged to statement of profit and Loss.

c) Defined Benefit plans:

1) Liability towards Superannuation and Gratuity are covered by appropriate schemes with Life insurance Corporation of India on accrual basis. Gratuity plans are determined by actuarial valuation by using the projected unit Credit method.

2) Leave encashment benefits are accounted on actuarial valuation basis.

8. Lease Rentals

Lease Rentals are accounted on accrual basis over the Lease term as per the relevant Lease Agreements.

9. Provisions, Contingent Liabilities and Contingent assets :

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.

10. Research and Development

Revenue expenditure on Research and Development is charged out in the accounting year in which it is incurred. expenditure, which results in creation of assets, is included in Fixed Assets and depreciation is provided on such assets as applicable.

11. Revenue Recognition

a) Sales:

Sales are accounted for inclusive of excise duty and VAt/ sales tax (wherever not charged separately), and are net of discounts and returns.

b) Export Benefits:

Export entitlements under the Duty entitlement pass Book (DEPB) and Duty Drawback Scheme / other scheme are recognized as income when the right to receive credit as per the terms of the scheme is established in respect of the exports made and where there is no significant uncertainty regarding the ultimate collection of the relevant export proceeds.

12. Taxation

a) Deferred tax is recognized, subject to the consideration of prudence, on timing differences, 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.

b) Current tax is determined as the amount of tax payable in respect of taxable income for the period. the credit is taken as per entitlement for the tax liability provided under MAT based on taxable income as per the provisions of income tax Act, 1961.

13. Borrowing Cost:

Borrowing costs Specifically relatable to the acquisition of fixed assets are capitalized as part of the cost of fixed assets, other borrowing costs are charged to revenue.

14. Impairment of assets

Impairment loss, if any, is provided to the extent, the carrying amount of assets exceeds their recoverable amount. Recoverable amount is higher of an asset's net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life.


Mar 31, 2010

1. Basis of presentation of Financial Statements

The financial statements are prepared under the historical cost convention modified by revaluation of fixed assets and in accordance with applicable Accounting Standards and relevant presentation requirements of the Companies Act, 1956.

The Company generally follows the mercantile system of accounting and recognizes significant items of income and expenditure on accrual basis.

2. Fixed Assets and Depreciation / Amortization

Fixed Assets are stated at cost net of MODVAT / CENVAT and includes amounts added on revaluation, less accumulated depreciation. Cost comprises of the purchase price and any directly attributable cost of bringing the assets to working condition for its intended use including interest and other incidental and trial run expenses up to the date of commercial production. When fixed assets were revalued, surplus on revaluation was credited to Capital / Revaluation Reserve Account.

Depreciation /Amortization is provided as follows:

- On Technical Know-how/Product Development Expenses @ 1/6th per annum.

- On Copyright Expenditure @ 1/5th per annum

- On Capital Expenditure on R&D and Assets other than Plant & Machinery - on Written Down Value method as per rates prescribed under Schedule XIV of the Companies Act, 1956.

- On Plant & Machinery acquired before 02.04.1987 on Straight Line method as per rates prevalent at the time of acquisition of the asset on single shift basis.

- On Plant & Machinery acquired after 02.04.1987 on Straight Line Method as per rates prescribed under Schedule XIV of the Companies Act, 1956, vide Notification GSR No.756(E) dated 16.12.1993.

- No write-off is being made in respect of leasehold land.

- Assets costing Rs.5000/- or Less is depreciated fully in the year of acquisition.

3. Investments

Investments are considered as long term investments and are accordingly stated at cost of acquisition. Market value of Quoted Investments at the date of the Balance Sheet is disclosed. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary in the opinion of the Management.

4. Inventories

Raw Materials, Stores and Spares and Packing Materials are valued at weighted average cost. Finished goods are valued at lower of the cost and market value. Semi-finished goods including those held for captive consumption are valued at factory cost (including depreciation).

5. Foreign Currency Transactions

a) Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction or that approximates the actual rate at the date of the transaction.

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

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

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

e) The Company has opted for accounting exchange rate differences arising on reporting of long term Foreign Currency Monetary Items in line with Companies (Accounting Standard) Amendment Rules 2009 on Accounting Standard 11 (AS-11) notified by Govt. of India on March 31, 2009. Accordingly, the effect of exchange differences on Foreign Currency Loans of the Company is accounted by addition or deduction to the cost of assets so far it relates to depreciable capital assets and in other cases by transfer to “Foreign Currency Monetary Items Translation Difference Account” to be amortized in subsequent period. Accordingly, in the previous year the Company has debited Rs. 50.76 lakhs to assets account by adjusting against reserve. The exchange loss for the year 2007-08 in the year under review the Company has amortized Rs. 85.23 lakhs from Foreign Currency Monetary Items Translation Difference due to repayment of the said Loans.

f) Investments in shares of foreign subsidiary Company are expressed in Indian Currency at the rate of exchange prevailing at the time when the original investments were made.

6. Inter-divisional Transfers

Inter-divisional transfers of goods for internal use as captive consumption are shown as contra items in the Profit & Loss Account to refect the true economic value of the production inter-se the divisions. This accounting treatment has no impact on the Profit of the Company.

7. Duties

Excise duty on fnished goods and custom duty on imported materials has been accounted on the basis of payments made in respect of goods cleared as also provision made for goods lying in Bonded Warehouse.

8. Employee Benefits:

a) Short Term Employee Benefits:

All benefits paid / payable wholly within 12 months of rendering the service are classified as short term. Benefits such as salaries, wages, short-term compensated absences, etc and the expected cost of bonus, ex-gratia, medical, LTA are recognized in the period in which the employee renders the related service and charged to Profit and Loss Account.

b) Defned Contribution Plans:

Company contributes Provident Fund in accordance with EPF Act, 1952 and ESIC Schemes in accordance with ESIC Act,1948 under Government administered schemes, however certain employees are covered under the contributory plans with the trust “Garware Polyester Limited Office Staff & Officers Provident Fund”. Contributions are accounted on accrual / paid basis and charged to Profit & Loss Account.

c) Defined Benefit Plans:

1) Liability towards Superannuation and Gratuity are covered by appropriate schemes with Life Insurance Corporation of India on accrual basis. Gratuity plans are determined by actuarial valuation by using the Projected Unit Credit method.

2) Leave encashment benefits are accounted on actuarial valuation basis.

9. Lease Rentals

Lease Rentals are accounted on accrual basis over the Lease Term as per the relevant Lease Agreements.

10. Provisions, Contingent Liabilities & Contingent Assets :

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognised but are disclosed in the notes. Contingent Assets are neither recognised nor disclosed in the financial statements.

11. Research and Development

Revenue expenditure on Research and Development is charged out in the accounting year in which it is incurred. Expenditure, which results in creation of assets, is included in Fixed Assets and depreciation is provided on such assets as applicable.

12. Revenue Recognition

a) Sales:

Sales are accounted for inclusive of excise duty and VAT/ sales tax (wherever not charged separately), and are net of discounts and returns.

b) Export Benefits:

Export entitlements under the Duty Entitlement Pass Book (DEPB) scheme / other scheme are recognized as income when the right to receive credit as per the terms of the scheme is established in respect of the exports made and where there is no significant uncertainty regarding the ultimate collection of the relevant export proceeds.

13. Taxation

a) Deferred tax is recognised, subject to the consideration of prudence, on timing differences, 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.

b) Current tax is determined as the amount of tax payable in respect of taxable income for the period. The credit is taken as per entitlement for the tax liability provided under MAT based on taxable income as per the provisions of Income Tax Act, 1961.

14. Borrowing Cost:

Borrowing costs specifically relatable to the acquisition of fixed assets are capitalized as part of the cost of fixed assets, other borrowing costs are charged to revenue.

15. Impairment of assets

Impairment loss, if any, is provided to the extent, the carrying amount of assets exceeds their recoverable amount.

Recoverable amount is higher of an assets net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life.

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