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Accounting Policies of Grasim Industries Ltd. Company

Mar 31, 2016

1.1 Basis of Preparation:

The financial statements have been prepared and presented in accordance with the Generally Accepted Accounting Principles (GAAP) in India under the historical cost convention on accrual basis and complied in all material aspects with the Accounting Standards (AS) and the relevant provisions of the Companies Act, 1956, and the Companies Act, 2013, as applicable, besides the pronouncements/guidelines of the Institute of Chartered Accountants of India (ICAI) and of the Securities and Exchange Board of India (SEBI)

1.2 Classification of Assets and Liabilities as Current and Non-Current:

All assets and liabilities are classified as current or non-current as per the Company''s normal operating cycle, and other criteria set out in Schedule III of the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, 12 months period has been considered by the Company as its normal operating cycle for the purpose of classification of assets and liabilities as current and non-current

1.3 Use of Estimates:

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of the financial statements and reported amount of revenues and expenses during the reporting period and the disclosures relating to contingent liabilities as of the date of the financial statements. Although these estimates are based on the management''s best knowledge of current events and actions, the actual outcome may be different from the estimates. Differences between actual results and estimates are recognised in the period in which the results are known or materialise

1.4 Government Grants:

Any Government Grant is recognised when there is reasonable assurance of its receipt. A capital grant relating to specific assets is reduced from the gross value of the fixed assets, and capital grant for project capital subsidy is credited to Capital Reserve. Revenue grant is recognised in the Statement of Profit and Loss

1.5 General Reserve:

General Reserve, a free reserve, is created by appropriation from profits of the current year and/or undistributed profits of previous years, before declaration of dividend duly complying with any regulations in this regard

1.6 Fixed Assets:

Fixed Assets (Tangible and Intangible) are stated at cost, less accumulated depreciation/amortisation Cost comprises the purchase price and any attributable cost of bringing the asset to its location and working condition for its intended use. Fixed assets, retired from active use and held for sale, are stated at lower of their net book value and net realisable value, and are disclosed separately in the financial statements under Current Assets

Spares, which can be used only in connection with a particular Plant and Equipment of the Company and use is expected to be irregular, are capitalised at cost

Gains/Losses arising from retirement or disposal of fixed assets, which are carried at cost, are recognised in the Statement of Profit and Loss

1.7 Treatment of Expenditure during Construction Period:

Expenditure, net of income earned, during construction period is included under capital work-in-progress, and the same is allocated to the respective fixed assets on the completion of construction

1.8 Impairment of Assets:

Carrying amount of assets is reviewed at the Balance Sheet date to ascertain if there is any indication of impairment based on the internal and external factors. The assets are treated as impaired when the carrying amount of the asset exceeds its recoverable amount.

An impairment loss, if any, is charged to the Statement of Profit and Loss as and when it arises. Impairment loss recognised in prior years is reversed when there is an indication that impairment loss recognised for the asset no longer exists or may have decreased

1.9 Investments:

Long-term investments are stated at cost. However, provision for diminution is made to recognise a decline, other than temporary, in the value of the investments. Such reduction is determined and made for each investment individually

Current investments, other than Long-term investments classified as current based on maturity in next 12 months, are stated at lower of cost and fair value determined for each category of investments

On disposal or sale of an investment, the difference between its carrying amount and net disposal proceeds is recognised in the Statement of Profit and Loss as Profit/Loss on sale of investments.

1.10 Inventories:

Inventories are valued at the lower of cost and net realisable value. The cost is computed on weighted-average basis

Cost of finished goods and process stock include cost of conversion, and other costs incurred in bringing the inventories to their present location and condition. Net realisable value is the estimated selling price in the ordinary course of business, ess the estimated costs of completion, and the estimated costs necessary to make the sale. In the absence of cost, waste/scrap is valued at estimated net realisable value

Obsolete, defective, slow moving and unserviceable inventories, if any, are duly provided for.

1.11 Financial Derivatives:

Derivative instruments are used to hedge risk associated with foreign currency fluctuations, interest rates and commodity prices. The derivative contracts are closely linked with the underlying transactions and are intended to be held till maturity. The Company does not enter into any derivative contracts for speculations or trading purposes

The Company follows Accounting Standard-30 - "Financial Instrument: Recognition and Measurement" - to the extent it does not conflict with other accounting standards and regulatory requirements. Accordingly, the Company tests each contract entered on the basis of highly probable forecast transaction and decide whether to designate the same as an effective hedging instrument for an underlying transaction

To designate a forward or options contract as an effective hedging instrument, the management objectively evaluates and evidences with appropriate supporting documents at the inception of each contract whether the contract is effective in achieving offsetting cash flows attributable to the hedged risk.

The gains or losses on designated hedging contracts that qualify as an effective hedge are recorded in the hedging reserve account until the transactions are completed. Upon completion or cessation of effective hedging relationship, net cumulative gains/losses are transferred to the Statement of Profit and Loss. The gains or losses on designated hedging contracts, which are considered as ineffective hedge transactions, are charged to the Statement of Profit and Loss

Forward exchange contracts, which are not designated for hedge accounting, are mark-to-market and losses, if any, are charged to Profit and Loss, while gains are ignored in accordance with the announcement by the Institute of Chartered Accountants of India on Accounting for Derivatives''.

The premium or discount on forward exchange contracts entered into to hedge an existing asset/liability is amortised as expense or income over the life of the contract. Any gain or loss, arising on cancellation or renewal of such forward exchange contract, is recognised as income or expense, as the case may be, on such occurrence

1.12 Revenue Recognition:

Sales revenue is recognised on transfer of the significant risks and rewards of ownership of the goods to the buyer, and stated net of sales tax, VAX trade discounts and rebates but includes excise duty.

Income from services is recognised as they are rendered (based on agreement/arrangement with the concerned customers)

Proceeds from sale of raw materials/stores are credited to their respective heads.

Dividend income on investments is accounted for as and when the right to receive the payment is established

Interest income is recognised on time-proportion basis

Export incentives and other government incentives, insurance claims and other claims, where quantum of accruals cannot be ascertained with reasonable certainty, are accounted on acceptance basis

Profit/(Loss) on sale of investments is recorded on transfer of title from the Company, and is determined as the difference between the sale price and the carrying value of investments and other incidental expenses

1.13 Employee Benefits: Short-Term Employee Benefits

Short-term employee benefits are recognised as an expense on accrual basis

Defined Contribution Plan

Contributions payable to recognised provident fund and approved superannuation scheme, which are substantially defined contribution plans, are recognised as expense in the Statement of Profit and Loss, as they are incurred

The Provident Fund contribution, as specified under the law, is paid to the Provident Fund set-up as an irrevocable trust by the Company or to the Regional Provident Fund Commissioner. The Company is liable for any shortfall in the fund assets based on the Government specified minimum rates of return. Such shortfall, if any, is recognised in the Statement of Profit and Loss as an expense in the year of incurring the same

Defined Benefit Plan

The obligations in respect of defined benefit plans, which covers Gratuity and Pension, are provided for on the basis of an actuarial valuation at the end of each financial year. Gratuity is funded with an approved fund. Actuarial gains/losses, if any, are recognised immediately in the Statement of Profit and Loss

Other Long-Term Benefits

Long-term compensated absences are provided for on the basis of an actuarial valuation at the end of each financial year. Actuarial gains/losses, if any, are recognised immediately in the Statement of Profit and Loss.

Share-Based Payments to Employees

The stock options granted to employees of the Company are accounted for as per the accounting treatment prescribed by the Securities and Exchange Board of India, whereby the intrinsic value of options is recognised as deferred employee compensation. The deferred employee compensation is charged to the Statement of Profit and Loss on the straight- line basis over the vesting period of the option. The employee stock option outstanding account is shown net of any unamortised deferred employee compensation

1.14 Foreign Currency Transactions and Translation:

Foreign currency transactions are recorded at the exchange rate prevailing on the date of transaction. Monetary assets and iabilities in foreign currency, existing at the Balance Sheet date, are translated at the year-end exchange rates

Exchange differences, including premium or discount on forward exchange contracts, arising till the commissioning of fixed assets, relating to borrowed funds and liabilities in foreign currency for acquisition of the fixed assets, are adjusted to the cost of fixed assets. All other exchange differences are recognised in the Statement of Profit and Loss

Investments in Share Capital of companies, registered outside India, are carried in the Balance Sheet at the rates at which the transactions have been executed

Exchange difference, arising on restatement of long-term monetary items that in substance forms part of the Company''s net investment in non-integral foreign operations, is accumulated in Foreign Currency Translation Reserve until the disposal of the investment, at which time such exchange difference is recognised in the Statement of Profit and Loss

1.15 Research and Development Expenditure:

Revenue expenditure pertaining to research is charged to the Statement of Profit and Loss. Development expenditure is capitalised if such expenditure leads to creation of any intangible asset, otherwise, such expenditure is charged to the Statement of Profit and Loss. Fixed assets which are procured for research and development activities are capitalised

1.16 Operating Leases:

Leases, where risk and reward of ownership are significantly retained by the lessor, are classified as operating leases, and ease rentals thereon are charged to the Statement of Profit and Loss on straight-line basis over the period of the lease

1.17 Borrowing Costs:

Borrowing costs include interest and ancillary costs incurred in connection with the borrowings. Borrowing costs in connection with the borrowing of funds, to the extent attributable to the acquisition or construction of a qualifying asset, are capitalised as part of the cost of such asset till such time the asset is ready for its intended use. All other borrowing costs are recognised in the Statement of Profit and Loss in the period in which they are incurred

1.18 Depreciation/Amortisation:

Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life and is provided on a straight-line basis or written-down-value method basis over the useful lives as prescribed in Schedule II of the Companies Act, 2013.

Depreciable amount for assets is the cost of an asset less its estimated residual value

Depreciation/Amortisation charge is provided on fixed assets on written-down-value method in respect of fixed assets of Viscose Staple Fibre Division (excluding Power Plants), Nagda, Engineering Division, Nagda, and Corporate Finance Division, Mumbai, and on straight-line method in respect of other assets

The useful life of an asset is the period over which an asset is expected to be available for use by an entity, or the number of production or similar units expected to be obtained from the asset by the entity

Useful life of part of the assets which is significant to the total cost of assets has been determined separately; and the depreciation has been provided accordingly

In case of certain class of assets, the Company uses different useful life than those prescribed in Schedule II of the Companies Act, 2013. The useful life has been assessed based on technical advice, taking into account the nature of the asset, the estimated usage of the asset on the basis of management''s best estimation of getting economic benefits from those class of assets. The Company uses its technical expertise along with historical and industry trends for arriving the economic life of an asset. Such class of assets and their estimated useful lives are as under:

Continuous process plants, as defined in Schedule II of the Companies Act, 2013, have been classified on the basis of technical assessment, and depreciation is provided accordingly.

Individual assets costing less than Rs. 10,000 are depreciated in full in the year of acquisition

Cost of Leasehold Land is amortised over the period of lease

In respect of fixed assets added/disposed of during the year, depreciation is provided on pro-rata basis with reference to the month of addition/deduction. In case of a new project, the depreciation from the date of commissioning of such project is charged to the Statement of Profit and Loss

1.19 Provision for Current and Deferred Tax:

Provision for Current Tax is made on the basis of estimated taxable income for the current accounting period in accordance with the provisions of the Income-tax Act, 1961

Deferred Tax, resulting from timing difference between book and taxable profit for the year, is accounted for using the Tax rates and laws enacted or substantively enacted as on the Balance Sheet date. The Deferred Tax asset is recognised and carried forward only to the extent there is a reasonable certainty of its realisation in future

In the event of unabsorbed depreciation or carry forward of losses under tax laws, deferred tax assets are recognised to the extent of virtual certainty that sufficient future taxable income will be available to realise such assets

1.20 Minimum Alternate Tax (MAT):

MAT is recognised as an asset only when and to the extent there is convincing evidence based on projections that the Company will pay normal Income Tax during the specified period. In the year, in which the MAT credit becomes eligible to be recognised as an asset in accordance with the recommendations contained in the Guidance Note issued by the ICAI, the said asset is created by way of a credit to the Statement of Profit and Loss and is shown as MAT Credit Entitlement. The Company reviews the same at each Balance Sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that the Company will pay normal Income Tax during the specified period

1.21 Provisions/Contingencies:

A provision is recognised when there is a present obligation as a result of past event, and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are determined (as provided/charged to the Statement of Profit and Loss) based on the estimate of the amount required to settle the obligation at the Balance Sheet date and are not discounted to the present value

Contingent liabilities are not recognised but are disclosed in the financial statements. Claims against the Company, where the possibility of materialisation is remote, are not considered as contingent liabilities

Contingent assets are neither recognised nor disclosed, in the financial statements

1.22 Segment Reporting:

Segments are identified based on the nature of products and services, the different risks and returns, and the internal reporting structure

Further, inter-segment revenues have been accounted for based on the transaction price agreed to between segments, which is primarily market based

"Unallocated Corporate Expenses" revenue and expenses, which relate to initiatives/costs attributable to the enterprise as a whole, are not attributable to segments

1A. Amalgamation of Aditya Birla Chemicals (India) Ltd.

The Hon''ble High Courts of Madhya Pradesh and Jharkhand have, by their respective orders, approved the Scheme of Amalgamation of Aditya Birla Chemicals (India) Limited (ABCIL), a leading manufacturer of Chlor Alkali and allied chemicals, with Grasim Industries Limited and their respective Shareholders and Creditors. ABCIL has been amalgamated with the Company on 4th January, 2016, w.e.f. the appointed date of 1st April, 2015

All the assets and liabilities have been accounted for in the books of account of the Company at the value appearing in the books of account of ABCIL as on 1 st April, 2015, under the "Pooling of Interest" method as prescribed by Accounting Standard-14 on "Accounting for Amalgamations"

In terms of the Scheme, the Company has issued 14.62 lakh Equity Shares to the shareholders of the erstwhile ABCIL in the ratio of 1 (one) share of Rs. 10/- each fully paid-up against 16 (sixteen) shares of Rs. 10/- each fully paid-up of ABCIL held by them. As a result, Issued and Paid-up Equity Share Capital of the Company has increased by Rs. 1.46 Crore to Rs. 93.33 Crore

Difference between Share Capital of ABCIL of Rs. 23.39 Crore and Equity Share Capital issued by the Company of Rs. 1.46 Crore to ABCIL shareholders amounting to Rs. 21.93 Crore has been disclosed as "Capital Reserve".

Further, Chlor Alkali plant and related assets of Ganjam, Odisha and Salt works at Pundi, Andhra Pradesh, were acquired during the year at a total consideration of Rs. 212 Crore as per the Business Transfer Agreement between ABCIL and Jayshree Chemicals Ltd

In view of amalgamation of ABCIL with the Company with effect from 1 st April, 2015, and above acquisition, the figures for the current year are not strictly comparable with those of the previous year.


Mar 31, 2015

1.1 Basis of Preparation:

The fi nancial statements have been prepared and presented in accordance with the Generally Accepted Accounting Principles (GAAP) in India under historical cost convention on accrual basis and comply in all material aspects with the Accounting Standards (AS) and the relevant provisions of the Companies Act, 1956 and Companies Act, 2013 as applicable, besides the pronouncements/guidelines of the Institute of Chartered Accountants of India (ICAI) and of the Securities and Exchange Board of India (SEBI).

1.2 Classifi cation of Assets and Liabilities as Current and Non-Current:

All assets and liabilities are classifi ed as current or non-current as per the Company''s normal operating cycle, and other criteria set out in Schedule III to the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, 12 months period has been considered by the Company as its normal operating cycle for the purpose of classifi cation of assets and liabilities as current and non-current.

1.3 Use of Estimates:

The preparation of fi nancial statements requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of the fi nancial statements and reported amount of revenues and expenses during the reporting period and the disclosures relating to contingent liabilities as of the date of the fi nancial statements. Although these estimates are based on the management''s best knowledge of current events and actions, the actual outcome may be different from the estimates. Difference between actual results and estimates are recognised in the period in which the results are known or materialise.

1.4 Government Grants:

Any government grant is recognised when there is reasonable assurance of its receipt. A capital grant relating to specifi c assets is reduced from the gross value of the fi xed assets, and capital grant for Project Capital Subsidy is credited to Capital Reserve. Revenue grant is recognised in the Statement of Profi t and Loss.

1.5 General Reserve:

General Reserve, a free reserve, is created by appropriation from profi ts of the current year and/or undistributed profi ts of previous years, before declaration of dividend duly complying with any regulations in this regard.

1.6 Fixed Assets:

Fixed assets (Tangible and Intangible) are stated at cost, less accumulated depreciation/amortisation. Cost comprises the purchase price and any attributable cost of bringing the asset to its location and working condition for its intended use. Fixed assets, retired from active use and held for sale, are stated at lower of their net book value and net realisable value, and are disclosed separately in the fi nancial statements under Current Assets.

Spares which can be used only in connection with a particular Plant and Equipment of the Company and use is expected to be irregular, are capitalised at cost.

Gains/losses arising from retirement or disposal of fi xed assets which are carried at cost are recognised in the Statement of Profi t and Loss.

1.7 Treatment of Expenditure during Construction Period:

Expenditure net of income earned during construction period is included under capital work-in-progress and the same is allocated to the respective fi xed assets on the completion of construction.

1.8 Impairment of Assets:

Carrying amount of assets is reviewed at the Balance Sheet date to ascertain if there is any indication of impairment based on the internal and external factors. The assets are treated as impaired when the carrying amount of the asset exceeds its recoverable amount.

An impairment loss, if any, is charged to the Statement of Profi t and Loss as and when it arises. Impairment loss recognised in prior years is reversed when there is an indication that impairment loss recognised for the asset no longer exists or may have decreased.

1.9 Investments:

Long-term investments are stated at cost. However, provision for diminution is made to recognise a decline, other than temporary, in the value of the investments. Such reduction is determined and made for each investment individually.

Current investments, except current maturities of Long-term investments, are stated at lower of cost and fair value determined for each category of investments.

1.10 Inventories:

Inventories are valued at the lower of cost and net realisable value. The cost is computed on weighted-average basis. In case of sale of raw material/stores, the proceeds are credited to their respective heads.

Cost of fi nished goods and process stock include cost of conversion, and other costs incurred in bringing the inventories to their present location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion, and the estimated costs necessary to make the sale. In the absence of cost, waste/scrap is valued at estimated net realisable value.

Obsolete, defective, slow moving and unserviceable inventories, if any, are duly provided for.

1.11 Financial Derivatives:

Derivative instrument are used to hedge risk associated with foreign currency fl uctuations, interest rates and commodity prices. The derivative contracts are closely linked with underlying transactions and are intended to be held till maturity. The Company does not enter into any derivative contracts for speculations or trading purposes.

With effect from current year, the Company has adopted AS 30 – "Financial Instrument – Recognition and Measurement", to the extent that adoption did not confl ict with existing accounting standards and other regulatory requirements. Accordingly the Company test each contract which are entered on the basis of highly probable forecast transaction and decide whether to designate the same as an underlying for the effective hedge relationship.

To designate a forward or options contract as an effective hedging instrument, the management objectively evaluates and evidences with appropriate supporting documents at the inception of each contract whether the contract is effective in achieving offsetting cash fl ows attributable to the hedged risk.

The gain or losses on designated hedging contract that qualify as an effective hedge is recorded in the hedging reserve account until the transactions are completed. Upon completion or cessation of hedging relationship as an effective, net cumulative gain / losses are transferred to Statement of Profi t & Loss. The gain or losses on designated hedging contracts which are considered as ineffective hedge transactions are charged to the Statement of Profi t and Loss.

Forward exchange contracts which are not designated for hedge accounting are marked to market and losses, if any, are charged to Profi t and Loss while gains are ignored in accordance with the announcement by the Institute of Chartered Accountants of India on ''Accounting for Derivatives''.

The premium or discount on forward exchange contracts entered into to hedge an existing asset/liability is amortised as expense or income over the life of the contract. Any gain or loss arising on cancellation or renewal of such forward exchange contract is recognised as income or expense, as the case may be on such occurrence.

1.12 Revenue Recognition:

Sales revenue is recognised on transfer of the signifi cant risks and rewards of ownership of the goods to the buyer, and stated net of sales tax, VAT, trade discounts and rebates but includes excise duty.

Income from services is recognised as they are rendered (based on agreement/arrangement with the concerned customers).

Dividend income on investments is accounted for as and when the right to receive the payment is established.

Interest income is recognised on time-proportion basis.

Export incentives and other government incentives, insurance claims and other claims, where quantum of accruals cannot be ascertained with reasonable certainty, are accounted on acceptance basis.

Profit/(Loss) on sale of investments is recorded on transfer of title from the Company, and is determined as the difference between the sale price and carrying value of investment and other incidental expenses.

1.13 Employee Benefi ts:

Short-Term Employee Benefi ts

Short-term employee benefi ts are recognised as an expense on accrual basis.

Defi ned Contribution Plan

Contribution payable to recognised provident fund and approved superannuation scheme, which are substantially defi ned contribution plans, are recognised as expense in the Statement of Profi t and Loss, as they are incurred.

The Provident Fund contribution as specifi ed under the law is paid to the Provident Fund set-up as an irrevocable trust by the Company or to the Regional Provident Fund Commissioner. The Company is liable for any shortfall in the fund assets based on the Government specifi ed minimum rates of return. Such shortfall, if any, is recognised in the Statement of Profi t and Loss as an expense in the year incurred.

Defi ned Benefi t Plan

The obligation in respect of defi ned benefi t plans, which covers Gratuity and Pension, are provided for on the basis of an actuarial valuation at the end of each fi nancial year. Gratuity is funded with an approved fund. Actuarial gains/losses, if any, are recognised immediately in the Statement of Profi t and Loss.

Other Long-Term Benefi ts

Long-term compensated absences are provided for on the basis of an actuarial valuation at the end of each fi nancial year. Actuarial gains/losses, if any, are recognised immediately in the Statement of Profi t and Loss.

Share-Based Payments to Employees

The stock options granted under Employee Stock Option Scheme-2006 and Employee Stock Option Scheme-2013 to employees of the Company are accounted for as per the accounting treatment prescribed by the Securities and Exchange Board of India, whereby the intrinsic value of options is recognised as deferred employee compensation. The deferred employee compensation is charged to the Statement of Profi t and Loss on the straight-line basis over the vesting period of the option. The employee stock option outstanding account is shown net of any unamortised deferred employee compensation.

1.14 Foreign Currency Transactions and Translation:

Foreign currency transactions are recorded at the exchange rate prevailing on the date of transaction. Monetary assets and liabilities in foreign currency, existing at the Balance Sheet date, are translated at the year-end exchange rates.

Exchange differences, including premium or discount on forward exchange contracts, arising till the commissioning of fi xed assets, relating to borrowed funds and liabilities in foreign currency for acquisition of the fi xed assets, are adjusted to the cost of fi xed assets. All other exchange differences are recognised in the Statement of Profi t and Loss.

Investment in Share Capital of companies registered outside India is carried in the Balance Sheet at the rates at which transactions have been executed.

Exchange difference, arising on restatement of long-term monetary items that in substance forms part of Company''s net investment in non-integral foreign operations, is accumulated in Foreign Currency Translation Reserve until the disposal of the investment, at which time such exchange difference is recognised in the Statement of Profi t and Loss.

1.15 Research and Development Expenditure:

Revenue expenditure pertaining to research is charged to the Statement of Profi t and Loss. Development expenditure is capitalised if such expenditure leads to creation of any intangible asset, otherwise, such expenditure is charged to the Statement of Profi t and Loss. Fixed assets procured for research and development activities are capitalised.

1.16 Operating Leases:

Leases, where risk and reward of ownership are signifi cantly retained by the lessor, are classifi ed as operating leases, and lease rentals thereon are charged to the Statement of Profi t and Loss on straight-line basis over the period of the lease.

1.17 Borrowing Costs:

Borrowing costs include interest and ancillary costs incurred in connection with the borrowings. Borrowing costs in connection with the borrowing of funds, to the extent attributable to the acquisition or construction of a qualifying asset, are capitalised as part of the cost of such asset till such time the asset is ready for its intended use. All other borrowing costs are recognised in the Statement of Profi t and Loss in the period in which they are incurred.

1.18 Depreciation/Amortisation:

Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life and is provided on a straight-line basis or WDV basis over the useful lives as prescribed in Schedule II to the Companies Act, 2013.

Depreciable amount for assets is the cost of an asset less its estimated residual value.

Depreciation/Amortisation charge is provided on fi xed assets on written-down-value method in respect of fi xed assets of Viscose Staple Fibre Division (excluding Power Plants), Nagda, Engineering Division, Nagda and Corporate Finance Division, Mumbai, and on Straight-line Method in respect of other assets.

The useful life of an asset is the period over which an asset is expected to be available for use by an entity, or the number of production or similar units expected to be obtained from the asset by the entity.

Useful life of part of the assets which is signifi cant to total cost of assets has been determined separately and depreciation has been provided accordingly.

In case of certain class of assets, the Company uses different useful life than those prescribed in Schedule II to the Companies Act, 2013. The useful life has been assessed based on technical advice, taking into account the nature of the asset, the estimated usage of the asset on the basis of management''s best estimation of getting economic benefi ts from those class of assets. The Company uses its technical expertise along with historical and industry trends for arriving the economic life of an asset. Such class of assets and their estimated useful lives are as under:

Continuous process plant, as defi ned in Schedule II of the Companies Act, 2013, have been classifi ed on the basis of technical assessment and depreciation is provided accordingly.

Individual assets costing less than Rs. 10,000 are depreciated in full in the year of acquisition.

Cost of Leasehold Land is amortised over the period of lease.

In respect of fi xed assets added/disposed of during the year, depreciation is provided on pro-rata basis with reference to the month of addition/deduction, however, in case of a new project the depreciation from the date of commissioning of such project is charged to Statement of Profi t and Loss.

1.19 Provision for Current and Deferred Tax:

Provision for Current Tax is made on the basis of estimated taxable income for the current accounting period in accordance with the provisions of the Income-tax Act, 1961.

Deferred Tax, resulting from timing difference between book and taxable profi t for the year, is accounted for using the Tax rates and laws enacted or substantively enacted as on the Balance Sheet date. The Deferred Tax asset is recognised and carried forward only to the extent there is a reasonable certainty of its realisation in future.

In the event of Unabsorbed Losses, deferred tax assets are recognised to the extent of virtual certainty that suffi cient future taxable income will be available to realise such assets.

1.20 Minimum Alternate Tax (MAT):

MAT is recognised as an asset only when and to the extent there is convincing evidence based on projections that the Company will pay normal Income-tax during the specifi ed period. In the year, in which the MAT credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in the Guidance Note issued by the ICAI, the said asset is created by way of a credit to the Statement of Profi t and Loss and is shown as MAT Credit Entitlement. The Company reviews the same at each Balance Sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income-tax during the specifi ed period.

1.21 Provisions/Contingencies:

A provision is recognised when there is a present obligation as a result of past event, and it is probable that an outfl ow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are determined (as provided/charged to the Statement of Profi t and Loss) based on estimate of the amount required to settle the obligation at the Balance Sheet date and are not discounted to present value.

Contingent liabilities are not recognised but are disclosed in the fi nancial statements. Claims against the Company where the possibility of materialisation is remote are not considered as contingent liabilities.

Contingent assets are neither recognised nor disclosed, in the financial statements.


Mar 31, 2014

1.1 Basis of Preparation:

The financial statements have been prepared and presented in accordance with the Generally Accepted Accounting Principles (GAAP) in India under the historical cost convention on accrual basis and comply in all material aspects with the Accounting Standards (AS) and the relevant provisions of the Companies Act, 1956, and Companies Act, 2013, as applicable, besides the pronouncements/guidelines of the Institute of Chartered Accountants of India (ICAI) and of the Securities and Exchange Board of India (SEBI).

1.2 Classification of Assets and Liabilities as Current and Non-Current:

All assets and liabilities are classified as current or non-current as per the Company''s normal operating cycle, and other criteria set out in Revised Schedule VI to the Companies Act, 1956. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, 12 months period has been considered by the Company as its normal operating cycle for the purpose of classification of assets and liabilities as current and non-current.

1.3 Use of Estimates:

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of the financial statements and reported amount of revenues and expenses during the reporting period and the disclosures relating to contingent liabilities as of the date of the financial statements. Although these estimates are based on the management''s best knowledge of current events and actions, the actual outcome may be different from the estimates. Difference between actual results and estimates are recognised in the period in which the results are known or materialise.

1.4 Government Grants:

Any government grant is recognised when there is reasonable assurance of its receipt. A capital grant relating to specific assets is reduced from the gross value of the fixed assets, and capital grant for Project Capital Subsidy is credited to Capital Reserve. Revenue grant is recognised in the Statement of Profit and Loss.

1.5 General Reserve:

General Reserve, a free reserve, is created by appropriation from profits of the current year and/or undistributed profits of previous years, before declaration of dividend duly complying with any regulations in this regard.

1.6 Fixed Assets:

Fixed assets (Tangible and Intangible) are stated at cost, less accumulated depreciation/amortisation. Cost comprises the purchase price and any attributable cost of bringing the asset to its location and working condition for its intended use. Fixed assets, retired from active use and held for sale, are stated at lower of their net book value and net realisable value, and are disclosed separately in the financial statements under Current Assets.

1.7 Treatment of Expenditure during Construction Period:

Expenditure during construction period is included under capital work-in-progress, and the same is allocated to the respective fixed assets on the completion of construction.

1.8 Impairment of Assets:

Carrying amount of assets is reviewed at the Balance Sheet date to ascertain if there is any indication of impairment based on the internal and external factors. The assets are treated as impaired when the carrying amount of the asset exceeds its recoverable amount.

An impairment loss, if any, is charged to the Statement of Profit and Loss as and when it arises. Impairment loss recognised in prior years is reversed when there is an indication that impairment loss recognised for the asset no longer exists or may have decreased.

1.9 Investments:

Long-term investments are stated at cost. However, provision for diminution is made to recognise a decline, other than temporary, in the value of the investments. Such reduction is determined and made for each investment individually.

Current investments, except current maturities of Long-term investments, are stated at lower of cost and fair value determined for each category of investments.

1.10 Inventories:

Inventories are valued at the lower of cost and net realisable value. The cost is computed on weighted-average basis. In case of sale of raw material/stores, the proceeds are credited to their respective heads.

Cost of finished goods and process stock include cost of conversion, and other costs incurred in bringing the inventories to their present location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion, and the estimated costs necessary to make the sale. In the absence of cost, waste/scrap is valued at estimated net realisable value.

Obsolete, defective, slow moving and unserviceable inventories, if any, are duly provided for.

1.11 Financial Derivatives:

Financial derivative instruments, such as swaps and options, are meant to hedge risks associated with fluctuations in foreign exchange and interest rates and, accordingly, are closely linked with the underlying transactions and are intended to be held to maturity. The underlying transactions are recorded as per the terms of the financial derivative contracts.

1.12 Revenue Recognition:

Sales revenue is recognised on transfer of the significant risks and rewards of ownership of the goods to the buyer, and stated net of sales tax, VAT, trade discounts and rebates but includes excise duty.

Income from services is recognised as they are rendered (based on agreement/arrangement with the concerned customers).

Dividend income on investments is accounted for as and when the right to receive the payment is established.

Interest income is recognised on time-proportion basis.

Export incentives and other government incentives, insurance claims and other claims, where quantum of accruals cannot be ascertained with reasonable certainty, are accounted on acceptance basis.

Profit/(Loss) on sale of investments is recorded on transfer of title from the Company, and is determined as the difference between the sale price and carrying value of investment and other incidental expenses.

1.13 Employee Benefits: Short-Term Employee Benefits

Short-term employee benefits are recognised as an expense on accrual basis.

Defined Contribution Plan

Contribution payable to the recognised provident fund and approved superannuation scheme, which are substantially defined contribution plans, are recognised as expense in the Statement of Profit and Loss, as they are incurred.

The Provident Fund contribution as specified under the law is paid to the Provident Fund set-up as an irrevocable trust by the Company or to the Regional Provident Fund Commissioner. The Company is liable for any shortfall in the fund assets based on the Government specified minimum rates of return. Such shortfall, if any, is recognised in the Statement of Profit and Loss as an expense in the year incurred.

Defined Benefit Plan

The obligation in respect of defined benefit plans, which covers Gratuity and Pension, are provided for on the basis of an actuarial valuation at the end of each financial year. Gratuity is funded with an approved fund. Actuarial gains/losses, if any, are recognised immediately in the Statement of Profit and Loss.

Other Long-Term Benefits

Long-term compensated absences are provided for on the basis of an actuarial valuation at the end of each financial year. Actuarial gains/losses, if any, are recognised immediately in the Statement of Profit and Loss.

Employee Share-Based Payments

The stock options granted under Employee Stock Option Scheme-2006 and Employee Stock Option Scheme-2013 to employees of the Company are accounted for as per the accounting treatment prescribed by the Securities and Exchange Board of India, whereby the intrinsic value of options is recognised as deferred employee compensation. The deferred employee compensation is charged to the Statement of Profit and Loss on the straight-line basis over the vesting period of the option. The employee stock option outstanding account is shown net of any unamortised deferred employee compensation.

1.14 Foreign Currency Transactions and Translation:

Foreign currency transactions are recorded at the exchange rate prevailing on the date of transaction. Monetary assets and liabilities in foreign currency, existing at the Balance Sheet date, are translated at the year-end exchange rates.

Exchange differences, including premium or discount on forward exchange contracts, arising till the commissioning of fixed assets, relating to borrowed funds and liabilities in foreign currency for acquisition of the fixed assets, are adjusted to the cost of fixed assets. All other exchange differences are recognised in the Statement of Profit and Loss.

The premium or discount on forward exchange contracts entered into to hedge an existing asset/liability is amortised as expense or income over the life of the contract. Any gain or loss arising on cancellation or renewal of such forward exchange contract is recognised as income or expense, as the case may be on such occurence.

Forward exchange contracts entered to hedge firm commitment and outstanding as at the year end are marked-to-market. In accordance with the announcement by the Institute of Chartered Accountants of India on ''Accounting for Derivatives'' the marked-to-market losses, if any, are recognised in the Statement of Profit and Loss, while gains are ignored.

Investment in Share Capital of companies registered outside India is carried in the Balance Sheet at the rates at which transactions have been executed.

Exchange difference, arising on restatement of long-term monetary items that in substance forms part of Company''s net investment in non-integral foreign operations, is accumulated in Foreign Currency Translation Reserve until the disposal of the investment, at which time such exchange difference is recognised in the Statement of Profit and Loss.

1.15 Research and Development Expenditure:

Revenue expenditure pertaining to research is charged to the Statement of Profit and Loss. Development expenditure is capitalised if such expenditure leads to creation of any intangible asset, otherwise, such expenditure is charged to the Statement of Profit and Loss. Fixed assets procured for research and development activities are capitalised.

1.16 Operating Leases:

Leases, where risk and reward of ownership are significantly retained by the lessor, are classified as operating leases, and lease rentals thereon are charged to the Statement of Profit and Loss on straight-line basis over the period of the lease.

1.17 Borrowing Costs:

Borrowing costs include interest and ancillary costs incurred in connection with the borrowings. Borrowing costs in connection with the borrowing of funds, to the extent attributable to the acquisition or construction of a qualifying asset, are capitalised as part of the cost of such asset till such time the asset is ready for its intended use. All other borrowing costs are recognised in the Statement of Profit and Loss in the period in which they are incurred.

1.18 Depreciation/Amortisation:

Depreciation/Amortisation charge is provided on fixed assets on written-down-value method in respect of fixed assets of Viscose Staple Fibre Division (excluding Power Plants), Nagda, Engineering Division, Nagda, and Corporate Finance Division, Mumbai, and on Straight-line Method in respect of other assets.

For provision of Depreciation/Amortisation the rates/useful life specified in Schedule XIV to the Companies Act, 1956, are applied except for the following assets where different useful life as stated below is used:

Assets Estimated Useful Life

Leasehold Land Over the period of lease

Motor Cars/Two-Wheelers 5 years

Computer Software 3 years

Computer and Other Electronic Office Equipment 4 years

Furniture, Fixtures and Electrical Fittings 7 years

Trademarks 10 years

Individual assets costing less than Rs. 5,000 are depreciated in full in the year of acquisition.

Continuous process plants, as defined in Schedule XIV of the Companies Act, 1956, have been classified on the basis of technical assessment and depreciation is provided accordingly.

In respect of fixed assets added/disposed off during the year, depreciation is provided on pro-rata basis with reference to the month of addition/deduction, however, in case of new projects the depreciation from the date of commissioning of such project is charged to the Statement of Profit and Loss.

1.19 Provision for Current and Deferred Tax:

Provision for Current Tax is made on the basis of estimated taxable income for the current accounting period in accordance with the provisions of the Income-tax Act, 1961.

Deferred Tax, resulting from timing difference between book and taxable profit for the year, is accounted for using the Tax rates and laws enacted or substantively enacted as on the Balance Sheet date. The Deferred Tax asset is recognised and carried forward only to the extent there is a reasonable certainty of its realisation in future.

1.20 Minimum Alternate Tax (MAT):

MAT is recognised as an asset only when and to the extent there is convincing evidence based on projections that the Company will pay normal Income-tax during the specified period. In the year in which the MAT credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in the Guidance Note issued by the ICAI, the said asset is created by way of a credit to the Statement of Profit and Loss and is shown as MAT Credit Entitlement. The Company reviews the same at each Balance Sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income-tax during the specified period.

1.21 Provisions/Contingencies:

A provision is recognised when there is a present obligation as a result of past event, and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are determined (as provided/charged to the Statement of Profit and Loss) based on estimate of the amount required to settle the obligation at the Balance Sheet date and are not discounted to the present value.

Contingent liabilities are not recognised but are disclosed in the financial statements. Claims against the Company where the possibility of materialisation is remote are not considered as contingent liabilities.

Contingent assets are neither recognised nor disclosed, in the financial statements.

2.1.7 Rights, Preferences and Restrictions attached to Equity Shares

The Company has only one class of Equity Shares having a par value of Rs. 10 per share. Each holder of Equity Shares is entitled to one vote per share. The Company declares dividend in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the Shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holders of Equity Shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of Equity Shares held by the Shareholders.

2.1.8.3 Fair Valuation

The fair value of options used to compute proforma net income and earnings per equity share has been done by an independent firm of Chartered Accountants on the date of grant using Black- Scholes Model.

The Key assumptions in Black-Scholes Model for calculating fair value as on the date of grant are:

2.2 RESERVES AND SURPLUS

2.2.1 The Board of Directors has recommended a dividend of Rs. 21 per share for the year ended, 31st March, 2014 (Previous Year Rs. 22.50 per share). The total cash outflows on account of the dividend would be Rs. 192.84 Crore (Previous Year Rs. 206.52 Crore) and on account of Corporate Dividend Tax Rs. 7.48 Crore (Previous Year Rs. 9.81 Crore).

2.2.2 Proposed Dividend (including Corporate Dividend Tax) includes Rs. 0.03 Crore (Previous Year Rs. 0.02 Crore) related to Previous Year.

2.8 TRADE PAYABLES

There is no principal amount and interest overdue to the Micro and Small Enterprises. During the year, no interest has been paid to such parties. This information has been determined to the extent such parties have been identified on the basis of information available with the Company and the same has been relied upon by the auditors.

2.11.6 Amortisation Expenses related to Trademark for the year is Rs. 10,000 (Previous Year Rs. 10,619)

2.12.2 97,142,856 Equity Shares of Rs. 10 each, received in terms of the Scheme of Amalgamation of Samruddhi Cement Limited with UltraTech Cement Limited, were locked in for a period of 3 years from the date of allotment, i.e., 26th August, 2010.

2.12.3 The investment in Company''s Subsidiary, Grasim Bhiwani Textiles Limited; its Joint Ventures, AV Cell Inc., AV Nackawic Inc., AV Terrace Bay Inc., Birla Jingwei Fibres Company Limited, Aditya Group AB; and its Associate, Idea Cellular Limited, are subject to maintenance of specified holding by the Company until the credit facility provided by certain lenders to the respective companies are outstanding.

Without guaranteeing the repayment to the lenders, the Company has also agreed that the affairs of the Subsidiary and JVs will be managed through its nominee directors on the boards of respective borrowing companies, in such a manner that they are able to meet their respective financial obligations.

2.12.4 Investment in shares of Larsen & Toubro Limited are non-transferable, pending disposal of appeal filed in earlier year by Larsen & Toubro Limited and others in the Hon''ble Bombay High Court against the single bench order of the court in favour of the Company.

2.12.5 Provision for diminution represents diminution in value of shares of Aditya Birla Power Ventures Limited (ABPVL). Application filed during the year for striking off the name of ABPVL under Section 560 of the Companies Act, 1956.

2.18 SHORT-TERM LOANS AND ADVANCES

* Includes deposit of Rs. 9.49 Crore (Previous Year Rs. 9.49 Crore) given to Aditya Birla Management Corporation Pvt. Limited (ABMCPL), Directors of which include Directors of the Company. The Company is one of the Promoter members of ABMCPL, a company limited by guarantee, which has been formed to provide a common pool of facilities and resources to its members, with a view to optimise the benefits of specialisation and minimise cost to each member. The Company''s share of expenses, under the common pool, has been accounted for under the appropriate heads.

3.12 Donations include contribution of Rs. 20 Crore (Previous Year Rs. 5.50 Crore) to General Electoral Trust (the ''Trust''), set up by the Company (along with other group companies). As per governing charter of the Trust, these contributions are used for contribution for Political purposes, as may be decided by the Board of Independent Trustees of the


Mar 31, 2013

1.1 Basis of Preparation:

The financial statements have been prepared and presented in accordance with the Generally Accepted Accounting Principles (GAAP) in India under historical cost convention on accrual basis and comply in all material aspects with the Accounting Standards (AS) and the relevant provisions prescribed in the Companies Act, 1956, besides the pronouncements/guidelines of the Institute of Chartered Accountants of India (ICAI) and of the Securities and Exchange Board of India (SEBI).

1.2 Classification of Assets and Liabilities as Current and Non-Current:

All assets and liabilities are classified as current or non-current as per the Company''s normal operating cycle, and other criteria set out in Revised Schedule VI to the Companies Act, 1956. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, 12 months period has been considered by the Company as its normal operating cycle for the purpose of current-non-current classification of assets and liabilities.

1.3 Use of Estimates:

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of the financial statements and reported amount of revenues and expenses during the reporting period and the disclosures relating to contingent liabilities as of the date of the Financial Statements. Although these estimates are based on the management''s best knowledge of current events and actions, the actual outcome may be different from the estimates. Difference between actual results and estimates are recognised in the period in which the results are known or materialise.

1.4 Government Grants:

Any government grant is recognised when there is reasonable assurance of its receipt. A capital grant relating to specific assets is reduced from the gross value of the fixed assets, and capital grant for Project Capital Subsidy is credited to Capital Reserve. Revenue grant is recognised in the Statement of Profit and Loss.

1.5 General Reserve:

General Reserve is created by appropriation from profits of the current year and/or undistributed profits of previous years, before declaration of dividend duly complying with any regulations in this regard. The General Reserve is a free reserve and can be utilised in accordance with the provisions of the Companies Act, 1956.

1.6 Fixed Assets:

Fixed assets (Tangible and Intangible) are stated at cost, less accumulated depreciation/amortisation. Cost comprises the purchase price and any attributable cost of bringing the asset to its location and working condition for its intended use. Fixed Assets retired from active use and held for sale are stated at lower of their net book value and net realisable value and are disclosed separately in the Financial Statements under Current Assets.

1.7 Treatment of Expenditure during Construction Period:

Expenditure during construction period is included under capital work-in-progress and the same is allocated to the respective fixed assets on the completion of construction.

1.8 Impairment of Assets:

Carrying amount of assets is reviewed at the Balance Sheet date if there is any indication of impairment based on the internal and external factors. The assets are treated as impaired when the carrying amount of the asset exceeds its recoverable amount.

An impairment loss, if any, is charged to the Statement of Profit and Loss as and when it arises. Impairment loss recognised in prior years is reversed when there is an indication that impairment loss recognised for the asset no longer exists or may have decreased.

1.9 Investments:

Long-term investments are stated at cost. However, provision for diminution is made to recognise a decline, other than temporary, in the value of investments, such reduction being determined and made for each investment individually.

Current investments, except current maturities of Long-term investments, are stated at lower of cost and fair value determined for each category of investments.

1.10 Inventories:

Inventories are valued at the lower of cost and net realisable value. The cost is computed on weighted- average basis. In case of sale of raw material/stores the proceeds are credited to their respective heads.

Cost of finished goods and process stock include cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale. In the absence of cost, waste/scrap is valued at estimated net realisable value.

Obsolete, defective, slow moving and/or unserviceable inventories, if any, are duly provided for.

1.11 Financial Derivatives:

Financial derivative instruments, such as swaps and options, are meant to hedge risks associated with fluctuations in foreign exchange and interest rates, and accordingly are closely linked with the underlying transactions and are intended to be held to maturity. The underlying transactions are recorded as per the terms of the financial derivative contracts.

1.12 Revenue Recognition:

Sales revenue is recognised on transfer of the significant risks and rewards of ownership of the goods to the buyer and stated net of sales tax, VAT, trade discounts and rebates but includes excise duty.

Income from services is recognised as they are rendered (based on agreement/arrangement with the concerned customers).

Dividend income on investments is accounted for as and when the right to receive the payment is established. Interest income is recognised on time-proportion basis.

Export or other government incentives, insurance claims and other claims, where quantum of accruals cannot be ascertained with reasonable certainty, are accounted on acceptance basis.

Profit on sale of investments is recorded on transfer of title from the Company and is determined as the difference between the sale price and carrying value of investment and other incidental expenses.

1.13 Employee Benefits:

Short-Term Employee Benefits

Short-term employee benefits are recognised as an expense on accrual basis.

Defined Contribution Plan

Contribution payable to recognised provident fund and approved superannuation scheme, which are substantially defined contribution plans, are recognised as expense in the Statement of Profit and Loss, as they are incurred.

The Provident Fund contribution as specified under the law is paid to the Provident Fund set-up as an irrevocable trust by the Company or to the Regional Provident Fund Commissioner. The Company is liable for any shortfall in the Fund assets based on the Government specified minimum rates of return. Such shortfall, if any, is recognised in the Statement of Profit and Loss as an expense in the year incurred.

Defined Benefit Plan

The obligation in respect of defined benefit plans, which covers Gratuity and Pension are provided for on the basis of an actuarial valuation at the end of each financial year. Gratuity is funded with an approved fund. Actuarial gains/losses, if any, are recognised immediately in the Statement of Profit and Loss.

Other Long-Tem Benefits

Long-term compensated absences are provided for on the basis of an actuarial valuation at the end of each financial year. Actuarial gains/losses, if any, are recognised immediately in the Statement of Profit and Loss.

Employee Share-Based Payments

The stock options granted under Employee Stock Option Scheme, 2006, are accounted for as per the accounting treatment prescribed by the Securities and Exchange Board of India, whereby the intrinsic value of options is recognised as deferred employee compensation. The deferred employee compensation is charged to the Statement of Profit and Loss on the straight-line basis over the vesting period of the option. The employee stock option outstanding account is shown net of any unamortised deferred employee compensation.

1.14 Foreign Currency Transactions and Translation:

Foreign currency transactions are recorded at the exchange rate prevailing on the date of transaction. Monetary assets and liabilities in foreign currency existing at the Balance Sheet date are translated at the year-end exchange rates.

Exchange differences, including premium or discount on forward exchange contracts, arising till the commissioning of fixed assets, relating to borrowed funds and liabilities in foreign currency for acquisition of the fixed assets, are adjusted to the cost of fixed assets. All other exchange differences are recognised in the Statement of Profit and Loss.

The premium or discount on forward exchange contracts entered into to hedge an existing asset/liability is amortised as expense or income over the life of the contract. Any gain or loss arising on cancellation or renewal of such a forward exchange contract is recognised as income or as expense, as the case may be, on such occurrence.

Forward exchange contracts entered to hedge firm commitment and outstanding as at the year end are marked to market. In accordance with the announcement by the Institute of Chartered Accountants of India on ''Accounting for Derivatives'', the marked to market losses, if any, are recognised in the Statement of Profit and Loss while gains are ignored.

Investment in Share Capital of companies registered outside India is carried in the Balance Sheet at the rates at which transactions have been executed.

Exchange difference arising on restatement of long-term monetary items that in substance forms part of the Company''s net investment in non-integral foreign operations is accumulated in Foreign Currency Translation Reserve until the disposal of the investment, at which time such exchange difference is recognised in the Statement of Profit and Loss.

1.15 Research and Development Expenditure:

Expenditure incurred during research phase is capitalised if such expenditure leads to creation of any intangible asset, otherwise the expenditure is charged to revenue. Fixed assets procured for research and development activities are capitalised.

1.16 Operating Leases:

Leases, where risk and reward of ownership are significantly retained by the lessor, are classified as operating leases, and lease rentals thereon are charged to the Statement of Profit and Loss equally over the period of the lease.

1.17 Borrowing Cost:

Borrowing cost includes interest and ancilliary cost incurred in connection with the borrowings. Borrowing costs, in connection with the borrowing of funds to the extent attributable to the acquisition or construction of a qualifying fixed asset, are capitalised as part of the cost of such asset till such time the asset is ready for its intended use. All other borrowing costs are recognised in the Statement of Profit and Loss in the period in which they are incurred.

1.18 Depreciation/Amortisation:

Depreciation/Amortisation charge is provided on fixed assets on written-down-value method in respect of fixed assets of Viscose Staple Fibre Division (excluding Power Plants), Nagda, Engineering Division, Nagda, and Corporate Finance Division, Mumbai, and on Straight-line Method in respect of other assets.

For provision of Depreciation/Amortisation the rates/useful life specified in Schedule XIV to the Companies Act, 1956, are applied except for the following assets where different useful life as stated below is used:

Individual assets costing less than Rs. 5,000 are depreciated in full in the year of acquisition.

Continuous process plants, as defined in Schedule XIV of the Companies Act, 1956, have been classified on technical assessment and depreciation provided accordingly.

In respect of fixed assets, added/disposed off during the year, the depreciation is provided on pro-rata basis with reference to the month of addition/deduction, however, in case of new projects the depreciation from the date of commissioning of such project is charged to the Statement of Profit and Loss.

1.19 Provision for Current and Deferred Tax:

Provision for Current Tax is made on the basis of estimated taxable income for the current accounting period in accordance with the provisions of the Income Tax Act, 1961.

Deferred Tax resulting from timing difference between book and taxable profit for the year is accounted for using the Tax rates and laws enacted or substantively enacted as on the Balance Sheet Date. The Deferred Tax asset is recognised and carried forward only to the extent there is a reasonable certainty of its realisation in future.

1.20 Minimum Alternate Tax (MAT):

MAT is recognised as an asset only when and to the extent there is convincing evidence based on projections that the Company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognised as an asset in accordance with the recommendations contained in the Guidance Note issued by the ICAI, the said asset is created by way of a credit to the Statement of Profit and Loss, and is shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income Tax during the specified period.

1.21 Provisions/Contingencies:

A provision is recognised when there is a present obligation as a result of past event, and it is probable that an outflow of resources will be required to settle the obligation and in respect of which a reliable estimate can be made. Provisions are determined (as provided/charged to the Statement of Profit and Loss) based on estimate of the amount required to settle the obligation at the Balance Sheet date and are not discounted to the present value.

Contingent liabilities are not recognised but are disclosed in the financial statements. Claims against the Company, where the possibility of materialisation is remote, are not considered as contingent liabilities.

Contingent assets are neither recognised nor disclosed in the financial statements.


Mar 31, 2012

1.1 Basis of Preparation:

The financial statements have been prepared and presented in accordance with the Generally Accepted Accounting Principles (GAAP) in India under historical cost convention on accrual basis and comply in all material aspects with the Accounting Standards (AS) and the relevant provisions prescribed in the Companies Act, 1956, besides the pronouncements/guidelines of the Institute of Chartered Accountants of India and of the Securities and Exchange Board of India.

1.2 Use of 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 reported amount of revenues and expenses during the reporting period. Although these estimates are based on the management's best knowledge of current events and actions, the actual outcome may be different from the estimates. Difference between actual results and estimates are recognised in the period in which the results are known or materialise.

1.3 Government Grants:

Any government grant is recognised when there is reasonable assurance of its receipt. A capital grant relating to specific assets is reduced from the gross value of the fixed assets and capital grant for Project Capital Subsidy is credited to Capital Reserve. Revenue grant is recognised in the Statement of Profit and Loss.

1.4 General Reserve:

General Reserve is created by appropriation from profits of the current year and/or undistributed profits of previous years, before declaration of dividend duly complying with any regulations in this regard. The General Reserve is a free reserve and can be utilised in accordance with the provisions of the Companies Act, 1956.

1.5 Fixed Assets:

Fixed assets (Tangible and Intangible) are stated at cost, less accumulated depreciation/amortisation. Cost comprises the purchase price and any attributable cost of bringing the asset to its location and working condition for its intended use.

1.6 Treatment of Expenditure during Construction Period:

Expenditure during construction period is included under capital work-in-progress and the same is allocated to the respective fixed assets on the completion of construction.

1.7 Impairment of Assets:

Carrying amount of assets is reviewed at the Balance Sheet date if there is any indication of impairment based on the internal and external factors.

The assets are treated as impaired when the carrying amount of the asset exceeds its recoverable amount. An impairment loss, if any, is charged to the Statement of Profit and Loss as and when it arises. Impairment loss recognised in prior years is reversed when there is an indication that impairment loss recognised for the asset no longer exists or may have decreased.

1.8 Classification of Assets and Liabilities as Current and Non-Current:

All assets and liabilities are classified as current or non-current as per the Company's normal operating cycle and other criteria set out in Schedule VI to the Companies Act, 1956. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, 12 months has been considered by the Company for the purpose of current - non- current classification of assets and liabilities.

1.9 Investments:

Investments are classified as Current and Non-Current. Current Investments are those investments which are readily realisable, and are intended to be held for not more than one year from the date of investment. All other investments are classified as long-term investments.

Current investments are stated at lower of cost and fair value determined for each category of investments.

Long-term investments are stated at cost. However, provision for diminution is made to recognise a decline, other than temporary, in the value of the investments, such reduction being determined and made for each investment individually.

1.10 Inventories:

Inventories are valued at the lower of cost and net realisable value. The cost is computed on weighted- average basis. In case of sale of raw material/stores the proceeds are credited to their respective heads.

Cost of finished goods and process stock include cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale. In the absence of cost, waste/scrap is valued at estimated net realisable value.

Obsolete, defective, slow moving and/or unserviceable inventories, if any, are duly provided for.

1.11 Financial Derivatives:

Financial derivative instruments, such as swaps and options, are meant to hedge risks associated with fluctuations in foreign exchange and interest rates, and accordingly are closely linked with the underlying transactions and are intended to be held to maturity. The underlying transactions are recorded as per the terms of the financial derivative contracts.

1.12 Revenue Recognition:

Sales revenue is recognised on transfer of the significant risks and rewards of ownership of the goods to the buyer and stated net of sales tax, VAT, trade discounts and rebates but includes excise duty.

Income from services is recognised as they are rendered (based on agreement/arrangement with the concerned customers).

Dividend income on investments is accounted for as and when the right to receive the payment is established.

Interest income is recognised on time proportion basis.

Income against claims of the Company, viz., export incentives, insurance and railway claims, etc., is recognised on accrual/right to receive basis.

Profit on sale of investments is recorded on transfer of title from the Company and is determined as the difference between the sale price and carrying value of Investment and other incidental expenses.

1.13 Employee Benefits:

Short-term employee benefits and contribution to defined contribution plans are recognised as an expense on accrual at the undiscounted amount in the Statement of Profit and Loss.

The Provident Fund contribution as specified under the law is paid to the Provident Fund set up as an irrevocable trust by the Company or to the Regional Provident Fund Commissioner. The Company is liable for any shortfall in the Fund assets based on the Government specified minimum rates of return. Such shortfall, if any, is recognised in the Statement of Profit and Loss.

Long-term employee benefits, including deferred post-employment benefits, are recognised as an expense, at the present value of the amounts payable determined using actuarial valuation techniques. Actuarial gains and losses in respect of post-employment and other long-term benefits are charged to the Statement of Profit and Loss. Gratuity is funded with an approved fund.

1.14 Employee Share-Based Payments:

The stock options granted under Employee Stock Option Scheme, 2006, are accounted for as per the accounting treatment prescribed by the Securities and Exchange Board of India, whereby the intrinsic value of options is recognised as deferred employee compensation. The deferred employee compensation is charged to the Statement of Profit and Loss on the straight-line basis over the vesting period of the option. The employee stock option outstanding account is shown net of any unamortised deferred employee compensation.

1.15 Foreign Currency Transactions:

Foreign currency transactions are recorded at the exchange rate prevailing on the date of transaction. Monetary assets and liabilities in foreign currency existing at the Balance Sheet date are restated at the year-end exchange rates.

The premium or discount on forward exchange contracts entered into to hedge an existing asset/liability is amortised as expense or income over the life of the contract. Any profit or loss arising on cancellation or renewal of such a forward exchange contract is recognised as income or as expense as the case may be on such occurrence.

Forward exchange contracts, outstanding as at the year end on account of firm commitment are marked to market. In accordance with the announcement by the Institute of Chartered Accountants of India on 'Accounting for Derivatives' the losses, if any, are recognised in the Statement of Profit and Loss while gains are ignored.

Exchange differences, including premium or discount on forward exchange contracts, arising till the commissioning of fixed assets, relating to borrowed funds and liabilities in foreign currency for acquisition of the fixed assets, are adjusted to the cost of fixed assets. All other exchange differences are recognised in the Statement of Profit and Loss.

1.16 Research and Development Expenditure:

Expenditure incurred during research phase is capitalised if such expenditure leads to creation of any intangible asset, otherwise the expenditure is charged to revenue. Fixed assets procured for research and development activities are generally capitalised.

1.17 Operating Leases:

Leases, where risk and reward of ownership, are significantly retained by the lessor are classified as operating leases, and lease rentals thereon are charged to the Statement of Profit and Loss equally over the period of the lease.

1.18 Borrowing Cost:

Interest and other costs in connection with the borrowing of funds to the extent attributable to the acquisition or construction of a qualifying fixed asset are capitalised as part of the cost of such asset till such time the asset is ready for its intended use. All other borrowing costs are recognised in the Statement of Profit and Loss in the period in which they are incurred.

1.19 Depreciation/Amortisation:

Depreciation/Amortisation charge is provided on fixed assets on written-down-value method in respect of fixed assets of Viscose Staple Fibre Division (excluding Power Plants), Nagda, Engineering Division, Nagda and Corporate Finance Division, Mumbai, and on Straight-line Method in respect of other assets.

For provision of Depreciation/Amortisation the rates/useful life specified in Schedule XIV of the Companies Act, 1956, are applied except for the following assets where different useful life as stated below is used:

Asset Estimated Useful Life

Leasehold Land over the period of lease

Motor Cars 5 years

Computer Software 3 years

Computer and Other Electronic Office Equipment 4 years Furniture, Fixtures and Electrical Fittings 7 years

Individual assets costing less than Rs 5,000 are depreciated in full in the year of acquisition.

Continuous process plants as defined in Schedule XIV of the Companies Act, 1956, have been classified on technical assessment and depreciation provided accordingly.

In respect of fixed assets added/disposed off during the year depreciation is provided on pro-rata basis with reference to the month of addition/deduction, however, in case of new projects the depreciation from the date of commissioning of such project is charged to the Statement of Profit and Loss.

1.20 Provision for Current and Deferred Tax:

Provision for Current Tax is made on the basis of estimated taxable income for the current accounting period in accordance with the provisions of the Income Tax Act, 1961.

Deferred Tax resulting from timing difference between book and taxable profit for the year is accounted for using the Tax rates and laws that are applicable as on the Balance Sheet Date. The Deferred Tax asset is recognised and carried forward only to the extent there is a reasonable certainty of its realisation in future.

1.21 Segment Reporting:

The accounting policies adopted for segment reporting are in conformity with the accounting policies adopted for the Company.

Primary Segments are identified based on the nature of products and services, the different risks and returns and the internal business reporting system. Revenue, Expense, Assets and Liabilities, which relate to the Company as a whole and could not be allocated to segments on a reasonable basis, have been classified as Unallocated.

Secondary segment is identified based on geography in which major operating divisions of the Company operate.

Inter-segment revenue have been accounted for based on the transaction price agreed to between the segments, which is primarily market based.

1.22 Provisions/Contingencies:

A provision is recognised when there is a present obligation as a result of past event, and it is probable that an outflow of resources will be required to settle the obligation and in respect of which a reliable estimate can be made. Provisions are determined (as provided/charged to the Statement of Profit and Loss) based on estimate of the amount required to settle the obligation at the Balance Sheet date and are not discounted to present value.

Contingent liabilities are not recognised but are disclosed in the financial statements. Claims against the Company where the possibility of materialisation is remote are not considered as contingent liabilities. Contingent assets are neither recognised nor disclosed in the financial statements.


Mar 31, 2011

1. Accounting Concepts:

The financial statements are prepared and presented in accordance with the Generally Accepted Accounting Principles (GAAP) in India and comply in all material aspects with the Accounting Standards (AS) notified under the Companies (Accounting Standard) Rules, 2006 (as amended), other pronouncements of the Institute of Chartered Accountants of India, the relevant provisions of the Companies Act, 1956, and guidelines issued by Securities and Exchange Board of India.

2. Use of Estimates:

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

3. Fixed Assets:

Fixed assets are stated at cost, less accumulated depreciation/amortisation. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use.

4. Foreign Currency Transactions:

Foreign currency transactions are recorded at the exchange rate prevailing on the date of transaction. Monetary assets and liabilities in foreign currency existing at Balance Sheet date are translated at the year-end exchange rates.

Exchange differences, including premium or discount on forward exchange contracts, arising till the commissioning of fixed assets, relating to borrowed funds and liabilities in foreign currency for acquisition of the fixed assets, are adjusted to the cost of fixed assets. Other premium or discount on forward exchange contracts is amortised as expense or income over the life of the contract. All other exchange differences are recognised in the Profit and Loss Account.

5. Financial Derivatives:

Financial derivative instruments, such as Swaps and Options, are used to hedge risks associated with fluctuations in foreign exchange and interest rates. The derivative contracts are closely linked with the underlying transactions and are intended to be held to maturity. The underlying transactions are recorded as per terms of the financial derivative contracts.

6. Treatment of Expenditure during Construction Period:

Expenditure during construction period is included under Capital Work-in-Progress and the same is allocated to the respective fixed assets on the completion of construction.

7. Investments:

Investments are classified as long term based on management intention, all other investments are classified as current investments. Current investments are stated at lower of cost and fair value. Long term investments are stated at cost after deducting provisions made, if any, for permanent diminution (i.e., other than temporary diminution) in value.

8. Inventories:

Inventories, except scrap, are valued at the lower of cost and net realisable value. Waste/Scrap is valued at net realisable value. The cost is computed on weighted-average basis. Proceeds in respect of sale of raw material/stores are credited to their respective heads.

Cost of Finished goods and process stock include cost of conversion and other costs incurred in bringing the inventories to their present location and condition.

Obsolete, defective, slow moving and unserviceable inventories are duly provided for.

9. Research and Development Expenditure:

Expenditure incurred during research phase is charged to revenue when no intangible asset arises from such research. Fixed Assets procured for research and development activities are generally capitalised.

10. Depreciation/Amortisation:

Depreciation/Amortisation charge is provided for on the following basis:

(a) On fixed assets on written-down-value method in respect of Viscose Staple Fibre Division, Nagda, Engineering Division, Nagda and Corporate Finance Division, Mumbai and on Straight Line Method in respect of assets of other Divisions including Power Plants at Nagda; applying the rates/useful life specified in Schedule XIV of the Companies Act, 1956, except as stated hereunder:

Asset Estimated Useful Life

Leasehold Land over the period of lease

Motor Cars 5 years

Computer Software 3 years

Computer and Other Electronic Office Equipment 4 years

Furniture, Fixtures and Electrical Fittings 7 years

Continuous process plants as defined in Schedule XIV of the Companies Act, 1956, have been classified on technical assessment and depreciation provided accordingly.

(b) In respect of Revalued Fixed Assets, on straight line method on the gross value of assets as increased by the amount of revaluation at lower rates, based on life of assets, as ascertained by the valuers.

(c) In respect of fixed assets added/disposed off during the year on pro-rata basis with reference to the month of addition/deduction except in case of new projects where it is provided on the basis of days of use.

(d) Individual assets costing less than Rs. 5,000 are depreciated in full in the year of acquisition.

11. Impairment of Assets:

Carrying amount of assets is reviewed at the Balance Sheet date if there is indication of impairment based on the internal and external factors.

The assets are treated as impaired when the carrying amount of asset exceeds its recoverable amount. An impairment loss, if any, is charged to the Profit and Loss Account in the year in which the asset is identified as impaired. Reversal of impairment loss recognised in prior years is recorded when there is an indication that impairment loss recognised for the asset no longer exists or has decreased.

12. Revenue Recognition:

Sales revenue is recognised on transfer of the significant risks and rewards of ownership of the goods to the buyer and stated at net of sales tax, VAT, trade discounts and rebates but includes excise duty.

Dividend income on investments is accounted for when the right to receive the payment is established.

Interest income is recognised on time proportion basis.

Income against claims of the Company, viz., export incentives, insurance and railway claims, etc., is recognised on accrual/right to receive basis. However, where the quantum of accrual cannot be ascertained with reasonable certainty, the same is accounted on acceptance basis.

Profit on sale of investments is recorded on transfer of title from the Company and is determined as the difference between sale price, carrying value of Investment and other incidental Expenses.

13. Employee Benefits:

(a) Short-term employee benefits and contribution to defined contribution plans are recognised as an expense on accrual at the undiscounted amount in the Profit and Loss Account.

The contribution as specified under the law are paid to the Provident Fund set up as irrevocable trust by the Company or to the Regional Provident Fund Commissioner. The Company is generally liable for annual contribution and any shortfall in the fund assets based on the government specified minimum rates of return. Such contributions and shortfall, if any, are recognised in the Profit and Loss Account as an expense in the year incurred.

(b) Post-employment and other long-term employee benefits are recognised as an expense, at the present value of the amounts payable determined using actuarial valuation techniques. Actuarial gains and losses in respect of post-employment and other long term benefits are charged to the Profit and Loss Account.

(c) Employee Stock Option Scheme: The stock options granted are accounted for as per the accounting treatment prescribed by Employee Stock Option Scheme and Employee Stock Purchase Guidelines, 1999, issued by Securities and Exchange Board of India, whereby the intrinsic value of options is recognised as deferred employee compensation. The deferred employee compensation is charged to Profit and Loss Account on straight line basis over the vesting period of the option. The employee stock option outstanding account is shown net of any unamortised deferred employee compensation.

14. Government Grants:

Government grants are recognised when there is reasonable assurance that the same will be received. Capital grants relating to specific assets are reduced from the gross value of the fixed assets and capital grants for Project Capital Subsidy are credited to Capital Reserve. Revenue grants are recognised in the Profit and Loss Account.

15. Borrowing Cost:

Interest and other costs in connection with the borrowing of the funds to the extent related/attributed to the acquisition/construction of qualifying fixed assets are capitalised upto the date when such fixed assets are ready for their intended use and all other borrowing costs are charged to Profit and Loss Account.

16. Provision for Current and Deferred Tax:

Provision for Current Tax is made on the basis of estimated taxable income for the current accounting period in accordance with the provisions of the Income Tax Act, 1961. Deferred Tax resulting from timing difference between book and taxable profit for the year is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the Balance Sheet date. The deferred tax asset is recognised and carried forward only to the extent there is a reasonable certainty that the deferred tax assets will be realised in future.

17. Operating Leases:

Leases where significant portion of risk and reward of ownership are retained by the Lessor are classified as Operating Leases and lease rentals thereon are charged to Profit and Loss Account over the period of the lease.

18. Provisions/Contingencies:

A provision is recognised when there is a present obligation as a result of past event, and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are determined (as provided/charged to Profit and Loss Account) based on best estimate of the amount required to settle the obligation at the Balance Sheet date.

Contingent Liabilities are not recognised but are disclosed, and Contingent Assets are neither recognised nor disclosed, in the financial statements.


Mar 31, 2010

1. Accounting Concepts:

The financial statements are prepared and presented in accordance with the Generally Accepted Accounting Principles (GAAP) in India and comply in all material aspects with the Accounting Standards (AS) notified under the Companies (Accounting Standard) Rules, 2006 (as amended), other pronouncements of the Institute of Chartered Accountants of India, the relevant provisions of the Companies Act, 1956, and guidelines issued by Securities and Exchange Board of India.

2. Use of Estimates:

The preparation of financial statements require estimates and assumptions to be made that effects the reported amount of assets and liabilities on the date of financial statements and 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/materialise.

3. Fixed Assets:

Fixed Assets are stated at cost, less accumulated depreciation/amortisation. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use.

4. Fixed Assets Held for Disposal:

Fixed assets held for disposal are stated at the lower of net book value and net realisable value.

5. Foreign Currency Transactions:

Foreign currency transactions are recorded at the exchange rate prevailing on the date of transaction. Monetary assets and liabilities in foreign currency existing at Balance Sheet date are translated at year-end exchange rates. Exchange differences, including premium or discount on forward exchange contracts, arising till the commissioning of fixed assets, relating to borrowed funds and liabilities in foreign currency for acquisition of the fixed assets, are adjusted to the cost of fixed assets. Other premium or discount on forward exchange contracts is amortised as expense or income over the life of the contract. All other exchange differences are recognised in Profit and Loss Account.

6. Financial Derivatives:

Financial Derivative instruments, such as Swaps and Options, are used to hedge risks associated with fluctuations in foreign exchange and interest rates. The derivative contracts are closely linked with the underlying transactions and are intended to be held to maturity. The underlying transactions are recorded as per terms of the financial derivative contracts.

7. Treatment of expenditure during construction period:

Expenditure during construction period is included under Capital Work in Progress and the same is allocated to the respective fixed assets on the completion of construction.

8. Investments:

Investments are classified as long term based on management intention, all other investments are classified as current investment. Current investments are stated at lower of cost and fair value. Long term investments are stated at cost after deducting provisions made, if any, for permanent diminution (i.e. other than temporary diminution) in value.

9. Inventories:

Inventories, except scrap, are valued at the lower of cost and net realisable value. Waste/Scrap is valued at net realisable value. The cost is computed on weighted average basis.

Cost of Finished goods and process stock include cost of conversion and other costs incurred in bringing the inventories to their present location and condition.

Obsolete, defective, slow moving and unserviceable inventories are duly provided for.

10. Research and Development Expenditure:

Expenditure incurred during research phase is charged to revenue when no intangible asset arises from such research. Assets procured for research and development activities are generally capitalised.

11. Depreciation/Amortisation:

Depreciation/Amortisation charge is provided for on the following basis:

(a) On fixed assets on written down value method in respect of Viscose Staple Fibre Division Nagda, Engineering Division Nagda and Corporate Finance Division Mumbai and on Straight Line Method in respect of assets of other Divisions including Power Plants at Nagda; applying the rates/useful life specified in Schedule XIV of the Companies Act, 1956, except as stated hereunder:

Asset Estimated useful life

Leasehold Land over the period of lease

Capital Expenditure on Assets not owned 5 years

Motor Cars 5 years

Computer Software 3 years

Computer and Other Electronic Office Equipments 4 years

Furniture, Fixtures and Electrical Fittings 7 years

Continuous process plants as defined in Schedule XIV have been classified on technical assessment and depreciation provided accordingly.

(b) In respect of Revalued Fixed Assets, on straight line method on the gross value of assets as increased by the amount of revaluation at lower rates, based on life of assets, as ascertained by the valuers.

(c) In respect of fixed assets added/disposed off during the year on pro-rata basis with reference to the month of addition/deduction except in case of new projects where it is provided on the basis of days of use.

12. Impairment of Assets:

Carrying amount of assets is reviewed at Balance Sheet date if there is indication of impairment based on the internal and external factors.

The assets are treated as impaired when the carrying amount of asset exceeds its recoverable amount. An impairment loss, if any, is charged to Profit and Loss Account in the year in which the asset is identified as impaired. Reversal of impairment loss recognised in prior years is recorded when there is an indication that impairment loss recognised for the asset no longer exists or has decreased.

13. Revenue Recognition:

(a) Sales revenue is recognised on transfer of the significant risks and rewards of ownership of the goods to the buyer and stated at net of sales tax, VAT, trade discounts and rebates but includes excise duty.

(b) Income from services is recognised as the services are rendered, based on agreement/arrangement with the concerned parties.

(c) Dividend income on investments is accounted for when the right to receive the payment is established.

(d) Interest income is recognised on time proportion basis.

(e) Certain claims of the Company, viz., export incentives, insurance, railway, etc. in respect of which quantum of accruals cannot be ascertained with reasonable certainity, are accounted on acceptance basis.

(f) Profit on sale of investments is recorded on transfer of title from the Company and is determined as the difference between sale price, carrying value of Investment and other incidental expenses.

14. Employee Benefits:

(a) Short term employee benefits and contribution to defined contribution plans are recognised as an expense on accrual at the undiscounted amount in the Profit and Loss Account.

The contribution as specified under the law are paid to the provident fund setup as irrevocable trust by the Company or to the Regional Provident Fund Commissioner. The Company is generally liable for annual contribution and any shortfall in the fund assets based on the government specified minimum rates of return and recognises such contributions and shortfall, if any, as an expense in the year incurred.

(b) Post-employment and other long term employee benefits are recognised as an expense, at the present value of the amounts payable determined using actuarial valuation techniques, in the Profit and Loss

Account for the year Actuarial gains and losses in respect of post-employment and other long term benefits are charged to the Profit and Loss Account.

(c) Employee Stock Option Scheme: The intrinsic value of options granted under Employee Stock Option Scheme is recognised as deferred compensation cost and amortised over the vesting period.

15. Government Grants:

Government Grants are recognised when there is reasonable assurance that the same will be received. Capital grants relating to specific assets are reduced from the gross value of the Fixed Assets and capital grants for Project Capital Subsidy are credited to Capital Reserve. Revenue grants are recognised in the Profit and Loss Account.

16. Borrowing Cost:

Interest and other costs, in connection with the borrowing of the funds to the extent related/attributed to the acquisition/construction of qualifying fixed assets, are capitalised upto the date when such fixed assets are ready for their intended use and all other borrowing costs are charged to Profit and Loss Account.

17. Provision for Current and Deferred Tax:

Provision for Current Tax is made on the basis of estimated taxable income for the current accounting period in accordance with the provisions of the Income tax Act, 1961. Deferred Tax resulting from timing difference between book and taxable profit for the year is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. The deferred tax asset is recognised and carried forward only to the extent there is a reasonable certainty that the deferred tax assets will be realised in future.

18. Mines Restoration Expenditure:

The Company provides for the expenditure to restore the mines based on technical estimates by internal/ external specialists. The total estimate of restoration expenditure is apportioned over the estimated quantities of total mineral reserves and provision is made based on the minerals mined during the year.

19. Operating Leases:

Leases where significant portion of risk and reward of ownership are retained by the Lessor are classified as Operating Leases and lease rentals thereon are charged to Profit and Loss Account.

20. Provisions/Contingencies:

A provision is recognised when there is a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are determined (as provided/charged to Profit and Loss Account) based on best estimate of the amount required to settle the obligation at the Balance Sheet date.

Contingent Liabilities are not recognised but are disclosed and Contingent Assets are neither recognised nor disclosed, in the financial statements.

 
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