Home  »  Company  »  Guj. Alkalie & C  »  Quotes  »  Accounting Policy
Enter the first few characters of Company and click 'Go'

Accounting Policies of Gujarat Alkalies & Chemicals Ltd. Company

Mar 31, 2015

(1) Accounting Convention

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013 ("the 2013 Act") as applicable. The financial statements have been prepared on accrual basis under the historical cost convention. Except where otherwise stated, the accounting policies are consistently applied.

All the assets and liabilities have been classified as current or non-current as per the Company's normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013.

Current assets / liabilities include the current portion of noncurrent financial assets / liabilities respectively. All other assets / liabilities are classified as noncurrent.

(2) Use of estimates

The preparation of financial statements in conformity with Indian GAAP requires management to make assumptions, critical judgements and estimates, which it believes are reasonable under the circumstances, that affect the reported amounts of assets, liabilities and contingent liabilities on the date of financial statements and the reported amounts of revenue and expenses during the period. Actual results could differ from those estimates. Difference between the actual results and estimates are recognized in the period in which the results are known or materialize.

(3) Revenue Recognition

(A) Sales

Revenue from sale of goods is recognized on accrual basis when the significant risks and rewards of ownership of goods are transferred to the customers, which generally coincides with the delivery of goods to customers. Sales are net of discounts, Sales Tax and Value Added Tax but includes handling charges and packing charges. Excise Duty collected on sales are shown by way of deduction from sales.

(B) Revenue with respect to Other Operating Income and Other Income is recognized when a reasonable certainty as to its realization exists. Income is accounted for on accrual basis, except in case of following:

(i) Insurance and other claims are accounted when received.

(ii) Compensation (Net) from the Multilateral Fund towards the phasing out of CTC product under Montreal Protocol is accounted when received.

(iii) Receipts against monetisation of Certified Emission Reduction (CER) under Kyoto Protocol for Clean Development Mechanism are accounted as and when received.

(C) Other Income

i. Dividend income is accounted for when the right to receive it is established.

ii. Interest income is recognized using the time- proportion method, based on rates implicit in the transaction.

(4) Fixed Assets and Depreciation

(a) Fixed Assets

(i) Tangible Assets are stated at cost of acquisition or construction less accumulated depreciation. In case of capital expenditure, such costs of acquisition or construction are capitalised upto the date the asset is ready for its intended use. Interest, commitment and other charges on borrowings directly attributable to acquisition of qualifying fixed assets up to date the asset is ready for its intended use are considered as cost of fixed asset.

Further, in respect of grass root projects, initial and pre-operative expenditure incurred prior to date the asset is ready for its intended use are also considered as cost of relevant projects.

(ii) Cost of major civil works required as plant and machinery supports is considered as Plant and Machinery.

(iii) In respect of plant & machinery acquired on lease, lease rent payable on such assets prior to completion of the project is capitalised.

(iv) Other Capital Expenditure :

When heavy expenditure for sustaining plant efficiency is required to be incurred and the benefit from this expenditure is to extend for a number of years, such heavy expenditure, is treated as "Other Capital Expenditure" and shown as "Tangible Assets" and carried forward for amortisation over useful life of facilities, after facilities is ready for its intended use/completion of the job.

(v) The Company's Contribution or Expenditure incurred in securing requirements of Utilities and Services without acquiring ownership rights on the assets so created are written off over an appropriate period.

(b) Accounting for Finance Lease

(i) The Company is capitalising the assets acquired under finance lease at fair value/ contracted price and charging depreciation on it in accordance with Accounting Standard -19 "Leases".

(ii) The lease rents paid/payable on these assets have been bifurcated into interest and principal and accordingly interest has been charged to revenue and principal has been reduced from the liability of lessor.

(iii) On completion of the finance lease, the value of the said leased asset is considered as an asset of the Company, at the Gross / Net value appearing in Balance Sheet on the date of the completion of the lease.

(iv) The Residual value payable on the termination of finance lease is accounted as Revenue Expenditure.

(c) Leasehold Land / Right of Use of Land

Cost of leasehold Land and right of use of land are amortised over the period of lease.

(d) Depreciation

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

Depreciation on tangible fixed assets has been provided on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013 except in respect of the following categories of assets, in whose case the life of the assets has been assessed as under based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers warranties and maintenance support, etc.:

(i) Remembraning of Membrane cell elements - 4 years.

(ii) Recoating of Anode & Cathode of membrane cell elements - 8 years.

(iii) Leasehold land is amortised over the duration of the lease.

Depreciation on additions during the year is charged from the date of the asset is ready for its intended use.

Depreciation on assets disposed off / discarded during the year is charged upto the date of disposal / discarded.

(e) Impairment of Assets

Impairment loss, if any, is provided to the extent, the carrying amount of assets exceeds lower of their recoverable amount or value in use. Company assesses impairment of asset at each Balance Sheet date.

(5) Investments

Long-term investments (excluding investment properties), are carried individually at cost less provision for diminution, other than temporary, in the value of such investments. Current investments are carried individually, at the lower of cost and fair value. Cost of investments include acquisition charges such as brokerage, fees and duties.

(6) Foreign Exchange Transactions

(i) Transactions in foreign currency are recorded at the exchange rates prevailing at the time of transaction. Any difference arising on actual payment / realisation is accounted under exchange variation account.

(ii) Other current assets & liabilities at the end of the year are being valued at the exchange rate prevailing on the date of Balance Sheet and difference arising is accounted as exchange difference and charged/credited to Statement of Profit and Loss.

(iii) Exchange difference on long-term foreign currency monetary items:

The exchange differences arising on settlement / restatement of long-term foreign currency monetary items are capitalised / decapitalised as part of the depreciable fixed assets to which the monetary item relates and depreciated over the remaining useful life of such assets.

(7) Inventories

Inventories are valued at the lower of cost (weighted average basis) and the net realisable value. Cost incurred in bringing inventories to its existing location and condition are determined on following basis:

(a) Cost of Raw materials, packing materials, stores & spares and process materials includes all cost incurred in bringing the goods to its present condition and location, including other levies, transit insurance and receiving charges.

(b) Work-in-progress and finished goods (including finished goods in transit and Consignment Stocks) include appropriate proportion of overheads and where applicable, Excise Duty.

(c) By-products are valued at net realisable value.

(d) Consumable stores categorised separately are charged to Statement of Profit and Loss at the time of purchase.

(e) Stores and spares issued to consuming departments and which are in the process of utilisation and / or remaining with them at the year end are included in the inventory at the weighted average cost.

(8) CENVAT and Value Added Tax Credit

(i) CENVAT and VAT Credit available on the material (inputs) is adjusted against purchases.

(ii) Cenvat and VAT Credit available on capital goods is adjusted against the cost of the capital assets.

(iii) The CENVAT and VAT credit available on purchase of raw materials, other eligible inputs and capital goods is utilised against Excise Duty and VAT payable on clearance / sale of goods produced. The unutilised CENVAT and VAT credit is shown under the head "Loans and Advances".

(iv) CENVAT and VAT benefits are accounted on accrual basis.

(9) Taxation

(i) Current tax is determined as the amount of tax payable in respect of taxable income for the period. Deferred tax is recognised, subject to the consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate in one period and is capable of reversal in one or more subsequent periods.

(ii) Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal Income Tax. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is highly probable that future economic benefit associated with it will flow to the Company.

(iii) Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. However, if there are unabsorbed depreciation and carry forward of losses and items relating to capital losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that there will be sufficient future taxable income available to realise the assets.

(10) Employee Benefits

a. Short term Employee Benefits

All employee benefits payable wholly within twelve months of rendering the services are classified as short term employee benefits. Benefits such as salaries, wages etc. and the expected cost of bonus, Ex-gratia, Leave Travel Allowance, Reimbursement of Medical Expenses, Personal Accident Policy, Deposit Linked Insurance Policy are recognised in the period in which the employee renders the related services.

b. Post-Employment Benefits

(i) Defined Contribution Plan : The Company's contribution paid/ payable during the year to Provident Fund, Superannuation Fund and other welfare funds are considered as defined contribution plans. The Contribution paid/ payable under these plans are recognised during the period in which the employee renders the services.

(ii) Defined Benefit Plans : The Gratuity scheme managed by Trust is considered as defined benefit plan. The present value of the obligation is determined based on actuarial valuation using the Projected Unit Credit Method.

Actuarial gains and losses are recognised immediately in the Statement of Profit & Loss. The fair value of the plan assets is reduced from the gross obligation under the defined benefit plan to recognise the obligation on net basis.

Gains or losses on the curtailment or settlement of any defined benefit plan are recognised when the curtailment or settlement occurs.

c. Long term Employee Benefits

The obligation for long term employee benefits such as long term compensated absences, long service awards etc. is recognised in the same manner as in the case of defined benefit plans as mentioned in (b) (ii) above.

(11) Research and Development

The capital expenditure in respect of Research and Development activities is charged to Statement of Profit and Loss in the year in which it is incurred.

(12) Prior Period Adjustments / Exceptional items

All identifiable items of Income and Expenditure pertaining to prior period are accounted as "Prior Period Items". "Exceptional items" are accounted depending on the nature of transaction.

(13) Borrowing Cost

Borrowing Costs attributable to the acquisition and construction of qualified assets are capitalised as part of the cost of such asset upto the date when all the activities necessary to prepare that asset for its intended use are completed. Other borrowing costs are treated as revenue expenditure.

(14) Provision and Contingencies

A provision is recognised when the Company has a present obligation as a result of past events 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 (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the Notes. Contingent assets are not recognised in the financial statements.


Mar 31, 2013

(1) Accounting Convention

The Financial Statements are prepared based on historical cost convention of accounting and in accordance with the prevalent Accounting Standards and the provisions of the Companies Act, 1956 as amended, except to the extent disclosed in the Notes on Accounts.

(2) Revenue Recognition

(A) Sales

Revenue is recognised with respect to Sales (net of discount) on accrual basis, including handling charges and packing charges but exclude Excise Duty and Sales Tax / Value Added Tax on accrual basis.

(B) Revenue is recognised with respect to Other Operating Income and Other Income on accrual basis with disclosed exceptions on receipt basis as under:

(a) Other Operating Income

(i) Insurance and other claims treated as Other Operating Income. However, insurance claims are adjusted towards replacement cost on selective basis.

(ii) Compensation (Net) received from the Multilateral Fund towards the phasing out of CTC product under Montreal Protocol.

(iii) Receipt against monetisation of Certified Emission Reduction (CER) under Kyoto Protocol for Clean Development Mechanism.

(b) Other Income

(i) Dividend Income

(3) Tangible Assets, Tangible Assets under lease, Capital Work in Progress, Expenditure on New Projects, Depreciation and Amortisation

(a) Tangible Assets, Tangible Assets under lease, Capital Work in Progress and Expenditure on New Projects:

(i) Tangible Assets are stated at cost of acquisition or construction less accumulated depreciation. In case of capital expenditure, such costs of acquisition or construction are capitalised upto the date the assets are put to use. Interest, commitment and other charges on borrowings, as also expenditure directly attributable to specific project upto its commissioning are accumulated as cost of relevant projects.

Further, in respect of grass root projects, initial and pre-operative expenditure incurred prior to commissioning of the projects are also considered as cost of relevant projects.

(ii) Capital Assets/Expenditure on new projects under erection / installation are reflected in Balance Sheet as "Capital Work-in-Progress".

(iii) Cost of major civil works required as plant and machinery supports is considered as Plant and Machinery.

(iv) In respect of plant & machinery acquired on lease, lease rent payable on such assets prior to completion of the project is capitalised.

(v) Advances to suppliers, contractors and others for new projects are included in long term loans and advances.

(b) Accounting for Finance Lease :

(i) The Company is capitalising the assets acquired under finance lease at fair value/contracted price and charging depreciation on it in accordance with Accounting Standard -19 "Leases".

(ii) The lease rents paid/payable on these assets have been bifurcated into interest and principal and accordingly interest has been charged to revenue and principal has been reduced from the liability of lessor.

(iii) On completion of the finance lease, the value of the said leased asset is considered as an asset of the Company, at the Gross / Net value appearing in Balance Sheet on the date of the completion of the lease.

(iv) The Residual value payable on the termination of finance lease is accounted as Revenue Expenditure.

(c) Leasehold Land / Right of Use of Land :

Cost of leasehold Land and right of use of land are amortised over the period of lease.

(d) Depreciation :

Depreciation on tangible assets including leased assets acquired under finance lease is provided on "Straight Line Method" at the rates prescribed in Schedule XIV of the Companies Act, 1956, as amended. Depreciation on additions to tangible assets (except those of Rs.5,000/- and below) is charged on prorata basis. Depreciation on assets disposed off/discarded during the year is charged upto the date of disposal/discard. Further, as regard to additions/deductions to the tangible assets arising from exchange variations, depreciation thereof is considered and covered during the period of residual life of the relevant assets.

(4) Investments

All Current and Non-current investments are stated at cost less permanent diminution, if any.

(5) Foreign Exchange Transactions

(i) Transactions in foreign currency are recorded at the exchange rates prevailing or approximately close to the exchange rate prevailing at the time of transaction. Any difference arising on actual payment / realisation is accounted under exchange variation account.

(ii) The liability in respect of the loans repayable in foreign currencies has been translated into rupees taking into consideration the exchange rates prevailing on the date of the Balance Sheet. The increase / decrease in the liability, if material, arising on realignment of foreign currencies where the loans are utilised for procurement of tangible assets is adjusted to the cost of such assets at the year end.

(iii) Other current assets & liabilities at the end of the year are being valued at the exchange rate prevailing on the date of Balance Sheet and difference arising is accounted as exchange difference and charged/credited to Statement of Profit and Loss.

(6) Inventories

(a) Raw Materials (including Natural Gas), Packing Materials, Stores & Spares and process stock are valued at weighted average cost.

(b) Finished Goods (including Consignment Stocks) are valued at lower of average cost for the year or average sale price for the year or average sale price of last month of financial year.

(c) By-products are valued at lower of average net realisable value for the year or average net realisable value of last month of Financial Year.

(d) Sale of Finished Goods in transit is valued at actual sales invoice value.

(e) Stock-in-Trade is valued at lower of the landed cost or realisable value.

(f) Consumable stores categorised separately are charged to Statement of Profit and Loss at the time of purchase.

(g) Stores and spares issued to consuming departments and which are in the process of utilisation and / or remaining with them at the year end are included in the inventory at the weighted average cost.

(7) CENVAT and Value Added Tax Credit

(i) CENVAT and VAT Credit available on the material (inputs) is adjusted against purchases.

(ii) Cenvat Credit and VAT available on capital goods is adjusted against the cost of the capital assets.

(iii) The CENVAT and VAT credit available on purchase of raw materials, other eligible inputs and capital goods is utilised against Excise Duty and VAT payable on clearance / sale of goods produced. The unutilised CENVAT and VAT credit is shown under the head "Loans and Advances".

(iv) CENVAT and VAT benefits are accounted on accrual basis.

(8) Taxation

(i) Current tax is determined as the amount of tax payable in respect of taxable income for the period. Deferred tax is recognised, subject to the consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate in one period and is capable of reversal in one or more subsequent periods.

(ii) Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

(9) Other Capital Expenditure

When heavy expenditure for sustaining plant efficiency is required to be incurred and the benefit from this expenditure is to extend for a number of years, such heavy expenditure, on a selective basis, is treated as "Other Capital Expenditure" and shown as "Tangible Assets" and carried forward for amortisation over a reasonable period of time, after facilities have been put to use/completion of the job.

(10) Expenditure by way of contributions

The Company''s Contribution or Expenditure incurred in securing requirements of Utilities and Services without acquiring ownership rights on the assets so created are considered as "Tangible Assets" and are written off over an appropriate period.

(11) Employee Benefits

(a) Short term Employee Benefits :

All employee benefits payable wholly within twelve months of rendering the services are classified as short term employee benefits. Benefits such as salaries, wages etc. and the expected cost of bonus, Ex-gratia, Leave Travel Allowance, Reimbursement of Medical Expenses, Personal Accident Policy, Deposit Linked Insurance Policy are recognised in the period in which the employee renders the related services.

(b) Post-Employment Benefits :

(i) Defined Contribution Plan : The Company''s contribution paid /payable during the year to Provident Fund, Superannuation Fund and other welfare funds are considered as defined contribution plans. The Contribution paid/ payable under these plans are recognised during the period in which the employee renders the services.

(ii) Defined Benefit Plans : The Gratuity scheme managed by Trust is considered as defined benefit plan. The present value of the obligation is determined based on actuarial valuation using the Projected Unit Credit Method.

Actuarial gains and losses are recognised immediately in the Statement of Profit & Loss.

The fair value of the plan assets is reduced from the gross obligation under the defined benefit plan to recognise the obligation on net basis.

Gains or losses on the curtailment or settlement of any defined benefit plan are recognised when the curtailment or settlement occurs.

(c) Long term Employee Benefits :

The obligation for long term employee benefits such as long term compensated absences, long service awards etc. is recognised in the same manner as in the case of defined benefit plans as mentioned in (b) (ii) above.

(12) Research and Development

The capital expenditure in respect of Research and Development activities is charged to Statement of Profit and Loss in the year in which it is incurred.

(13) Prior Period Adjustments / Exceptional Items

All identifiable items of Income and Expenditure pertaining to prior period are accounted as "Prior Period item" or as "Exceptional item" as the case may be.

(14) Borrowing Cost

Borrowing Costs attributable to the acquisition and construction of assets are capitalised as part of the cost of such asset upto the date when such asset is ready for its intended use. Other borrowing costs are treated as revenue expenditure.

(15) Impairment of Assets

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


Mar 31, 2012

(1) Accounting Convention

The Financial Statements are prepared based on Historical cost convention of accounting and in accordance with the prevalent Accounting Standards and the provisions of the Companies Act, 1956 as amended, except to the extent disclosed in the Notes on Accounts.

(2) Revenue Recognition

(A) Sales

Revenue is recognised with respect to Sales (net of discount) on accrual basis, including handling charges and packing charges but exclude Excise Duty and Sales Tax / Value Added Tax on accrual basis.

(B) Revenue is recognised with respect to Other Operating Income and Other Income on accrual basis with disclosed exceptions on receipt basis as under. :

(a) Other Operating Income

(i) Insurance and other claims treated as Other Operating Income. However, insurance claims are adjusted towards replacement cost on selective basis.

(ii) Compensation (Net) received from the Multilateral Fund towards the phasing out of CTC product under Montreal Protocol.

(iii) Receipt against monetisation of Certified Emission Reduction (CER) under Kyoto Protocol for Clean Development Mechanism.

(b) Other Income

(i) Dividend Income

(3) Tangible Assets, Tangible Assets under lease, Capital Work in Progress, Expenditure on New Projects, Depreciation and Amortisation

(a) Tangible Assets, Tangible Assets under lease, Capital Work in Progress and Expenditure on New Projects:

(i) Tangible Assets are stated at cost of acquisition or construction less accumulated depreciation. In case of capital expenditure, such costs of acquisition or construction are capitalised upto the date the assets are put to use. Interest, commitment and other charges on borrowings, as also expenditure directly attributable to specific project upto its commissioning are accumulated as cost of relevant projects.

Further, in respect of grass root projects, initial and pre-operative expenditure incurred prior to commissioning of the projects are also considered as cost of relevant projects.

(ii) Capital Assets/Expenditure on new projects under erection / installation are reflected in Balance Sheet as "Capital Work-in-Progress".

(iii) Cost of major civil works required as plant and machinery supports is considered as Plant and Machinery.

(iv) In respect of plant & machinery acquired on lease, lease rent payable on such assets prior to completion of the project is capitalised.

(v) Advances to suppliers, contractors and others for new projects are included in long term loans and advances.

(b) Accounting for Finance Lease :

(i) The Company is capitalising the assets acquired under finance lease at fair value/contracted price and charging depreciation on it in accordance with Accounting Standard -19 "Leases".

(ii) The lease rents paid/payable on these assets have been bifurcated into interest and principal and accordingly interest has been charged to revenue and principal has been reduced from the liability of lessor.

(iii) On completion of the finance lease, the value of the said leased asset is considered as an asset of the Company, at the Gross / Net value appearing in Balance Sheet on the date of the completion of the lease.

(iv) The Residual value payable on the termination of finance lease is accounted as Revenue Expenditure.

(c) Leasehold Land / Right of Use of Land :

Cost of leasehold land and right of use of land are amortised over the period of lease.

(d) Depreciation :

Depreciation on tangible assets including leased assets acquired under finance lease is provided on "Straight Line Method" at the rates prescribed in Schedule XIV of the Companies Act, 1956, as amended. Depreciation on additions to tangible assets (except those of Rs.5,000/- and below) is charged on prorata basis. Depreciation on assets disposed off/discarded during the year is charged upto the date of disposal/discard. Further, as regard to additions/deductions to the tangible assets arising from exchange variations, depreciation thereof is considered and covered during the period of residual life of the relevant assets.

(4) Investments

All Current and Non-current investments are stated at cost less permanent diminution, if any.

(5) Foreign Exchange Transactions

(i) Transactions in foreign currency are recorded at the exchange rates prevailing or approximately close to the exchange rate prevailing at the time of transaction. Any difference arising on actual payment / realisation is accounted under exchange variation account.

(ii) The liability in respect of the loans repayable in foreign currencies has been translated into rupees taking into consideration the exchange rates prevailing on the date of the Balance Sheet. The increase / decrease in the liability, if material, arising on realignment of foreign currencies where the loans are utilised for procurement of tangible assets is adjusted to the cost of such assets at the year end.

(iii) Other current assets & liabilities at the end of the year are being valued at the exchange rate prevailing on the date of Balance Sheet and difference arising is accounted as exchange difference and charged/ credited to Statement of Profit and Loss.

(6) Inventories

(a) Valuation of inventories at both Baroda and Dahej plants has been worked out separately.

(b) (i) Raw Materials, Packing Materials and Stores & Spares are valued at daily weighted average cost.

(ii) Raw Materials of imported goods, Salt, Furnace Oil, Aluminium Ingots and Alumina Trihydrate Powder are valued at monthly weighted average cost.

(iii) Natural Gas is valued at fortnightly weighted average cost.

(iv) The valuation of inventories includes taxes, duties [(net of Excise Duty and Value Added Tax) / counter veiling duty to the extent to which CENVAT credit availed] and other direct costs attributable to the cost of inventory.

(c) Finished Goods are valued at lower of average cost for the year or average sale price for the year or average sale price of last month of Financial Year.

(d) Finished Goods lying with Consignment Stockists are valued at lower of yearly average cost or average sale price for the year or average sale price of last month of financial year plus transport charges and excise duty paid.

(e) By-products are valued at lower of average net realisable value for the year or average net realisable value of last month of Financial Year.

(f) Sale of Finished Goods in transit is valued at actual sales invoice value.

(g) Process stocks are valued at weighted average cost.

(h) Stock-in-Trade is valued at lower of the landed cost or realisable value.

(i) Consumable stores categorised separately are charged to Statement of Profit and Loss at the time of purchase.

(j) Stores and spares issued to consuming departments and which are in the process of utilisation and / or remaining with them at the year end are included in the inventory at the weighted average cost.

(7) CENVAT and Value Added Tax Credit

(i) CENVAT and VAT Credit available on the material (inputs) is adjusted against purchases.

(ii) Cenvat Credit and VAT available on capital goods is adjusted against the cost of the capital assets.

(iii) The CENVAT and VAT credit available on purchase of raw materials, other eligible inputs and capital goods is utilised against Excise Duty and VAT payable on clearance / sale of goods produced. The unutilised CENVAT and VAT credit is shown under the head "Loans and Advances".

(iv) CENVAT and VAT benefits are accounted on accrual basis.

(8) Taxation

(i) Current tax is determined as the amount of tax payable in respect of taxable income for the period.

Deferred tax is recognised, subject to the consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate in one period and is capable of reversal in one or more subsequent periods.

(ii) Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

(9) Other Capital Expenditure

When heavy expenditure for sustaining plant efficiency is required to be incurred and the benefit from this expenditure is to extend for a number of years, such heavy expenditure, on a selective basis, is treated as "Other Capital Expenditure" and shown as "Tangible Assets" and carried forward for amortisation over a reasonable period of time, after facilities have been put to use/completion of the job.

(10) Expenditure by way of contributions

The Company's Contribution or Expenditure incurred in securing requirements of Utilities and Services without acquiring ownership rights on the assets so created are considered as "Tangible Assets" and are written off over an appropriate period.

(11) Excise Duty

The Excise Duty in respect of closing stock of finished goods is included as part of the inventory cost.

(12) Employee Benefits

(a) Short term Employee Benefits :

All employee benefits payable wholly within twelve months of rendering the services are classified as short term employee benefits. Benefits such as salaries, wages etc. and the expected cost of bonus, Ex-gratia, Leave Travel Allowance, Reimbursement of Medical Expenses, Personal Accident Policy, Deposit Linked Insurance Policy are recognised in the period in which the employee renders the related services.

(b) Post-Employment Benefits :

(i) Defined Contribution Plan : The Company's contribution paid / payable during the year to Provident Fund, Superannuation Fund and other welfare funds are considered as defined contribution plans. The Contribution paid/ payable under these plans are recognised during the period in which the employee renders the services.

(ii) Defined Benefit Plans : The Gratuity scheme managed by Trust is considered as defined benefit plan. The present value of the obligation is determined based on actuarial valuation using the Projected Unit Credit Method.

Actuarial gains and losses are recognised immediately in the Statement of Profit & Loss.

The fair value of the plan assets is reduced from the gross obligation under the defined benefit plan to recognise the obligation on net basis.

Gains or losses on the curtailment or settlement of any defined benefit plan are recognised when the curtailment or settlement occurs.

(c) Long term Employee Benefits :

The obligation for long term employee benefits such as long term compensated absences, long service awards etc. is recognised in the same manner as in the case of defined benefit plans as mentioned in (b) (ii) above.

(13) Research and Development

The capital expenditure in respect of Research and Development activities is charged to Statement of Profit and Loss in the year in which it is incurred.

(14) Prior Period Adjustments

All identifiable items of Income and Expenditure pertaining to prior period are accounted as "Prior Period item" or as "Exceptional item" as the case may be.

(15) Borrowing Cost

Borrowing Costs attributable to the acquisition and construction of assets are capitalised as part of the cost of such asset upto the date when such asset is ready for its intended use. Other borrowing costs are treated as revenue expenditure.

(16) Impairment of Assets

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


Mar 31, 2011

(1) Accounting Convention

The Financial Statements are prepared based on Historical cost convention of accounting and in accordance with the prevalent Accounting Standards and the provisions of the Companies Act, 1956 as amended, except to the extent disclosed in the Notes on Accounts.

(2) Revenue Recognition

Revenue is recognised with respect to Sales (net of discount) and Other Income on accrual basis with disclosed exceptions on receipt basis as under. :

(a) Sales

Sales (net of discount) include handling charges and packing charges but exclude excise duty and Sales Tax / Value Added Tax.

(b) Other Income

(i) Insurance and other claims treated as Other Income. However, insurance claims are adjusted towards replacement cost on selective basis.

(ii) Dividend income.

(iii) Compensation (Net) received from the Multilateral Fund towards the phasing out of CTC product under Montreal Protocol.

(iv) Receipt against monetisation of Certified Emission Reduction (CER) under Kyoto Protocol for Clean Development Mechanism.

(v) Income arising from Derivative transactions is recognised in the books of accounts as and when the settlements take place in accordance with the terms of the respective contracts over the tenor thereof. The open positions are marked to market on the Balance Sheet date and losses, if any, are provided for, while gains, if any, are not recognised.

(3) Fixed Assets, Leased Assets, Capital Work in Progress, Expenditure on New Projects and Depreciation

(a) Fixed Assets, Leased Assets, Capital Work in Progress and Expenditure on New Projects:

(i) Fixed Assets are stated at cost of acquisition or construction less accumulated depreciation. In case of capital expenditure, such costs of acquisition or construction are capitalised upto the date the assets are put to use. Interest, commitment and other charges on borrowings, as also expenditure directly attributable to specific project upto its commissioning are accumulated as cost of relevant projects. Further, in respect of grass root projects, initial and pre-operative expenditure incurred prior to commissioning of the projects are also considered as cost of relevant projects.

(ii) Capital Assets under erection/installation are reflected in Balance Sheet as "Capital Work-in-Progress". "Expenditure on New Projects" includes advances to suppliers, contractors and others.

(iii) Cost of major civil works required as plant and machinery supports is considered as Plant and Machinery. (iv) In respect of plant & machinery acquired on lease, lease rent payable on such assets prior to completion of the project is capitalised.

(b) Accounting for Finance Lease :

(i) The Company is capitalising the assets acquired under finance lease at fair value/contracted price and charging depreciation on it in accordance with Accounting Standard -19 "Leases".

(ii) The lease rents paid/payable on these assets have been bifurcated into interest and principal and accordingly interest has been charged to revenue and principal has been reduced from the liability of lessor.

(iii) On completion of the finance lease, the value of the said leased asset is considered as an asset of the Company, at the Gross / Net value appearing in Balance Sheet on the date of the completion of the lease.

(iv) The Residual value payable on the termination of finance lease is accounted as Revenue Expenditure.

(c) Leasehold Land / Right of Use of Land.

Cost of leasehold Land and right of use of land are amortised over the period of lease.

(d) Depreciation

Depreciation on fixed assets including leased assets acquired under finance lease is provided on "Straight Line Method" at the rates prescribed in Schedule XIV of the Companies Act, 1956, as amended. Depreciation on additions to Fixed Assets (except those of Rs5,000/- and below) is charged on prorata basis. Depreciation on assets disposed off/discarded during the year is charged upto the date of disposal/discard. Further, as regard to additions/deductions to the fixed assets arising from exchange variations, depreciation thereof is considered and covered during the period of residual life of the relevant assets.

(4) Investments

All investments are stated at cost less permanent diminution, if any.

(5) Foreign Exchange Transactions

(i) Transactions in foreign currency are recorded at the exchange rates prevailing or approximately close to the exchange rate prevailing at the time of transaction. Any difference arising on actual payment / realisation is accounted under exchange variation account.

(ii) The liability in respect of the loans repayable in foreign currencies has been translated into rupees taking into consideration the exchange rates prevailing on the date of the Balance Sheet. The increase / decrease in the liability, if material, arising on realignment of foreign currencies where the loans are utilised for procurement of fixed assets is adjusted to the cost of such assets at the year end.

(iii) Other current assets & liabilities at the end of the year are being valued at the exchange rate prevailing on the date of Balance Sheet and difference arising is accounted as exchange difference and charged/credited to profit and loss account.

(6) Inventories

(a) Valuation of inventories at both Baroda and Dahej plants has been worked out separately.

(b) (i) Raw Materials, Packing Materials and Stores & Spares are valued at daily weighted average cost.

(ii) Raw Materials of imported goods, Salt, Furnace Oil, Aluminium Ingots and Alumina Trihydrate Powder are valued at monthly weighted average cost.

(iii) Natural Gas is valued at fortnightly weighted average cost.

(iv) The valuation of inventories includes taxes, duties ((net of excise duty and Value Added Tax) / counter veiling duty to the extent to which CENVAT credit availed) and other direct costs attributable to the cost of inventory.

(c) Finished Goods are valued at lower of average cost for the year or average sale price for the year or average sale price of last month of financial year.

(d) Finished Goods lying with Consignment Stocklists are valued at lower of yearly average cost or average sale price for the year or average sale price of last month of financial year plus transport charges and excise duty paid.

(e) By-products are valued at lower of average net realisable value for the year or average net realisable value of last month of financial year.

(f) Sale of Finished Goods in transit is valued at actual sales invoice value.

(g) Process stocks are valued at weighted average cost.

(h) Stock of items traded is valued at lower of the landed cost or realisable value.

(i) Consumable stores categorised separately are charged to Profit and Loss Account at the time of purchase. (j) Stores and spares issued to consuming departments and which are in the process of utilisation and / or remaining with them at the year end are included in the inventory at the weighted average cost.

(7) CENVAT and Value Added Tax Credit

(i) CENVAT and VAT Credit available on the material (inputs) is adjusted against purchases.

(ii) Cenvat Credit and VAT available on capital goods is adjusted against the cost of the capital assets.

(iii) The CENVAT and VAT credit available on purchase of raw materials, other eligible inputs and capital goods is utilised against excise duty and VAT payable on clearance / sale of goods produced. The unutilised CENVAT and VAT credit is shown under the head "Loans and Advances".

(iv) CENVAT and VAT benefits are accounted on accrual basis.

(8) Taxation

(i) Current tax is determined as the amount of tax payable in respect of taxable income for the period. Deferred tax is recognised, subject to the consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate in one period and is capable of reversal in one or more subsequent periods.

(ii) Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

(9) Other Capital Expenditure

When heavy expenditure for sustaining plant efficiency is required to be incurred and the benefit from this expenditure is to extend for a number of years, such heavy expenditure, on a selective basis, is treated as "Other Capital Expenditure" and shown in the schedule of Fixed Assets and carried forward for amortisation over a reasonable period of time, after facilities have been put to use/completion of the job.

(10) Expenditure by way of contributions

The Company's Contribution or Expenditure incurred in securing requirements of Utilities and Services without acquiring ownership rights on the assets so created are considered as Fixed Assets and are written off over an appropriate period.

(11) Excise Duty

The excise duty in respect of closing stock of finished goods is included as part of the inventory cost.

(12) Employee Benefits

(a) Short term Employee Benefits :

All employee benefits payable wholly within twelve months of rendering the services are classified as short term employee benefits. Benefits such as salaries, wages etc. and the expected cost of bonus, Ex-gratia, Leave Travel Allowance, Reimbursement of Medical Expenses, Personal Accident Policy, Deposit Linked Insurance Policy are recognised in the period in which the employee renders the related services.

(b) Post-Employment Benefits :

(i) Defined Contribution Plan : The Company's contribution paid/ payable during the year to Provident Fund, Superannuation Fund and other welfare funds are considered as defined contribution plans. The Contribution paid/ payable under these plans are recognised during the period in which the employee renders the services.

(ii) Defined Benefit Plans : The Gratuity scheme managed by Trust is considered as defined benefit plan. The present value of the obligation is determined based on actuarial valuation using the Projected Unit Credit Method.

Actuarial gains and losses are recognised immediately in the Profit & Loss Account.

The fair value of the plan assets is reduced from the gross obligation under the defined benefit plan to recognise the obligation on net basis.

Gains or losses on the curtailment or settlement of any defined benefit plan are recognised when the curtailment or settlement occurs.

(c) Long term Employee Benefits :

The obligation for long term employee benefits such as long term compensated absenses, long service award etc. is recognised in the same manner as in the case of defined benefit plans as mentioned in (b) (ii) above.

(13) Research and Development

The capital expenditure in respect of Research and Development activities is charged to Profit and Loss Account in the year in which it is incurred.

(14) Prior Period Adjustments

All identifiable items of Income and Expenditure pertaining to prior period are accounted through "Prior Period Adjustment Account".

(15) Borrowing Cost

Borrowing Costs attributable to the acquisition and construction of assets are capitalised as part of the cost of such asset upto the date when such asset is ready for its intended use. Other borrowing costs are treated as revenue expenditure.

(16) Impairment of Assets

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




Mar 31, 2010

(1) Accounting Convention

The Financial Statements are prepared based on Historical cost convention of accounting and in accordance with the prevalent Accounting Standards and the provisions of the Companies Act, 1956 as amended, except to the extent disclosed in the Notes on Accounts.

(2) Revenue Recognition

Revenue is recognised with respect to Sales (net of discount) and Other Income on accrual basis with disclosed exceptions on receipt basis as under. :

(a) Sales

Sales (net of discount) include handling charges and packing charges but exclude excise duty and Sates Tax / Value Added Tax.

(b) Other Income

(i) Insurance and other claims treated as Other Income. However, insurance claims are adjusted towards replacement cost on selective basis.

(ii) Dividend income.

(iii) Compensation (Net) received from the Multilateral Fund towards the phasing out of CTC product under Montreal

Protocol.

(iv) Receipt against monetisation of Certified Emission Reduction (CER) under Kyoto Protocol for Clean Development Mechanism.

(v) Income arising from Derivative transactions is recognised in the books of accounts as and when the settlements take place in accordance with the terms of the respective contracts over the tenor thereof. The open positions are marked to market on the Balance Sheet date and losses, if any, are provided for while gains, if any, are not recognised.

(3) Fixed Assets, Leased Assets, Capital Work In Progress, Expenditure on New Projects and Depreciation

(a) Fixed Assets, Leased Assets, Capital Work in Progress and Expenditure on New Projects:

(i) Fixed Assets are stated at cost of acquisition or construction less accumulated depreciation. In case of capital expenditure, such costs of acquisition or construction are capitalised upto the date the assets are put to use. Interest, commitment and other charges on borrowings, as also expenditure directly attributable to specific project upto its commissioning are accumulated as cost of relevant projects.

Further, in respect of grass root projects, initial and pre-operative expenditure incurred prior to commissioning of the projects are also considered as cost of relevant projects.

(ii) Capital Assets under erection/installation are reflected in Balance Sheet as "Capital Work-in-Progress". "Expenditure on New Projects" includes advances to suppliers, contractors and others.

(iii) Cost of major civil works required as plant and machinery supports is considered as Plant and Machinery,

(iv) In respect of plant & machinery acquired on lease, lease rent payable on such assets prior to completion of the project is capitalised.

(b) Accounting for Finance Lease :

(i) The Company is capitalising the assets acquired under finance lease at fair value/contracted price and charging depreciation on it in accordance with Accounting Standard -19 "Leases".

(ii) The lease rents paid/payable on these assets have been bifurcated into interest and principal and accordingly interest has been charged to revenue and principal has been reduced from the liability of lessor.

(iii) On completion of the finance lease, the value of the said leased asset is considered as an asset of the Company, at the Gross / Net value appearing in Balance Sheet on the date of the completion of the lease.

(iv) The Residual value payable on the termination of finance lease is accounted as Revenue Expenditure.

(c) Leasehold Land / Right of Use of Land.

Cost of leasehold Land and right of use of land are amortised over the period of lease.

(d) Depreciation

Depreciation on fixed assets including leased assets acquired under finance lease is provided on "Straight Line Method" at the rates prescribed in Schedule XIV of the Companies Act, 1956, as amended. Depreciation on additions to Fixed Assets (except those of 75,000/- and below) is charged on prorata basis. Depreciation on assets disposed off/discarded during the year is charged upto the date of disposal/discard. Further, as regard to additions/deductions to the fixed assets arising from exchange variations, depreciation thereof is considered and covered during the period of residual life of the relevant assets,

(4) Investments

All investments are stated at cost less permanent diminution, if any.

(5) Foreign Exchange Transactions

(i) Transactions in foreign currency are recorded at the exchange rates prevailing or approximately close to the exchange rate prevailing at the time of transaction. Any difference arising on actual payment / realisation is accounted under exchange variation account.

(ii) The liability in respect of the loans repayable in foreign currencies has been translated into rupees taking into consideration the exchange rates prevailing on the date of the Balance Sheet. The increase / decrease in the liability, if material, arising on realignment of foreign currencies where the loans are utilised for procurement of fixed assets is adjusted to the cost of such assets at the year end.

(iii) Other current assets & liabilities at the end of the year are being valued at the exchange rate prevailing on the date of Balance Sheet and difference arising is accounted as exchange difference and charged/credited to profit and loss account.

(6) Inventories

(a) Valuation of inventories at both Baroda and Dahej plants has been worked out separately.

(b) (i) Raw Materials, Packing Materials and Stores & Spares are valued at daily weighted average cost.

(ii) Raw Materials of imported goods, Salt, Furnace Oil, Aluminium Ingots and Alumina Trihydrate Powder are valued at monthly weighted average cost.

(iii) Natural Gas is valued at fortnightly weighted average cost.

(iv) The valuation of inventories includes taxes, duties ((net of excise duty and Value Added Tax) / counter veiling duty to the extent to which CENVAT credit availed) and other direct costs attributable to the cost of inventory.

(c) Finished Goods are valued at lower of average cost for the year or average sale price for the year or average sale price of last month of financial year.

(d) Finished Goods lying with Consignment Stockists are valued at lower of yearly average cost or average sale price for the year or average sale price of last month of financial year plus transport charges and excise duty paid.

(e) By-products are valued at lower of average net realisable value for the year or average net realisable value of last month of financial year.

(f) Sale of Finished Goods in transit is valued at actual sales invoice value.

(g) Process stocks are valued at weighted average cost.

(h) Stock of items traded is valued at tower of the landed cost or realisable value.

(i) Consumable stores categorised separately are charged to Profit and Loss Account at the time of purchase. fj) Stores and spares issued to consuming departments and which are in the process of utilisation and / or remaining with them at the year end are included in the inventory at the weighted average cost.

(7) CENVAT and Value Added Tax Credit

(i) CENVAT and VAT Credit available on the material (inputs) is adjusted against purchases.

(ii) Cenvat Credit and VAT available on capital goods is adjusted against the cost of the capital assets.

(iii) The CENVAT and VAT credit available on purchase of raw materials, other eligible inputs and capital goods is utilised against excise duty and VAT payable on clearance / sale of goods produced. The unutilised CENVAT and VAT credit is shown under the head "Loans and Advances",

(iv) CENVAT and VAT benefits are accounted on accrual basis.

(8) Taxation

(i) Current tax is determined as the amount of tax payable in respect of taxable income for the period. Deferred tax is recognised, subject to the consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate in one period and is capable of reversal in one or more subsequent periods.

(ii) Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

(9) Other Capital Expenditure

When heavy expenditure for sustaining plant efficiency is required to be incurred and the benefit from this expenditure is to extend for a number of years, such heavy expenditure, on a selective basis, is treated as "Other Capital Expenditure" and shown in the schedule of Fixed Assets and carried forward for amortisation over a reasonable period of time, after facilities have been put to use/completion of the job.

(10) Expenditure by way of contributions

The Companys Contribution or Expenditure incurred in securing requirements of Utilities and Services without acquiring ownership rights on the assets so created are considered as Fixed Assets and are written off over an appropriate period.

(11) Excise Duty

The excise duty in respect of closing stock of finished goods is included as part of the inventory cost.

(12) Employee Benefits

(a) Short term Employee Benefits :

All employee benefits payable wholly within twelve months of rendering the services are classified as short term employee benefits. Benefits such as salaries, wages, short term compensated absences, etc. and the expected cost of bonus, Ex-gratia, Leave Travel Allowance, Reimbursement of Medical Expenses, Personal Accident Policy, Deposit Linked Insurance Policy are recognised in the period in which the employee renders the related services.

(b) Post-Employment Benefits :

(i) Defined Contribution Plan : The Companys contribution paid/ payable during the year to Provident Fund. Superannuation Fund and other welfare funds are considered as defined contribution plans. The Contribution paid/ payable under these plans are recognised during the period in which the employee renders the services.

(ii) Defined Benefit Plans : The Gratuity scheme managed by Trust is considered as defined benefit ptan. The present value of the obligation is determined based on actuarial valuation using the Projected Unit Credit Method. Actuarial gains and losses are recognised immediately in the Profit & Loss Account.

The fair value of the plan assets is reduced from the gross obligation under the defined benefit plan to recognise the obligation on net basis.

Gains or losses on the curtailment or settlement of any defined benefit plan are recognised when the curtailment or settlement occurs.

(c) Long term Employee Benefits :

The obligation for long term employee benefits such as long service award is recognised in the same manner as in the case of defined benefit plans as mentioned in (b) (ii) above.

(13) Research and Development

The capital expenditure in respect of Research and Development activities is charged to Profit and Loss Account in the year in which it is incurred.

(14) Prior Period Adjustments

All identifiable items of Income and Expenditure pertaining to prior period are accounted through "Prior Period Adjustment Account",

(15) Borrowing Cost

Borrowing Costs attributable to the acquisition and construction of assets are capitalised as part of the cost of such asset upto the date when such asset is ready for its intended use. Other borrowing costs are treated as revenue expenditure.

(16) Impairment of Assets

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

 
Subscribe now to get personal finance updates in your inbox!