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Accounting Policies of KRBL Ltd. Company

Mar 31, 2015

1. Company information

- KRBL Limited (the Company) is a Domestic Public Limited company and listed on the Bombay Stock Exchange Ltd. (BSE) and National Stock Exchange of India Ltd. (NSE). Te Company is World''s leading Basmati Rice player with milling capacity of 195 MT per hour. Te company has fully integrated operations with involvement in every aspect of Basmati value chain, right from seed development, contact farming, procurement of paddy, storage, processing, packaging, branding and marketing. Among the many brands launched by the company "India Gate" is the flagship brand both in Domestic and International Markets.

2.1 accounting Convention

- Te Financial Statements are prepared on the historical cost convention on going concern basis and in accordance with the applicable accounting standards notified under relevant provisions of the Companies Act, 2013 and other Accounting principles generally accepted in India, to the extent applicable.

2.2 use of estimates

- Te preparation of Financial Statements requires management to make certain assumptions and estimates that affect the reported amount the Financial Statements and Notes thereto. Difference between actual results and estimates are recognized in the period in which they materialize.

2.3 Fixed assets including intangible assets

- Fixed Assets are stated at cost of acquisition / installation inclusive of freight, duties, taxes and all incidental expenses and net of accumulated depreciation. In respect of major projects involving construction, related pre-operational expenses form part of the value of assets capitalized. Expenses capitalized also include applicable borrowing costs. All up gradation / enhancements are generally charged of as revenue expenditure unless they bring similar signifcant additional benefts.

- Intangible assets are stated at their cost of acquisition.

- Freehold Land is stated at original cost of acquisition.

- Capital work-in-progress is stated at amount spent up to the date of Balance Sheet.

2.4 depreciation and amortization

- Depreciation on fixed assets has been provided on straight line method, in terms of useful life of the Assets as prescribed in Schedule II of Companies Act, 2013.

- Computer software charges, patent, trademark & design and Goodwill are recognized as intangible assets and amortized on straight line method over a period of 10 years except one software which is depreciated in 6 years on straight line method based upon life of servers where it is installed.

- Leasehold land is amortized on straight line method over the lease period.

2.5 investments

- Investments that are readily realizable and are intended to be held for not more than one year at the point of acquisition are classified as "Current Investments". All other Investments are classified as "Non-Current Investments". Current investments are stated at lower of cost and fair value. Non-current investments are stated at cost. A provision for diminution is made to recognize a decline, other than temporary, in the value of non-current investments.

2.6 inventories

- Items of inventories are measured at lower of cost or net realizable value. Raw material on shop for and work- in process is taken as part of raw material and valued accordingly.

- Te cost is calculated on weighted average cost method and it comprises expenditure incurred in normal course of business in bringing such inventories to its location and includes, where applicable, appropriate overheads based on normal level of activity. Obsolete, slow moving & defective inventories are identifed at the time of physical verifcation and wherever necessary a provision is made.

- By-products are valued at net realizable value and are deducted from the cost of main product.

- Inventory of Finished Excisable products are valued inclusive of Excise Duty.

2.7 Revenue Recognition and accounting for Sales & Services

- Export sales are accounted for on the basis of date of bill of lading and adjusted for exchange fluctuations on exports realized during the year and the trade receivable in foreign exchange which are restated at the year end. Domestic sales are recognized on the dispatch of goods to the customers and are net of discounts, Sales Tax, Excise Duty, Returns. Gross sales includes Excise Duty and then reduced thereafter to compute net sales in conformity with AS-14 on disclosure of the revenue from sale transaction. Sale of energy is accounted for on basis of energy supplied. Sale of Certified Emission Reduction (CER) is recognized as income on delivery of CERs to the customer. Sale of Renewable Energy Certificate (REC) is recognized as income on sale of REC on the IEX / PXIL. Dividend income is recognized when the right to receive Dividend is established. Revenue and Expenditure are accounted for ongoing concern basis. Interest Income / Expenditure is recognized using the time proportion method based on the rates implicit in the transaction.

- Revenue in respect of Insurance / others claims, Interest, Commission, etc. is recognized only when it is reasonably certain that the ultimate collection will be made.

2.8 proposed dividend

- Dividend (including Dividend Tax thereon, if any) are provided for in the books of account as proposed by the Directors pending for approval at the ensuing Annual General Meeting.

2.9 Research and development

- Revenue expenditure on Research & Development is written of in the year in which it is incurred. Capital Expenditure on Research & Development is included under Fixed Assets.

2.10 treatment of employee benefits

- Contributions to defend provident fund are charged to the profit and loss account on accrual basis. Present liability for future payment of gratuity and unavailed leave benefts are determined on the basis of actuarial valuation at the balance sheet date and charged to the proft and loss account. Gratuity fund is managed by the Kotak Life Insurance.

2.11 Foreign Currency transactions

- Te transactions in foreign currencies are recognized at rate of overseas currencies ruling on the date of transaction. Gain / ( loss) arising on account of rise or fall in overseas currencies vis a vis reporting currencies between the date of transaction and that of payment is charged to statement of Profit& loss account.

- Year-end balance of foreign currency monetary items is translated at the year-end rates and the corresponding effect is given in the respective accounts. Transactions completed during the year are adjusted on actual basis.

- Exchange difference on forward contract is also recognized in Profit & Loss Account on change of Exchange rate at the reporting date.

- Transactions covered by cross currency swap contracts to be settled on future dates are recognized at the year-end rates of

the underlying foreign currency. Effects arising from swap contracts are adjusted on the date of settlement.

- In respect of Non integral foreign operation-both monetary and non-monetary items are translated at the closing rate and resultant diference is accumulated in foreign currency translation reserve, until the disposal of net investment.

- Non monetary foreign currency item are carried at cost.

2.12 government grant

- Government grant is considered for inclusion in accounts only when conditions attached to them are complied with and it is reasonably certain that ultimate collection will be made. Grant received from government towards fixed assets acquired / constructed by the Company is deducted out of gross value of the asset acquired / constructed and depreciation is charged accordingly.

2.13 borrowing Costs

- Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalized as a part of such assets till such time as the assets are ready for their intended use or sale. All other borrowing costs are recognized as expense in the period in which they are incurred.

2.14 taxes on income

- Te liability of Company on Account of Income Tax is estimated considering the provisions of Income tax Act 1961.

- Deferred tax is recognized subject to the consideration of prudence on timing differences being the difference between book and tax profits that originate in one year and capable of reversal in one or more subsequent years.

2.15 leases

- In respect of Operating leases, rentals are expensed with reference to lease terms and other considerations.

2.16 provisions, Contingent liability and Contingent assets

- Te Company creates a provision when there is a present obligation as a result of past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of obligation. A disclosure of contingent liability is made when there is a possible obligation or a present obligation that will probably not require outflow of resources or where a reliable estimate of the obligation cannot be made. Contingent Assets neither recognized nor disclosed in the Financial Statement.

2.17 Segment Reporting

- Segments are identifed based on dominant source and nature of risks and returns and internal fnancial reporting system to the management Inter segment revenue are accounted for on the basis of transactions which are primarily market led. Revenue and expenses which relate to enterprises as a whole and are not attributable to segments are included under "Other Unallocable Expenditure Net of Unallocable Income".

2.18 Financial and management information System

- An Integrated Accounting System has been put to practice which unifies both Financial Books and Costing Records. Te books of account and other records have been designated to facilitate compliance with the relevant provisions of the Companies Act on one hand and provides Internal Financial Reporting System for Planning, Review and Internal Control on the other. Te Cost Accounts are designed to adopt Costing Systems appropriate to the business carried out by the Division, with each Division incorporating into its costing system, the basic tenets and principles of Standard Costing, Budgetary Control and Marginal Costing as appropriate.

2.19 impairment of assets

- Te Company assesses at each Balance Sheet date whether there is any indication that an assets may be impaired. If any such Indication exists; the Company estimates the recoverable amount of assets. If such recoverable amount of the assets or the recoverable amount of the cash generating unit to which the assets belong is less than its carrying amount, the carrying amount is reduced to its recoverable amount. Te reduction is treated as an impairment loss and is recognised in the Proft & Loss Account. If at the Balance Sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the assets is refected at recoverable amount.

2.20 mergers / amalgamation

- Mergers / Amalgamations (of the nature of Merger) of other company / body Corporate with the company are accounted for on the basis of purchase method, the Assets / Liabilities being incorporated in terms of values of assets and Liabilities appearing in the books of transferor entity on the date of such merger / amalgamation for the purpose of arriving at the figure of Good will or amalgamation reserve.


Mar 31, 2013

1.1 Accounting Convention

- The Financial Statements are prepared on the historical cost convention on going concern basis and in accordance with the applicable accounting standards referred to in section 211 (3C) of the Companies Act, 1956.

- The Company follows mercantile system of accounting and recognizes income and expenditure on accrual basis

1.2 Use Of Estimates

- The preparation of Financial Statements requires management to make certain assumptions and estimates that affect the reported amount the Financial Statements and notes thereto. Difference between actual results and estimates are recognised in the period in which the results are known/ materialise.

1.3 Fixed Assets including intangible Assets

- Fixed Assets are stated at cost of acquisition / installation inclusive of freight, duties, taxes and all incidental expenses and net of accumulated depreciation. In respect of major projects involving construction, related pre-operational expenses form part of the value of assets capitalised. Expenses capitalised also include applicable borrowing costs. The original cost of imported Fixed Assets acquired through foreign currency loans has been adjusted at the end of each Financial Year by any change in liability arising out of expressing the outstanding foreign loan at the rate of exchange prevailing at the date of Balance Sheet. All up gradation / enhancements are generally charged off as revenue expenditure unless they bring similar significant additional benefits.

- Intangible assets are stated at their cost of acquisition.

- Freehold Land is stated at original cost of acquisition.

- Capital work- in- progress is stated at amount spent up to the date of Balance Sheet.

1.4 Depreciation and Amortisation

- Depreciation on fixed assets is provided on straight line method at the rates specified in Schedule XIV of the Companies Act, 1 956 for the period of usage.

- Computer software charges, patent, trademark & design and Goodwill are recognised as intangible assets and amortized on straight line method over a period of 1 0 years.

- Leasehold land is amortized on straight line method over the lease period.

1.5 Investments

- Investments are classified into current and non-current investments. Current investments are stated at lower of cost and fair value. Non-current investments are stated at cost. A provision for diminution is made to recognize a decline, other than temporary, in the value of non-current investments

1.6 Inventories

- Items of inventories are measured at lower of cost or net realizable value. Raw material on shop floor and work-in- process is taken as part of raw material and valued accordingly.

- The cost is calculated on weighted average cost method and it comprises expenditure incurred in normal course of business in bringing such inventories to its location and includes, where applicable, appropriate overheads based on normal level of activity. Obsolete, slow moving & defective inventories are identified at the time of physical verification and wherever necessary a provision is made.

- By-products are valued at net realizable value and are deducted from the cost of main product.

- Inventory of Finished Excisable products are valued inclusive of Excise Duty

1.7 Revenue Recognition and Accounting for Sales & Services

- Export sales are accounted for on the basis of date of bill of lading and adjusted for exchange fluctuations on exports realized during the year and the trade receivable in foreign exchange which are restated at the year end. Domestic sales are recognized on the dispatch of goods to the customers and are net of discounts, Sales Tax, Excise Duty, Returns. Gross sales includes Excise Duty and then reduced thereafter to compute net sales in conformity with AS-14 on disclosure of the revenue from sale transaction. Dividend income is recognised when the right to receive Dividend is established. Revenue and Expenditure are accounted for on going concern basis. Interest Income/Expenditure is recognized using the time proportion method based on the rates implicit in the transaction.

- Revenue in respect of Insurance/others claims, Interest, Commission, etc. is recognised only when it is reasonably certain that the ultimate collection will be made.

1.8 Proposed Dividend

- Dividends (including Dividend Tax thereon, if any) are provided for in the books of account as proposed by the Directors pending for approval at the ensuing Annual General Meeting.

1.9 Research and Development

- Revenue expenditure on Research & Development is written-off in the year in which it is incurred. Capital Expenditure on Research & Development is included under Fixed Assets.

1.10 Treatment of Employee Benefits

- Contributions to defined provident fund are charged to the profit and loss account on accrual basis. Present liability for future payment of gratuity and unavailed leave benefits are determined on the basis of actuarial valuation at the balance sheet date and charged to the profit and loss account. Gratuity fund is managed by the Kotak Life Insurance.

1.11 Foreign Currency Transactions

- Year-end balance of foreign currency monetary items is translated at the year-end rates and the corresponding effect is given in the respective accounts. Transactions completed during the year are adjusted on actual basis.

- Exchange difference on forward contract is also recognized in Profit & Loss Account on change of exchange rate at the reporting date.

- Transactions covered by cross currency swap contracts to be settled on future dates are recognised at the year-end rates of the underlying foreign currency. Effects arising from swap contracts are adjusted on the date of settlement.

- In respect of Non integral foreign operation - both monetary and non-monetary items are translated at the closing rate and resultant difference is accumulated in foreign currency translation reserve, until the disposal of net investment.

- Non monetary foreign currency item are carried at cost

1.12 Government Grant

- Government grant is considered for inclusion in accounts only when conditions attached to them are complied with and it is reasonably certain that ultimate collection will be made. Grant received from government towards fixed assets acquired by the Company is deducted out of gross value of the asset acquired and depreciation is charged accordingly.

1.13 Borrowing Costs

- Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalised as a part of such assets till such time as the assets are ready for their intended use or sale. All other borrowing costs are recognised as expense in the period in which they are incurred.

1.14 Taxes on Income

- Current tax is determined on taxable income for the period at the applicable rates. Deferred tax is recognised subject to the consideration of prudence in respect of deferred tax assets, resulting from timing differences between book and tax profits, at the tax rates that have been enacted or substantially enacted by the balance sheet date, to the extent these are capable of reversal in one or more subsequent periods.

1.15 Leases

- In respect of Operating leases, rentals are expensed with reference to lease terms and other considerations.

1.16 Provisions, Contingent Liability and Contingent Assets

- The Company creates a provision when there is a present obligation as a result of past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of obligation. A disclosure of contingent liability is made when there is a possible obligation or a present obligation that will probably not require outflow of resources or where a reliable estimate of the obligation can not be made. Contingent Assets neither recognised nor disclosed in the Financial statement.

1.17 Segment Reporting

- Segments are identified based on dominant source and nature of risks and returns and the internal organization and management structure. Inter segment revenue are accounted for on the basis of transactions which are primarily market led. Revenue and expenses which relate to enterprises as a whole and are not attributable to segments are included under "Other Unallocable Expenditure Net of Unallocable Income.

1.18 Financial and Management Information System

- An Integrated Accounting System has been put to practice which unifies both Financial Books and Costing Records. The books of account and other records have been designated to facilitate compliance with the relevant provisions of the Companies Act on o ne hand and meet the internal requirements of information and systems for Planning, Review and Internal Control on the other. The Cost Accounts are designed to adopt Costing Systems appropriate to the business carried out by the Division, with each Division incorporating into its costing system, the basic tenets and principles of Standard Costing, Budgetary Control and Marginal Costing as appropriate

1.19 Impairment of Assets

- The Company assesses at each Balance Sheet date whether there is any indication that an assets may be impaired. If any such Indication exists; the Company estimates the recoverable amount of assets. If such recoverable amount of the assets or the recoverable amount of the cash generating unit to which the assets belong is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the Profit & Loss Account. If at the Balance Sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the assets is reflected at recoverable amount.


Mar 31, 2012

1.1 Accounting Convention

- The Financial Statements are prepared on the historical cost convention on going concern basis and in accordance with the applicable accounting standards referred to in section 211(3C) of the Companies Act, 1956.

- The company follows mercantile system of accounting and recognizes income and expenditure on accrual basis.

1.2 Use of Estimates

- The preparation of Financial Statements requires management to make certain assumptions and estimates that affect the reported amount in the financial statements and notes thereto. Difference between actual results and estimates are recognised in the period in which the results are known/ materialise.

1.3 Fixed Assets including intangible Assets

- Fixed Assets are stated at cost of acquisition / installation inclusive of freight, duties, taxes and all incidental expenses and net of accumulated depreciation. in respect of major projects involving construction, related pre-operational expenses form part of the value of assets capitalised. Expenses capitalised also include applicable borrowing costs. The original cost of imported Fixed Assets acquired through foreign currency loans has been adjusted at the end of each financial year by any change in liability arising out of expressing the outstanding foreign loan at the rate of exchange prevailing at the date of Balance Sheet. All up gradation / enhancements are generally charged off as revenue expenditure unless they bring similar significant additional benefits.

- intangible assets are stated at their cost of acquisition.

- Freehold Land is stated at original cost of acquisition.

- Capital work- in- progress is stated at amount spent up to the date of Balance Sheet.

1.4 Depreciation and Amortisation

- Depreciation on fixed assets is provided on straight line method at the rates specified in Schedule XIV of the Companies Act, 1956 for the period of usage.

- Computer software charges, patent, trademark & design and Goodwill are recognised as intangible assets and amortized on straight line method over a period of 10 years.

- Leasehold land is amortized on straight line method over the lease period.

1.5 Investments

- Investments are classified into current and non-current investments. Current investments are stated at lower of cost and fair value. Non-current investments are stated at cost. A provision for diminution is made to recognize a decline, other than temporary, in the value of non-current investments.

1.6 Inventories

- Item of finish goods inventories are measured at lower of cost or net reliasable value. item of raw materials, stores, spares and consumable are valued at cost. Raw material on shop floor and work-in- process are taken as part of raw material and valued accordingly.

- The cost is calculated on weighted average cost method and it comprises expenditure incurred in normal course of business in bringing such inventories to its location and includes, where applicable, appropriate overheads based on normal level of activity. Obsolete, slow moving & defective inventories are identified at the time of physical verification and wherever necessary a provision is made.

- By-products are valued at net realizable value and are deducted from the cost of main product.

- inventory of Finished Excisable Products are valued inclusive of Excise Duty.

1.7 Revenue Recognition and Accounting for Sales & Services

- Export sales are accounted for on the basis of date of bill of lading and adjusted for exchange fluctuations on exports realized during the year and the trade receivable in foreign exchange which are restated at the year end. Domestic sales are recognized on the dispatch of goods to the customers and are net of discounts, Sales Tax, Excise Duty, Returns etc. Gross sales includes Excise Duty and then reduced thereafter to compute net sales in conformity with ASI-14 on disclosure of the revenue from sale transaction. Dividend income is recognised when the right to receive dividend is established. Revenue and Expenditure are accounted for on going concern basis. interest income / Expenditure is recognized using the time proportion method based on the rates implicit in the transaction.

- Revenue in respect of insurance / others claims, interest, Commission, etc. is recognised only when it is reasonably certain that the ultimate collection will be made.

1.8 Proposed Dividend

- Dividends (including Dividend Tax thereon) are provided for in the books of account as proposed by the Directors pending approval at the Annual General Meeting.

1.9 Research and Development

- Revenue expenditure on Research & Development is written- off in the year in which it is incurred. Capital Expenditure on Research & Development is included under Fixed Assets.

1.10 Treatment of Employee Benefits

- Contributions to defined provident fund are charged to the Statement of Profit & Loss on accrual basis. Present liability for future payment of gratuity and unavailed leave benefits are determined on the basis of actuarial valuation at the balance sheet date and charged to the profit and loss account. Gratuity fund is managed by the Kotak Life Insurance.

1.11 Foreign Currency Transactions

- Year-end balance of foreign currency monetary items is translated at the year-end rates and the corresponding effect is given in the respective accounts. Transactions completed during the year are adjusted on actual basis.

- Exchange difference on forward contract is also recognized in Profit & Loss Account on change of exchange rate at the reporting date.

- Transactions covered by cross currency swap contracts to be settled on future dates are recognised at the year-end rates of the underlying foreign currency. Effects arising from swap contracts are adjusted on the date of settlement.

- in respect of Non integral foreign operation - both monetary and non-monetary items are translated at the closing rate and resultant difference is accumulated in foreign currency translation reserve, until the disposal of net investment.

- Non monetary foreign currency item are carried at cost.

1.12 Government Grant

- Government grant is considered for inclusion in accounts only when conditions attached to them are complied with and it is reasonably certain that ultimate collection will be made. Grant received from government towards fixed assets acquired by the Company is deducted out of gross value of the asset acquired and depreciation is charged accordingly

1.13 Borrowing Costs

- Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalised as a part of such assets till such time as the assets are ready for their intended use or sale. All other borrowing costs are recognised as expense in the period in which they are incurred.

1.14 Taxes on Income

- Current tax is determined on taxable income for the period at the applicable rates. Deferred tax is recognised subject to the consideration of prudence in respect of deferred tax assets, resulting from timing differences between book and tax profits, at the tax rates that have been enacted or substantially enacted by the balance sheet date, to the extent these are capable of reversal in one or more subsequent periods.

1.15 Leases

- in respect of operating leases, rentals are expensed with reference to lease terms and other considerations.

1.16 Provisions, Contingent Liability and Contingent Assets

- The Company creates a provision when there is a present obligation as a result of past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of obligation. A disclosure of contingent liability is made when there is a possible obligation or a present obligation that will probably not require outflow of resources or where a reliable estimate of the obligation can not be made. Contingent Assets neither recognised nor disclosed in the financial statement.

1.17 Segment Reporting

- Segments are identified based on dominant source and nature of risks and returns and the internal organisation and management structure. inter segment revenue are accounted for on the basis of transactions which are primarily market led. Revenue and expenses which relate to enterprises as a whole and are not attributable to segments are included under "other unallocable expenditure net of unallocable income.

1.18 Financial and Management Information System

- An integrated Accounting System has been put to practice which unifies both Financial Books and Costing Records. The books of account and other records have been designated to facilitate compliance with the relevant provisions of the Companies Act on one hand and meet the internal requirements of information and systems for Planning, Review and internal

Control on the other. The Cost Accounts are designed to adopt Costing Systems appropriate to the business carried out by the division, with each division incorporating into its costing system, the basic tenets and principles of Standard Costing, Budgetary Control and Marginal Costing as appropriate.

1.19 Impairment of Assets

- The Company assess at each Balance Sheet date whether there is any indication that an asset may be impaired. if any such indication exists, the Company estimates the recoverable amount of asset. if such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the assets belong is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the Statement of Profit & Loss. If at the Balance Sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at recoverable amount.


Mar 31, 2010

A. ACCOUNTING CONVENTION

(a) The accounts are prepared on the historical cost convention on going concern basis and in accordance with the accounting standards referred to in section 211(3C) of the Companies Act, 1956.

(b) The company follows mercantile system of accounting and recognizes income and expenditure on accrual basis.

B. 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 Financial Statements and reported amount of revenue and expenditure during the reporting period. Difference between actual results and estimates are recognised in the period in which the results are known/ materialise.

C. FIXED ASSETS

(a) VALUATION OF FIXED ASSETS

(i) Fixed Assets are stated at cost of acquisition / installation inclusive of freight, duties, taxes and all incidental expenses are stated net of accumulated depreciation. In respect of major projects involving construction, related pre-operational expenses form part of the value of assets capitalised. Expenses capitalised also include applicable borrowing costs. The original cost of imported Fixed Assets acquired through foreign currency loans is adjusted at the end of each financial year by any change in liability arising out of expressing the outstanding foreign loan at the rate of exchange prevailing at the date of Balance Sheet. All up gradation / enhancements are generally charged off as revenue expenditure unless they bring significant additional benefits.

(ii) Intangible assets are stated at their cost of acquisition,

(iii) Land is stated at original cost of acquisition.

(iv) Capital work in progress is stated at amount spent up to the date of Balance Sheet.

(b) METHODS OF DEPRECIATION AND AMORTISATION

(i) Depreciation on fixed assets is provided for on straight line method at the rates specified in Schedule XIV of the Companies Act, 1956 for the period of usage.

(ii) Computer software Development charges and Patent, Trademark & Design are recognised as intangible assets and amortized on straight line method over a period of 10 years.

(iii) Leasehold land is amortized on straight line method over lease period.

D. INVESTMENTS

Investments are classified into current and long term investments. Current investments are stated at lower of cost and fair value. Long term investments are stated at cost. A provision for diminution is made to recognize a decline, other than temporary, in the value of long term investments.

E. INVENTORIES

(a) Items of inventories are measured at lower of cost or net realizable value. Raw material on floor shop and work-in- process is taken as part of raw material and valued accordingly.

(b) The cost is calculated on weighted average cost method. Cost comprises of expenditure incurred in normal course of business in bringing such inventories to its location and includes, where applicable, appropriate overhead based on normal level of activity. Obsolete, slow moving & defective inventories are identified at the time of physical verification of inventories and, where necessary, provision is made for such inventories.

(c) By-products are valued at net realizable value and are deducted from the cost of main product.

(d) Inventory of Finished Excisable product is valued inclusive of Excise Duty.

F. REVENUE RECOGNITION

(a) Export sales are accounted for on the basis of date of bill of lading. Domestic sales of goods are recognised on the dispatch of goods to the customers. Sales are net of discounts, Sales Tax, Excise Duty and Returns but include exchange fluctuations on exports realised during the year and also the effect of trade receivable in foreign exchange as at the year end and restated at exchange rate existing as on that date. Dividend income is recognised when the right to receive dividend is established. Revenue and Expenditure are accounted for on a going concern basis. Interest Income / Expenditure is recognised using the time proportion method based on the rates implicit in the transaction.

(b) Revenue in respect of Insurance / others claims, Interest, Commission, etc. is recognised only when it is reasonably certain that the ultimate collection will be realised.

(c) Turnover includes gain / loss on corresponding forward contracts.

G. PROPOSED DIVIDEND

Dividends (including dividend Tax thereon) are provided for in the books of account as proposed by the Boards, pending approval at the Annual General Meeting.

H. RESEARCH & DEVELOPMENT

All expenditure other than Capital Expenditure is written- off in the year it is incurred. Capital Expenditure on Research & Development is included under Fixed Assets.

I. EMPLOYEE BENEFITS

Contributions to the provident fund, which is a defined contribution retirement plan, are charged to the profit and loss account in the period in which the contributions are incurred. Present liability for future payment of gratuity and unavailed leave benefits are determined on the basis of actuarial valuation carried out by M/s. K.A. Pandit, Consultant & Actuarial at the balance sheet date and is charged to the profit and loss account. Gratuity fund is managed by the Kotak Life Insurance.

J. FOREIGN EXCHANGE TRANSACTIONS AND FORWARD CONTRACTS

(a) Year-end balance of foreign currency monetary items is translated at the year-end rates and the corresponding effect is given in the respective accounts. Transactions completed during the year are adjusted on actual basis.

(b) Exchange difference on forward contract is also recognized in profit & loss Account on change of Exchange rate at the reporting date.

(c) Transactions covered by cross currency swap contracts to be settled on future dates are recognised at the year-end rates of the underlying foreign currency. Effects arising from swap contracts are adjusted on the date of settlement. Non monetary foreign currency items are carried at cost.

(d) To recornise the net mark to market loss in the profit and loss accounts on the outstanding portfolio of options as at the balance sheet date, and to ignore the net gain, if any, in respect of Non integral foreign operation - both monetary and non-monetary items are translated at the closing rate and resultant difference is accumulated in foreign currency translation reserve, until the disposal of net investment.

K. GOVERNMENT GRANT

Government grant is considered for inclusion in accounts only when conditions attached to them are complied with and it is reasonably certain that ultimate collection will be realised. Grant received from government towards fixed assets acquired by the Company is deducted from gross value of the asset acquired and depreciation is charged accordingly.

L. BORROWING COSTS

Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalised as a part of such assets till such time as the assets are ready for their intended use or sale. All other borrowing costs are recognised as expense in the period in which they are incurred.

M. TAXES ON INCOME

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 in respect of deferred tax assets, resulting from timing differences between book and tax profits, at the tax rates that have been enacted or substantively enacted by the balance sheet date, to the extent these are capable of reversal in one or more subsequent periods.

N. LEASES

In respect of Operating leases, rentals are expensed with reference to lease terms and other considerations.

O. CONTINGENT LIABILITIES

Contingent liabilities are disclosed by way of notes to the accounts of financial statements. Provision is made in accounts for those liabilities which are likely to materialise after the year end and having effect on the position stated in the Balance Sheet as at the year end.

P. SEGMENT REPORTING

Segments are identified based on dominant source and nature of risks and returns and the internal organization and management structure. Inter segment revenue accounted for on the basis of transactions which are primary market led. Revenue and expenses which relate to enterprises as a whole and not attributable to segments are included under "other unallocable expenditure net of unallocable income".

Q. FINANCIAL AND MANAGEMENT INFORMATION SYSTEM

An Integrated Accounting System has been put to practice which unifies both Financial Books and Costing Records. The books of account and other records have been designated to facilitate compliance with the relevant provisions of the Companies Ac t on one hand, and to meet the internal requirements of information and systems for Planning, Review and Internal Control on the other. The Cost Accounts are designed to adopt Costing Systems appropriate to the business carried out by the Divisions, with each Divisions incorporating into its costing system, the basic tenets and principles of Standard Costing, Budgetary Control and Marginal Costing as appropriate.

R. IMPAIRMENT OF ASSETS

The Company assesses at each Balance sheet date whether there is any indication that an assets may be impaired. If any such Indication exists; the Company estimates the recoverable amount of assets. If such recoverable amount of the assets or the recoverable amount of the cash generating unit to which the assets belong is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the Profit & Loss Account. If at the balance sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the assets is reflected at recoverable amount.

 
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