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Accounting Policies of NTC Industries Ltd. Company

Mar 31, 2015

A. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The financial statements are prepared under historical cost convention on accrual basis as a going concern and in accordance with the Generally Accepted Accounting Principles (GAAP), the Companies Act, 2013 and in compliance with Companies (Accounting Standard) Rules, 2006, (as amended) as notified u/s 129 of Companies Act, 2013 except those with significant uncertainty. Accounting policies not stated explicitly otherwise are consistent with Generally Accepted Accounting Principles.

As required by Schedule III, the Company has classified assets and liabilities into current and non- current based on the operating cycle. An operating cycle is the time between the acquisition of assets for processing and their realization in cash or cash equivalents. The operating cycle has been considered as 12 months.

B. USE OF ESTIMATES

The preparation of financial statements in conformity with Indian GAAP requires management to make estimates and assumptions that affect the balances of assets and liabilities and disclosures relating to contingent liabilities as at the balance sheet date and amounts of income and expenses during the year. Examples of such estimates include income taxes and future obligation under employee retirement benefit plans. Actual results could differ from those estimated. The effects of adjustment arising from revisions made to the estimates are included in the statement of profit and loss of the year in which such revisions are made.

C. REVENUE RECOGNITION

a) Revenue from sale of goods is recognised on transfer of all significant risks and rewards of ownership to the buyer. Sales represent invoice value of finished goods sold inclusive of excise duty and VAT/CST but exclude sales returns, claims, rate difference etc.

b) Revenue from services are recognised on rendering of services to customers except otherwise stated.

c) Rental income (exclusive of Service Tax) from assets given on operating lease is recognised using straight line method. Contingent rent is recognised as income to reflect systematic allocation of earnings over the lease period. This policy is not applicable for variable rental income based on turnover of the tenant.

Other Income:

d) Interest income is recognised on time proportion basis taking into account the amount outstanding and the rate applicable.

e) Dividend income is recognised when the right to receive is established.

D. FIXED ASSETS

i) Tangible assets, including those given on operating lease, are stated at cost of acquisition inclusive of freight incurred, duties and taxes (net of CENVAT/VAT) and incidental expenses less accumulated depreciation.

ii) Capital work in progress, cost incurred on construction of fixed assets consists of all directly attributable expenditure.

iii) Software is capitalised, where it is expected to provide future enduring economic benefits.

E. DEPRECIATION AND AMORTISATION

Depreciation is provided on depreciable value (cost minus residual value) using straight line method in the manner that the assets is depreciated over the useful life stated in "Schedule - II" of Companies Act, 2013.

F. IMPAIRMENT OF ASSETS

An asset is treated as impaired when the carrying cost of the same exceeds its recoverable amount. Impairment is charged to statement of profit and loss in the year in which an asset is identified as impaired. The impairment losses recognised in prior accounting period are reversed if there has been a change in the estimate of the recoverable amount.

G. INVESTMENTS

Investments are bifurcated into noncurrent and current on the basis of intention of holding. Investments that are readily realisable and intended to be held for not more than a year from the date of balance sheet are classified as current investments. All other investments are classified as noncurrent. Current investments are carried at lower of cost or fair market value, determined on an individual investment basis. Noncurrent investments are carried at cost. Provision for diminution in the value of noncurrent investments is made, only if such a diminution is other than temporary.

H. INVENTORIES

a) Raw materials: At lower of weighted average cost or net realisable value.

b) Work in progress: At lower of cost or net realisable value.

c) Finished goods and Stock in trade: At lower of cost or net realisable value.

d) Stores and spares, packing: At lower of weighted average cost or net realisable value.

I. CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash on hand, demand deposits with banks, other short-term highly liquid investments without significant risk and with original maturities of three months or less as per the AS - 3 "CASH FLOW STATEMENT".

J. FOREIGN CURRENCY TRANSACTIONS

Transactions denominated in foreign currencies are recorded at the exchange rate prevailing at the date of the transactions or that approximates the actual rate at the date of transactions.

Exchange differences arising on foreign exchange transactions settled during the year are recognised in the statement of profit and loss for the year.

K. EXCISE DUTY

Excise duty has been accounted for at the time of manufacture of goods, accordingly excise duty on only marketable finished goods lying as stock in factory has been considered for valuation.

L. EMPLOYEE BENEFITS

a) Short term employee benefits: All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits. Benefits such as salaries, wages and short term compensated absences, the expected cost of ex-gratia, etc are recognised in the period in which the employee renders the related service.

b) Post-employment benefits

i) Defined Contribution Plan: Employee benefits in the form of Provident fund, employees state insurance etc. are considered as defined contribution plan and the contributions are charged to the statement of profit and loss for the year when the contributions to the respective funds are due.

ii) Defined Benefit Plan: Employee benefits in the form of gratuity and leave encashment are considered as defined benefit plan and are provided for on the basis of an independent actuarial valuation, using the projected unit credit method, as at the balance sheet date as per requirements of Accounting Standard- 15 (Revised 2005) on "Employee Benefits".

Actuarial gains/losses, if any, are immediately recognised in the statement of profit and loss.

M. TAXATION

a) Current Tax: Current tax is determined as the amount of tax payable in respect of taxable income for the year in accordance with the provisions of the Income Tax Act, 1961. Minimum Alternative Tax credit available under section 115JB of the Income Tax Act, 1961 are accounted in the year in which the benefits are claimed.

b) Deferred Tax: Deferred tax is recognised subject to consideration of prudence on the basis of 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 using the tax rates and laws that have been enacted or substantially enacted as at the balance sheet date. Deferred tax asset is recognised and carried forward only to the extent there is reasonable certainty that the asset will be realised in future.

N. PROVISIONS/CONTINGENCIES

i. The Company creates a provision when there is a present obligation as a result of past events and it is probable that there will be outflow of resources and a reliable estimate of the obligation can be made of the amount of the obligation. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

ii. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer probable that the outflow of resources would be required to settle the obligation, the provision is reversed.

O. CONTINGENT LIABILITY

Liabilities which are contingent in nature are not provided for in the accounts and the same are separately disclosed by way of notes to account.

P. EARNINGS PER SHARE

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

Q. PRIOR PERIOD ADJUSTMENTS

Adjustment of identifiable items of income and expenditure pertaining to prior period are accounted for as prior period adjustments.


Mar 31, 2014

A. Basis of Preparation of Financial Statements

The financial statements are prepared under historical cost convention on accrual basis as a going concern and in accordance with the Generally Accepted Accounting Principles (GAAP), the Companies Act, 1956 and in compliance with Companies (Accounting Standard) Rules, 2006, (as amended) as notified u/s 211(3C) of Companies Act, 1956 except those with significant uncertainty. Accounting policies not stated explicitly otherwise are consistent with Generally Accepted Accounting Principles.

B. Use of Estimates

The preparation of financial statements in conformity with Indian GAAP requires management to make estimates and assumptions that affect the balances of assets and liabilities and disclosures relating to contingent liabilities as at the balance sheet date and amounts of income and expenses during the year. Examples of such estimates include income taxes and future obligation under employee retirement benefit plans. Actual results could differ from those estimated. The effects of adjustment arising from revisions made to the estimates are included in the statement of profit and loss of the year in which such revisions are made.

C. Current and Non Current

All the assets and liabilities have been classified as current and non-current as per company''s normal operating cycle and other criteria set out in the Revised Schedule VI to the Companies Act, 1956.

D. Revenue Recognition

a) Revenue from sale of goods are recognised on transfer of all significant risks and rewards of ownership to the buyer. Sales represent invoice value of finished goods sold inclusive of excise duty and VAT/CST but exclude sales returns, claims, rate difference etc.

b) Revenue from services are recognised on rendering of services to customers except otherwise stated.

c) Rental income (exclusive of Service Tax) from assets given on operating lease is recognised using straight line method. Contingent rent is recognised as income to reflect systematic allocation of earnings over the lease period. This policy is not applicable for variable rental income under short term license agreement and based on turnover of the tenant.

Other Income:

d) Interest income is recognised on time proportion basis taking into account the amount outstanding and the rate applicable.

e) Dividend income is recognised when the right to receive is established.

E. Fixed Assets Y

i) Tangible assets, including those given on operating lease, are stated at cost of acquisition inclusive of freight incurred, duties and taxes (net of CENVAT/VAT) and incidental expenses less accumulated depreciation.

ii) Capital work in progress : cost incurred on construction of fixed assets consists of all directly attributable expenditure.

F. Depreciation

Depreciation is provided on fixed assets including those given on operating lease on written down value method at the rates and in the manner specified in Schedule - XIV of the Companies Act, 1956.

G.l Impairment of Assets

An asset is treated as impaired when the carrying cost of the same exceeds its recoverable amount. Impairment is charged to statement of profit and loss in the year in which an asset is identified as impaired. The impairment losses recognised in prior accounting period are reversed if there has been a change in the estimate of the recoverable amount.

H Investments

Investments are bifurcated into non current and current on the basis of intention of holding. Investments that are readily realisable and intended to be held for not more than a year from the date of balance sheet are classified as current investments. All other investments are classified as non current. Current investments are carried at lower of cost or fair market value, determined on an individual investment basis. Noncurrent investments are carried at cost. Provision for diminution in the value of noncurrent investments is made, only if such a diminution is other than temporary.

I. Inventories

a) Raw materials and Packing materials : At lower of weighted average cost or net realisable value.

b) Work in progress: At lower of cost or net realisable value.

c) Finished goods and Stock in trade: At lower of cost or net realisable value.

d) Stores and spares : At lower of weighted average cost or net realisable value.

J. Cash And Cash Equivalents _ ft

Cash and cash equivalents include cash on hand, demand deposits with banks, other short- term highly liquid investments without significant risk and with original maturities of three months or less as per the AS - 3 “CASH FLOW STATEMENT".

K. Foreign Currency Transactions ^^^^-^

Transactions denominated in foreign currencies are recorded at the exchange rate prevailing at the date of the transactions or that approximates the actual rate at the date of transactions. Exchange differences arising on foreign exchange transactions settled during the year are recognised in the statement of profit and loss for the year. v

L. Excise Duty

Excise duty has been accounted for at the time of manufacture of goods, accordingly excise duty on finished goods lying as stock in factory has been considered for valuation.

M. Employee Benefits

a) Short term employee benefits

All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits. Benefits such as salaries, wages and short term compensated absences, the expected cost of ex-gratia, etc are recognised in the period in which the employee renders the related service.

b) Post-employment benefits

i) Defined Contribution Plan: Employee benefits in the form of Provident fund etc. are considered as defined contribution plan and the contributions are charged to the statement of profit and loss for the year when the contributions to the respective funds are due.

ii) Defined Benefit Plan: Employee benefits in the form of gratuity and leave encashment are considered as defined benefit plan and are provided for on the basis of an independent actuarial valuation, using the projected unit credit method, as at the balance sheet date as per requirements of Accounting Standard- 15 (Revised 2005) on “Employee Benefits". Actuarial gains/losses, if any, are immediately recognised in the statement of profit and loss.

N. Taxation

a) Current Tax: Current tax is determined as the amount of tax payable in respect of taxable income for the year in accordance with the provisions of the Income Tax Act, 1961. Minimum Alternative Tax credit available under section 115JB of the Income Tax Act, 1961 are accounted in the year in which the benefits are claimed.

b) Deferred Tax: Deferred tax is recognised subject to consideration of prudence on the basis of 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 using the tax rates and laws that have been enacted or substantially enacted as at the balance sheet date. Deferred tax asset is recognised and carried forward only to the extent there is reasonable certainty that the asset will be realised in future.

O. Provisions/contingencies

A provision is recognised for a present obligation as a result of past events if it is probable that an outflow of resources will be required to settle the obligation and in respect of which a reliable estimate can be made. Provisions are determined based on best estimate of the amount required to settle the obligation as at the balance sheet date. Liabilities which are material and whose future outcome cannot be ascertained with reasonable certainty are treated as contingent liability and are disclosed by way of notes to accounts.

P. Prior Period Adjustments

Adjustment of identifiable items of income and expenditure pertaining to prior period are accounted for as prior period adjustments.


Mar 31, 2013

A. Basis of Preparation of Financial Statements

The financial statements are prepared under historical cost convention on accrual basis as a going concern and in accordance with the Generally Accepted Accounting Principles (GAAP), the Companies Act, 1956 and in compliance with Companies (Accounting Standard) Rules, 2006, (as amended) as notified u/s 211(3C) of Companies Act, 1956 except those with significant uncertainty. Accounting policies not stated explicitly otherwise are consistent with Generally Accepted Accounting Principles.

B. Use of Estimates

The preparation of financial statements in conformity with Indian GAAP requires management to make estimates and assumptions that affect the balances of assets and liabilities and disclosures relating to contingent liabilities as at the balance sheet date and amounts of income and expenses during the year. Examples of such estimates include income taxes and future obligation under employee retirement benefit plans. Actual results could differ from those estimated. The effects of adjustment arising from revisions made to the estimates are included in the statement of profit and loss of the year in which such revisions are made.

C. Current and Non-Current

All the assets and liabilities have been classified as current and non-current as per Company''s normal operating cycle and other criteria set out in the Revised Schedule VI to the Companies Act, 1956.

D. Revenue Recognition

a) Revenue from sale of goods are recognised on transfer of all significant risks and rewards of ownership to the buyer. Sales represents invoice value of finished goods sold inclusive of excise duty and value added tax but excludes sales returns, claims, rate difference etc.

b) Revenue from services are recognised on rendering of services to customers except otherwise stated.

c) Rental income (exclusive of Service Tax) from assets given on operating lease is recognised using straight line method. Contingent rent is recognised as income to reflect systematic allocation of earnings over the lease period. This policy is not applicable for variable rental income based on turnover of the tenant.

Other Income

d) Interest income is recognised on time proportion basis taking into account the amount outstanding and the rate applicable.

e) Dividend income is recognised when the right to receive is established.

f) Excise, insurance and other claims/refunds are accounted for on acceptance/actual receipt/ payment basis.

E. Fixed Assets

i) Tangible assets, including those given on operating lease, are stated at cost of acquisition inclusive of freight incurred, duties and taxes (net of CENVAT/VAT) and incidental expenses less accumulated depreciation.

ii) Capital work in progress, cost incurred on construction of fixed assets consists of all directly attributable expenditure.

F. Depreciation

Depreciation is provided on fixed assets including those given on operating lease on written down value method at the rates and in the manner specified in Schedule - XIV of the Companies Act, 1956.

G. Impairment of Assets

An asset is treated as impaired when the carrying cost of the same exceeds its recoverable amount. Impairment is charged to statement of profit and loss in the year in which an asset is identified as impaired. The impairment losses recognised in prior accounting period are reversed if there has been a change in the estimate of the recoverable amount.

H. Investments

Investments are bifurcated into non current and current on the basis of intention of holding. Investments that are readily realisable and intended to be held for not more than a year from the date of balance sheet are classified as current investments. All other investments are classified as non current. Current Investments are carried at lower of cost or fair market value, determined on an individual investment basis. Non current investments are carried at cost. Provision for diminution in the value of non current investments is made, only if such a diminution is other than temporary.

I. Inventories

a) Raw materials : At lower of weighted average cost or net realisable value.

b) Work in progress : At lower of cost or net realisable value.

c) Finished goods and Stock in trade : At lower of cost or net realisable value.

d) Stores and spares, packing and printing materials : At lower of weighted average cost or net realisable value.

J. Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, demand deposits with banks, other short-term highly liquid investments without significant risk and with original maturities of three months or less as per the AS - 3 "CASH FLOWSTATMENT".

K. Foreign Currency Transactions

Transactions denominated in foreign currencies are recorded at the exchange rate prevailing at the date of the transactions or that approximates the actual rate at the date of transactions.

Exchange differences arising on foreign exchange transactions settled during the year are recognised in the statement of profit and loss for the year.

L. Excise Duty

Excise Duty has been accounted for at the time of manufacture of goods, accordingly excise duty on finished goods lying as stock in factory has been considered for valuation.

M. Employee Benefits

a) Short term employee benefits

All employee benefits payable wholly within twelve months of rendering the service are classified as short- term employee benefits. Benefits such as salaries, wages and short term compensated absences, the expected cost of ex-gratia, etc are recognised in the period in which the employee renders the related service.

b) Post-employment benefits

i) Defined Contribution Plan : Employee benefits in the form of Provident Fund etc. are considered as defined contribution plan and the contributions are charged to the statement of profit & loss for the year when the contributions to the respective funds are due.

ii) Defined Benefit Plan : Employee benefits in the form of gratuity and leave encashment are considered as defined benefit plan and are provided for on the basis of an independent actuarial valuation, using the projected unit credit method, as at the balance sheet date as per requirements of Accounting Standard- 15 (Revised 2005) on "Employee Benefits". Actuarial gains/losses, if any, are immediately recognised in the statement of profit and loss.

N. Taxation

a) Current Tax : Current Tax is determined as the amount of tax payable in respect of taxable income for the year in accordance with the provisions of the Income Tax Act, 1961. Minimum Alternative Tax credit available under Section 115JB of the Income Tax Act, 1961 are accounted in the year in which the benefits are claimed.

b) Deferred Tax : Deferred Tax is recognised subject to consideration of prudence on the basis of 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 using the tax rates and laws that have been enacted or substantially enacted as at the balance sheet date. Deferred tax asset is recognised and carried forward only to the extent there is reasonable certainty that the asset will be realised in future.

O. Provisions/Contingencies

A provision is recognised for a present obligation as a result of past events if it is probable that an outflow of resources will be required to settle the obligation and in respect of which a reliable estimate can be made. Provisions are determined based on best estimate of the amount required to settle the obligation as at the balance sheet date. Liabilities which are material and whose future outcome cannot be ascertained with reasonable certainty are treated as contingent liability and are disclosed by way of notes to accounts.

P. Prior Period Adjustments

Adjustment of identifiable items of income and expenditure pertaining to prior period are accounted for as prior period adjustments.

The Company is in communication with its suppliers to ascertain the applicability of "The Micro, Small and Medium Enterprises Development Act, 2006". As at the date of this balance sheet the company has not received any communications from any of its suppliers regarding the applicability of the Act to them. This has been relied upon by the auditors.

In the opinion of the Board the current assets, loans and advances are not less than the stated value if realised in ordinary course of business. The provisions for all known liabilities are adequate. There are no contingent liabilities except stated, as informed by the management.

The Business of the company falls under a single segment i.e. Manufacturing of Cigarette and Smoking Mixture. In view of the general classification notified by Central Government in exercise of powers conferred u/s 211(3C) of Companies Act, 1956 for companies operating in single segment, the disclosure requirement as per Accounting Standard -17 on "Segment Reporting" are not applicable to the Company. The Company''s business is mainly concentrated in similar geographical, political and economical conditions; hence disclosure for geographical segment is also not required.


Mar 31, 2012

A. FINANCIAL STATEMENTS

The financial statements are prepared under historical cost convention on accrual basis as a going concern and in accordance with the generally accepted accounting principles (GAAP), the Companies Act, 1956 and in compliance with Companies (Accounting Standard) Rules, 2006, (as amended) as notified u/s 211 (3C) of Companies Act, 1956 except those with significant uncertainty. Accounting policies not stated explicitly otherwise are consistent with generally accepted accounting principles.

B. USE OF ESTIMATES

The preparation of financial statements in conformity with Indian GAAP requires management to make estimates and assumptions that affect the balances of assets and liabilities and disclosures relating to contingent liabilities as at the balance sheet date and amounts of income and expenses during the year. Examples of such estimates include income taxes and future obligation under employee retirement benefit plans. Actual results could differ from those estimated. The effects of adjustment arising from revisions made to the estimates are included in the statement of profit and loss of the year in which such revisions are made.

C. CURRENT AND NON CURRENT

All the assets and liabilities have been classified as current and non-current as per Company's normal operating cycle and other criteria set out in the revised Schedule VI to the Companies Act, 1956.

D. REVENUE RECOGNITION

a) Revenue from sale of goods is recognised on transfer of all significant risks and rewards of ownership to the buyer.

b) Revenue from services are recognised on rendering of services to customers except otherwise stated.

OTHER INCOME :

c) Rental income (exclusive of Service Tax) from assets given on operating lease is recognised using straight line method. Contingent rent is recognised as income to reflect systematic allocation of earnings over the lease period. This policy is not applicable for variable rental income based on turnover of the tenant.

d) Interest income is recognised on time proportion basis taking into account the amount outstanding and the rate applicable.

e) Dividend income is recognised when the right to receive is established.

E. FIXED ASSETS

i) Tangible assets, including those given on operating lease, are stated at cost of acquisition inclusive of freight incurred, duties and taxes (net of CENVAT/ sales tax) and incidental expenses less accumulated depreciation.

ii) Capital work in progress, cost incurred on construction of fixed assets consists of all directly attributable expenditure.

F. DEPRECIATION

Depreciation is provided on fixed assets including those given on operating lease on written down value method at the rates and in the manner specified in Schedule - XIV of the Companies Act, 1956.

Depreciation on reduced amount of fixed assets is net of depreciation on that compensation amount excess charged in earlier years.

G. INVESTMENTS

All investments are bifurcated into non current investments and current investments. Investments that are readily realizable and intended to be held for not more than a year from the date of balance sheet are classified as current investments. All other investments are classified as non current. Current investments are carried at lower of cost or fair market value, determined on an individual investment basis. Non current investments are carried at cost. Provision for diminution in the value of non current investments is made, only if such a diminution is other than temporary.

H. INVENTORIES

a) Raw materials: At lower of weighted average cost or net realisable value.

b) Work in progress: At lower of cost or net realisable value.

c) Finished goods and Stock in trade: At lower of cost or net realizable value.

d) Stores and spares, packing and printing materials: At lower of weighted average cost or net realizable value.

I. CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash on hand, demand deposits with banks, other short-term highly liquid investments with original maturities of three months or less as per the AS - 3 "CASH FLOW STATEMENT".

J. FOREIGN CURRENCY TRANSACTION

Transactions denominated in foreign currencies are recorded at the exchange rate prevailing at the date of the transactions or that

approximates the actual rate at the date of transactions.

Exchange differences arising on foreign exchange transactions settled during the year are recognised in the statement of profit and loss for the year.

Transactions which remains unsettled at the reporting date are reported at the rates prevailing as on reporting date and any exchange gain / loss is recognised in statement of profit and loss.

K. SALES

Sales represents invoice value of finished goods sold inclusive of excise duty and value added tax but excludes sales returns, claims, rate difference etc.

L. EXCISE DUTY

Excise duty has been accounted for at the time of manufacture of goods, accordingly excise duty on finished goods lying as stock in factory has been considered for valuation.

M. CLAIMS/REFUNDS

Excise, insurance and other claims/refunds are accounted for on acceptance/actual receipt/ payment basis.

N. EMPLOYEE BENEFITS

a) Short term employee benefits

All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits. Benefits such as salaries, wages and short term compensated absences, the expected cost of ex-gratia, etc are recognised in the period in which the employee renders the related service.

b) Post-employment benefits

i) Defined Contribution Plan: Employee benefits in the form of Employees State Insurance Corporation and provident fund are considered as defined contribution plan and the contributions are charged to the statement of profit and loss for the year when the contributions to the respective funds are due.

ii) Defined Benefit Plan: Employee benefits in the form of gratuity and leave encashment are considered as defined benefit plan and are provided for on the basis of an independent actuarial valuation, using the projected unit credit method, as at the balance sheet date as per requirements of Accounting Standard- 15 (Revised 2005) on "Employee Benefits". Actuarial gains/losses, if any, are immediately recognised in the statement of profit and loss.

O. BORROWING COSTS

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use or sale. Other borrowing costs are recognised as an expense in the year in which they are incurred.

P. TAXATION

a) Current Tax: Current tax is determined as the amount of tax payable in respect of taxable income for the year in accordance with the provisions of the Income Tax Act, 1961. Minimum Alternative Tax credit available under section 115JB of the Income Tax Act, 1961 are accounted in the year in which the benefits are claimed.

b) Deferred Tax: Deferred tax is recognised subject to consideration of prudence on the basis of timing differences being the differences between taxable income and accounting income that originate in one period and is capable of reversal in one or more subsequent periods using the tax rates and laws that have been enacted or substantially enacted as at the balance sheet date. Deferred tax asset is recognised and carried forward only to the extent there is reasonable certainty that the asset will be realized in future.

Q. IMPAIRMENT OF ASSETS

An asset is treated as impaired when the carrying cost of the same exceeds its recoverable amount. Impairment is charged to statement of profit and loss in the year in which an asset is identified as impaired. The impairment loss recognised in prior accounting period is reversed if there has been a change in the estimate of the recoverable amount.

R. PROVISIONS/CONTINGENCIES

A provision is recognised for a present obligation as a result of past events if it is probable that an outflow of resources will be required to settle the obligation and in respect of which a reliable estimate can be made. Provisions are determined based on best estimate of the amount required to settle the obligation as at the balance sheet date. Liabilities which are material and whose future outcome cannot be ascertained with reasonable certainty are treated as contingent liability and are disclosed by way of notes to accounts.


Mar 31, 2010

A. FINANCIAL STATEMENTS

The financial statements are prepared under historical cost convention on accrual basis as a going concern and in accordance with the Generally Accepted Accounting Principles (GAAP), the Companies Act, 1956 and in compliance with Companies (Accounting Standard) Rules, 2006, except those with significant uncertainty. Accounting policies not stated explicitly otherwise are consistent with Generally Accepted Accounting Principles.

B. USE OF ESTIMATES

The preparation of financial statements in conformity with Indian GAAP requires management to make estimates and assumptions that affect the balances of assets and liabilities and disclosures relating to contingent liabilities as at the Balance Sheet date and amounts of income and expenses during the year. Examples of such estimates include contract costs expected to be incurred to complete construction contracts, provision for doubtful debts, income taxes and future obligation under employee retirement benefit plans. Management periodically assesses whether there is an indication that an asset may be impaired and makes provision in the accounts for any impairment losses estimated. Actual results could differ from those estimates. The effects of adjustment arising from revisions made to the estimates are included in the Profit and Loss statement of the year in which such revisions are made.

C. REVENUE RECOGNITION

a) Revenue from sale of goods is recognised on transfer of all significant risks and rewards of ownership to the buyer.

b) Revenue from services are recognised on rendering of services to customers except otherwise stated.

c) Rental income from assets given on operating lease is recognised using straight line method. Contingent rent is recognised as income to reflect systematic allocation of earning over the lease period. This policy is not applicable for variable rental income based on turnover of the tenant.

d) Interest income is recognised on accrual basis on a time proportion basis.

D. FIXED ASSETS

Fixed Assets, including those given on operating lease, are stated at cost of acquisition inclusive of freight incurred, duties and taxes (net of CENVAT/ Sales Tax) and incidental expenses less accumulated depreciation. Cost incurred on construction of fixed assets consists of all directly attributable expenditure.

Software is capitalized, where it is expected to provide future enduring economic benefits. Capitalisation cost includes license fees, duties and taxes and cost of implementation.

E. DEPRECIATION

Depreciation is provided on fixed assets including those given on operating lease on written down value method at the rates and in the manner specified in Schedule-XIV of the Companies Act, 1956, except Software.

Software costs are amortised over their useful lives or five years whichever is lower.

F. INVESTMENTS

All investments are bifurcated into Long Term Investments and Current Investments. Investments that are readily realisable and intended to be held for not more than a year are classified as Current Investments. All other investments are classified as Long Term. Current Investments are carried at lower of cost or fair market value, determined on an individual investment basis. Long Term Investments are carried at cost. Provision for Diminution in the value of Long Term Investments is made, only if such a diminution is other than temporary.

G. INVENTORIES

Tobacco Division

a) Raw Materials: At lower of weighted average cost or net realisable value.

b) Work in Progress: At lower of cost or net realisable value.

c) Finished Goods: At lower of cost or net realisable value.

d) Stores, Packing & Other Materials: At lower of weighted average cost or net realisable value.

Construction Activity a) Work-in-Progress: At lower of cost or net realisable value.

Cost comprises of cost of land and development, material cost including material lying at respective sites, construction expenses, finance and administrative expenses which contribute to bring the inventory to their present location and condition.

Provision for obsolescence in inventories is made, wherever required.

H. EXCISE DUTY

Excise duty has been accounted for at the time of manufacture of goods, accordingly excise duty on finished goods lying as stock in factory has been considered for valuation.

I. FOREIGN CURRENCY TRANSACTION

Transactions in foreign currencies are recorded at the exchange rate prevailing at the time of occurrence of payments/receipts.

Exchange differences arising on foreign exchange transactions settled during the year are recognized in the profit and loss account of the year.

J. SALES

Sales represents invoice value of finished goods sold inclusive of excise duty and value added tax but excludes sales returns, claims, rate difference etc.

K. CLAIMS/REFUNDS

Excise, Insurance and other claims/refunds are accounted for on acceptance/actual receipt/ payment basis.

L. EMPLOYEE BENEFITS

i) Short term employee benefits

All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits. Benefits such as salaries, wages and short term compensated absences, etc. and the expected cost of ex-gratia is recognised in the period in which the employee renders the related service.

(ii) Post-employment benefits

a) Defined Contribution Plan: Employee benefits in the form of Employees State Insurance Corporation and Provident Fund are considered as defined contribution plan and the contributions are charged to the Profit and Loss Account of the year when the contributions to the respective funds are due.

b) Defined Benefit Plan: Employee benefits in the form of Gratuity and Leave Encashment are considered as defined benefit plan and are provided for on the basis of an independent actuarial valuation, using the projected unit credit method, as at the Balance Sheet date as per requirements of Accounting Standard- 15 (Revised 2005) on "Employee Benefits".

Actuarial gains/losses, if any, are immediately recognised in the Profit and Loss Account.

M. TAXATION

a) Current Tax: Current tax is determined as the amount of tax payable in respect of taxable income for the year in accordance with the provisions of the Income Tax Act, 1961. Minimum Alternative Tax credit available under section 115JB of the Income Tax Act, 1961 will be accounted in the year in which the benefits are claimed.

b) Deferred Tax: Deferred tax is recognised subject to consideration of prudence on the basis of timing differences being the differences between taxable income and accounting income that originate in one period and capable of reversal in one or more subsequent periods using the tax rates and laws that have been enacted or substantially enacted as on the balance sheet date. Deferred tax asset is recognised and carried forward only to the extent that there is reasonable certainty that the asset will be realised in future.

N. IMPAIRMENT OF ASSETS

An asset is treated as impaired when the carrying cost of the same exceeds its recoverable amount. Impairment is charged to the Profit and Loss account in the year in which an asset is identified as impaired. The impairment loss recognised in prior accounting period is reversed if there has been a change in the estimate of the recoverable amount.

O. BORROWING COSTS

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use or sale. Other borrowing costs are recognised as an expense in the year in which they are incurred.

P. PROVISIONS/CONTINGENCIES

A provision is recognised for a present obligation as a result of past events if it is probable that an outflow of resources will be required to settle the obligation and in respect of which a reliable estimate can be made. Provisions are determined based on best estimate of the amount required to settle the obligation as at the Balance Sheet date. Liabilities which are material and whose future outcome cannot be ascertained with reasonable certainty are treated as contingent liability and are disclosed by way of note.

 
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