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Accounting Policies of Radico Khaitan Ltd. Company

Mar 31, 2015

1.01 Basis of preparation of financial statements

The financial statements are prepared under historical cost convention, on accrual basis and in accordance with the generally accepted accounting principle (GAAP) in India and 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 Ad) t the Companies Act, 1956 (the 1956 Act), as applicable.

1.02 Use of estimates

The preparation of financial statements requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and notes thereto. Differences between actual results and estimates are recognized in the period in which they materialise.

1.03 Fixed assets, Intangible assets and capital work -ln-progress

Fixed Assets are stated at cost except to the extent revalued. Borrowing costs attributable to the qualifying assets and all significant costs incidental to the acquisition of assets are capitalised. Freehold and Leasehold land at Rampur, inter alia, were revalued by an approved valuer as on 1st January, 1999. Capital work in progress indudes cost of assets a! sites, construction expenditure and interest on the funds deployed, intangible Assets are stated at cost less accumulated amortization and impairment loss, if any.

1.04 Depreciation

Tangible assets

a) Cost of Leasehold land and leasehold improvements are amortised over the period of lease

b) With effect from 01.04.2014, depreciation is provided as per Schedule II to the Companies Act, 2013, on straight line method at with reference to the useful life of the assets specified therein.

c) On additions costing less than Rs.5000, depreciation is provided at 100% in the year of addition

d) Depredation on amount added on revaluation of assets is transferred from Revaluation Reserve.

Intangible assets

e) Based on the anticipated future economic benefits, the life of Brands & Trade Mark and Goodwill are amortised over twenty year on straight line method.

f) Softwares are amortised over a peiod of three years on straightline method.

1.05 Impairment:

At each Balance Sheet date, the Company reviews the carrying amount of its fixed assets to determine whether there are any indication that those assets have suffered an impairment loss. If any such indication exists, recoverable amount of the assets is estimated in order to determine the extent of impairment loss

1.06 Investments

Long term investments are earned at cost. Provision for diminution in value of long term investment is considered, if in the opinion of management, such a decline in value is considered as other than temporary in nature. Current investments are valued at lower of cost or fair value

1.07 Inventories

Finished goods and stock-in-process are valued at lower of cost or net realisable value. Cost includes cost of conversion and other expenses incurred in bringing the goods to their location and condition. Raw materials, packing materials, stores and spares are valued at lower of cost or net realisable value. Cost is ascertained on 'moving average' basis for all Inventories.

1.08 Revenue recognition

Sales are recognised on delivery or on passage of title of the goods to the customers when the risk and reward stand transferred to customers They are accounted net of sales tax/VAT, trade discounts and rebates but Inclusive of excise duty,Export incentives are accounted for on the basis of export sales effected during the year Interest income is accounted on time proportion basis. Dividend income is accounted for, when the right to receive is established.

1.09 Excise Duty

In respect of stocks covered by central excise, excise duty is provided on closing stocks and also considered for valuation. In respect of country liquor and IMFL stocks, applicable State excise duty/ export duty Is provided on the basis of state-wise despatches identified. In the case of Rectified Spirit/ ENA, it is not ascertainable as to how much would be converted finally into country liquor or IMFL or sold as such and also to which particular state or exported outside India. Duty payable in such cases is not determinable (as it varies depending on the places and the form in which these are despacthed). Hence, the excise duty on such stocks lying In factory is accounted for on clearances of such goods. The method of accounting followed by the Company has no impact on the results of the year.

1.10 Transfer pricing of Bio-Gas / Power

Since it is not possible to compute the actual cost, inter unit transfer of bio-gas & power have been valued on the basis of savings in direct fuel cost / prevailing purchase price of power. The same has been considered for valuation of inventories.

1.11 Treatment of Employee benefits

The Company makes regular contributions to duly constituted funds set up for Provident Fund, Family Pension Fund, Employees state Insurance, Superannuation and Gratuity, which are charged to revenue. The employees are allowed the benefit of leave encashment as per the rules of the Company, for which provision for accruing liability is made on actuarial valuation carried out at the end of the year Contribution to gratuity is also determined on actuarial basis

1.12 Foreign Currency Transactions

Transactions in foreign currencies are accounted for at the exchange rate prevailing on tine day of the transaction. The outstanding liabilities/ receivables are translated at the year end rates In the case long term foreign currency monetary items, relating to acquisition of depreciable capital assets, the resultant gain or loss is adjusted to cost of respective capital asset and in the case of other tong term foreign currency monetary items, the resultant gain or loss is transferred to 'Foreign currency monetary item translation difference account' and transferred to revenue over the period of long term foreign currency monetary item. In the case of other monetary foreign currency items, the resultant gain or loss are adjusted to the statement of Profit & Loss. Non-monetary items denominaled in foreign currency, (such as fixed assets) are valued at the exchange rate prevailing on the date of transaction. Any gain or losses arising due to exchange differences arising on translation or settlement are accounted for in the Statement of Profit and Loss. In case of forward exchange contracts, the premium or discount arising at the inception of such contracts, is amortised as income or expense over the period of contract and exchange difference on such contracts, i.e. difference between the exchange rate at the reporting / settlement date and the exchange rate on the date of inception / the last reporting date, is recognized as income / expenses for the period.

1.13 Derivative Transactions

These transactions are undertaken to hedge the cost of borrowing and comprise of principal / interest rate swaps The income / expenses are recognised as & when earned I incurred. In case of outstanding derivative contracts at the year end date, toss is determined on marked to market (MTM) basis and provision made.

1.14 Leasee

Since significant portion of risks and rewards are retained by lessor in respect of assets acquired on lease, they are classified as operating lease and the lease rentals are charged off to revenue account

1.15 Research and Development

Fixed assets used for Research and Development are depreciated In the same manner as in the case of similar assets; the revenue expenses are charged off in the year of incurrance.

1.16 Taxation

Provision is made for deferred fax for all timing differences arising between taxable income and accounting income at currently enacted or substantially enacted tax rates Deferred tax assets are recognized, only if there is reasonable / virtual certainty that they will be realized and are reviewed for the appropriateness of their respective carrying values at each Balance Sheet date.

1.17 Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation In measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disdosed in the notes to accounts. Contingent assets are neither recognized nor disdosed in the financial statements




Mar 31, 2014

1.01 Basis of preparation of financial statements

The financial statements are prepared under historical cost convention, on a going concern basis and in accordance with the applicable accounting standards prescribed in the Companies (Accounting Standards) Rules, 2006 issued by the Central Government, in consultation with the National Advisory Committee on Accounting Standards and relevant provisions of the Companies Act, 1956.

1.02 Use of estimates

The preparation of financial statements requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and notes thereto. Differences between actual results and estimates are recognized in the period in which they materialise.

1.03 Fixed assets, Intangible assets and capital work-in-progress

Fixed Assets are stated at cost except to the extent revalued. Borrowing costs attributable to the qualifying assets and all significant costs incidental to the acquisition of assets are capitalised. Freehold and Leasehold land at Rampur, inter alia, were revalued by an approved valuer as on 1st January, 1999. Capital work in progress includes cost of assets at sites, construction expenditure and interest on the funds deployed. Intangible Assets are stated at cost less accumulated amortization and impairment loss, if any.

1.04 Depreciation

Tangible assets

a) Cost of Leasehold land and leasehold improvements are amortised over the period of lease.

b) Depreciation is charged for the year on straight line method at the rates and in the manner specified in Schedule XIV of the Companies Act,1956.

c) On additions costing less than Rs.5000, depreciation is provided at 100% in the year of addition.

d) Depreciation on amount added on revaluation of assets is transferred from Revaluation Reserve.

Intangible assets

e) Based on the anticipated future economic benefits, the life of Brands & Trade Mark and Goodwill are amortised over twenty to twenty one years on straight line method.

f) Softwares are amortised over a peiod of six years on straight line method.

1.05 Impairment :

At each Balance Sheet date, the Company reviews the carrying amount of its fixed assets to determine whether there are any indication that those assets have suffered an impairment loss. If any such indication exists, recoverable amount of the assets is estimated in order to determine the extent of impairment loss.

1.06 Investments

Long term investments are carried at cost. Provision for diminution in value of long term investment is considered, if in the opinion of management, such a decline in value is considered as other than temporary in nature. Current investments are valued at lower of cost or fair value

1.07 Inventories

Finished goods and stock-in-process are valued at lower of cost or net realisable value. Cost includes cost of conversion and other expenses incurred in bringing the goods to their location and condition. Raw materials, packing materials, stores and spares are valued at lower of cost or net realisable value. Cost is ascertained on "moving average" basis for all inventories.

1.08 Revenue recognition

Sales are recognised on delivery or on passage of title of the goods to the customers when the risk and reward stand transferred to customers. They are accounted net of sales tax/VAT, trade discounts and rebates but inclusive of excise duty. Excise revenue subsidy is accounted for based on the policy of the State Government of Uttar Pradesh. Export Incentives are accounted for on the basis of export sales effected during the year. Interest income is accounted on time proportion basis. Dividend income is accounted for, when the right to receive is established.

1.09 Excise Duty

In respect of stocks covered by central excise, excise duty is provided on closing stocks and also considered for valuation. In respect of country liquor and IMFL stocks, applicable State excise duty/ export duty is provided on the basis of state- wise despatches identified. In the case of Rectified Spirit/ ENA, it is not ascertainable as to how much would be converted finally into country liquor or IMFL or sold as such and also to which particular state or exported outside India. Duty payable in such cases is not determinable (as it varies depending on the places to which they are despatched and the form in which these are despacthed). Hence, the excise duty on such stocks lying in factory is accounted for on clearances of such goods. The method of accounting followed by the Company has no impact on the results of the year.

1.10 Transfer pricing of Bio-Gas / Power

Since it is not possible to compute the actual cost, inter unit transfer of bio-gas & power have been valued on the basis of savings in direct fuel cost / prevailing purchase price of power. The same has been considered for valuation of inventories.

1.11 Treatment of Employee benefits

The Company makes regular contributions to duly constituted funds set up for Provident Fund, Family Pension Fund, Employees State Insurance, Superannuation and Gratuity, which are charged to revenue. The employees are allowed the benefit of leave encashment as per the rules of the Company, for which provision for accruing liability is made on actuarial valuation carried out at the end of the year. Contribution to gratuity is also determined on actuarial basis.

1.12 Foreign Currency Transactions

Transactions in foreign currencies are accounted for at the exchange rate prevailing on the day of the transaction. The outstanding liabilities/ receivables are translated at the year end rates. In the case long term foreign currency monetary items, relating to acquisition of depreciable capital assets, the resultant gain or loss is adjusted to cost of respective capital asset and in the case of other long term foreign currency monetary items, the resultant gain or loss is transferred to ''Foreign currency monetary item translation difference account'' and transferred to revenue over the period of long term foreign currency monetary item. In the case of other monetary foreign currency items, the resultant gain or loss are adjusted to the statement of Profit & Loss. Non-monetary items denominated in foreign currency, (such as fixed assets) are valued at the exchange rate prevailing on the date of transaction. Any gain or losses arising due to exchange differences arising on translation or settlement are accounted for in the Statement of Profit and Loss. In case of forward exchange contracts, the premium or discount arising at the inception of such contracts, is amortised as income or expense.

1.13 Derivative Transactions

These transactions are undertaken to hedge the cost of borrowing and comprise of principal / interest rate swaps.The income / expenses are recognised when earned / incurred. In case of outstanding derivative contracts at the year end date, loss is determined on marked to market (MTM) basis and provision made.

1.14 Leases

Since significant portion of risks and rewards are retained by lessor in respect of assets acquired on lease, they are classified as operating lease and the lease rentals are charged off to revenue account.

1.15 Research and Development

Fixed assets used for Research and Development are depreciated in the same manner as in the case of similar assets; the revenue expenses are charged off in the year of incurrance.

1.16 Taxation

Provision is made for deferred tax for all timing differences arising between taxable income and accounting income at currently enacted or substantially enacted tax rates. Deferred tax assets are recognized, only if there is reasonable / virtual certainty that they will be realized and are reviewed for the appropriateness of their respective carrying values at each Balance Sheet date.

1.17 Provisions, Contingent Liabilities and Contingent Assets

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

Notes on Accounts for the year ended 31.03.2014

a. The Company has issued only one class of shares, referred to as equity shares having a par value of Rs. 2/- Each holder of equity shares is entitled to one vote per share.

b. The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

c. During the year ended March 31, 2014, the amount of dividend per share recognized for distribution to equity shareholders is Rs. 0.80 (previous year Rs. 0.80). The total dividend appropriation for the year ended March 31, 2014 amounted to Rs.1245.19 lacs (previous year Rs. 1,243.95 lacs) including corporate dividend tax of Rs. 180.88 lacs (previous year Rs. 180.79 lacs).

In respect of Options granted under the Employee Stock Options plan, in accordance with the guidelines issued by SEBI, the accounting value of the options is accounted as deferred employee compensation, which is amortized on a straight line basis over the period between the date of grant of options and eligible dates for conversion into equity shares. Consequently, Employee benefits expense ( Note no. 25) includes Rs. 8.22 lacs debit (Previous year Rs.15.68 lacs debitt) being the amortisation of deferred employee compensation.


Mar 31, 2013

1.01 Basis of preparation of financial statements

The financial statements are prepared under historical cost convention, on a going concern basis and in accordance with the applicable accounting standards prescribed in the Companies (Accounting Standards) Rules, 2006 issued by the Central Government, in consultation with the National Advisory Committee on Accounting Standards and relevant provisions of the Companies Act, 1956.

1.02 Use of estimates

The preparation of financial statements requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and notes thereto. Differences between actual results and estimates are recognized in the period in which they materialise.

1.03 Fixed assets. Intangible assets and capital work-in-progress

Fixed Assets are stated at cost except to the extent revalued. Borrowing costs attributable to the qualifying assets and all significant costs incidental to the acquisition of assets are capitalised. Freehold and Leasehold land at Rampur, inter alia, were revalued by an approved valuer as on 1st January, 1999. Capital work in progress includes cost of assets at sites, construction expenditure and interest on the funds deployed. Intangible Assets are stated at cost less accumulated amortization and impairment loss, if any.

1.04 Depreciation Tangible assets

a) Cost of Leasehold land and leasehold improvements are amortised over the period of lease.

b) Depreciation is charged for the year on straight line method at the rates and in the manner specified in Schedule XIV of the Companies Act,1956.

c) On additions costing less than Rs.5000, depreciation is provided at 100% in the year of addition.

d) Depreciation on amount added on revaluation of assets is transferred from Revaluation Reserve.

Intangible assets

e) Based on the anticipated future economic benefits, the life of Brands & Trade Mark and Goodwill are amortised over twenty to twenty one years on straight line method.

f) Softwares are amortised over a period of six years on straight line method.

1.05 Impairment:

At each Balance Sheet date, the Company reviews the carrying amount of its fixed assets to determine whether there are any indication that those assets have suffered an impairment loss. If any such indication exists, recoverable amount of the assets is estimated in order to determine the extent of impairment loss.

1.06 Investments

Long term investments are carried at cost. Provision for diminution in value of long term investment is considered , if in the opinion of management, such a decline in value is considered as other than temporary in nature. Current investments are valued at lower of cost or fair value.

1.07 Inventories

Finished goods and stock-in-process are valued at lower of cost or net realisable value. Cost includes cost of conversion and other expenses incurred in bringing the goods to their location and condition. Raw materials, packing materials, stock in trade, stores and spares are valued at lower of cost or net realisable value. Cost is ascertained on "moving average" basis for all inventories.

1.08 Revenue recognition

Sales are recognised on delivery or on passage of title of the goods to the customers when the risk and reward stand transferred to customers. They are accounted net of sales tax/VAT, trade discounts and rebates but inclusive of excise duty. Excise revenue subsidy is accounted for based on the policy of the State Government of Uttar Pradesh. Export Incentives are accounted for on the basis of export sales effected during the year. Interest income is accounted on time proportion basis. Dividend income is accounted for, when the right to receive is established.

1.09 Excise Duty

In respect of stocks covered by central excise, excise duty is provided on closing stocks and also considered for valuation. In respect of other stocks, keeping in view that State excise duty payable on finished products is not determinable (as it varies depending on the places to which they are despatched), the excise duty on such stocks lying in factory is accounted for on clearances of such goods. The method of accounting followed by the Company has no impact on the results of the year.

1.10 Transfer pricing of Bio-Gas/ Power

Since it is not possible to compute the actual cost, inter unit transfer of bio-gas & power have been valued on the basis of savings in direct fuel cost/ prevailing purchase price of power. The same has been considered for valuation of inventories.

1.11 Treatment of Employee benefits

The Company makes regular contributions to duly constituted funds set up for Provident Fund, Family Pension Fund, Employees State Insurance, Superannuation and Gratuity, which are charged to revenue. The employees are allowed the benefit of leave encashment as per the rules of the Company, for which provision for accruing liability is made on actuarial valuation carried out at the end of the year. Contribution to gratuity is also determined on actuarial basis.

1.12 Foreign Currency Transactions

Transactions in foreign currencies are accounted for at the exchange rate prevailing on the day of the transaction. The outstanding liabilities/ receivables are translated at the year end rates. The resultant gain or loss are adjusted to the Profit & Loss Account. Non-monetary items denominated in foreign currency, (such as fixed assets) are valued at the exchange rate prevailing on the date of transaction. Any gain or losses arising due to exchange differences arising on translation or settlement are accounted for in the Statement of Profit and Loss. In case of forward exchange contracts, the premium or discount arising at the inception of such contracts, is amortised as income or expense over the period of contract and exchange difference on such contracts, i.e. difference between the exchange rate at the reporting / settlement date and the exchange rate on the date of inception / the last reporting date, is recognized as income / expenses for the period.

1.13 Derivative Transactions

These transactions are undertaken to hedge the cost of borrowing and comprise of principal / interest rate swaps. The income / expenses are recognised when earned / incurred. In case of outstanding derivative contracts at the year end date, loss is determined on marked to market (MTM) basis and provision made.

1.14 Leases

Since significant portion of risks and rewards are retained by lessor in respect of assets acquired on lease, they are classified as operating lease and the lease rentals are charged off to revenue account.

1.15 Research and Development

Fixed assets used for Research and Development are depreciated in the same manner as in the case of similar assets; the revenue expenses are charged off in the year of incurrance.

1.16 Taxation

Provision is made for deferred tax for all timing differences arising between taxable income and accounting income at currently enacted or substantially enacted tax rates. Deferred tax assets are recognized, only if there is reasonable / virtual certainity that they will be realized and are reviewed for the appropriateness of their respective carrying values at each Balance Sheet date.

1.17 Provisions, Contingent Liabilities and Contingent Assets

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


Mar 31, 2012

1.01 Basis of preparation of financial statements

The financial statements are prepared under historical cost convention, on a going concern basis in accordance with the applicable accounting standards prescribed in the Companies (Accounting Standards) Rules, 2006 issued by the Central Government, in consultation with the National Advisory Committee on Accounting Standards and relevant provisions of the Companies Act, 1956.

1.02 Use of estimates

The preparation of financial statements requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and notes thereto. Differences between actual results and estimates are recognized in the period in which they materialise.

1.03 Fixed assets, Intangible assets and capital work-in-progress

Fixed Assets are stated at cost except to the extent revalued. Borrowing costs attributable to the qualifying assets and all significant costs incidental to the acquisition of assets are capitalised. Freehold and Leasehold land at Rampur, inter alia, were revalued by an approved valuer as on 1st January, 1999. Capital work in progress includes cost of assets at sites, construction expenditure and interest on the funds deployed. Intangible Assets are stated at cost less accumulated amortization and impairment loss, if any.

1.04 Depreciation

Tangible assets

a) Cost of Leasehold land and leasehold improvements are amortised over the period of lease.

b) Depreciation is charged for the year on straight line method at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956.

c) On additions costing less than Rs.5000, depreciation is provided at 100% in the year of addition.

d) Depreciation on amount added on revaluation of assets is transferred from Revaluation Reserve. Intangible .assets

e) Based on the anticipated future economic benefits, the life of Brands & Trade Mark and Goodwill are amortised over twenty to twenty one years on straight line method.

f) Software's are amortised over a period of six years on straight line method.

1.05 Investments

Long term investments are carried at cost. Provision for diminution in value of long term investment is considered , if in the opinion of management, such a decline in value is considered as other than temporary in nature. Current investments are valued at lower of cost or fair value

1.06 Inventories

Finished goods and stock-in-process are valued at lower of cost or net realisable value. Cost includes cost of conversion and other expenses incurred in bringing the goods to their location and condition. Raw materials, packing materials, stores and spares are valued at lower of cost or net realisable value. Cost is ascertained on "moving average" basis for all inventories.

1.07 Revenue recognition

Sales are recognised on delivery or on passage of title of the goods to the customers when the risk and reward stand transferred to customers. I hey are accounted net of sales tax/VAT, trade discounts and rebates but inclusive of excise duty. Excise revenue subsidy is accounted for based on the policy of the State Government of Uttar Pradesh. Export Incentives are accounted for on the basis of export sales effected during the year. Interest income is accounted on time proportion basis. Dividend income is accounted for, when the right to receive is established.

1.08 Excise Duty

In respect of stocks covered by central excise, excise duty is provided on closing stocks and also considered for valuation. In respect of other stocks, keeping in view that State excise duty payable on finished products is not determinable was it varies depending on the places to which they are despatched), the excise duty on such stocks lying in factory is accounted for on clearances of such goods. The method of accounting followed by the Company has no impact on the results of the year.

1.09 Transfer pricing of Bio-Gas / Power

Since it is not possible to compute the actual cost, inter unit transfer of bio-gas & power have been valued on the basis of savings in direct fuel cost / prevailing purchase price of power. The same has been considered for valuation of inventories.

1.10 Treatment of Employee benefits

1 he Company makes regular contributions to duly constituted funds set up for Provident Fund, Family Pension Fund, Employees State Insurance, Superannuation and Gratuity, which are charged to revenue. The employees are allowed the benefit of leave encashment as per the rules of the Company, for which provision for accruing liability is made on actuarial valuation carried out at the end of the year. Contribution to gratuity is also determined on actuarial basis.

1.11 Impairment :

At each Balance Sheet date, the Company reviews the carrying amount of its fixed assets to determine whether there arc any indication that those assets have suffered an impairment loss. If any such indication exists, recoverable amount of the assets is estimated in order to determine the extent of impairment loss.

1.12 Foreign Currency Transactions

Transactions in foreign currencies are accounted for at the exchange rate prevailing on the day of the transaction. The outstanding liabilities/ receivables are translated at the year end rates. The resultant gain or loss are adjusted to the Profit & Loss Account. Non-monetary items denominated in foreign currency, (such as fixed assets) are valued at the exchange rate prevailing on the date of transaction. Any gain or losses arising due to exchange differences arising on translation or settlement are accounted for in the Statement of Profit and Loss. In case of forward exchange contracts, the premium or discount arising at the inception of such contracts, is amortised as income or expense over the period of contract and exchange difference on such contracts, i.e. difference between the exchange rate at the reporting / settlement date and the exchange rate on the date of inception / the last reporting date, is recognized as income / expenses for the period.

1.13 Derivative Transactions

These transactions are undertaken to hedge the cost of borrowing and comprise of principal / interest rate swaps. The income / expenses are recognised when earned / incurred. In case of outstanding derivative contracts at the year end date, loss is determined on marked to market (MTM) basis and provision made.

1.14 Provisions, Contingent Liabilities and Contingent Assets

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

1.15 Research and Development

Fixed assets used for Research and Development are depreciated in the same manner as in the case of similar assets; the revenue expenses are charged off in the year of insurance.

1.16 Taxation

Provision is made for deferred tax for all timing differences arising between taxable income and accounting income at currently enacted or substantially enacted tax rates. Deferred tax assets are recognized, only if there is reasonable / virtual certainty that they will be realized and are reviewed for the appropriateness of their respective carrying values at each Balance Sheet date.

1.17 Leases

Since significant portion of risks and rewards are retained by lessor in respect of assets acquired on lease, they are classified as operating lease and the lease rentals are charged off to revenue account.

 
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