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Accounting Policies of Rainbow Denim Ltd. Company

Mar 31, 2015

A. General :

Accounts are maintained on accrual basis and on the basis of historical cost convention and materially comply with the mandatory accounting standards issued by the Institute of Chartered Accountants of India.

B. Revenue Recognition :

a. The company follows practice of accounting for all Income and Expenditure on accrual basis.

b. Export incentives have been recognized in the year of export.

c. Claims and damages are accounted for to the extent they are reasonably certain and determinable.

C. Fixed Assets :

a. Fixed Assets are stated at cost of acquisition, inclusive of freight, duties, taxes and incidental expenses related to acquisition. Cenvat Credit availed on capital goods and Interest Subsidy under TUF Scheme pertaining to pre-operative period has been credited to respective Capital Reserve Accounts. Depreciation attributable to these reserves has been adjusted there from.

b. Pre-operative Expenditure comprising of revenue expenditure incurred in connection with project implementation during the period upto commencement of commercial production are treated as part of project cost and are capitalized.

c. Adjustments arising from foreign exchange variation, attributable to Fixed Assets, are capitalized.

D. Depreciation :

Depreciation is provided on the Straight Line Method in the manner prescribed in Schedule II to the Companies Act, 2013 as applicable to the continuous process plant. Depreciation on additions/deletions is provided on pro-rata basis with the reference to the date of addition/deletion as the case may be.

E. Excise and Custom Duty :

a. Excise duty, if applicable, is accounted on the basis of both, payments made in respect of goods cleared as also provision made for goods lying in bonded warehouse.

b. Liability on account of customs duty on imported materials is accounted in the year in which the goods are cleared from the customs.

F. Foreign Exchange Transactions :

a. Foreign currency transactions which are not covered by forward contracts are accounted for at the exchange rates prevailing on the date of such transactions.

b. Balances in the form of Current Assets and Current Liabilities in foreign currency, outstanding at the close of the year are converted into Indian currency at appropriate rate of exchange prevailing on the date of Balance Sheet. Resultant gain or loss is accounted during the year.

c. Exchange difference in the carrying amount of the Fixed Assets due to change in the rate of exchange of Fixed Assets linked liability denominated in foreign exchange has been adjusted to the book value of the relevant asset.

G. Investments :

Long Term Investments are stated at cost after deducting provision, if any, made for permanent diminution in the value of investment.

H. Employee Benefits :

a. Short Term Employee Benefits :

All employee benefits falling due wholly within twelve months of rendering the service are classified as short term employee benefits. The benefits like salaries, wages, short term compensated absences etc. and the expected cost of bonus, ex-gratia are recognized in the period in which the employee renders the related service.

b. Post Employment Benefits :

Defined Benefit Plans : The Employee Gratuity Fund Scheme and Government Provident Fund Scheme are funded defined benefit schemes. Employee Gratuity Fund Scheme is covered by Group Insurance Scheme of Life Insurance Corporation of India and Provident Fund Scheme is provided on accrual basis.

c. Long Term Employee Benefits :

The obligation for long term employee benefit such as long term compensated absence is funded benefit which is covered by Group Insurance Scheme of Life Insurance Corporation of India.

I. Valuation of Inventories :

a. Work-in-progress are valued at the lower of cost or net realizable value. The cost is computed on weighted average method and includes cost of materials, cost of conversion and other costs incurred in acquiring the inventory and bringing them to their present location and condition.

b. Finished Goods are valued at the lower of cost or net realizable value. The cost is computed on weighted average method and includes cost of materials, cost of conversion and other costs incurred in acquiring the inventory and bringing them to their present location and condition.

c. Raw Materials and other inventories of Colours, Dyes, Chemicals, Stores, Spares and Packing Materials etc. are valued at the lower of cost or net realizable value. Raw materials and other supplies held for use in production of inventories are not written down below cost except in cases where material prices have declined, and it is estimated that the cost of the finished products will exceed their net realizable value. The cost of Raw Materials is computed on specific identification basis and other inventories of Colours, Dyes, Chemicals, Stores, Spares and Packing Materials etc. is computed on FIFO basis.

d. Stock of Waste and Scrap is valued at estimated net realizable value.

J. Borrowing Cost :

Borrowing cost that is attributable to the acquisition or construction of the qualifying assets is capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of the time to get ready for intended use. All other borrowing costs are charged to revenue.

K. Provision for current and deferred tax :

a. Provision for the current tax is made after taking into consideration benefits admissible under the provisions of Income Tax Act, 1961.

b. Deferred tax charge or credit reflects the tax effects of timing differences between accounting income and taxable income for the period. The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognized using the tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognized only to the extent there is reasonable certainty that the assets can be realized in future. Deferred tax assets are reviewed at each Balance Sheet date and is written-down or written up to reflect the amount that is reasonably or virtually certain, as the case may be, to be realized.

L. Impairment of Assets :

The Company assesses 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 the assets. If such recoverable amount of the assets or the recoverable amount of the cash generating unit to which the assets belongs 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 recognized in the Statement of Profit and 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 the recoverable amount subject to a maximum of depreciated historical cost.

M. Provisions and Contingent Liabilities :

The company creates a provision when there is a present obligation as a result of past events that probably requires an outflow of resources and reliable estimates can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is possible obligation or a present obligation that may require an outflow of resources. Contingent assets are neither recognized nor disclosed.


Mar 31, 2014

A. General :

Accounts are maintained on accrual basis and on the basis of historical cost convention and materially comply with the mandatory accounting standards issued by the Institute of Chartered Accountants of India.

B. Revenue Recognition :

a. The company follows practice of accounting for all Income and Expenditure on accrual basis.

b. Export incentives have been recognized in the year of export.

c. Claims and damages are accounted for to the extent they are reasonably certain and determinable.

C. Fixed Assets :

a. Fixed Assets are stated at cost of acquisition, inclusive of freight, duties, taxes and incidental expenses related to acquisition. Cenvat Credit availed on capital goods and Interest Subsidy under TUF Scheme pertaining to pre-operative period has been credited to respective Capital Reserve Accounts. Depreciation attributable to these reserves has been adjusted there from.

b. Pre-operative Expenditure comprising of revenue expenditure incurred in connection with project implementation during the period upto commencement of commercial production are treated as part of project cost and are capitalized.

c. Adjustments arising from foreign exchange variation, attributable to Fixed Assets, are capitalized.

D. Depreciation :

Depreciation is provided on the Straight Line Method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956 as applicable to the continuous process plant. Depreciation on additions/deletion is provided pro-rata basis with the reference to the date of addition/deletion as the case may be, except in case of fi xed assets costing less than Rs. 5,000 per item which are written off in the year of addition.

E. Excise and Custom Duty :

a. Excise duty, if applicable, is accounted on the basis of both, payments made in respect of goods cleared as also provision made for goods lying in bonded warehouse.

b. Liability on account of customs duty on imported materials is accounted in the year in which the goods are cleared from the customs.

F. Foreign Exchange Transactions :

a. Foreign currency transactions which are not covered by forward contracts are accounted for at the exchange rates prevailing on the date of such transactions.

b. Balances in the form of Current Assets and Current Liabilities in foreign currency, outstanding at the close of the year are converted into Indian currency at appropriate rate of exchange prevailing on the date of Balance Sheet. Resultant gain or loss is accounted during the year.

c. Exchange difference in the carrying amount of the Fixed Assets due to change in the rate of exchange of Fixed Assets linked liability denominated in foreign exchange has been adjusted to the book value of the relevant asset.

G. Investments :

Long Term Investments are stated at cost after deducting provision, if any, made for permanent diminution in the value of investment.

H. Employee Benefi ts :

a. Short Term Employee Benefi ts :

All employee benefi ts falling due wholly within twelve months of rendering the service are classifi ed as short term employee benefi ts. The benefi ts like salaries, wages, short term compensated absences etc. and the expected cost of bonus, ex-gratia are recognized in the period in which the employee renders the related service.

b. Post Employment Benefi ts :

Defi ned Benefi t Plans : The Employee Gratuity Fund Scheme and Government Provident Fund Scheme are funded defi ned benefi t schemes. Employee Gratuity Fund Scheme is covered by Group Insurance Scheme of Life Insurance Corporation of India and Provident Fund Scheme is provided on accrual basis.

c. Long Term Employee Benefi ts :

The obligation for long term employee benefi t such as long term compensated absence is funded benefi t which is covered by Group Insurance Scheme of Life Insurance Corporation of India.

I. Valuation of Inventories :

a. Work-in-progress are valued at the lower of cost or net realizable value. The cost is computed on weighted average method and includes cost of materials, cost of conversion and other costs incurred in acquiring the inventory and bringing them to their present location and condition.

b. Finished Goods are valued at the lower of cost or net realizable value. The cost is computed on weighted average method and includes cost of materials, cost of conversion and other costs incurred in acquiring the inventory and bringing them to their present location and condition.

c. Raw Materials and other inventories of Colours, Dyes, Chemicals, Stores, Spares and Packing Materials etc. are valued at the lower of cost or net realizable value. Raw materials and other supplies held for use in production of inventories are not written down below cost except in cases where material prices have declined, and it is estimated that the cost of the fi nished products will exceed their net realizable value. The cost of Raw Materials is computed on specifi c identifi cation basis and other inventories of Colours, Dyes, Chemicals, Stores, Spares and Packing Materials etc. is computed on FIFO basis.

d. Stock of Waste and Scrap is valued at estimated net realizable value.

J. Borrowing Cost :

Borrowing cost that is attributable to the acquisition or construction of the qualifying assets is capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of the time to get ready for intended use. All other borrowing costs are charged to revenue.

K. Provision for current and deferred tax :

a. Provision for the current tax is made after taking into consideration benefi ts admissible under the provisions of Income Tax Act, 1961.

b. Deferred tax charge or credit refl ects the tax effects of timing differences between accounting income and taxable income for the period. The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognized using the tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognized only to the extent there is reasonable certainty that the assets can be realized in future. Deferred tax assets are reviewed at each Balance Sheet date and is written-down or written up to refl ect the amount that is reasonably or virtually certain, as the case may be, to be realized.

L. Impairment of Assets :

The Company assesses 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 the assets. If such recoverable amount of the assets or the recoverable amount of the cash generating unit to which the assets belongs 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 recognized in the Statement of Profit and 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 refl ected at the recoverable amount subject to a maximum of depreciated historical cost.

M. Provisions and Contingent Liabilities :

The company creates a provision when there is a present obligation as a result of past events that probably requires an outfl ow of resources and reliable estimates can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is possible obligation or a present obligation that may require an outfl ow of resources. Contingent assets are neither recognized nor disclosed.


Mar 31, 2013

A. General :

Accounts are maintained on accrual basis and on the basis of historical cost convention and materially comply with the mandatory accounting standards issued by the Institute of Chartered Accountants of India.

B. Revenue Recognition :

a. The company follows practice of accounting for all Income and Expenditure on accrual basis.

b. Export incentives have been recognized in the year of export.

c. Claims and damages are accounted for to the extent they are reasonably certain and determinable.

C. Fixed Assets :

a. Fixed Assets are stated at cost of acquisition, inclusive of freight, duties, taxes and incidental expenses related to acquisition. Cenvat Credit availed on capital goods and Interest Subsidy under TUF Scheme pertaining to pre-operative period has been credited to respective Capital Reserve Accounts. Depreciation attributable to these reserves has been adjusted there from.

b. Adjustments arising from foreign exchange variation, attributable to Fixed Assets, are capitalized.

D. Depreciation :

Depreciation is provided on the Straight Line Method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956 as applicable to the continuous process plant. Depreciation on additions/deletion is provided pro-rata basis with the reference to the date of addition/deletion as the case may be, except in case of fixed assets costing less than Rs. 5,000 per item which are written off in the year of addition.

E. Excise and Custom Duty :

a. Excise duty, if applicable, is accounted on the basis of both, payments made in respect of goods cleared as also provision made for goods lying in bonded warehouse.

b. Liability on account of customs duty on imported materials is accounted in the year in which the goods are cleared from the customs.

F. Foreign Exchange Transactions :

a. Foreign currency transactions which are not covered by forward contracts are accounted for at the exchange rates prevailing on the date of such transactions.

b. Balances in the form of Current Assets and Current Liabilities in foreign currency, outstanding at the close of the year are converted into Indian currency at appropriate rate of exchange prevailing on the date of Balance Sheet. Resultant gain or loss is accounted during the year.

c. Exchange difference in the carrying amount of the Fixed Assets due to change in the rate of exchange of Fixed Assets linked liability denominated in foreign exchange has been adjusted to the book value of the relevant asset.

G. Investments :

Long Term Investments are stated at cost after deducting provision, if any, made for permanent diminution in the value of investment.

H. Employee Benefits :

a. Short Term Employee Benefits :

All employee benefits falling due wholly within twelve months of rendering the service are classified as short term employee benefits. The benefits like salaries, wages, short term compensated absences etc. and the expected cost of bonus, ex-gratia are recognized in the period in which the employee renders the related service.

b. Post Employment Benefits :

Defined Benefit Plans : The Employee Gratuity Fund Scheme and Government Provident Fund Scheme are funded defined benefit schemes. Employee Gratuity Fund Scheme is covered by Group Insurance Scheme of Life Insurance Corporation of India and Provident Fund Scheme is provided on accrual basis.

c. Long Term Employee Benefits :

The obligation for long term employee benefit such as long term compensated absence is funded benefit which is covered by Group Insurance Scheme of Life Insurance Corporation of India.

I. Valuation of Inventories :

a. Work-in-progress are valued at the lower of cost or net realizable value. The cost is computed on weighted average method and includes cost of materials, cost of conversion and other costs incurred in acquiring the inventory and bringing them to their present location and condition.

b. Finished Goods are valued at the lower of cost or net realizable value. The cost is computed on weighted average method and includes cost of materials, cost of conversion and other costs incurred in acquiring the inventory and bringing them to their present location and condition.

c. Raw Materials and other inventories of Colours, Dyes, Chemicals, Stores, Spares and Packing Materials etc. are valued at the lower of cost or net realizable value. Raw materials and other supplies held for use in production of inventories are not written down below cost except in cases where material prices have declined, and it is estimated that the cost of the finished products will exceed their net realizable value. The cost of Raw Materials is computed on specific identification basis and other inventories of Colours, Dyes, Chemicals, Stores, Spares and Packing Materials etc. is computed on FIFO basis.

d. Stock of Waste and Scrap is valued at estimated net realizable value.

J. Borrowing Cost :

Borrowing cost that is attributable to the acquisition or construction of the qualifying assets is capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of the time to get ready for intended use. All other borrowing costs are charged to revenue.

K. Provision for current and deferred tax :

a. Provision for the current tax is made after taking into consideration benefits admissible under the provisions of Income Tax Act, 1961.

b. Deferred tax charge or credit reflects the tax effects of timing differences between accounting income and taxable income for the period. The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognized using the tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognized only to the extent there is reasonable certainty that the assets can be realized in future. Deferred tax assets are reviewed at each Balance Sheet date and is written-down or written up to reflect the amount that is reasonably or virtually certain, as the case may be, to be realized.

L. Impairment of Assets :

The Company assesses 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 the assets. If such recoverable amount of the assets or the recoverable amount of the cash generating unit to which the assets belongs 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 recognized in the Statement of Profit and 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 the recoverable amount subject to a maximum of depreciated historical cost.

M. Provisions and Contingent Liabilities :

The company creates a provision when there is a present obligation as a result of past events that probably requires an outflow of resources and reliable estimates can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is possible obligation or a present obligation that may require an outflow of resources. Contingent assets are neither recognized nor disclosed.

N. Preliminary Expenses :

Preliminary Expenses are amortized proportionately over a period of 10 years from the year in which these are incurred.


Mar 31, 2012

A. General:

Accounts are maintained on accrual basis and on the basis of historical cost convention and materially comply with the mandatory accounting standards issued by the Institute of Chartered Accountants of India.

B. Revenue Recognition :

a. The company follows practice of accounting for all Income and Expenditure on accrual basis.

b. Export incentives have been recognized in the year of export.

c. Claims and damages are accounted for to the extent they are reasonably certain and determinable.

C. Fixed Assets : .

a. Fixed Assets are stated at cost of acquisition, inclusive of freight, duties, taxes and incidental expenses related to acquisition. Cenvat Credit availed on capital goods and Interest Subsidy under TUF Scheme pertaining to pre-operative period has been credited to respective Capital Reserve Accounts.

Depreciation attributable to these reserves has been adjusted there from. .

b. Adjustments arising from foreign exchange variation, attributable to Fixed Assets, are capitalized.

D. Depreciation :

Depreciation is provided on the Straight Line Method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956 as applicable to the continuous process plant. Depreciation on additions/ deletion is provided pro-rata basis with the reference to the date of addition/deletion as the case may be, except in case of fixed assets costing less than Rs. 5,000 per item which are written off in the year of addition.

E. Excise and Custom Duty : .

a. Excise duty, if applicable, is accounted on the basis of both, payments made in respect of goods cleared as also provision made for goods lying in bonded warehouse.

b. Liability on account of customs duty on imported materials is accounted in the year in which the goods are cleared from the customs.

F. Foreign Exchange Transactions :

a. Foreign currency transactions which are not covered by forward contracts are accounted for at the exchange rates prevailing on the date of such transactions. .

b. Balances in the form of Current Assets and Current Liabilities in foreign currency, outstanding at the close of the year are converted into Indian currency at appropriate rate of exchange prevailing on . the date of Balance Sheet. Resultant gain or loss is accounted during the year.

c. Exchange difference in the carrying amount of the Fixed Assets due to change in the rate of exchange of Fixed Assets linked liability denominated in foreign exchange has been adjusted to the book value of the relevant asset.

G. Investments:

Long Term Investments are stated at cost after deducting provision, if any, made for permanent diminution in the value of investment.

H. Employee Benefits : ,

a. Short Term Employee Benefits :

All employee benefits falling due wholly within twelve months of rendering the service are classified as short term employee benefits. The benefits like salaries, wages, short term compensated absences etc. and the expected cost of bonus, ex-gratia are recognized in the period in which the employee renders the related service.

b. Post Employment Benefits : '

Defined Benefit Plans : The Employee Gratuity Fund Scheme and Government Provident Fund Scheme are funded defined benefit schemes. Employee Gratuity Fund Scheme is covered by Group Insurance Scheme of Life Insurance Corporation of India and Provident Fund Scheme is provided on accrual basis.

c. Long Term Employee Benefits :

The obligation for long term employee benefit such as long term compensated absence is funded benefit which is covered by Group Insurance Scheme of Life Insurance Corporation of India.

I. Valuation of Inventories :

a. Work-in-progress are valued at the lower of cost or net realizable value. The cost is computed on weighted average method and includes cost of materials, cost of conversion and other costs incurred in acquiring the inventory and bringing them to their present location and condition.

b. Finished Goods are valued at the lower of cost or net realizable value. The cost is computed on weighted average method and includes cost of materials, cost of conversion and other costs incurred in acquiring the inventory and bringing them to their present location and condition.

c. Raw Materials and other inventories of Colours, Dyes, Chemicals, Stores, Spares and Packing Materials etc. are valued at the lower of cost or net realizable value. Raw materials and other supplies held for use in production of inventories are not written down below cost except in cases where material prices have declined, and it is estimated that the cost of the finished products will exceed their net realizable value. The cost of Raw Materials is computed on specific identification basis and other inventories of Colours, Dyes, Chemicals, Stores, Spares and Packing Materials etc. is computed on FIFO basis.

d. Stock of Waste and Scrap is valued at estimated net realizable value.

J. Borrowing Cost:

Borrowing cost that is attributable to the acquisition or construction of the qualifying assets is capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of the time to get ready for intended use. All other borrowing costs are charged to revenue.

K. Provision for current and deferred tax :

a. Provision for the current tax is made after taking into consideration benefits admissible under the provisions of Income Tax Act, 1961.

b. Deferred tax charge or credit reflects the tax effects of timing differences between accounting income and taxable income for the period. The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognized using the tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognized only to the extent there is reasonable certainty that the assets can be realized in future. Deferred tax assets are reviewed at each Balance Sheet date and is written-down or written up to reflect the amount that is reasonably or virtually certain, as the case may be, to be realized.

L. Impairment of Assets :

The Company assesses 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 the assets. If such recoverable amount of the assets or the recoverable amount of the cash generating unit to which the assets belongs 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 recognized in the Profit and 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 asset is reflected at the recoverable amount subject to a maximum of depreciated historical cost.

M. Provisions and Contingent Liabilities :

The company creates a provision when there is a present obligation as a result of past events that probably requires an outflow of resources and reliable estimates can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is possible obligation or a present obligation that may require an outflow of resources. Contingent assets are neither recognized nor disclosed.

N. Preliminary Expenses :

Preliminary Expenses are amortized proportionately over a period of 10 years from the year in which these are incurred.


Mar 31, 2010

1. General:

Accounts are maintained on accrual basis and on the basis of historical cost convention and materialy comply with the mandatory accounting standards issued by the Institute of Chartered Accountants of India.

2. Revenue Recognition:

a. The company follows practice of accounting for all Income and Expenditure on accrual basis.

b. Export incentives under the DEPB scheme have been recognized in the year of export.

c. Claims and damages are accounted for to the extent they are reasonably certain and determinable.

3. Fixed Assets :

a. Fixed Assets are stated at cost of acquisition, inclusive of freight, duties, taxes and incidental expenses related to acquisition. Cenvat Credit availed on capital goods and Interest Subsidy under TUF Scheme * pertaining to preoperative period has been credited to respective Capital Reserve Accounts. Depreciation attributable to these reserves has been adjusted there from.

b. Adjustments arising from foreign exchange variation, attributable to fixed assets, are capitalized.

4. Depreciation:

Depreciation is provided on the Straight Line Method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956 as applicable to the continuous process plant. Depreciation on additions/ deletion is provided pro-rata basis with the reference to the date of addition/deletion as the case may be, except in case of fixed assets costing less than Rs. 5,000 per item which are written off in the year of addition.

5. Excise Duty and Custom Duty :

a. Excise duty, if applicable, is accounted on the basis of both, payments made in respect of goods cleared as also provision made for goods lying in bonded warehouse.

b. Liability on account of customs duty on imported materials is accounted in the year in which the goods are cleared from the customs.

6. Foreign Exchange Transactions :

a. Foreign currency transactions which are not covered by forward contracts are accounted for at the exchange rates prevailing on the date of such transactions.

b. Balances in the form of Current Assets and Current Liabilities in foreign currency,, outstanding at the close of the year are converted into Indian currency at appropriate rate of exchange prevailing on the date of Balance Sheet. Resultant gain or loss is accounted during the year.

c. Exchange difference in the carrying amount of the Fixed Assets due to change in the rate of exchange of fixed assets linked liability denominated in foreign exchange has been recognised in Profit and Loss Account.

7. Investments:

Long Term Investments are stated at cost after deducting provision, if any, made for permanent diminution in the value of investment.

8. Employee Benefits:

a. Short Term Employee Benefits :

All employee benefits falling due wholly within twelve months of rendering the service are classified as short term employee benefits. The benefits like salaries, wages, short term compensated absences etc. and the expected cost of bonus, ex-gratia are recognized in the period in which the employee renders the related service.

b. Post-Employment Benefits:

Defined Benefit Plans: The Employee Gratuity Fund Scheme and Government Provident Fund Scheme are funded defined benefit schemes. Employee Gratuity Fund Scheme is covered by Group Insurance Scheme of Life Insurance Corporation of India and Provident Fund Scheme is provided on accrual basis.

c. Long Term Employee Benefits :

The obligation for long term employee benefit such as long term compensated absence, fs funded benefit which is covered by Group Insurance Scheme of Life Insurance Corporation of India.

9. Valuation of Inventories :

a. The Semi-Finished Goods and Finished Goods are valued at the lower of cost or net realizable value. The cost is computed on weighted average method and includes cost of materials, cost of conversion and other costs incurred in acquiring the inventory and bringing them to their present location and condition.

b. Raw Materials and other inventories of Stores, Spares, and Packing Materials etc. are valued at the lower of cost or net realizable value. Raw materials and other supplies held for use in production of inventories are not written down below cost except in cases where material prices have declined, and it is estimated that the cost of the finished products will exceed their net realizable value. The cost of Raw Materials is computed on specific identification basis and other inventories of Stores, Spares and Packing Materials etc. is computed on FIFO basis.

c. Stock of Waste and Scrap is valued at estimated net realizable value.

10. Borrowing Cost:

Borrowing cost that is attributable to the acquisition or construction of the qualifying assets is capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of the time to get ready for intended use. All other borrowing costs are charged to revenue.

11. Provision for current and deferred tax :

a. Provision for the current tax is made after taking into consideration benefits admissible under the provisions of Income Tax Act, 1961.

b. Deferred tax charge or credit reflects the tax effects of timing differences between accounting income and taxable income for the period. The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognized using the tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognized only to the extent there is reasonable certainty that the assets can be realized in future. Deferred tax assets are reviewed at each Balance Sheet date and is written-down or written up to reflect the amount that is reasonably or virtually certain, as the case may be, to be realized.

12. Impairment of Assets :

The Company assesses at each Balance Sheet date whether theTe is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the assets. If such recoverable amount of the assets or the recoverable amount of the cash generating unit to which the assets belongs 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 recognized in the Profit and 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 asset is reflected at the recoverable amount subject to a maximum of depreciated historical cost.

13. Provisions and Contingent Liabilities:

The company creates a provision when there is a present obligation as a result of past events that probably requires an outflow of resources and reliable estimates can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is possible obligation or a present obligation that may require an outflow of resources. Contingent assets are neither recognized nor disclosed.

14. Deferred Revenue Expenses and Preliminary Expenses :

Deferred Revenue Expenses and Preliminary Expenses are amortized proportionately over a period of 10 years from the year in which these are incurred.

 
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