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Accounting Policies of Ramco Industries Ltd. Company

Mar 31, 2017

1. Corporate Information

Ramco Industries Limited is a Public Limited Company domiciled and headquartered in India and incorporated under the provisions of Companies Act 1956. The Registered office of the Company is located at P.S.K Nagar, Rajapalayam - 626 108, Tamilnadu. The Company’s shares are listed in BSE Limited and NSE Limited.

The Company is engaged in manufacture of Fiber Cement (FC) sheets and Calcium Silicate Boards (CSBs). The Company’s segments are Fiber Cement (FC) sheets and Calcium Silicate Boards (CSBs), Textiles and power generation from wind mills. The Company caters mainly to the domestic markets. The Company is also engaged in sale of surplus electricity generated from its windmills after meeting its captive requirements.

The financial statements of the Company for the year were approved and adopted by Board of Directors of the Company in their meeting dated 30-05-2017.

2. Basis of Preparation of Separate Financial Statements

2.1 The financial statements for the period up to 31-03-2016 were prepared in accordance with Accounting Standards notified under section 133 of the Companies Act, 2013 read together with Rule 7 of the Companies (Accounts) Rules, 2014 (Previous GAAP). Pursuant to the mandatory requirement for adoption of Ind AS as notified by MCA, the Company has prepared its financial statements for the year ended 31-03-2017 in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules 2015 as amended from time to time. The comparative figures in the financial statements with respect to the previous year have been restated in accordance with Ind AS requirements. While preparing these financials statements, the Company has first prepared its opening Balance sheet as at 01-04-2015, the date of transition to Ind AS.

2.2 The significant accounting policies used in preparing the financial statements are set out in Note No.5

2.3 The Company has considered its operating cycle to be 12 months for the purpose of Current or Non-current classification of assets and liabilities.

2.4 An asset is classified as current when it is expected to be realized or intended to be sold or consumed in the normal operating cycle or held primarily for the purpose of trading or expected to be realized within 12 months after the reporting period or cash or cash equivalents unless restricted from being exchanged or used to settle a liability 12 months after the reporting period. All other assets are classified as non-current.

2.5 A liability is classified as current when it is expected to be settled in normal operating cycle or held primarily for the purpose of trading or due for settlement within 12 months after the reporting period or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current.

2.6 The financial statements are presented in Indian Rupees rounded to the nearest Lakhs with two decimals. The amount below the round off norm adopted by the Company is denoted as Rs.0.00 Lakhs.

3. First time adoption of Ind AS

The financial statements for the year ended 31-03-2017 are the first financial statements prepared in accordance with Ind AS. The Reconciliation and description of the effect of transition from previous GAAP to Ind AS on Equity, Statement of Profit and Loss and Cash flow are provided in Note 57. The Balance sheet as on the date of transition has been prepared in accordance with Ind AS 101

- First time adoption of Indian Accounting Standards (Ind AS). All applicable Ind AS were applied consistently and retrospectively in preparation of the first Ind AS Financial Statements with certain mandatory exceptions and voluntary exemptions for the specific cases as provided under Ind AS 101.

Estimates

The estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP unless there is objective evidence that those estimates were in error. Accordingly, the Company has not made any changes to estimates made in accordance with previous GAAP.

4 Basis of Measurement

The financial statements have been prepared on accrual basis under historical cost convention except for certain financial instruments (Refer Note 5.18 - Accounting Policy for Financial Instruments) and defined benefit plan assets which are measured at fair value.

5. Significant Accounting Policies

5.1 Inventories

5.1.1 Raw-materials, Stores & Spares, Fuel, Packing materials etc., are valued at cost, computed on a moving weighted average basis including the cost incurred in bringing the inventories to their present location and condition after providing for obsolescence and other losses or net realizable value whichever is lower. However, these items are considered to be realizable at cost, if the finished products, in which they will be used, are expected to be sold at or above cost.

5.1.2 Process stock is valued at weighted average cost including the cost of conversion with systematic allocation of production overheads, or net realizable value whichever is lower. Factory administration overheads to the extent attributable to bring the inventories to their present location and condition are also included in the valuation of Process stock.

5.1.3 Finished goods are valued at cost or net realizable value whichever is lower. Cost includes cost of conversion and other costs incurred in bringing the inventory to their present location and condition including excise duty. Finished goods include stock-in-trade also which comprises cost of purchase and other cost incurred in bringing the inventories to the present location and condition. Cost is determined on a moving weighted average basis.

Net realizable value is the estimated selling price in the ordinary course of business less estimated costs of completion and estimated costs necessary to make the sale.

5.2 Cash Flow Statement

5.2.1 Cash flows are presented using indirect method, whereby profit / (loss) before tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments.

5.2.2 Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances with original maturity of less than 3 months, highly liquid investments that are readily convertible into cash.

5.2.3 Bank borrowings are generally considered to be financing activities. However, where bank overdrafts which are repayable on demand form an integral part of an entity’s cash management, bank overdrafts are included as a component of cash and cash equivalents for the purpose of Cash flow statement.

5.3 Dividend distribution to Equity shareholders

Final dividend distribution to shareholders is recognized in the period in which the dividends are approved by the shareholders. Any interim dividend paid is recognized on approval by Board of Directors. Dividend together with applicable taxes is recognized directly in Equity.

5.4 Income Taxes

5.4.1 Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the applicable tax rates, the provisions of the Income tax Act, 1961 and other applicable tax laws.

5.4.2 Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future tax liability, is recognized as an asset viz. MAT Credit Entitlement, to the extent there is convincing evidence that the Company will pay normal Income tax and it is highly probable that future economic benefits associated with it will flow to the Company during the specified period. The Company reviews the “MAT Credit Entitlement” at each Balance Sheet date and writes down the carrying amount of the same to the extent there is no longer convincing evidence to the effect that the Company will pay normal Income tax during the specified period.

5.4.3 Current tax assets and liabilities are offset, when the Company has legally enforceable right to set off the recognized amounts and intends to settle the asset and the liability on a net basis.

5.4.4 Deferred tax is recognized using the balance sheet approach on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting at the reporting date.

5.4.5 Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year where the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

5.4.6 Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by same governing tax laws and the Company has legally enforceable right to set off current tax assets against current tax liabilities.

5.4.7 Both current tax and deferred tax relating to items recognized outside the Profit or Loss is recognized either in “Other Comprehensive Income” or directly in “Equity” as the case may be.

5.5 Property, plant and equipments (PPE)

5.5.1. PPEs are stated at cost of acquisition or construction (net of CENVAT / VAT wherever applicable) less accumulated depreciation / amortization and impairment losses if any, except freehold land which is carried at cost. The cost comprises of purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use.

The company identifies the significant parts of plant and equipment separately which are required to be replaced at intervals. Such parts are depreciated separately based on their specific useful lives. The cost of replacement of significant parts are capitalized and the carrying amount of replaced parts are de-recognized. When each major inspection/overhauling is performed, its cost is recognized in the carrying amount of the item of property, plant and equipment as a replacement if the recognition criteria are satisfied. Any remaining carrying amount of the cost of the previous inspection/overhauling (as distinct from physical parts) is de-recognized.

Other expenses on fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts that does not meet the capitalization criteria in accordance with Ind AS 16 are charged to the Statement of Profit and Loss for the period during which such expenses are incurred.

Capital Expenditure on tangible assets for research and development is classified as PPE and is depreciated based on the estimated useful life. Other expenditure incurred for research and development are expensed under the respective heads of accounts in the year in which it is incurred.

5.5.2 The Company follows the useful lives of the significant parts of certain class of PPE on best estimate basis upon technical advice, as detailed below, that are different from the useful lives prescribed under Part C of Schedule II of the Companies Act, 2013:

5.5.3 PPE acquired in full or part exchange for another asset are recorded at the fair market value or the net book value of the asset given up, adjusted for any balancing cash transaction. Fair market value is determined either for the assets acquired or asset given up, whichever is more clearly evident.

5.5.4 PPEs are eliminated from the financial statements on disposal or when no further benefit is expected from its use and disposal. Gains or losses arising from disposal, measured as the difference between the net disposal proceeds and the carrying amount of such assets, are recognized in the Statement of Profit and Loss. Amount received towards PPE that are impaired and derecognized in the financial statements, are recognized in Statement of Profit and Loss, when the recognition criteria are met.

5.5.5 Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life on a straight line method. The depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less 5% being its residual value.

5.5.6 Depreciation for PPE on additions is calculated on pro-rata basis from the date of such additions. For deletion/ disposals, the depreciation is calculated on pro-rata basis up to the date on which such assets have been discarded / sold.

5.5.7 The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each reporting date and adjusted prospectively, if appropriate.

Capital Work in progress

5.5.8 Capital work in progress includes cost of property, plant and equipment under installation, under development including related expenses and attributable interest as at the reporting date.

5.6 Leases

5.6.1 The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date whether fulfillment of arrangement is dependent on the use of a specific asset and the arrangement conveys a right to use the asset.

5.6.2 The lease arrangements where the risks and rewards incidental to ownership of an asset substantially vests with the Lessor are recognized as operating lease. Operating lease receipts and payments are recognized in the Statement of Profit and Loss on accrual basis as per the lease terms. The Company do not have any finance leases.

5.6.3 The amount paid for securing right to use of lands qualify as Operating lease and the amount paid for leasehold land is classified as “Lease prepayments” under prepaid expenses, which are amortized over the tenure of lease.

5.7 Revenue Recognition

5.7.1 Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.

5.7.2 Revenue from Operations

Sale of products

Revenue is recognized at the fair value of consideration received or receivable upon transfer of significant risks and rewards of ownership of goods which coincides with the delivery of goods. It comprises of invoice value of goods including excise duty and after deducting discounts, volume rebates and applicable taxes on sale. It also excludes value of self-consumption.

Power generated from Windmills

Power generated from windmills that are covered under wheeling & banking arrangement with TANGEDCO/BESCOM/ PGVCL are consumed at factories and unutilized units are sold to concerned distribution companies. The monetary values of such power generated that are captively consumed are not recognized as revenue for the company.

Power generated from windmills that are covered under power purchase agreement with TANGEDCO /BESCOM/ PGVCL are sold to State Electricity Boards at the rate fixed by respective State Electricity Regulatory Commissions and the income is recognized as Sale of surplus power generated from windmills

Scrap sale

Scrap sale is recognized at the fair value of consideration received or receivable upon transfer of significant risk and rewards. It comprises of invoice value of goods including excise duty excluding applicable taxes on sale.

Industrial Promotion Assistance

This being in the nature of Government grants, which are recognized at fair value when the Company’s right to receive the same is established with reasonable assurance.

5.7.3 Other Income

a. Interest income is recognized using the Effective Interest Rate (EIR) method. EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period where appropriate, the gross carrying amount of the financial asset or to the amortized cost of a financial liability.

b. Dividend income is recognized when the Company’s right to receive dividend is established.

c. Rental income from operating lease on investment properties is recognized on a straight line basis over the term of the relevant lease.

d. Value of Carbon credits are recognized when the Company’s right to receive the same is established.

5.8 Employee Benefits

5.8.1 Short-term employee benefits viz., Salaries and Wages are recognized as an expense at the undiscounted amount in the Statement of Profit and Loss for the year in which the related service is rendered.

5.8.2 Defined Contribution Plan viz., Contributions to Provident Fund and Superannuation Fund are recognized as an expense in the Statement of Profit and Loss for the year in which the employees have rendered services.

5.8.3 The Company contributes monthly to Employees’ Provident Fund & Employees’ Pension Fund administered by the Employees’ Provident Fund Organization, Government of India, at 12% of employee’s basic salary. The Company has no further obligations.

5.8.4 The Company also contributes for superannuation a sum equivalent to 15% of the officer’s eligible annual basic salary subject to maximum of Rs.1.50 lakhs and (Out of the said 15% contribution, a sum up to Rs.1.50 Lakhs per annum) is remitted to Ramco Industries Limited Officer’s Superannuation Fund administered by trustees and managed by LIC of India. There are no further obligations in respect of the above contribution plan.

5.8.5 The Company has its own Defined Benefit Plan viz., an approved Gratuity Fund. It is in the form of lump sum payments to vested employees on resignation, retirement, death while in employment or on termination of employment, for an amount equivalent to 15 days basic salary for each completed year of service. Vesting occurs upon completion of five years of continuous service. The Company makes annual contributions to “Ramco Industries Limited Employees’ Gratuity Fund” administered by trustees and managed by LIC of India, including for its employees in subsidiary Company, based on the Actuarial Valuation by an independent external actuary as at the Balance Sheet date using Projected Unit Credit method.

5.8.6 The Company provides for expenses towards compensated absences provided to its employees. The expense is recognized at the present value of the amount payable determined based on an independent external actuarial valuation as at the Balance Sheet date, using Projected Unit Credit method.

5.8.7 Remeasurement of net defined benefit asset / liability comprising of actuarial gains or losses arising from experience adjustments and changes in actuarial assumptions are charged / credited to other comprehensive income in the period in which they arise and immediately transferred to retained earnings. Other costs are accounted in the Statement of Profit and Loss.

5.9 Government Grants

5.9.1 I n case of revenue related grant, the income is recognized on a systematic basis over the period for which it is intended to compensate an expense and is disclosed under “Other operating revenue” or netted off against corresponding expenses wherever appropriate. Receivables of such grants are shown under “Other Financial Assets”. Export benefits are accounted for in the year of exports based on eligibility and when there is no uncertainty in receiving the same. Receivables of such benefits are shown under “Other Financial Assets”.

5.10 Foreign currency transactions

5.10.1 The financial statements are presented in Indian Rupees, which is also the Company’s functional currency.

5.10.2 All transactions in foreign currency are recorded on initial recognition at their functional currency exchange rates prevailing on that date.

5.10.3 Monetary assets and liabilities in foreign currencies outstanding at the reporting date are translated to the functional currency at the exchange rates prevailing on the reporting date and the resultant gains or losses are recognized during the year in the Statement of Profit and Loss.

5.10.4 Non-monetary items which are carried at historical cost denominated in foreign currency are reported using the exchange rates at the date of transaction.

5.11 Borrowing Costs

5.11.1 Borrowing cost include interest computed using Effective Interest Rate method, amortization of ancillary costs incurred and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost.

5.11.2 Borrowing costs that are directly attributable to the acquisition, construction, production of a qualifying asset are capitalized as part of the cost of that asset which takes substantial period of time to get ready for its intended use. The Company determines the amount of borrowing cost eligible for capitalization by applying capitalization rate to the expenditure incurred on such cost. The capitalization rate is determined based on the weighted average rate of borrowing cost applicable to the borrowings of the Company which are outstanding during the period, other than borrowings made specifically towards purchase of the qualifying asset. The amount of borrowing cost that the Company capitalizes during the period does not exceed the amount of borrowing cost incurred during that period. All other borrowings cost are expensed in the period in which they occur.

5.12 Earnings per Share

5.12.1 Net profit after tax is divided by the weighted average number of equity shares including un-allotted bonus shares outstanding during the year.

5.12.2 Where an item of income or expense which is otherwise required to be recognized in the Statement of Profit and Loss is debited or credited to Equity, the amount in respect thereof is suitably adjusted in Net profit for the purpose of computing Earnings per share.

5.12.3 The Company do not have any potential equity shares.

5.13 Impairment of Non-financial Assets

5.13.1 The carrying values of assets include property, plant and equipment, investment properties, cash generating units and intangible assets are reviewed for impairment at each Balance Sheet date, if there is any indication of impairment based on internal and external factors.

5.13.2 Non-financial assets are treated as impaired when the carrying amount of such asset exceeds its recoverable value. After recognition of impairment loss, the depreciation for the said assets is provided for remaining useful life based on the revised carrying amount, less its residual value if any, on straight line basis.

5.13.3 An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired.

5.13.4 An impairment loss is reversed when there is an indication that the impairment loss may no longer exist or may have decreased.

5.14 Provisions, Contingent Liabilities and Contingent Assets

5.14.1 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 embodying economic benefits in respect of which a reliable estimate can be made.

5.14.2 Provisions are discounted if the effect of the time value of money is material, using pre-tax rates that reflects the risks specific to the liability. When discounting is used, an increase in the provisions due to the passage of time is recognized as finance cost. These provisions are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.

5.14.3 Insurance claims are accounted on the basis of claims admitted or expected to be admitted and to the extent that the amount recoverable can be measured reliably and it is reasonable to expect ultimate collection. Any subsequent change in the recoverability is provided for. Contingent Assets are not recognized.

5.14.4 Contingent liability is a possible obligation that may arise from past events and its existence will be confirmed only by occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation and the same are not recognized but disclosed in the financial statements.

5.15 Intangible Assets

5.15.1 The costs of computer software acquired and its subsequent improvements are capitalized. Internally generated software is not capitalized and the expenditure is recognized in the Statement of Profit and Loss in the year in which the expenditure is incurred.

5.15.2 Intangible Assets are amortized over their estimated useful life on straight line method. The estimated useful lives of intangible assets are assessed by the internal technical team. Its accounting classification is given below:

5.15.3 The intangible assets that are under development phase are carried at cost including related expenses and attributable interest, and are recognized as Intangible assets under development.

5.15.4 The residual values, useful lives and methods of depreciation of intangible asset are reviewed at each reporting date and adjusted prospectively, if appropriate.

5.16 Investment Properties

5.16.1 An investment in land or buildings both furnished and unfurnished, which are held for earning rentals or capital appreciation or both rather than for use in the production or supply of goods or services or for administrative purposes or sale in the ordinary course of business, are classified as investment properties.

5.16.2 Investment properties are stated at cost, net of accumulated depreciation and impairment loss, if any except freehold land which is carried at cost.

5.16.3 The company identifies the significant parts of investment properties separately which are required to be replaced at intervals. Such parts are depreciated separately based on their specific useful lives determined on best estimate basis upon technical advice. The cost of replacement of significant parts are capitalized and the carrying amount of replaced parts are de-recognized. Other expenses including day-to-day repair and maintenance expenditure and cost of replacing parts that does not meet the capitalization criteria, are charged to the Statement of Profit and Loss for the period during which such expenses are incurred.

5.16.4 Depreciation on investment properties are calculated on straight-line method based on useful life of the significant components.

5.16.5 Investment properties are eliminated from the financial statements on disposal or when no further benefit is expected from its use and disposal. Gains or losses arising from disposal, measured as the difference between the net disposal proceeds and the carrying amount of such investment properties, are recognized in the Statement of Profit and Loss. Amount received towards investment properties that are impaired and derecognized in the financial statements, are recognized in Statement of Profit and Loss, when the recognition criteria are met.

5.16.6 The residual values, useful lives and methods of depreciation of investment properties are rev''ewed at each reporting date and adjusted prospectively, if appropriate.

5.17 Operating Segments

Operating segment has been identified on the basis of nature of products and reported in a manner consistent with the internal reporting provided to Chief Operating Decision Maker.

The Company has three operating/reportable segments viz. building, textile and wind power generation.

The inter-segment transfers of units of power from windmills are recognized at the applicable tariff rates of the electricity boards for the purpose of segment reporting as per the relevant accounting standard.

Costs are allocated to the respective segment based upon the actual incidence of respective cost. Unallocated items include general other income and expenses which are not allocated to any business segment.

5.18 Financial Instruments

5.18.1 A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

5.18.2 Financial assets and liabilities are offset and the net amount is presented in the Balance sheet when and only when the Company has a legal right to offset the recognized amounts and intends either to settle on a net basis or to realise the assets and settle the liabilities simultaneously.

5.18.3 The Company initially determines the classification of financial assets and liabilities. After initial recognition, no re-classification is made for financial assets which are categorized as equity instruments at FVTOCI and financial assets / liabilities that are specifically designated as FVTPL. However, other financial assets are re-classifiable when there is a change in the business model of the Company. When the Company reclassifies the financial assets, such reclassifications are done prospectively from the first day of the immediately next reporting period. The Company does not restate any previously recognized gains, losses including impairment gains or losses or interest.

Financial Assets

5.18.4 Financial assets comprises of investments in equity and mutual funds, trade receivables, cash and cash equivalents and other financial assets.

5.18.5 Depending on the business model (i.e) nature of transactions for managing those financial assets and its contractual cash flow characteristics, the financial assets are initially measured at fair value and subsequently measured and classified at:

a) Amortized cost; or

b) Fair value through other comprehensive income (FVTOCI); or

c) Fair value through profit or loss (FVTPL)

Amortized cost represents carrying amount on initial recognition at fair value plus or minus transaction cost.

5.18.6 The Company has evaluated the facts and circumstances on date of transition to Ind AS for the purpose of classification and measurement of financial assets. Accordingly, financial assets are measured at FVTPL except for those financial assets whose contractual terms give rise to cash flows on specified dates that represents solely payments of principal and interest thereon, are measured as detailed below depending on the business model:

Investment in equity of subsidiary and associates are carried at cost (i.e) previous GAAP carrying amount as the date of transition to Ind AS. The Company has exercised an irrevocable option at time of initial recognition to measure the changes in fair value of other equity investments at FVTOCI. Accordingly, the Company classifies its financial assets for measurement as below:

5.18.7 Financial assets are derecognized (i.e) removed from the financial statements, when its contractual rights to the cash flows expire or upon transfer of the said assets. The Company also derecognizes when it has an obligation to adjust the cash flows arising from the financial asset with third party and either upon transfer of:

a. significant risk and rewards of the financial asset, or

b. control of the financial asset

However, the Company continue to recognize the transferred financial asset and its associated liability to the extent of its continuing involvement, which are measured on the basis of retainment of its rights and obligations of financial asset. The Company has applied the de-recognition requirements prospectively.

5.18.8 Upon derecognition of its financial asset or part thereof, the difference between the carrying amount measured at the date of recognition and the consideration received including any new asset obtained less any new liability assumed shall be recognized in the Statement of Profit and Loss.

5.18.9 For impairment purposes, significant financial assets are tested on individual basis at each reporting date. Other financial assets are assessed collectively in groups that share similar credit risk characteristics. Accordingly, the impairment testing is done retrospectively on the following basis:

Financial Liabilities

5.18.10 Financial liabilities comprises of Borrowings from Banks, Trade payables, Derivative financial instruments, Financial guarantee obligation and other financial liabilities.

5.18.12 Financial guarantee contracts issued by the company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Transaction cost of financial guarantee contracts that are directly attributable to the issuance of the guarantee are recognized initially as a liability at fair value. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognized less cumulative amortization.

5.18.13 Financial liabilities are derecognised when and only when it is extinguished (i.e) when the obligation specified in the contract is discharged or cancelled or expired.

5.18.14 Upon derecognition of its financial liabilities or part thereof, the difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid including any non-cash assets transferred or liabilities assumed is recognized in the Statement of Profit and Loss.

5.19 Fair value measurement

5.19.1 Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

5.19.2 The fair value of an asset or a liability is measured using the assumptions that the market participants would use when pricing the asset or liability, assuming that the market participants act in the economic best interest.

5.19.3 All assets and liabilities for which fair value is measured are disclosed in the financial statements are categorized within fair value hierarchy based on the lowest level input that is significant to the fair value measurement as a whole. The fair value hierarchy is described as below:

Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities

Level 2: Valuation techniques for which the lowest level inputs that are significant to the fair value measurement are directly or indirectly observable.

Level 3: Valuation techniques for which the lowest level inputs that are significant to the fair value measurement are unobservable.

5.19.4 For assets and liabilities that are recognized in the Balance sheet on a recurring basis, the company determines whether transfers have occurred between levels in the hierarchy by reassessing categorization at the end of each reporting period (i.e) based on the lowest level input that is significant to the fair value measurement as a whole.

5.19.5 For the purpose of fair value disclosures, the company has determined the classes of assets and liabilities based on the nature, characteristics and risks of the assets or liabilities and the level of the fair value hierarchy as explained above.

5.19.6 The basis for fair value determination for measurement and / or disclosure purposes is detailed below:

Investments in Equity / Mutual Funds

The fair value is determined by reference to their quoted prices at the reporting date. In the absence of the quoted price, the fair value of the equity is measured using valuation techniques.

Trade and other receivables

The fair value is estimated as the present value of the future cash flows, discounted at the market rate of interest at the reporting date. However, the fair value generally approximates the carrying amount due to the short term nature of such assets.

Forward exchange contracts

The fair value of forward exchange contracts is based on the quoted price if available; otherwise it is estimated by discounting the difference between contractual forward price and current forward price for the residual maturity of the contract using government bond rates.

Non-derivative financial liabilities

The fair value of non-derivative financial liabilities viz, soft loan from government, deferred sales tax liability, borrowings are determined for disclosure purposes calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date.

Financial guarantee obligation

The fair value of financial guarantee obligation with reference to loan availed by subsidiary/associates is determined on the basis of estimated cost involved in securing equivalent size of the guarantees from bank.

Investment Properties

The fair value is determined for disclosure purposes based on an annual evaluation performed by an internal technical team measured using the technique of quoted prices for similar assets in the active markets and further moderated by market corroborated inputs.

6. Significant Estimates and Judgments

The preparation of the financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the accompanying disclosures, and the disclosure of contingent liabilities. Actual results could vary from these estimates. The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision effects only that period or in the period of the revision or future periods, if the revision affects both current and future years.

Accordingly, the management has applied the following estimates / assumptions / judgments in preparation and presentation of financial statements:

Property, Plant and Equipment, Intangible Assets and Investment Properties

The residual values and estimated useful life of PPEs, Intangible Assets and Investment Properties are assessed by technical team duly reviewed by the management at each reporting date. Wherever the management believes that the assigned useful life and residual value are appropriate, such recommendations are accepted and adopted for computation of depreciation/amortization. Also, management judgment is exercised for classifying the asset as investment properties or vice- versa.

Current Taxes

Calculations of income taxes for the current period are done based on applicable tax laws and management’s judgment by evaluating positions taken in tax returns and interpretations of relevant provisions of law.

Deferred Tax Asset (Including MAT Credit Entitlement)

Significant management judgment is exercised by reviewing the deferred tax assets at each reporting date to determine the amount of deferred tax assets that can be retained / recognized, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

Contingent Liabilities

Management judgment is exercised for estimating the possible outflow of resources, if any, in respect of contingencies / claims / litigations against the Company as it is not possible to predict the outcome of pending matters with accuracy.

Impairment of Trade receivables

The impairment for financial assets are done based on assumptions about risk of default and expected loss rates. The assumptions, selection of inputs for calculation of impairment are based on management judgment considering the past history, market conditions and forward looking estimates at the end of each reporting date.

Impairment of Non-financial assets (PPE/Intangible Assets/Investment Properties)

The impairment of non-financial assets is determined based on estimation of recoverable amount of such assets. The assumptions used in computing the recoverable amount are based on management judgement considering the timing of future cash flows, discount rates and the risks specific to the asset.

Defined Benefit Plans and Other long term benefits

The cost of the defined benefit plan and other long term benefits, and the present value of such obligation are determined by the independent actuarial valuer. Management believes that the assumptions used by the actuary in determination of the discount rate, future salary increases, mortality rates and attrition rates are reasonable. Due to the complexities involved in the valuation and its long term nature, this obligation is highly sensitive to changes in these assumptions.

Fair value measurement of financial instruments

When the fair values of financial assets and financial liabilities could not be measured based on quoted prices in active markets, management uses valuation techniques including the Discounted Cash Flow (DCF) model, to determine its fair value The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is exercised in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility.

Interests in other entities

Significant management judgment is exercised in determining the interests in other entities. The management believes that wherever there is significant influence over certain companies belong to its group, such companies are treated as Associate companies even though it holds less than 20% of the voting rights.


Mar 31, 2016

1. Basis of preparation and presentation of financial statements

The Company maintains its accounts on accrual basis following the historical cost convention in accordance with Generally Accepted Accounting Principles {“GAAP”} in compliance with the provisions of the Companies Act, 2013 and the Accounting Standards as specified in the Companies (Accounting Standards) Rules, 2014, prescribed by the Central Government (as amended). However, certain claims are accounted for as and when admitted by the appropriate authorities.

2. Use of Estimates

The preparation of financial statements in conformity with GAAP requires that the management of the Company makes estimates and assumptions that affect the reported amounts of income and expenses of the year, the reported balances of assets and liabilities and the disclosures relating to contingent liabilities as at the date of the financial statements. Examples of such estimates include the useful lives of tangible and intangible fixed assets, provision for doubtful debts/ advances, future obligations in respect of retirement benefit plans etc. Difference, if any, between the actual results and estimates is recognized in the period in which the results are known.

3. Revenue recognition

i. Revenue from sale of goods is recognized when all significant risks and rewards of ownership is transferred to the buyer under the terms of the contract and we retain no effective control of the goods transferred to a degree usually associated with ownership and no significant uncertainty exist regarding the amount of consideration that will be derived from sale of the goods.

Sales exclude excise duty and sales tax.

ii. Industrial Promotion Assistance (IPA) is recognized when the Company’s right to receive the same is established with reasonable certainty.

iii. Other income is accounted on accrual basis as and when the right to receive arises.

iv. Dividend income is accounted in the period in which the right to receive the same is established.

v. Interest income on deposits is recognized at the agreed rate on time proportion basis.

vi. Income from Wind mills:

a. Under wheeling and banking arrangement:

Units generated from windmills are adjusted against the consumption of power at our factories. The monetary value of the power generated at wind farms that are consumed at factories are not recognized as revenue because it is inter-divisional transfer.

The value of unadjusted units as on the Balance Sheet date has been included under Other Current Assets.

b. Under Power purchase agreement:

Units generated from windmills are sold to State Electricity Board at agreed rates and the income is included in Income from Wind power generation.

4. Tangible Fixed assets

Fixed assets are stated at original cost less accumulated depreciation, accumulated amortization and cumulative impairment. Pre-operative expenses including administrative and other general overhead expenses which are specifically attributable to the project, incurred up to the date of commencement of commercial operation are capitalized as a part of the cost of the fixed asset. Gains or losses arising from disposal of fixed assets, measured as the difference between the net disposal proceeds and the carrying amount of such assets, are recognized in the statement of profit and loss.

5. Depreciation

i. Own Assets

Depreciation has been provided based on Straight-line basis as per the useful life prescribed in Schedule II of the Companies Act, 2013

Depreciation on additions/ deductions is calculated pro-rata from / to the month of additions/ deductions.

ii. Leasehold Land

Land acquired under long-term lease is classified under “Tangible assets” and is amortized over the primary lease period

6. Intangible Assets and Amortization

Intangible assets are recognized when it is probable that the future economic benefits that are attributable to the assets will flow to the Company and the cost of the asset can be measured reliably.

Intangible assets are amortized over their estimated useful life on Straight-line method as follows:

- Computer Software - Over a period of 5 years

Amortization on impaired assets is adjusted in the future periods in such a manner that the revised carrying amount of the asset is allocated over its remaining useful life.

Internally generated software, if any, is not capitalized and the expenditure is reflected in the statement of profit and loss in the year in which the expenditure is incurred.

7. Impairment of assets

As at each Balance Sheet date, the carrying amount of asset is tested for impairment so as to determine:

i. the provision for impairment loss, if any; and

ii. the reversal of impairment loss recognized in previous periods, if any,

Impairment loss is recognized when the carrying amount of an asset exceeds its recoverable amount.

Recoverable amount is determined:

a) in the case of an individual asset, at the higher of the net selling price and the value in use; and

b) in the case of a cash generating unit (a group of assets that generates identified, independent cash flows), at the higher of the cash generating unit’s net selling price and the value in use.

(Value in use is determined as the present value of estimated future cash flows from the continuing use of an asset and from its disposal at the end of its useful life.)

8. Investments

i. All Investments being non-current and non-trade are valued at cost.

ii. The carrying amount of long term investments is determined on an individual investment basis.

iii. As at the balance sheet date, provision for diminution is made to recognize the decline other than temporary, in the value of investments.

iv. The Company discontinues the use of the equity method from the date when its investment ceases to be an Associate and accounted in accordance with Accounting Standard (AS) 13, Accounting for investments. Accordingly, in CFS the carrying amount of the Investment on that date of cessation of Associate is considered as cost.

9. Inventories

i. Raw-materials, stores, spares and packing materials etc. are valued at cost, computed on a moving weighted average basis including the cost incurred in bringing the inventories to their present location and condition or net realizable value whichever is lower.

ii. Work-in-progress is valued at weighted average cost, including the cost of conversion with systematic allocation of production and administration overheads.

iii. Finished goods are valued at cost or net realizable value whichever is lower. Cost includes cost of conversion and other costs incurred in bringing the inventory to their present location and condition including excise duty.

10. Foreign currency transactions and forward contracts

i. The reporting currency of the Company is Indian Rupee.

ii. Foreign currency transactions are recorded on initial recognition in the reporting currency, using the exchange rate at the date of the transaction. At each Balance Sheet date, foreign currency monetary items are reported using the closing rate.

iii. The exchange differences on settlement/ restatement are included in pre-operative expenses up to the date of commercial operation and recognized as income or expense thereafter in the period in which they arise.

iv. Forward contracts, other than those entered into to hedge foreign currency risk on unexecuted firm commitments or highly probable forecast transactions, are treated as foreign currency transactions and accounted accordingly as per Accounting

Standard (AS) 11 “The Effects of Changes in Foreign Exchange Rates’’. Exchange differences arising on such contracts are recognized in the period in which they arise. Gains and losses arising on account of roll over/cancellation of forward contracts are recognized as income/expenses of the period in which such roll over/cancellation takes place. The premium paid/ received on a foreign currency forward contract is accounted as expenses/income over the period of the contract.

11. Employee Benefits

a. Short-term employee benefits :

Short-term employee benefits viz., Salaries, Wages, are recognized as an expense at the undiscounted amount in the profit and loss account for the year in which the related service is rendered.

b. Post Employment Benefits :

i. Defined Contribution plans:

Contributions to Provident fund and Superannuation fund are recognized as an expense in the profit and loss account for the year in which the employees have rendered services. The Company contributes to Provident fund administered by the Government on a monthly basis at 12% of employee’s basic salary. The Company also contributes for superannuation a sum equivalent to 15% of the employee’s eligible annual basic salary subject to a maximum of '' 1 Lac per annum and is remitted to “Ramco Industries Limited Superannuation Scheme” administered by trustees and managed by Life Insurance Corporation of India The balance amount, if any, is paid as salary at the option of the company. There are no other obligation other than the above defined contribution plan.

ii. Defined Benefit Plan :

Gratuity:

The Company has its own approved Gratuity Fund. It is in the form of lump sum payments to vested employees on resignation, retirement and death while in employment or on termination of employment of an amount equivalent to 15 Day’s basic salary payable for each completed year of service. Vesting occurs upon completion of 5 years of continuous service. The Company makes annual contributions to “Ramco Industries Limited Employees Gratuity Fund” administered by Trustees and managed by Life Insurance Corporation of India, based on the Actuarial Valuation by an independent external actuary as at the Balance sheet date using the “projected unit credit method”.

Leave Encashment :

The Company has a policy of providing encashment of unveiled leave for its employees. The obligation for the leave encashment is recognized based on an independent external actuarial valuation at the Balance Sheet date. The expense is recognized at the present value of the amount payable determined based on actuarial valuation using “projected unit credit method”.

c. Long-term employee benefits :

The obligation for long term employee benefits such as long term compensated absences is recognized in the similar manner as in the case of defined benefit plans as mentioned in (b) (ii) above.

d. Employee Separation Costs :

Compensation to employees who have opted for retirement under the voluntary retirement scheme of the Company is charged to Profit and Loss Statement in the year of exercise of option by the employee.

12. Lease

Lease rentals are expensed off with reference to the lease terms.

13. Borrowing costs

Specific borrowing costs that are directly attributable to the acquisition and construction of qualifying assets are capitalized as part of the cost of those assets as per AS 16. All other borrowing costs are charged to revenue.

14. Research and Development Expenditure

Expenditure on Research & Development of revenue nature incurred by the Company is charged to statement of Profit and Loss account under the respective revenue heads, while those of capital nature are treated as fixed assets, under respective asset heads.

15. Taxes on income

Tax on income for the current period is determined on the basis of taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961 and based on the expected outcome of assessments/ appeals.

Minimum Alternate Tax (MAT) credit is recognized as an asset to the extent there is convincing evidence that the company will pay normal income tax during the specified period. When the MAT credit becomes eligible to be recognized as an Asset viz., “MAT credit entitlement”, the same is created by way of credit to the Statement of Profit and loss and shown as “MAT credit Recognition”.

Deferred tax is recognized on timing differences between the accounting income and the taxable income for the year and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date.

Deferred tax assets relating to unabsorbed depreciation/business losses are recognized and carried forward to the extent there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

Other deferred tax assets are recognized and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

16. 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 event and it is possible that there will be an outflow of resources. Un-provided contingent liabilities are disclosed in the accounts by way of notes. Contingent assets are not recognized.

17. Segment Accounting

i. The Company identifies business segment as the primary segment as per AS-17. Under the primary segment, there are three reportable segments viz., Building products, Textile and Power generation from Windmills. These were identified considering the nature of the products, the differing risks and returns. The valuation of inter segment transfers are based on prevailing market prices.

ii. Costs are allocated to the respective segment based upon the actual incidence of respective cost. Unallocated items include general corporate income and expenses which are not allocated to any business segment.

iii. The Company prepares its segment information in conformity with accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.

18. Subsidies and Government Grants

Revenue related grants are recognized on accrual basis wherever there is reasonable certainty and are disclosed under “Revenue from operations”.

Receivables of such grants are shown under “Other current asset”.

Capital related grants is accounted as “Capital Reserve” under Reserves and Surplus upon fulfillment of conditions attached thereto and is not adjusted against Fixed Assets.

Interest Subsidy under Technology Up gradation Fund Scheme (TUF) is credited to the Interest on borrowings under the head “Finance costs”.

19. Earnings Per Share

Earnings per share (EPS) is calculated by taking into account, the net profit after tax, divided by the weighted average number of Equity Shares outstanding as on the Balance Sheet date.

20. Operating cycle for current/non-current classification

Operating cycle for the business activities of the Company is taken as twelve months for classification of its assets and liabilities into current/non-current.


Mar 31, 2015

1. Basis of preparation and presentation of financial statements

The Company maintains its accounts on accrual basis following the historical cost convention in accordance with Generally Accepted Accounting Principles {"GAAP"} in compliance with the provisions of the Companies Act, 2013 and the Accounting Standards as specified in the Companies (Accounting Standards) Rules, 2014, prescribed by the Central Government (as amended). However, certain claims are accounted for as and when admitted by the appropriate authorities.

2. Use of Estimates

The preparation of financial statements in conformity with GAAP requires that the management of the Company makes estimates and assumptions that affect the reported amounts of income and expenses of the year, the reported balances of assets and liabilities and the disclosures relating to contingent liabilities as at the date of the financial statements. Examples of such estimates include the useful lives of tangible and intangible fixed assets, provision for doubtful debts/ advances, future obligations in respect of retirement benefit plans etc. Difference, if any, between the actual results and estimates is recognized in the period in which the results are known.

3. Revenue recognition

i. Revenue from sale of goods is recognized when all significant risks and rewards of ownership is transferred to the buyer under the terms of the contract and we retain no effective control of the goods transferred to a degree usually associated with ownership and no significant uncertainty exist regarding the amount of consideration that will be derived from sale of the goods.

Sales exclude excise duty and sales tax.

ii. Industrial Promotion Assistance (IPA) is recognized when the Company''s right to receive the same is established with reasonable certainty.

iii. Other income is accounted on accrual basis as and when the right to receive arises.

iv. Dividend income is accounted in the period in which the right to receive the same is established.

v. Interest income on deposits is recognized at the agreed rate on time proportion basis.

vi. Income from Wind mills:

a. Under wheeling and banking arrangement:

Units generated from windmills are adjusted against the consumption of power at our factories. The monetary value of the power generated at wind farms that are consumed at factories are not recognised as revenue because it is inter- divisional transfer.

The value of unadjusted units as on the Balance Sheet date has been included under Other Current Assets.

b. Under Power purchase agreement:

Units generated from windmills are sold to State Electricity Board at agreed rates and the income is included in Income from Wind power generation.

4. Tangible Fixed assets

Fixed assets are stated at original cost less accumulated depreciation, accumulated amortisation and cumulative impairment.

Pre-operative expenses including administrative and other general overhead expenses which are specifically attributable to the project, incurred up to the date of commencement of commercial operation are capitalized as a part of the cost of the fixed asset.

Gains or losses arising from disposal of fixed assets, measured as the difference between the net disposal proceeds and the carrying amount of such assets, are recognised in the statement of profit and loss.

5. Depreciation

i. Own Assets

Depreciation has been provided based on Straight-line basis as per the useful life prescribed in Schedule II of the Companies Act, 2013.

Depreciation on additions/ deductions is calculated pro-rata from / to the month of additions/ deductions.

ii. Leasehold Land

Land acquired under long-term lease is classified under "tangible assets" and is amortised over the primary lease period.

6. Intangible Assets and Amortisation

Intangible assets are recognized when it is probable that the future economic benefits that are attributable to the assets will flow to the Company and the cost of the asset can be measured reliably.

Intangible assets are amortized over their estimated useful life on Straight-line method as follows:

– Computer Software – Over a period of 3 years

Amortisation on impaired assets is adjusted in the future periods in such a manner that the revised carrying amount of the asset is allocated over its remaining useful life.

Internally generated software, if any, is not capitalized and the expenditure is reflected in the statement of profit and loss in the year in which the expenditure is incurred.

7. Impairment of assets

As at each Balance Sheet date, the carrying amount of asset is tested for impairment so as to determine:

i. the provision for impairment loss, if any; and

ii. the reversal of impairment loss recognized in previous periods, if any,

Impairment loss is recognized when the carrying amount of an asset exceeds its recoverable amount.

Recoverable amount is determined:

a) in the case of an individual asset, at the higher of the net selling price and the value in use; and

b) in the case of a cash generating unit (a group of assets that generates identified, independent cash flows), at the higher of the cash generating unit''s net selling price and the value in use.

(Value in use is determined as the present value of estimated future cash flows from the continuing use of an asset and from its disposal at the end of its useful life.)

8. Investments

i. All Investments being non-current and non-trade are valued at cost.

ii. The carrying amount of long-term investments is determined on an individual investment basis.

iii. As at the balance sheet date, provision for diminution is made to recognize the decline other than temporary, in the value of investments.

9. Inventories

i. Raw-materials, stores, spares and packing materials etc. are valued at cost, computed on a moving weighted average basis including the cost incurred in bringing the inventories to their present location and condition or net realizable value whichever is lower.

ii. Work-in-progress is valued at weighted average cost, including the cost of conversion with systematic allocation of production and administration overheads.

iii. Finished goods are valued at cost or net realizable value whichever is lower. Cost includes cost of conversion and other costs incurred in bringing the inventory to their present location and condition including excise duty.

10. Foreign currency transactions and forward contracts

i. The reporting currency of the Company is Indian Rupee.

ii. Foreign currency transactions are recorded on initial recognition in the reporting currency, using the exchange rate at the date of the transaction. At each Balance Sheet date, foreign currency monetary items are reported using the closing rate.

iii. The exchange differences on settlement/ restatement are included in pre-operative expenses up to the date of commercial operation and recognised as income or expense thereafter in the period in which they arise.

iv. Forward contracts, other than those entered into to hedge foreign currency risk on unexecuted firm commitments or highly probable forecast transactions, are treated as foreign currency transactions and accounted accordingly as per Accounting Standard (AS) 11 "The Effects of Changes in Foreign Exchange Rates''''. Exchange differences arising on such contracts are recognized in the period in which they arise. Gains and losses arising on account of roll over/cancellation of forward contracts are recognized as income/expenses of the period in which such roll over/cancellation takes place. The premium paid/ received on a foreign currency forward contract is accounted as expenses/income over the period of the contract.

11. Employee Benefits

a. Short-term employee benefits :

Short-term employee benefits viz., Salaries, Wages, are recognized as an expense at the undiscounted amount in the profit and loss account for the year in which the related service is rendered.

b. Post Employment Benefits :

i. Defined Contribution plans :

Contributions to Provident fund and Superannuation fund are recognized as an expense in the profit and loss account for the year in which the employees have rendered services. The Company contributes to Provident fund administered by the Government on a monthly basis at 12% of employee''s basic salary. The Company also contributes for superannuation a sum equivalent to 15% of the employee''s eligible annual basic salary subject to a maximum of Rs. 1 Lac per annum and is remitted to "Ramco Industries Limited Superannuation Scheme" administered by trustees and managed by Life Insurance Corporation of India. The balance amount, if any, is paid as salary at the option of the company. There are no other obligation other than the above defined contribution plan.

ii. Defined Benefit Plan :

Gratuity:

The Company has its own approved Gratuity Fund. It is in the form of lump sum payments to vested employees on resignation, retirement and death while in employment or on termination of employment of an amount equivalent to 15 Day''s basic salary payable for each completed year of service. Vesting occurs upon completion of 5 years of continuous service. The Company makes annual contributions to "Ramco Industries Limited Employees Gratuity Fund" administered by Trustees and managed by Life Insurance Corporation of India, based on the Actuarial Valuation by an independent external actuary as at the Balance sheet date using the "projected unit credit method".

Leave Encashment :

The Company has a policy of providing encashment of unavailed leave for its employees. The obligation for the leave encashment is recognised based on an independent external actuarial valuation at the Balance Sheet date. The expense is recognized at the present value of the amount payable determined based on actuarial valuation using "projected unit credit method".

c. Long-term employee benefits :

The obligation for long-term employee benefits such as long-term compensated absences is recognized in the similar manner as in the case of defined benefit plans as mentioned in (b) (ii) above.

d. Employee Separation Costs :

Compensation to employees who have opted for retirement under the voluntary retirement scheme of the Company is charged to Profit and Loss Statement in the year of exercise of option by the employee.

12. Lease

Lease rentals are expensed off with reference to the lease terms.

13. Borrowing costs

Specific borrowing costs that are directly attributable to the acquisition and construction of qualifying assets are capitalized as part of the cost of those assets as per AS 16. All other borrowing costs are charged to revenue.

14. Research and Development Expenditure

Expenditure on Research & Development of revenue nature incurred by the Company is charged to statement of Profit and Loss account under the respective revenue heads, while those of capital nature are treated as fixed assets, under respective asset heads.

15. Taxes on Income

Tax on income for the current period is determined on the basis of taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961 and based on the expected outcome of assessments/ appeals.

Minimum Alternate Ta x (MAT) credit is recognized as an asset to the extent there is convincing evidence that the company will pay normal income tax during the specified period. When the MAT credit becomes eligible to be recognized as an Asset viz., "MAT credit entitlement", the same is created by way of credit to the Statement of Profit and loss and shown as "MAT credit Recognition".

Deferred tax is recognized on timing differences between the accounting income and the taxable income for the year and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date.

Deferred tax assets relating to unabsorbed depreciation/business losses are recognized and carried forward to the extent there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

Other deferred tax assets are recognized and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

16. 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 event and it is possible that there will be an outflow of resources. Un-provided contingent liabilities are disclosed in the accounts by way of notes. Contingent assets are not recognized.

17. Segment Accounting

i. The Company identifies business segment as the primary segment as per AS-17. Under the primary segment, there are three reportable segments viz., Building products, Textile and Power generation from Windmills. These were identified considering the nature of the products, the differing risks and returns. The valuation of inter segment transfers are based on prevailing market prices.

ii. Costs are allocated to the respective segment based upon the actual incidence of respective cost. Unallocated items include general corporate income and expenses which are not allocated to any business segment.

iii. The Company prepares its segment information in conformity with accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.

18. Subsidies and Government Grants

Revenue related grants are recognised on accrual basis wherever there is reasonable certainty and are disclosed under "Revenue from operations".

Receivables of such grants are shown under "Other current asset".

Capital related grants is accounted as "Capital Reserve" under Reserves and Surplus upon fulfillment of conditions attached thereto and is not adjusted against Fixed Assets.

Interest Subsidy under Technology Up gradation Fund Scheme (TUF) is credited to the Interest on borrowings under the head "Finance costs".

19. Earnings Per Share

Earnings per share (EPS) is calculated by taking into account, the net profit after tax, divided by the weighted average number of Equity Shares outstanding as on the Balance Sheet date.

20. Operating cycle for current/non-current classification

Operating cycle for the business activities of the Company is taken as twelve months for classification of its assets and liabilities into current/non-current.


Mar 31, 2014

1. Basis of preparation and presentation of financial statements

The Company maintains its accounts on accrual basis following the historical cost convention in accordance with Generally Accepted Accounting Principles {"GAPP"} in compliance with the provisions of the Companies Act, 1956 and the Accounting Standards as specified in the Companies (Accounting Standards) Rules, 2006, prescribed by the Central Government (as amended). However, certain claims are accounted for as and when admitted by the appropriate authorities.

2. Use of Estimates

The preparation of financial statements in conformity with GAAP requires that the management of the Company makes estimates and assumptions that affect the reported amounts of income and expenses of the year, the reported balances of assets and liabilities and the disclosures relating to contingent liabilities as at the date of the financial statements. Examples of such estimates include the useful lives of tangible and intangible fixed assets, provision for doubtful debts/ advances, future obligations in respect of retirement benefit plans etc. Difference, if any, between the actual results and estimates is recognised in the period in which the results are known.

3. Revenue recognition

i. Revenue from sale of goods is recognised when all significant risks and rewards of ownership is transferred to the buyer under the terms of the contract and we retain no effective control of the goods transferred to a degree usually associated with ownership and no significant uncertainty exist regarding the amount of consideration that will be derived from sale of the goods.

Sales exclude excise duty and sales tax.

ii. Other income is accounted on accrual basis as and when the right to receive arises.

iii. Dividend income is accounted in the period in which the right to receive the same is established.

iv. Interest income on deposits is recognised at the agreed rate on time proportion basis.

v. Income from Wind mills:

a. Under wheeling and banking arrangement:

Units generated from windmills are adjusted against the consumption of power at our factories. The value of unadjusted units as on the Balance Sheet date has been included under Other Current Assets.

b. Under Power purchase agreement:

Units generated from windmills are sold to State Electricity Board at agreed rates and the income is included in Value of power generated from wind farms.

4. Tangible Fixed assets

Fixed assets are stated at original cost less accumulated depreciation, accumulated amortisation and cumulative impairment.

Pre-operative expenses including administrative and other general overhead expenses which are specifically attributable to the project, incurred up to the date of commencement of commercial operation are capitalised as a part of the cost of the fixed asset.

Gains or losses arising from disposal of fixed assets, measured as the difference between the net disposal proceeds and the carrying amount of such assets, are recognised in the statement of profit and loss.

5. Depreciation

i. Owned Assets

Depreciation is provided under straight line method at the rates prescribed in Schedule XIV of the Companies Act, 1956, in respect of Fibre Cement Sheet Plants at Arakkonam, Karur, Maksi, Silvassa, Corporate Office and Textiles Division.

Depreciation is provided under written down value method at the rates prescribed in Schedule XIV of the Companies Act, 1956, in respect of Fibre Cement Sheet Plants at Kharagpur, Vijayawada, Bhuj, Gangaikondan, Bihiya, Calcium Silicate Board Plants at Arakkonam and Jaipur, Clinker Cement Grinding unit at Kharagpur and Wind Electric Generators.

Depreciation on additions/deductions is calculated pro-rata from/ to the month of additions/deductions. Assets costing less than Rs. 5,000/- each are fully depreciated in the year of purchase.

Depreciation charge for impaired assets is adjusted in the future periods in such a manner that the revised carrying amount of the asset is allocated over its remaining useful life.

ii. Leasehold Land

Land acquired under long-term lease is classified under "tangible assets" and is amortised over the primary lease period

6. Intangible Assets and Amortisation

Intangible assets are recognised when it is probable that the future economic benefits that are attributable to the assets will flow to the Company and the cost of the asset can be measured reliably.

Intangible assets are amortised under straight line method as follows:

Amortisation on impaired assets is adjusted in the future periods in such a manner that the revised carrying amount of the asset is allocated over its remaining useful life.

Internally generated software, if any, is not capitalised and the expenditure is reflected in the statement of profit and loss in the year in which the expenditure is incurred.

7. Impairment of assets

As at each Balance Sheet date, the carrying amount of asset is tested for impairment so as to determine:

a) the provision for impairment loss, if any; and

b) the reversal of impairment loss recognised in previous periods, if any,

Impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount. Recoverable amount is determined:

a) in the case of an individual asset, at the higher of the net selling price and the value in use; and

b) in the case of a cash generating unit (a group of assets that generates identified, independent cash flows), at the higher of the cash generating unit''s net selling price and the value in use.

(Value in use is determined as the present value of estimated future cash flows from the continuing use of an asset and from its disposal at the end of its useful life.)

8. Investments

All Investments being non-current and non-trade are valued at cost. Provision for diminution is made to recognise the decline other than temporary, in the value of investments.

9. Inventories

a) Raw-materials, stores, spares and packing materials etc. are valued at cost, computed on a moving weighted average basis including the cost incurred in bringing the inventories to their present location and condition or net realisable value whichever is lower.

b) Work-in-progress is valued at weighted average cost, including the cost of conversion with systematic allocation of production and administration overheads.

c) Finished goods are valued at cost or net realisable value whichever is lower. Cost includes cost of conversion and other costs incurred in bringing the inventory to their present location and condition including excise duty.

10. Foreign currency transactions and forward contracts

i. The reporting currency of the Company is Indian Rupee.

ii. Foreign currency transactions are recorded on initial recognition in the reporting currency, using the exchange rate at the date of the transaction. At each Balance Sheet date, foreign currency monetary items are reported using the closing rate. I

iii. The exchange differences on settlement/ restatement are included in pre-operative expenses up to the date of commercial operation and recognised as income or expense thereafter in the period in which they arise.

iv. Forward contracts, other than those entered into to hedge foreign currency risk on unexecuted firm commitments or highly probable forecast transactions, are treated as foreign currency transactions and accounted accordingly as per Accounting Standard (AS) 11 "The Effects of Changes in Foreign Exchange Rates". Exchange differences arising on such contracts are recognised in the period in which they arise. Gains and losses arising on account of roll over/cancellation of forward contracts are recognised as income/expenses of the period in which such roll over/cancellation takes place. The premium paid/ received on a foreign currency forward contract is accounted as expenses/income over the period of the contract.

11. Employee Benefits

a. Short-term employee benefits :

Short-term employee benefits viz., Salaries, Wages etc., are recognised as an expense at the undiscounted amount in the profit and loss account for the year in which the related service is rendered.

b. Post Employment Benefits :

i. Defined Contribution plans

Contributions to Provident fund and Superannuation fund are recognised as an expense in the profit and loss account for the year in which the employees have rendered services. The Company contributes to Provident fund administered by the Government on a monthly basis at 12% of employee''s basic salary. The Company also contributes for superannuation a sum equivalent to 15% of the employee''s eligible annual basic salary subject to a maximum of Rs. 1 lakh per annum to LIC. There are no other obligations other than the above defined contribution plans.

ii. Defined Benefit Plan :

Gratuity:

The Company has its own approved Gratuity Fund. It is in the form of lump sum payments to vested employees on resignation, retirement and death while in employment or on termination of employment of an amount equivalent to 15 Day''s basic salary payable for each completed year of service. Vesting occurs upon completion of 5 years of continuous service. The Company makes annual contributions to funds administered by Life Insurance Corporation of India, based on the Actuarial Valuation by an independent external actuary as at the Balance sheet date using the "projected unit credit method".

Leave Encashment:

The Company has a policy of providing encashment of unavailed leave for its employees. The obligation for the leave encashment is recognised based on an independent external actuarial valuation at the Balance Sheet date. The expense is recognised at the present value of the amount payable determined based on actuarial valuation using "projected unit credit method".

c. Long-term employee benefits :

The obligation for Long-term employee benefits such as Long-term compensated absences is recognised in the similar manner as in the case of defined benefit plans as mentioned in (b) (ii) above.

12. Lease

Lease rentals are expensed off with reference to the lease terms.

13. Borrowing costs

Specific borrowing costs that are directly attributable to the acquisition and construction of qualifying assets are capitalised as part of the cost of those assets as per AS 16. All other borrowing costs are charged to revenue.

14. Research and Development Expenditure

Expenditure on Research and Development of revenue nature incurred by the Company is charged to statement of Profit and Loss account under the respective revenue heads, while those of capital nature are treated as fixed assets, under respective asset heads.

15. Taxes on Income

Tax on income for the current period is determined on the basis of taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961 and based on the expected outcome of assessments/ appeals.

Deferred tax is recognised on timing differences between the accounting income and the taxable income for the year and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date.

Deferred tax assets relating to unabsorbed depreciation/business losses are recognised and carried forward to the extent there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

Other deferred tax assets are recognised and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

16. Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past event and it is possible that there will be an outflow of resources. Un-provided contingent liabilities are disclosed in the accounts by way of notes. Contingent assets are not recognised.

17. Segment Accounting

i. The Company identifies business segment as the primary segment as per AS-17. Under the primary segment, there are three reportable segments viz., Building products, Textile and Power generation from Windmills. These were identified considering the nature of the products, the differing risks and returns. The valuation of inter segment transfers are based on prevailing market prices.

ii. Costs are allocated to the respective segment based upon the actual incidence of respective cost. Unallocated items include general corporate income and expenses which are not allocated to any business segment.

iii. The Company prepares its segment information in conformity with accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.

18. Subsidies and Government Grants

Revenue related grants are recognised on accrual basis wherever there is reasonable certainty. Investment Subsidy/Grant received/ receivable from the Government is treated as Capital Reserve or Revenue receipt based on the nature of subsidy/grant as per AS 12.

Interest Subsidy under Technology Upgradation Fund Scheme (TUF) is credited to the Interest and Finance Charges.

19. Earnings Per Share

Earnings per share (EPS) is calculated by taking into account, the net profit after tax, divided by the weighted average number of Equity Shares outstanding as on the Balance Sheet date.

20. Operating cycle for current/non-current classification

Operating cycle for the business activities of the Company is taken as twelve months for classification of its assets and liabilities into current/non-current.


Mar 31, 2013

A. Basis of preparation of f inancial statements

1. The Company generally follows mercantile system of accounting and recognizes signifi cant items of Income and Expenditure on accrual basis.

2. The fi nancial statements are prepared under the Historical Cost convention and the accounts are prepared in accordance with the generally accepted accounting principles, the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956 as adopted consistently by the Company.

B. Employee Benef its

1. Short-term employee benefi ts viz., Salaries, Wages, are recognized as an expense at the undiscounted amount in the profi t and loss account for the year in which the related service is rendered.

2. Defi ned Contribution plan viz., Contributions to Provident fund and Superannuation fund are recognized as an expense in the profi t and loss account for the year in which the employees have rendered services. The Company contributes to Provident fund administered by the Government on a monthly basis at 12% of employee''s basic salary. The Company also contributes for superannuation a sum equivalent to 15% of the employee''s eligible annual basic salary subject to a maximum of Rs..1 Lac per annum to LIC. There are no other obligations other than the above defi ned contribution plans.

3. Defi ned Benefi t Plan:

Gratuity:

The Company has its own approved Gratuity Fund. It is in the form of lump sum payments to vested employees on resignation, retirement and death while in employment or on termination of employment of an amount equivalent to 15 Day''s basic salary payable for each completed year of service. Vesting occurs upon completion of 5 years of continuous service. The Company makes annual contributions to funds administered by Life Insurance Corporation of India, based on the Actuarial Valuation by an independent external actuary as at the Balance sheet date using the "projected unit credit method".

Leave Encashment:

The Company has a policy of providing encashment of unavailed leave for its employees. The obligation for the leave encashment is recognised based on an independent external actuarial valuation at the Balance Sheet date. The expense is recognized at the present value of the amount payable determined based on actuarial valuation using "projected unit credit method".

C. Tangible Assets

1. Tangible Fixed Assets are stated at cost of acquisition (net of CENVAT / VAT wherever applicable) less accumulated depreciation / amortisation and impairment losses if any, except freehold land which is carried at cost less impairment losses if any. The cost comprises purchase price, borrowing cost if capitalisation criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Subsequent expenditure related to an item of fi xed asset is added to its book value only if it increases the future benefi ts from the asset beyond its previously assessed standard of performance. All other expenses on fi xed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profi t and loss for the period during which such expenses are incurred.

2. The lands acquired under lease are amortized equally over the lease period and such amount is included in depreciation.

3. Depreciation is provided under Straight Line Method at the rates prescribed in Schedule XIV of the Companies Act 1956, in respect of Fibre Cement Sheet Plants at Arakonam, Karur, Maksi, Silvassa and Corporate Offi ce and Textiles Division.

4. Depreciation is provided under Written Down Value Method at the rates prescribed in Schedule XIV of the Companies Act 1956, in respect of Fibre Cement Sheet Plants at Kharagpur, Vijayawada, Bhuj, Gangaikondan & Bihiya, Calcium Silicate Board Plant at Arakonam, Clinker Grinding unit at Kharagpur and Wind Electric Generators.

5. Gains or losses arising from disposal of fi xed assets are measured as the difference between the net disposal proceeds and the carrying amount of such assets are recognised in the statement of profi t and loss.

D. Intangible Assets

The costs of computer software that are installed are accounted at cost for acquisition of such software and are carried at cost less accumulated amortisation and impairment, if any. Internally generated software is not capitalized and the expenditure is refl ected in the statement of profi t and loss in the year in which the expenditure is incurred.

E. Valuation of Inventories

1. Raw-materials, stores, spares and packing materials are valued at cost, including the cost incurred in bringing the inventories to their present location and condition or net realizable value whichever is lower.

2. Process Stock is valued at cost including the cost of conversion. The cost of conversion includes direct costs, including a systematic allocation of production and administration overheads.

3. Finished goods are valued at cost or net realizable value whichever is lower. Cost includes cost of conversion and other costs ncurred in bringing the inventory to its present location and condition. In accordance with the Accounting Standard (AS-2) excise duty have been included in the valuation. This has no impact on the profi ts.

F. Revenue recognition

1. Revenue is recognised to the extent that is probable that the economic benefi ts will fl ow to the Company and the revenue can be reliably measured.

2. Sale of products is recognised when the signifi cant risks and rewards of ownership of the goods have been passed to the buyer.

3. Revenue from operation exclude Excise duty, Education Cess, Secondary and Higher Education Cess, VAT and CST.

4. Dividend income is recognised when the Company''s right to receive dividend is established by the reporting date.

5. Income from Wind mills:

a. Under wheeling and banking arrangement:

Units generated from windmills are adjusted against the consumption of power at our factories. The value of unadjusted units as on the Balance Sheet date has been included under Other Current Assets.

b. Under Power purchase agreement:

Units generated from windmills are sold to State Electricity Board at agreed rates and the income is included in Value of power generated from wind farms.

G. Investments

All Investments being non-current and non-trade are valued at cost. Provision for dimunition is made to recognize the decline other than temporary, in the value of investments.

H. 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 event and it is possible that there will be an outfl ow of resources. Un-provided contingent liabilities are disclosed in the accounts by way of notes. Contingent assets are not recognized.

I. Research and Development Expenditure

Expenditure on Research & Development of revenue nature incurred by the Company is charged to statement of Profi t and Loss account under the respective revenue heads, while those of capital nature are treated as fi xed assets, under respective asset heads.

J. Lease

Lease rentals are expensed off with reference to the lease terms.

K. Borrowing Costs

Specifi c borrowing costs that are directly attributable to the acquisition and construction of qualifying assets are capitalized as part of the cost of those assets as per AS 16. All other borrowing costs are charged to revenue.

L. Earnings per Share

Earnings per share (EPS) is calculated by taking into account, the net profi t after tax, divided by the weighted average number of Equity Shares outstanding as on the Balance Sheet date.

M. Tax on Income

The tax provision is considered as stipulated in AS 22 (Accounting for taxes on income) and includes both current and deferred tax The Company recognizes the deferred tax liability based on the accumulated timing difference using the current tax rate

N. Foreign Currency Transactions

1. Transactions in foreign currency are accounted at the exchange rates prevailing at the time of transactions

2. Covered liabilities in foreign currencies are accounted at the rate at which they have been covered. Uncovered liabilities in foreign currency are accounted at the rates as on the balance sheet date

3. The difference between forward rate and exchange rate at the inception of a forward exchange contract is recognized as ncome or expenses over the life of the contract

4. Exchange difference in respect of uncovered foreign currency liabilities are recognized in the profi t and loss account.

O. Segment Reporting

1. The Company identifi es business segment as the primary segment as per AS-17. Under the primary segment, there are three reportable segments viz., Building products, Textile and Power generation from Windmills. These were identifi ed considering the nature of the products, the differing risks and returns. The valuation of inter segment transfers are based on prevailing market prices

2. Costs are allocated to the respective segment based upon the actual incidence of respective cost. Unallocated items include general corporate income and expenses which are not allocated to any business segment.

3. The Company prepares its segment information in conformity with accounting policies adopted for preparing and presenting the fi nancial statements of the Company as a whole

P. Subsidies and Government Grants

Revenue related grants are recognised on accrual basis wherever there is reasonable certainty. Investment Subsidy/Grant received/ receivable from the Government is treated as Capital Reserve or Revenue receipt based on the nature of subsidy/grant as per AS 12 nterest Subsidy under Technology Upgradation Fund Scheme (TUF) is credited to the Interest and Finance Charges

Q. Impairment of assets

An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. An impairment loss is charged to the statement of profi t and loss in the year in which an asset is identifi ed as impaired

R. Use of Estimates

The preparation of fi nancial statements in accordance with the generally accepted accounting principles requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates in the future periods


Mar 31, 2012

A. Basis of preparation of financial statements

1. The Company generally follows mercantile system of accounting and recognizes significant items of Income and Expenditure on accrual basis.

2. The financial statements are prepared under the Historical Cost convention and the accounts are prepared in accordance with the generally accepted accounting principles, the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956 as adopted consistently by the Company.

3. From the beginning of the reporting period, the revised Schedule VI notified under the Companies Act, 1956 has become applicable to the company, for preparation and presentation of its financial statements which has significant impact on presentation and disclosures made in the financial statements. The Company has also reclassified the previous year figures in accordance with the requirements applicable in the current year. Current year and previous year figures have been reported in Lakhs with two decimals.

B. Employee Benefits

1. Short-term employee benefits viz., Salaries, Wages are recognized as an expense at the undiscounted amount in the profit and loss account for the year in which the related service is rendered.

2. Defined Contribution plan viz., Contributions to Provident fund and Superannuation fund are recognized as an expense in the profit and loss account for the year in which the employees have rendered services. The Company contributes to Provident fund administered by the Government on a monthly basis at 12% of employee's basic salary. The Company also contributes for superannuation a sum equivalent to 15% of the employee's eligible annual basic salary subject to a maximum of Rs 1 Lac per annum to LIC. There are no other obligations other than the above defined contribution plans.

3. Defined Benefit Plan:

Gratuity:

The Company has its own approved Gratuity Fund. It is in the form of lump sum payments to vested employees on resignation, retirement and death while in employment or on termination of employment of an amount equivalent to 15 day's basic salary payable for each completed year of service. Vesting occurs upon completion of 5 years of continuous service. The company makes annual contributions to funds administered by Life Insurance Corporation of India, based on the Actuarial Valuation by an independent external actuary as at the Balance sheet date using the projected unit credit method.

Leave Encashment:

The Company has a policy of providing encashment of unveiled leave for its employees. The obligation for the leave encashment is recognized based on an independent external actuarial valuation at the Balance Sheet date. The expense is recognized at the present value of the amount payable determined based on actuarial valuation using projected unit credit method.

C. Tangible Assets

1. Tangible Fixed Assets are stated at cost of acquisition (net of CENVAT / VAT wherever applicable) less accumulated depreciation / amortization and impairment losses if any, except freehold land which is carried at cost less impairment losses if any. The cost comprises purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Subsequent expenditure related to an item of fixed asset is added to its book value only if it increases the future benefits from the asset beyond its previously assessed standard of performance. All other expenses on fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.

2. The lands acquired under lease are amortized equally over the lease period and such amount is included in depreciation.

3. Under Straight Line Method in respect of Fibre Cement Sheet Plants at Arakonam, Karur, Maksi, Silvassa and Corporate Office and Textiles Division.

4. Under Written Down Value Method in respect of Fibre Cement Sheet Plants at Kharagpur, Vijayawada, Bhuj, Gangaikondan & Bihiya, Calcium Silicate Board Plant at Arakonam, Plastic Storage Container units at Silvassa and Maksi, Clinker Grinding unit at Kharagpur and Wind Electric Generators.

5. Gains or losses arising from disposal of fixed assets are measured as the difference between the net disposal proceeds and the carrying amount of such assets are recognized in the statement of profit and loss.

D. Intangible Assets

The costs of computer software that are installed are accounted at cost for acquisition of such software and are carried at cost less accumulated amortization and impairment, if any. Internally generated software is not capitalized and the expenditure is reflected in the statement of profit and loss in the year in which the expenditure is incurred.

E. Valuation of Inventories

1. Raw-materials, stores, spares and packing materials are valued at cost, including the cost incurred in bringing the inventories to their present location and condition or net realizable value whichever is lower.

2. Process Stock is valued at cost including the cost of conversion. The cost of conversion includes direct costs, including a systematic allocation of production and administration overheads.

3. Finished goods are valued at cost or net realizable value whichever is lower. Cost includes cost of conversion and other costs incurred in bringing the inventory to its present location and condition. In accordance with the Accounting Standard (AS-2) excise duty have been included in the valuation. This has no impact on the profits.

F. Revenue recognition

1. Revenue is recognized to the extent that is probable that the economic benefits will flow to the company and the revenue can be reliably measured.

2. Sale of products is recognized when the significant risks and rewards of ownership of the goods have been passed to the buyer.

3. Revenue from operation exclude Excise duty, Education Cess, Secondary and Higher education cess, VAT and CST.

4. Dividend income is recognized when the company's right to receive dividend is established by the reporting date.

5. Income from Wind mills:

a. Under wheeling and banking arrangement:

Units generated from windmills are adjusted against the consumption of power at our factories. The monetary value of the units so adjusted, calculated at the prevailing EB rates net of wheeling charges has been included in power & fuel. The value of unadjusted units as on the Balance Sheet date has been included under loans and advances.

b. Under Power purchase agreement:

Units generated from windmills are sold to State Electricity Board at agreed rates and the income is included in value of power generated from wind farms.

G. Investments

All Investments being non-current and non-trade are valued at cost. Provision for diminution is made to recognize the decline other than temporary, in the value of investments.

H. 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 event and it is possible that there will be an outflow of resources. Un-provided contingent liabilities are disclosed in the accounts by way of notes. Contingent assets are not recognized.

I. Research and Development Expenditure

Expenditure on Research & Development of revenue nature incurred by the Company is charged to statement of Profit and Loss account under the respective revenue heads, while those of capital nature are treated as fixed assets, under respective asset heads.

J. Lease

Lease rentals are expensed off with reference to the lease terms.

K. Borrowing Costs

Specific borrowing costs that are directly attributable to the acquisition and construction of qualifying assets are capitalized as part of the cost of those assets as per AS 16. All other borrowing costs are charged to revenue.

L. Earnings per Share

Earnings per share (EPS) is calculated by taking into account, the net profit after tax, divided by the number of Equity Shares outstanding as on the Balance Sheet date.

M. Tax on Income

The tax provision is considered as stipulated in AS 22 (Accounting for taxes on income) and includes both current and deferred tax liability. The company recognizes the deferred tax liability based on the accumulated timing difference using the current tax rate.

N. Foreign Currency Transactions

1. Transactions in foreign currency are accounted at the exchange rates prevailing at the time of transactions.

2. Covered liabilities in foreign currencies are accounted at the rate at which they have been covered. Uncovered liabilities in foreign currency are accounted at the rates as on the balance sheet date.

3. The difference between forward rate and exchange rate at the inception of a forward exchange contract is recognized as income or expenses over the life of the contract.

4. Exchange difference in respect of uncovered foreign currency liabilities are recognized in the profit and loss account.

O. Segment Reporting

1. The company identifies business segment as the primary segment as per AS-17. Under the primary segment, there are three reportable segments viz., Building products, Textile and Power generation from Windmills. These were identified considering the nature of the products, the differing risks and returns. The valuation of inter segment transfers are based on prevailing market prices.

2. Costs are allocated to the respective segment based upon the actual incidence of respective cost. Unallocated items include general corporate income and expenses which are not allocated to any business segment.

3. The company prepares its segment information in conformity with accounting policies adopted for preparing and presenting the financial statements of the company as a whole.

P. Subsidies and Government Grants:

Revenue related grants are recognized on accrual basis wherever there is reasonable certainty. Investment Subsidy/Grant received/ receivable from the Government is treated as Capital Reserve or Revenue receipt based on the nature of subsidy/grant as per AS 12.

Interest Subsidy under Technology Up gradation Fund Scheme (TUF) is credited to the Interest and Finance Charges.

Q. Impairment of assets

An assets is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the statement of profit and loss in the year in which an asset is identified as impaired.

R. Use of Estimates

The preparation of financial statements in accordance with the generally accepted accounting principles requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based upon management's best knowledge of current events and actions, actual results could differ from these estimates in the future periods.


Mar 31, 2011

A Basis of preparation of financial statements

1 The Company generally follows mercantile system of accounting and recognizes significant items of Income and Expenditure on accrual basis.

2 The financial statements are prepared under the Historical Cost convention and the accounts are prepared in accordance with the generally accepted accounting principles, the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956 as adopted consistently by the Company.

B Sales

Net Sales exclude Excise Duty, Secondary and Higher Education Cess and VAT/CST.

C Employee Benefits

1 Short-term employee benefits viz., Salaries, Wages, are recognized as an expense at the undiscounted amount in the profit and loss account for the year in which the related service is rendered.

2 Defined Contribution plan viz., Contributions to Provident fund and Superannuation fund are recognized as an expense in the profit and loss account for the year in which the employees have rendered services. The Company contributes to Provident fund administered by the Government on a monthly basis at 12% of employees basic salary. The Company also contributes for superannuation a sum equivalent to 15% of the employees eligible annual basic salary subject to a maximum of Rs.1 Lac per annum to funds administered by trustees and managed by LIC. There are no other obligations other than the above defined contribution plans.

3 Defined Benefit Plan:

Gratuity:The Company has its own approved Gratuity Fund. It is in the form of lump sum payments to vested employees on resignation, retirement, death while in employment or on termination of employment of an amount equivalent to 15 Days basic salary payable for each completed year of service. Vesting occurs upon completion of 5 years of continuous service. The Company makes annual contributions to funds administered by Trustees and managed by Life Insurance Corporation of India, based on the Actuarial Valuation by an independent external actuary as at the Balance sheet date using the projected unit credit method.

Leave Encashment: The Company has a policy of encashing unavailed leave for its employees. The obligation for the leave encashment is recognised based on an independent external actuarial valuation at the Balance Sheet date. The expense is recognized at the present value of the amount payable determined based on actuarial valuation using projected unit credit method.

D Fixed Assets:

Fixed Assets are accounted at acquisition cost (net of CENVAT / VAT wherever applicable) less accumulated depreciation. Depreciation has been provided at the rates specified under rules / Schedule XIV to the Companies Act 1956 at the time of acquisition of the asset:

Under Straight Line Method in respect of Fibre Cement Sheet Plants at Arakkonam, Karur, Maksi, Silvassa and Corporate Office and Textiles Division.

Under Written Down Value Method in respect of Fibre Cement Sheet Plants at Kharagpur, Vijayawada, Bhuj & Gangaikondan, Calcium Silicate Board Plant at Arakkonam, Plastic Storage Container units at Silvassa and Maksi, Clinker Grinding unit at Kharagpur and Wind Electric Generators.

The land acquired under lease are amortized equally over the lease period and such amount is included in depreciation.

E Valuation of Inventories:-

1 Raw-materials, stores, spares and packing materials are valued at cost, computed on a moving weighted average basis except Fibre, which is valued at lot basis, including the cost incurred in bringing the inventories to their present location and condition or net realizable value whichever is lower.

2 Process Stock is valued at cost including the cost of conversion. The cost of conversion includes direct costs, including a systematic allocation of production and administration overheads.

3 Finished goods are valued at cost or net realizable value whichever is lower. Cost includes cost of conversion and other costs incurred in bringing the inventory to its present location and condition. In accordance with the Accounting Standard (AS-2) excise and customs duty have been included in the valuation. This has no impact on the profits.

F Investments

All Investments being long term and non-trade are valued at cost. Provision for diminution is made to recognize the decline

other than temporary, in the value of investments.

G Contingent Liabilities

Provisions including substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past event and it is possible that there will be an outflow of resources. Un-provided contingent liabilities disclosed in the accounts by way of notes. Contingent assets are not recognized.

H Research and Development Expenditure

Expenditure on Research & Development of revenue nature incurred by the Company is charged to Profit and Loss account under the respective revenue heads, while those of capital nature are treated as fixed assets.

I Income from Windmill

1 Under wheeling and banking arrangement:

Units generated from windmills are adjusted against the consumption of power at our factories. The monetary value of the units so adjusted, calculated at the prevailing EB rates net of wheeling charges has been included in Power & Fuel. The value of unadjusted units as on the Balance Sheet date has been included under Loans and Advances.

2 Under Power purchase agreement:

Units generated from windmills are sold to State Electricity Board at agreed rates and the income is included in Value of power generated from wind farms. J Lease

Lease rentals are expensed off with reference to the lease terms. K Borrowing Costs

Specific borrowing costs that are directly attributable to the acquisition and construction of qualifying assets are capitalized as part of the cost of those assets as per AS 16. All other borrowing cost are charged to revenue. L Earnings per Share

Earnings per share (EPS) is calculated by taking into account, the net profit after tax, divided by the number of Equity Shares outstanding as on the Balance Sheet date.

M Income Tax

The tax provision is considered as stipulated in AS 22 (Accounting for taxes on income) and includes both current and deferred tax liability. The Company recognizes the deferred tax liability based on the accumulated timing difference using the current tax rate.

N Foreign Currency Transactions

1. Transactions in foreign currency are accounted at the exchange rates prevailing at the time of transactions.

2. Covered liabilities in foreign currencies are accounted at the rate at which they have been covered. Uncovered liabilities in foreign currency are accounted at the rates as on the balance sheet date.

3. The difference between forward rate and exchange rate at the inception of a forward exchange contract is recognized as income or expenses over the life of the contract.

4. Exchange difference in respect of uncovered foreign currency liabilities are recognized in the profit and loss account.

O Segment Reporting

In terms of Accounting Standard (AS 17) relating to Segment reporting, the Company reports segment wise turnover / Income, Profit before interest and tax and return on capital employed as part of the financial statements.

P Subsidies and Government Grants:

Investment Subsidy/Grant received from the Government is treated as Capital Reserve or Revenue receipt based on the nature of subsidy/grant as per AS 12.

Interest Subsidy under Technology Upgradation Fund Scheme (TUF) is credited to the Interest and Finance Charges.

Q 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 asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the assets belong is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is 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.


Mar 31, 2010

A Basis of preparation of financial statements

1 The Company generally follows mercantile system of accounting and recognizes significant items of Income and Expenditure on accrual basis.

2 The financial statements are prepared under the Historical Cost convention and the accounts are prepared in accordance with the generally accepted accounting principles, the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956 as adopted consistently by the Company.

B Sales

Sales is recognized net of Excise Duty, VAT and CST.

C Employee Benefits

1 Short-term employee benefits viz., Salaries, Wages, are recognized as an expense at the undiscounted amount in the Profit and Loss Account for the year in which the related service is rendered.

2 Defined Contribution Plan viz., Contributions to Provident Fund and Superannuation Fund are recognized as an expense in the profit and loss account for the year in which the employees have rendered services. The Company contributes to Provident Fund administered by the Government on a monthly basis at 12% of employee’s basic salary. The Company also contributes for Superannuation a sum equivalent to 15% of the employee’s eligible annual basic salary to LIC annually. There are no other obligations other than the above defined contribution plans.

3 Defined Benefit Plan:

Gratuity:

The Company has its own approved Gratuity Fund. It is in the form of lump sum payments to vested employees on resignation, retirement, death while in employment or on termination of employment of an amount equivalent to 15 Day’s basic salary payable for each completed year of service. The company makes annual contributions to funds administered by Life Insurance Corporation of India, based on the Actuarial Valuation by an independent external actuary as at the Balance Sheet date using the projected unit credit method.

Leave Encashment:

The Company has a policy of encashing unavailed leave for its employees. The obligation for the leave encashment is recognised based on an independent external actuarial valuation at the Balance Sheet date. The expense is recognized at the present value of the amount payable determined based on actuarial valuation using projected unit credit method.

D Fixed Assets:

Fixed Assets are accounted at acquisition cost (net of CENVAT / VAT wherever applicable) less accumulated depreciation. Depreciation has been provided at the rates specified under rules / Schedule XIV to the Companies Act, 1956 at the time of acquisition of the asset.

Under Straight Line Method in respect of Fibre Cement Sheet Plants at Arakonam, Karur, Maksi, Silvassa and Corporate Office and Textiles Division.

Under Written Down Value Method in respect of Fibre Cement Sheet Plants at Kharagpur, Vijayawada & Bhuj, Calcium Silicate Board Plant at Arakonam, Plastic Storage Container units at Silvassa and Maksi, Clinker Grinding unit at Kharagpur and Wind Electric Generators.

E Valuation of Inventories:

1 Raw-materials, stores, spares and packing materials are valued at cost, including the cost incurred in bringing the inventories to their present location and condition or net realizable value whichever is lower.

2 Process Stock is valued at cost including the cost of conversion. The cost of conversion includes direct costs, including a systematic allocation of production and administration overheads.

3 Finished goods are valued at cost or net realizable value whichever is lower. Cost includes cost of conversion and other costs incurred in bringing the inventory to its present location and condition. In accordance with the Accounting Standard (AS-2) excise and customs duty have been included in the valuation. This has no impact on the profits.

F Investments:

Investments being long-term in nature are stated at cost.

G Contingent Liabilities:

Contingent Liabilities are disclosed in the accounts by way of notes.

H Research and Development Expenditure:

1 Expenditure on Research & Development of revenue nature incurred by the Company is charged to Profit and Loss Account under the respective heads, while those of capital nature are treated as fixed assets.

I Income from Windmill

1 Under Wheeling and Banking arrangement:

Units generated from windmills are adjusted against the consumption of power at our factories. The monetary value of the units so adjusted, calculated at the prevailing EB rates net of wheeling charges has been included in Power & Fuel. The value of unadjusted units as on the Balance Sheet date has been included under Loans and Advances.

2 Under Power Purchase agreement:

Units generated from windmills are sold to State Electricity Board at agreed rates and the income is included in value of power generated from wind farms.

J Lease

Lease rentals are expensed off with reference to the lease terms.

K Borrowing Costs

Specific borrowing costs incurred up to the date of commissioning for bringing the qualifying fixed assets into their present condition and location are capitalized.

L Earnings per Share

Earnings per share (EPS) is calculated by taking into account, the net profit after tax, divided by the number of Equity Shares outstanding as on the Balance Sheet date.

M Income Tax

The tax provision is considered as stipulated in AS 22 (Accounting for taxes on income) and includes both current and deferred tax liability.

N Foreign Currency Transactions

1. Transactions in foreign currency are accounted at the exchange rates prevailing at the time of transactions.

2. Covered liabilities in foreign currencies are accounted at the rate at which they have been covered. Uncovered liabilities in foreign currency are accounted at the rates as on the Balance Sheet date.

3. The difference between forward rate and exchange rate at the inception of a forward exchange contract is recognized as income or expenses over the life of the contract.

4. Exchange difference in respect of uncovered foreign currency liabilities are recognized in the Profit and Loss Account.

O Segment Reporting

In terms of Accounting Standard (AS 17) relating to Segment reporting, the Company reports segment wise turnover / Income, Profit before interest and tax and return on capital employed as part of the financial statements.

P Subsidies and Government Grants

Investment Subsidy/Grant received from the Government is treated as Capital Reserve or Revenue receipt based on the nature of subsidy/grant as per AS 12.

Interest Subsidy under Technology Upgradation Fund Scheme (TUF) is credited to the Interest and Finance Charges.

Q 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 asset. If such recoverable amount of the asset 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.

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