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Accounting Policies of Ruby Mills Ltd. Company

Mar 31, 2015

1.1 Basis of Accounting :

These financial statements are prepared in accordance with the generally accepted accounting principles in India (Indian GAAP) under the historical cost convention as also on accrual basis. These financial statements have been prepared to comply with the accounting standards prescribed under Section 133 of the Companies Act, 2013 ('the Act') read with Rule 7 of the Companies (Accounts) Rules, 2014 ('the Accounting Standards') and the relevant provisions of the Act (to the extent notified). In the light of the first proviso to Section 129(1) of the Act and Schedule III to the Act, the items and terms contained in these financial statements are in accordance with the Accounting Standards.

1.2 Use of Estimates :

The preparation of the financial statements in conformity with the generally accepted accounting principles requires Management to make estimates and assumptions to be made that affect the reported amounts of revenues and expenses during the reporting period, the reported amounts of assets and liabilities and the disclosures relating to the contingent liabilities on the date of the financial statements. Examples of such estimates include useful lives of Fixed Assets, provision for doubtful debts/advances, deferred tax etc. Actual results could differ from those estimates. Such difference is recognised in the period/s in which the results are known/materialised.

1.3 Revenue Recognition:

i. Domestic Sales is recognised on transfer of significant risks and rewards of ownership which is on the despatch of goods. Export Sales are accounted for on the basis of the dates of'On Board Bill of Lading'.

ii. Income from processing charges is accounted on the despatch of processed goodsto customers.

iii. Export Benefits are accounted in the year of export.

iv. License fees are recognised over the period of Leave and License Agreements.

v. Revenue from the Sale of Development rights is recognised in terms of agreement entered into by the Company with the developer.

vi. Interest income is recognised on a time proportion basis taking into accountthe amount outstanding and the rate applicable.

vii. Dividend income is recognised when the rightto receive dividend is established.

1.4 Fixed Assets:

i. Fixed Assets are valued at cost less depreciation.

ii. The Cost of Fixed Asset comprises its purchase price net of capital subsidy receivable, including non-refundable taxes, duties and directly attributable cost of bringing the asset to its working condition for its intended use.

iii. Borrowing costs, for the assets that necessarily take a substantial period of time to get ready for its intended use are capitalised to the cost of assets.

iv. Projects under which tangible fixed assets are not yet ready for their intended use are carried at cost, comprising direct cost, related incidental expenses and attributable interestand are disclosed as"Capital Work-in-Progress".

1.5 Depreciation:

i. Depreciation on tangible Fixed Assets is provided over the useful lives of assets as prescribed under Part C of Schedule II of the Companies Act, 2013 as under:

a. Plant and Machinery (otherthan Laboratory Equipments) on the "Straight Line Method".

b. All other assets, on the "Written Down Value Method".

ii. Depreciation for Fixed Assets purchased / sold during the period is charged on a pro-rata basis.

1.6 Investments:

i. Investments, which are long-term, are stated at cost. A provision for diminution, if any, is made to recognise a decline, other than temporary, in the value of investments.

ii. Profit or loss on sale of long-term investments, if any, is calculated by considering the weighted average amount of the total holding of the investment.

1.7 InventoryValuation:

i. Raw Materials, Materials in Process, Finished Goods, Fuel, Stores and Spares are valued at the lower of Cost and Net RealisableValue.

ii. Cost comprises all cost of purchases, cost of conversion and cost incurred in bringing the inventory to their present location and condition.The cost is arrived at on the weighted average basis.

iii. Due allowances are made for obsolete inventory based on technical estimates made by the Company.

iv. Waste is valued at the net realisable value.

1.8 Transactions in Foreign Currency:

i. Transactions in foreign currency (Monetary or Non-Monetary items) are recorded at the exchange rate prevailing on the date of the transaction.

ii. Monetary items (i.e. receivables, payables, loans etc.) which are denominated in foreign currency are translated and reported using the exchange rates prevailing on the date of the Balance Sheet.

iii. Non-monetary items which are carried at historical cost denominated in a foreign currency are reported using the exchange rate atthe date of the transaction.

iv. Exchange differences arising on the settlement of monetary items or on reporting at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognised as income or expenses in the year in which they arise.

1.9 Employee Benefits:

i. Defined Contribution Plan

Contribution as per the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 towards Provident Fund and Family Pension Fund are provided for and payments in respect thereof are made to the relevant authorities on actual basis.

ii. Defined Benefit Plan

a. Gratuity - In accordance with applicable Indian laws, the Company provides for gratuity, a defined benefit retirement plan ("Gratuity Plan") covering all employees. The Gratuity Plan provides a lump sum payment to vested employees, at retirement or termination of employment, an amount based on the respective employee's last drawn salary and the years of employment with the Company. Liability with regard to Gratuity Plan is accrued, based on actuarial valuation atthe Balance Sheet date, carried out by an independent actuary. Actuarial gain or loss is recognised immediately in the Statement of Profit and Loss as income or expense. The Company makes contributions to The Ruby Mills Ltd. Staff Gratuity Trust and The Ruby Mills Workmen's Gratuity Trust.

b. Compensated Absences - The Company provides for the encashment of absence orabsence with pay based on policy of the Company in this regard. The employees are entitled to accumulate such absence subject to certain limits, for the future encashment or absence. The Company records an obligation for compensated absences in the period in which the employee renders the services that increases this entitlement. The Company measures the expected cost of compensated absences as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated atthe Balance Sheet date on the basis of an independent actuarial valuation.

1.10 Government Grants:

Grants, in the nature of interest subsidy and foreign exchange subsidy underthe Technology Upgradation Fund Scheme (TUFS), are accounted for when it is reasonably certain that ultimate collection will be made. Government grants specifically related to fixed assets undercapital subsidy scheme ofTUFS are reduced from the value of the fixed assets and shown as receivable under Other CurrentAssetsinthe Balance Sheet.

1.11 Borrowing Costs :

i. Borrowing costs are interest and other costs incurred in connection with the borrowing of funds.

ii. Borrowing costs, less any income on the temporary investment of those borrowings, that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as a part of the cost of that asset.

iii. Other borrowing costs are recognised as an expense in the period in which they are incurred.

1.12 Leases:

Assets taken on lease, under which all the risks and rewards of ownership are effectively retained by the lessor, are classified as operating lease. Operating lease payments are recognised as expense in the Statement of Profit and Loss on a straight-line basis overthe lease term.

1.13 Taxation:

i. Current Tax : Provision for current tax is made on the estimated taxable income at the rate applicable to the relevant assessment year.

ii. Minimum AlternateTax (MAT) credit is recognised as an asset only when and to the extent there is a convincing evidence that the Company will pay normal tax within the period specified underthe Income-tax Act, 1961 to avail such MAT credit.

iii. Deferred Tax : Deferred tax is recognised, subject to consideration of prudence, on timing differences between taxable and accounting income which originates in one period and are capable of reversal in one or more subsequent periods (adjusted for reversals expected during tax holiday period). The tax effect is calculated on accumulated timing differences at the year end based on tax rates and laws enacted or substantially enacted as of the balance sheet date.

In the event of unabsorbed depreciation and carryforward of losses, deferred tax assets are recognised only to the extent that there is virtual certainty that sufficient future taxable income will be available to realise such deferred tax assets. In other situations, deferred tax assets are recognised only to the extent that there is a reasonable certainty that sufficient future taxable income will be available to realise such deferred tax assets.

The Company offsets deferred tax assets and deferred tax liabilities if it has a legally enforceable right and these relate to taxes on income levied by the same governing taxation laws.

1.14 Impairmentof Assets:

If internal / external indications suggest that an asset of the Company may be impaired, the recoverable amount of asset / cash generating unit is determined on the Balance Sheet date and if it is less than its carrying amount, the carrying amount of the asset/ cash generating unit is reduced to the said recoverable amount. Subsequently, if there is a change in the indication, since the last impairment was recognised, so that recoverable amount of an asset exceeds its carrying amount, an impairment recognised for an asset in prior accounting period is reversed. The recoverable amount is measured as the higher of the net selling price and value in use of such assets / cash generating unit, which is determined by the present value of the estimated future cash flows.

1.15 Provisions,Contingent Liabilities and Contingent Assets :

i. The Company recognises a Provision when there is a present obligation as a result of a past event, the settlement of which is probable to result in an outflow of resources and a reliable estimate can be made of the amount of obligation.

ii. Contingent Liability is disclosed byway of a note to the financial statements after careful evaluation by the management of the facts and legal aspects of the matters involved.

iii. Contingent Assets are neither recognised nordisclosed.

1.16 SegmentAccounting:

Segment accounting policies are in line with the accounting policies of the Company. In addition, the following specific accounting policies have been followed for segment reporting :

i. Segment revenue includes sales/lease rent and other income directly identifiable with/allocable to the segment.

ii. Expenses that are directly identifiable with / allocable to segments are considered for determining the segment result. Expenses which relate to the Company as a whole and not allocable to segments are included under"Unallocable Corporate Expenditure".

iii. Income which relates to the Company as a whole and not allocable to segments is included in "Unallocable Corporate Income."

iv. Segment assets and liabilities include those directly identifiable with the respective segments. Unallocable corporate assets and liabilities are those that relate to the Company as a whole and not allocable to any segment.

i. The Company has only one class of shares referred to as equity shares having par value ofRs. 5. Each holder of equity shares is entitled to one vote pershare.

ii. The Company declares and pays dividend in Indian Rupees.The dividend proposed by the Board of Directors is subject to the approval of the Shareholders in the ensuing Annual General Meeting.The Board of Directors, in their meeting on May 15, 2015, proposed a final dividend of Rs. 2.5 per equity share of Rs. 5 each. The proposal is subject to the approval of shareholders at the coming Annual General Meeting.The total dividend appropriation forthe year ended March 31,2015 amounted toRs. 2,51,54,822 including corporate dividend tax of Rs. 42,54,822.

During the year ended March 31,2014, the amount of per share dividend recognised as distribution to equity shareholders is Rs. 2. The Dividend appropriation forthe year ended March 31,2014 amounted toRs. 1,95,61,600 including corporate dividend tax of Rs. 28,41,600.

iii. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.


Mar 31, 2013

1.1 Basis of Accounting :

The accounts are prepared on the basis of going concern under historical cost convention as also on accrual basis and in accordance with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956, which have been prescribed by the Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act, 1956.

1.2 Use of Estimates :

The preparation of the financial statements in conformity with the generally accepted accounting principles requires Management to make estimates and assumptions to be made that affect the reported amounts of revenues and expenses during the reporting period, the reported amounts of assets and liabilities and the disclosures relating to the contingent liabilities on the date of the financial statements. Examples of such estimates include useful lives of Fixed Assets, provision for doubtful debts/advances, deferred tax etc. Actual results could differ from those estimates. Such difference is recognised in the period/s in which the results are known/ materialised.

1.3 Revenue Recognition :

I. Domestic Sales is recognised on transfer of significant risks and rewards of ownership which is on the despatch of goods. Export Sales are accounted for on the basis of the dates of ''On Board Bill of Lading''.

ii. Income from processing charges is accounted on the despatch of processed goods to customers.

iii. Export Benefits are accounted in the year of export.

iv. License fees are recognised over the period of Leave and License Agreements.

v. Revenue from the Sale of Development rights is recognised in terms of agreement entered into by the Company with the developer.

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

vii. Dividend income is recognised when the right to receive dividend is established.

1.4 Fixed Assets :

i. Fixed Assets are valued at cost less depreciation.

ii. The Cost of Fixed Asset comprises its purchase price net of capital subsidy receivable, including non-refundable taxes, duties and directly attributable cost of bringing the asset to its working condition for its intended use.

iii. Borrowing costs, for the assets that necessarily take a substantial period of time to get ready for its intended use are capitalised to the cost of assets.

iv. Expenditure on incomplete Fixed Assets are shown as capital work-in-progress until such time the same are completed. Capital work-in-progress is stated at cost.

1.5 Depreciation :

i. Depreciation is calculated at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956 as under :

a. Plant and Machinery capitalised on or after April 1, 1988, on the "Straight Line Method".

b. All other assets, on the "Written Down Value Method".

ii. Depreciation in respect of each item of depreciable asset so provided is equal to or not less than the depreciation which is required to be provided at the rates specified in Schedule XIV of the Companies Act, 1956.

iii. In respect of Fixed Assets whose actual cost does not exceed Rs. 5,000, deprecation is provided at 100% in the year of addition.

1.6 Investments :

i. Investments, which are long-term, are stated at cost. A provision for diminution, if any, is made to recognise a decline, other than temporary, in the value of investments.

ii. Profit or loss on sale of long-term investments, if any, is calculated by considering the weighted average amount of the total holding of the investment.

1.7 Inventory Valuation :

i. Raw Materials, Materials in Process, Finished Goods, Fuel, Stores and Spares are valued at the lower of Cost and Net Realisable Value.

ii. Cost comprises all cost of purchases, cost of conversion and cost incurred in bringing the inventory to their present location and condition. Cost is arrived at as follows :

a. Raw Materials - on Specific Identification Cost basis.

b. Stores, Spares and Fuel - on Weighted Average basis.

c. Materials in Process and Finished Goods - on Specific Identification Cost basis.

iii. Due allowances are made for obsolete inventory based on technical estimates made by the Company. iv. Waste is valued at the net realisable value.

1.8 Transactions in Foreign Currency :

i. Transactions in foreign currency (Monetary or Non-Monetary items) are recorded at the exchange rate prevailing on the date of the transaction.

ii. Monetary items (i.e. receivables, payables, loans etc.) which are denominated in foreign currency are translated and reported using the exchange rates prevailing on the date of the Balance Sheet.

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

iv. Exchange differences arising on the settlement of monetary items or on reporting at rates different from those at which they were initially recorded during the year, or reported in previous financial staements, are recognised as income or expenses in the year in which they arise.

1.9 Employee Benefits :

i. Defined Contribution Plan

Contribution as per the Employees'' Provident Funds and Miscellaneous Provisions Act, 1952 towards Provident Fund and Family Pension Fund are provided for and payments in respect thereof are made to the relevant authorities on actual basis.

ii. Defined Benefit Plan

a. Gratuity - In accordance with applicable Indian laws, the Company provides for gratuity, a defined benefit retirement plan ("Gratuity Plan") covering all employees. The Gratuity Plan provides a lump sum payment to vested employees, at retirement or termination of employment, an amount based on the respective employee''s last drawn salary and the years of employment with the Company. Liability with regard to Gratuity Plan is accrued, based on actuarial valuation at the Balance Sheet date, carried out by an independent actuary. Actuarial gain or loss is recognised immediately in the Statement of Profit and Loss as income or expense. The Company makes contributions to The Ruby Mills Ltd. Staff Gratuity Trust and The Ruby Mills Workmen''s Gratuity Trust.

b. Compensated Absences - The Company provides for the encashment of absence or absence with pay based on policy of the Company in this regard. The employees are entitled to accumulate such absence subject to certain limits, for the future encashment or absence. The Company records an obligation for compensated absences in the period in which the employee renders the services that increases this entitlement. The Company measures the expected cost of compensated absences as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the Balance Sheet date on the basis of an independent actuarial valuation.

1.10 Government Grants :

Grants, in the nature of interest subsidy and foreign exchange subsidy under the Technology Upgradation Fund Scheme (TUFS), are accounted for when it is reasonably certain that ultimate collection will be made. Government grants specifically related to fixed assets under capital subsidy scheme of TUFS are reduced from the value of the fixed assets and shown as receivable under Other Current Assets in the Balance Sheet.

1.11 Borrowing Costs :

I. Borrowing costs are interest and other costs incurred in connection with the borrowing of funds.

ii. Borrowing costs, less any income on the temporary investment of those borrowings, that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as a part of the cost of that asset.

iii. Other borrowing costs are recognised as an expense in the period in which they are incurred.

1.12 Leases :

Assets taken on lease, under which all the risks and rewards of ownership are effectively retained by the lessor, are classified as operating lease. Operating lease payments are recognised as expense in the Statement of Profit and Loss on a straight-line basis over the lease term.

1.13 Taxation :

i. Current Tax : Provision for current tax is made on the estimated taxable income at the rate applicable to the relevant assessment year.

ii. Deferred Tax : In accordance with the Accounting Standard 22 - "Accounting for Taxes on Income", the deferred tax for the timing differences is measured using the tax rates and tax laws that have been enacted or substantially enacted at the Balance Sheet date. Deferred tax assets arising from the timing differences are recognised only on the consideration of prudence.

1.14 Impairment of Assets :

If internal / external indications suggest that an asset of the Company may be impaired, the recoverable amount of asset / cash generating unit is determined on the Balance Sheet date and if it is less than its carrying amount, the carrying amount of the asset / cash generating unit is reduced to the said recoverable amount. Subsequently, if there is a change in the indication, since the last impairment was recognised, so that recoverable amount of an asset exceeds its carrying amount, an impairment recognised for an asset in prior accounting period is reversed. The recoverable amount is measured as the higher of the net selling price and value in use of such assets / cash generating unit, which is determined by the present value of the estimated future cash flows.

1.15 Provisions, Contingent Liabilities and Contingent Assets :

i. The Company recognises as Provisions, the liabilities being present obligations arising from past events, the settlement of which is expected to result in an outflow of resources and which can be measured only by using a substantial degree of estimation.

ii. Contingent Liability is disclosed by way of a note to the financial statements after careful evaluation by the management of the facts and legal aspects of the matters involved.

iii. Contingent Assets are neither recognised nor disclosed.

1.16 Segment Accounting :

Segment accounting policies are in line with the accounting policies of the Company. In addition, the following specific accounting policies have been followed for segment reporting :

i. Segment revenue includes sales / lease rent and other income directly identifiable with / allocable to the segment.

ii. Expenses that are directly identifiable with / allocable to segments are considered for determining the segment result. Expenses which relate to the Company as a whole and not allocable to segments are included under "Unallocable Corporate Expenditure".

iii. Income which relates to the Company as a whole and not allocable to segments is included in "Unallocable Corporate Income."

iv. Segment assets and liabilities include those directly identifiable with the respective segments. Unallocable corporate assets and liabilities are those that relate to the Company as a whole and not allocable to any segment.


Mar 31, 2012

1.1 Basis of Accounting:

i. The Accounts have been prepared on a going concern basis under historical cost convention. The accounts have been prepared on accrual basis, in accordance with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956, which have been prescribed by the Companies (Accounting Standards) Rules, 2006 and the provisions of the Companies Act, 1956.

ii. The financial statements for the year ended March 31, 2011 were prepared as per the then applicable, Pre-revised Schedule VI to the Companies Act, 1956. Consequent to the notification of the Revised Schedule VI under the Companies Act, 1956, the financial statements for the year ended March 31, 2012 are prepared as per the Revised Schedule VI. Accordingly, the previous year's figures have also been reclassified/regrouped to conform to this year's classification. The adoption of the Revised Schedule VI does not impact recognition and measurement principles followed for preparation of financial statements.

1.2 Use of Estimates:

The preparation of the financial statements in conformity with the generally accepted accounting principles requires Management to make estimates and assumptions to be made that affect the reported amounts of revenues and expenses during the reporting period, the reported amounts of assets and liabilities and the disclosures relating to the contingent liabilities on the date of the financial statements. Examples of such estimates include useful lives of Fixed Assets, provision for doubtful debts/advances, deferred tax etc. Actual results could differ from those estimates.

1.3 Revenue Recognition:

i. Domestic Sales is recognised on transfer of significant risks and rewards of ownership which is on the despatch of goods. Export Sales are accounted for on the basis of the dates of 'On Board Bill of Lading'.

ii. Income from processing charges is accounted on the despatch of processed goods to customers.

iii. Export Benefits are accounted in the year of export.

iv. License fees are recognised over the period of Leave and License Agreements

v. Revenue from the Sale of Development rights is recognised in terms of agreement entered into by the Company with the developer.

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

vii. Dividend income is recognised when the right to receive dividend is established.

1.4 Fixed Assets:

i. Fixed Assets are valued at cost less depreciation.

ii. The Cost of Fixed Asset comprises its purchase price net of capital subsidy receivable, including non-refundable taxes, duties and directly attributable cost of bringing the asset to its working condition for its intended use.

iii. Borrowing costs, for the assets that necessarily take a substantial period of time to get ready for its intended use are capitalised to the cost of assets.

iv. Expenditure on incomplete Fixed Assets are shown as capital work-in-progress until such time the same are completed. Capital work-in-progress is stated at cost.

1.5 Depreciation:

i. Depreciation is calculated at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956 as under:

a. Plant and Machinery capitalised on or after April 1, 1988, on the "Straight Line Method".

b. All other assets, on the "Written Down Value Method".

ii. Depreciation in respect of each item of depreciable asset so provided is equal to or not less than the depreciation which is required to be provided at the rates specified in Schedule XIV of the Companies Act, 1956.

iii. In respect of Fixed Assets whose actual cost does not exceed Rs. 5,000, deprecation is provided at 100% in the year of addition.

1.6 Investments:

Investments, which are long term, are stated at cost. A provision for diminution, If any, is made to recognise a decline, other than temporary, in the value of investments.

1.7 Inventory Valuation:

i. Raw Materials, Materials in Process, Finished Goods, Stores, Spares and Liquid Fuel are valued at the lower of Cost and Net Realisable Value.

ii. Cost comprises all cost of purchases, cost of conversion and cost incurred in bringing the inventory to their present location and condition.

iii. Due allowances are made for obsolete inventory based on technical estimates made by the Company.

iv. Waste is valued at the net realisable value.

1.8 Transactions in Foreign Currency:

i. Transactions in foreign currency (Monetary or Non-Monetary items) are recorded at the exchange rate prevailing on the date of the transaction.

ii. Monetary items (i.e. receivables, payables, loans etc.) which are denominated in foreign currency are translated and reported using the exchange rates prevailing on the date of the Balance Sheet.

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

iv. Exchange differences arising on the settlement of monetary items or on reporting at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognised as income or expenses in the year in which they arise.

1.9 Employee Benefits:

i. Defined Contribution Plan

Contribution as per the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 towards Provident Fund and Family Pension Fund are provided for and payments in respect thereof are made to the relevant authorities on actual basis.

ii. Defined Benefit Plan

a. Gratuity - In accordance with applicable Indian laws, the Company provides for gratuity, a defined benefit retirement plan ("Gratuity Plan") covering all employees. The Gratuity Plan provides a lump sum payment to vested employees, at retirement or termination of employment, an amount based on the respective employee's last drawn salary and the years of employment with the Company. Liability with regard to Gratuity Plan is the years accrued based on actuarial valuation at the Balance Sheet date, carried out by an independent actuary. Actuarial gain or loss is recognised immediately in the statement of the profit and loss as income or expense. The Company makes contributions to The Ruby Mills Ltd. Staff & Gratuity Trust and The Ruby Mills Workmen's Gratuity Trust.

b. Compensated Absences - The Company provides for the encashment of absence or absence with pay based on policy of the Company in this regard. The employees are entitled to accumulate such absence subject to certain limits, for the future encashment or absence. The Company records an obligation for compensated absences in the period in which the employee renders the services that increases this entitlement. The Company measures the expected cost of compensated absences as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the Balance Sheet date on the basis of an independent actuarial valuation.

1.10 Government Grants:

Grants, in the nature of interest subsidy and foreign exchange subsidy under the Technology Upgradation Fund Scheme (TUFS), are accounted for when it is reasonably certain that ultimate collection will be made. Government grants specifically related to fixed assets under capital subsidy scheme of TUFS are reduced from the value of the fixed assets and shown as receivable under Other Current Assets in the Balance Sheet.

1.11 Borrowing Costs:

i. Borrowing costs, less any income on the temporary investment out of those borrowings, that are directly attributable to acquisition, construction or production of a qualifying asset are capitalised as a part of the cost of that asset.

ii. Other borrowing costs are recognised as expense in the period in which they are incurred.

1.12 Leases:

Assets taken on lease, under which all the risks and rewards of ownership are effectively retained by the lessor, are classified as operating lease. Operating lease payments are recognised as expense in the Statement of Profit and Loss on a straight-line basis over the lease term.

1.13 Taxation:

i. Current Tax : Provision for current tax is made on the estimated taxable income at the rate applicable to the relevant assessment year.

ii. Deferred Tax: In accordance with the Accounting Standard 22 - "Accounting for Taxes on Income", the deferred tax for the timing differences is measured using the tax rates and tax laws that have been enacted or substantially enacted at the Balance Sheet date. Deferred tax assets arising from the timing differences are recognised only on the consideration of prudence.

1.14 Impairment of Assets:

If internal/external indications suggest that an asset of the Company may be impaired, the recoverable amount of asset/cash generating unit is determined on the Balance Sheet date and if it is less than its carrying amount, the carrying amount of the asset/cash generating unit is reduced to the said recoverable amount. Subsequently, if there is a change in the indication, since the last impairment was recognised, so that recoverable amount of an asset exceeds its carrying amount, an impairment recognised for an asset in prior accounting period is reversed. The recoverable amount is measured as the higher of the net selling price and value in use of such assets/cash generating unit, which is determined by the present value of the estimated future cash flows.

1.15 Provisions, Contingent Liabilities and Contingent Assets:

i. The Company recognizes as Provisions, the liabilities being present obligations arising from past events, the settlement of which is expected to result in an outflow of resources and which can be measured only by using a substantial degree of estimation.

ii. Contingent Liability is disclosed by way of a note to the financial statements after careful evaluation by the management of the facts and legal aspects of the matters involved.

iii. Contingent Assets are neither recognised nor disclosed.

1.16 Segment Accounting:

Segment accounting policies are in line with the accounting policies of the Company. In addition, the following specific accounting policies have been followed for segment reporting:

i. Segment revenue includes sales/lease rent and other income directly identifiable with/allocable to the segment.

ii. Expenses that are directly identifiable with/allocable to segments are considered for determining the segment result. Expenses which relate to the Company as a whole and not allocable to segments are included under "Unallocable Corporate Expenditure".

iii. Income which relates to the Company as a whole and not allocable to segments is included in "Unallocable Corporate Income."

iv. Segment assets and liabilities include those directly identifiable with the respective segments. Unallocable corporate assets and liabilities are those that relate to the Company as a whole and not allocable to any segment.


Mar 31, 2011

1. Overall Valuation Policy:

The Accounts have been prepared on a going concern basis under historical cost convention.

2. Basis of Accounting:

The accounts have been prepared on accrual basis, in accordance with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956, which have been prescribed by the Companies (Accounting Standards) Rules, 2006 and the provisions of the Companies Act, 1956. Accounting policies have been consistently applied except where a newly issued Accounting Standard is initially adopted or a revision to an existing Accounting Standard or a more appropriate presentation of the financial statements requires a change in the accounting policy hitherto in use.

The preparation of the financial statements in conformity with the generally accepted accounting principles requires Management to make estimates and assumptions to be made that affect the reported amounts of revenues and expenses during the reporting period, the reported amounts of assets and liabilities and the disclosures relating to the contingent liabilities on the date of the financial statements. Examples of such estimates include useful lives of Fixed Assets, provision for doubtful debts/advances, deferred tax etc. Actual results could differ from those estimates.

3. Revenue Recognition:

a) Domestic Sales is recognised on transfer of significant risks and rewards of ownership which is on the despatch of goods. Export Sales are accounted for on the basis of the dates of 'On Board Bill of Lading'.

b) License fees are recognised over the period of Leave & License Agreements.

c) Income from processing charges is accounted on the despatch of processed goods to customers.

d) Export Benefits are accounted in the year of export.

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

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

4. Fixed Assets:

a) Fixed Assets are valued at cost less depreciation.

b) The Cost of Fixed Asset comprises its purchase price net of capital subsidy receivable, including non-refundable taxes duties and directly attributable cost of bringing the asset to its working condition for its intended use.

c) Borrowing costs, for the assets that necessarily take a substantial period of time to get ready for its intended use are capitalised to the cost of assets.

d) Expenditure and outlays of money on incomplete Fixed Assets are shown as capital work-in-progress until such time the same are completed. Capital work-in-progress is stated at cost.

5. Depreciation:

a) Depreciation is calculated at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956 as under:-

i. Plant and Machinery capitalised on or after April 1, 1988 on Straight Line basis.

ii. All other assets, on Written Down Value basis.

b) Depreciation, in respect of each item of depreciable asset so provided is equal to or not less than the depreciation which is required to be provided at the rates specified in Schedule XIV of the Companies Act, 1956.

c) In respect of Fixed Assets whose actual cost does not exceed Rs. 5,000/-, deprecation is provided at 100% in the year of addition.

6. Investments:

Investments, which are long term, are stated at cost. A provision for diminution, if any, is made to recognise a decline, other than temporary, in the value of investments.

7. Inventory Valuation:

a) Raw Materials, Materials in Process, Finished Goods, Goods for Trade, Stores, Spares and Liquid Fuel are valued at the lower of Cost and Net Realisable Value.

b) Cost comprises all cost of purchases, cost of conversion and cost incurred in bringing the inventory to their present location and condition.

c) Due allowances are made for obsolete inventory based on technical estimates made by the Company.

d) Waste is valued at the net realisable value.

8. Transactions in Foreign Currency:

a) Transactions in Foreign Currencies are recorded, on initial recognition in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

b) Monetary items which are denominated in foreign currency are translated at the exchange rates prevailing at the Balance Sheet date and profit/loss on translation thereon is credited / charged to the Profit and Loss account.

c) Pursuant to the adoption of Companies (Accounting Standard) Rules, 2006 with effect from April 1, 2007, exchange differences arising on settlement or restatement of foreign currency denominated liabilities relating to the acquisition of fixed asset are recognised in the Profit and Loss account.

9. Employee Benefits:

a) Defined Contribution Plan

Contribution as per the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 towards Provident Fund and Family Pension Fund are provided for and payments in respect thereof are made to the relevant authorities on actual basis.

b) Defined Benefit Plan

Gratuity - In accordance with applicable Indian laws, the Company provides for gratuity, a defined benefit retirement plan ("Gratuity Plan") covering all employees. The Gratuity Plan provides a lump sum payment to vested employees, at retirement or termination of employment, an amount based on the respective employee's last drawn salary and the years of employment with the Company. Liability with regard to Gratuity Plan is the years accrued based on actuarial valuation at the Balance Sheet date, carried out by an independent actuary. Actuarial gain or loss is recognised immediately in the statement of the profit and loss as income or expense. The Company makes contributions to The Ruby Mills Ltd. Staff & Gratuity Trust and The Ruby Mills Workmen's Gratuity Trust.

Compensated Absences - The Company provides for the encashment of absence or absence with pay based on policy of the Company in this regard. The employees are entitled to accumulate such absence subject to certain limits, for the future encashment or absence. The Company records an obligation for compensated absences in the period in which the employee renders the services that increases this entitlement. The Company measures the expected cost of compensated absences as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the Balance Sheet date on the basis of an independent actuarial valuation.

10. Government Grants:

Grants, in the nature of interest subsidy under the Technology Upgradation Fund Scheme (TUFS), are accounted for when it is reasonably certain that ultimate collection will be made. Government grants specifically related to fixed assets under Capital subsidy scheme of TUFS are reduced from the value of the fixed assets and shown as receivable under Other Current Assets in the Balance Sheet.

11. Borrowing Costs:

a) Borrowing costs, less any income on the temporary investment out of those borrowings, that are directly attributable to acquisition, construction or production of a qualifying asset are capitalised as a part of the cost of that asset.

b) Other borrowing costs are recognised as expense in the period in which they are incurred.

12. Leases:

Assets taken on lease, under which all the risks and rewards of ownership are effectively retained by the lessor, are classified as operating lease. Operating lease payments are recognised as expense in the Profit and Loss Account on a straight-line basis over the lease term.

13. Taxation:

a) Current Tax: Provision for current tax is made on the estimated taxable income at the rate applicable to the relevant assessment year.

b) Deferred Tax: In accordance with the Accounting Standard 22 - "Accounting for Taxes on Income", issued by the Institute of Chartered Accountants of India, the deferred tax for the timing differences is measured using the tax rates and tax laws that have been enacted or substantially enacted at the Balance Sheet date.

Deferred tax assets arising from the timing differences are recognised only on the consideration of prudence.

14. Impairment of Assets:

If internal / external indications suggest that an asset of the company may be impaired, the recoverable amount of asset / cash generating unit is determined on the Balance Sheet date and if it is less than its carrying amount, the carrying amount of the asset / cash generating unit is reduced to the said recoverable amount. Subsequently, if there is a change in the indication, since the last impairment was recognised, so that recoverable amount of an asset exceeds its carrying amount, an impairment recognised for an asset in prior accounting period is reversed. The recoverable amount is measured as the higher of the net selling price and value in use of such assets / cash generating unit, which is determined by the present value of the estimated future cash flows.

15. Provisions, Contingent Liabilities and Contingent Assets:

a) The Company recognizes as Provisions, the liabilities being present obligations arising from past events, the settlement of which is expected to result in an outflow of resources and which can be measured only by using a substantial degree of estimation.

b) Contingent Liability is disclosed by way of a note to the financial statements after careful evaluation by the management of the facts and legal aspects of the matters involved.

c) Contingent Assets are neither recognized nor disclosed.

16. Segment Accounting:

Segment accounting policies are in line with the accounting policies of the Company. In addition, the following specific accounting policies have been followed for segment reporting:

a) Segment revenue includes sales/lease rent and other income directly identifiable with/allocable to the segment.

b) Expenses that are directly identifiable with/allocable to segments are considered for determining the segment result. Expenses which relate to the Company as a whole and not allocable to segments are included under "Unallocable Corporate Expenditure".

c) Income which relates to the Company as a whole and not allocable to segments is included in "Unallocable Corporate Income."

d) Segment assets and liabilities include those directly identifiable with the respective segments. Unallocable corporate assets and liabilities are those that relate to the Company as a whole and not allocable to any segment.













 
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