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Accounting Policies of State Trading Corporation Of India Ltd. Company

Mar 31, 2016

2.4 Bonus reserve represents "Set On" available under the Payment of Bonus Act, 1965.

2.5 Deductions from Bonus Reserve represents amount transferred to Statement of Profit & Loss being "Set Off" as per the Payment of Bonus Act, 1965.

10.1 Interest accrued and due on borrowings includes Rs. 43.80 crore (Rs. 44.70 crore) against which bank guarantee of Rs. 56.00 crore (Rs. 44.70 crore) have been issued to Bank.

10.2Deposit includes Rs. 4.19 Crore (Rs. 4.24 Crore) from wholly owned subsidiary company.

10.3The liability for CSR outstanding as on 31.03.2016 for the earlier years budgeted amount is Rs. 0.22 crore (Rs. 0.41 crore), out of which unspent fund of Rs. 0.05 crore is outstanding for more than 3 years.

10.4Gross amount required to be spent by the company during the year Rs. NIL (0.40 crore)

10.5Other liabilities include an amount of Rs. 0.03 crore (negligible) appearing as unclaimed dividend for the year 2008 09 (Interim) which could not be transferred to Investor Education & Protection Fund (IEPF) as on 31.03.2016. The said amount has been deposited in April 2016.

1 2.1 The process of issuance of sub divided lease deeds in respect of STC''s Office Complex at New Delhi, residential land and flats at Mehrauli Road, Delhi separately in the name of company and its co owners is pending. Original cost of land is Rs. 1.04 crore (Rs. 1.04 crore) and of Building for housing colony and office complex is Rs. 1 8.66 crore (Rs. 18.66 crore). Gross Block after revaluation of such land is Rs. 548.33 crore (Rs. 548.33 crore) and of such Building is Rs. 1 85.91 crore (Rs. 1 85.65 crore).

Execution of lease deed in respect of flats at AGVC complex is pending. The original cost of such flats is Rs. 1.25 crore (Rs. 1.25 crore) and the Gross Block after revaluation is Rs. 28.42 crore (Rs. 28.42 crore).

1 2.2 Formal lease deed in respect of Lease hold plot where company has tank farm installation at Mumbai Port Trust is yet to be executed though lease has been extended

by way of allotment letter. Registration of deed of conveyance in respect of 7 flats at Mumbai is pending. Total original cost of such flats is Rs. 0.41 crore (Rs. 0.41 crore) and revalued amount is Rs. 33.1 9 crore (Rs. 33.1 9 crore).

12.3 The company has revalued its immovable properties during 2014-15 consequently an amount of Rs. 914.25 crore was credited to revaluation reserve. As a result of revaluation additional depreciation amounting Rs. 1 2.89 crore (Rs. 16.74 crore) is transferred from revaluation reserve to general reserve during the year.

1 2.4 Cost of flats include cost of land also where flats are purchased or constructed on land. Depreciation has been charged on total value of flats in absence of breakup of value between land and building.

12.5 Gross fixed assets and accumulated depreciation includes Rs. 1.06 crore and Rs. 0.42 crore respectively in respect of electric installation & vehicle of Chennai branch destroyed due to flood during the year against which an adhoc claim of Rs. 0.26 crore has been received from insurance company and the same is kept as sundry deposit till the final settlement of claim.

16.1 Other investment includes Rs. 2.82 crore (Rs. 2.82 crore) in its 100% subsidiary company namely STCL. The subsidiary company was having negative net worth as on 31st March 2016 (Audited). Full provision for diminution in the value of investment has been made in the earlier years.

17.1 In accordance with the Accounting Standard 22 on "Accounting for Taxes on Income" , the company has Deferred Tax Assets (Net) of Rs. 73.01 crore (Rs. 73.01 crore). As a matter of prudence & conservative principle of accounting, Deferred Tax Asset (Net) relating to losses and other temporary differences amounting to Rs. 183.41 crore (Rs. 188.75 crore) has not been recognized.

18.1 Trade advances include a sum of Rs. 87.39 crore (Rs. 87.39 crore) recoverable from one of the parties, against which the company has initiated legal actions including criminal proceedings. In this regard, full provision has been made in earlier years. The Company was successful in getting arbitration award for Rs. 110.00 crore in its favour along with 12% interest per annum from 1st May 2006 till realization of award. In order to secure above award amount, the company sought the detail of assets from party through court which have been submitted by the party. The company is in process of verifying the status and valuation of the properties. Next date of hearing is 19.07.2016.

19.1 Long term unsecured trade receivables include Rs. 568.44 crore (Rs. 568.44 crore) on account of export of pharma products to foreign buyers through Indian business associates against which credit balance of Rs. 568.44 crore (Rs. 568.44 crore) is available under trade payables. As corresponding credit of Rs. 568.44 crore (Rs. 568.44 crore) is available under back to back arrangement, no provision is considered necessary. The local business associates drew bills of exchange which were accepted by the company on back to back basis. The foreign buyer defaulted in making payment against the export bills and one of the business associates having outstanding of Rs. 536.86 crore (Rs. 536.86 crore) has gone into liquidation and litigation proceedings have been initiated by the company as well as by Indian business associates and their bankers. A claim of Rs. 527.86 crore (Rs. 527.86 crore) has been admitted by the liquidator. Regarding other business associates, decree have been awarded for Rs. 63.00 crore by Hon''ble Mumbai High Court in favour of the company. Indian business associates also discounted the bills of exchange conditionally accepted by the company from their bankers by utilizing their own credit limits. Banks & Financial Institutions have filed legal suit against business associate before Hon''ble High Court Mumbai and DRT making company also a party to the case claiming Rs. 476.47

NOTE NO. 19

OTHER NON CURRENT ASSETS (Contd.)

Crore. However the company contended that under the Agreement amount to Indian business associates is payable only after receipt from foreign buyer. "

19.2 Long term unsecured trade receivables include Rs. 787.65 crore (Rs. 788.47 crore) under the Credit Linked Insurance Scheme (CLIS) for export of gold jewellery etc. to foreign buyers through Indian business associates against which corresponding credit balances of Rs. 342.18 crore (Rs. 342.18 crore) are available under back to back arrangement, leaving net receivable of Rs. 445.47 crore (Rs. 446.29 crore). The foreign buyer defaulted in making payment and accordingly action against the business associates has been initiated u/s 138 of Negotiable Instruments Act, 1881 and civil hearings are in progress. The matter is being pursued legally. However, as a matter of prudence and measure of abundant caution, full provision of Rs. 445.47 crore (Rs. 446.29 crore) has been made in the earlier years to the extent of net trade receivables.

19.3 Long term unsecured trade receivables include Rs. 41.92 crore (Rs. 41.92 crore) on account of export of agro commodities to foreign buyers through Indian business associates against which credit balance amounting Rs. 41.92 crore (Rs. 41.92 crore) is available under trade payable. The foreign buyer defaulted in making payment and upon non-receipt of the dues from the business associate; the company has initiated necessary legal steps for its recovery. As corresponding credit of Rs. 41.92 crore (Rs. 41.92 crore) is available under back to back arrangement, no provision is considered necessary.

19.4 Long term trade receivables include Rs. 12.05 crore (Rs. 11.85 crore) recoverable from one of the business associate for goods sold in the earlier years. The entire overdue is secured by duly insured pledged stocks in favour of the company valuing Rs. 10.19 crore under CWC custody. Further, cases u/s 138 of Negotiable Instrument Act, 1881 for Rs. 8.62 crore have been filed against the associate. Provision for Rs. 1.86 crore has been created during the current financial year.

19.5 Long term trade receivable includes Rs. 3.22 crore (Rs. 3.21 crore) recoverable from one of the associates towards import of pet bottle material, which are pledged with the company. Steps have been taken to recover the dues. A provision of Rs. 1.75 crore (Rs. 1.28 crore) has been made to the extent dues not covered by pledged stock.

19.6 Long term trade receivables include Rs. 58.55 Crore (Rs. 58.55 crore) recoverable from one of the business associates for goods sold in earlier years. The entire balance overdue is secured by pledge of stocks in favour of the company. The company has invoked risk sale clause of the agreement and twice floated tenders for sale of pledged stocks -both faced interim injunction for stay, out of which the first one got vacated. The company has also filed winding up petition and criminal complaints i.e. cases u/s 138 of Negotiable Instruments Act, 1881 and contempt application for misleading the court against the business associate. The company has also filed transfer application before the Hon''ble Supreme Court of India for transfer of all the pending cases since there is an admitted liability by business associate as per the arbitration clause of the MOA dated 17.07.2006, which describes the jurisdiction as Delhi.

19.7 Claims recoverable (Govt. of India) include Rs. 100.70 crore (Rs. 114.95 crore) towards import of pulses under Govt. A/c during the year 2006-07 to 2010-11 which was fully provided during the year 2013-14. As approved by Ministry of Consumer Affairs, reimbursement limit has been enhanced from 15% to 20% of the landed cost, resulting in admissible claims to the tune of Rs. 60.47 crore against which Rs. 14.25 crore has already been received during F.Y. 2015-16. Balance of Rs. 46.22 crore is expected to be received during F.Y. 2016-17. In addition, claim of Rs. 18.80 crore on account of interest deducted by Ministry is also being taken up vigorously. Further, the reimbursement of remaining claims beyond 20% is being taken up with the Ministry of Consumer Affairs by the company.

19.8 Long Term unsecured trade receivables include Rs. 10.21 crore (Rs. 10.21 crore) recoverable from MARKFED, Govt. of Maharashtra (GOM) towards supply of RBD Palmolien under PDS Scheme during the year 2010-11 and 2011

12. All amounts relating to this supply were received by company except the outstanding balance of Rs. 10.21 crore (Rs. 10.21 crore) pending for final reconciliation at their end. Matter is being constantly taken up with GOM and MARKFED for recovery. The company is confident of recovering the dues in due course of time and hence no provision is considered necessary.

19.9 Claim recoverable includes Rs. 2.13 crore due from CCIC and HHEC which are Govt. of India undertakings on account of common maintenance charges. The company has received Rs. 1.18 Crore from CCIC and Rs. 0.55 crore from HHEC during the year 2015-16. Further, the matter has been taken up at higher level and the company is hopeful of receiving its entire dues from above organization. Hence, no provision in respect of above is considered necessary.

22.1 Trade receivables include Rs. 122.77 crore (Rs. 122.46 crore) recoverable from one of the business associate for goods sold in the earlier years which are overdue. The entire amount is secured by duly insured pledged stocks to the company procured under advance license (with export obligation) for a value of Rs. 264.47 crore under custody of CWC. Negotiation with a PSU for selling of the stocks, which has acquired the plant and machinery, is under progress. The business associate is under liquidation. The company is a secured creditor and where company has also solely staked claim on an industrial (mortgaged) land of about 90 acres at Alibagh, Maharashtra before Hon''able Gujarat High Court. In view of above, no provision is considered necessary.

NOTE NO. 22

TRADE RECEIVABLES (Contd.)

22.2 Trade receivables include Rs. 1740.42 crore (Rs. 1640.53 Crore) for goods sold during previous years to one of the business associates. Dues are secured by EMD of Rs. 29.73 crore, corporate guarantee of its holding company and the personal guarantee of Chairman of its holding company. The business associate and its holding company (Guarantor) had signed a Conciliation Agreement dated 15.11.2011 and further settlement agreement dated 17.05.2012 with the company for payment of entire dues by 10.11.2012 under Indian Arbitration and Conciliation Act and is legally enforceable as decree. The business associate has confirmed on various occasions its commitment to repay the entire dues along with interest. The case for enforcement of decree is continuing with Hon''ble Supreme Court. During the year, the business associate remitted an amount of Rs. 144.90 crore on the direction of Hon''ble Supreme Court. Considering the financial strength of guarantors and status of case in the Hon''ble Supreme Court, the debt has been considered good and fully recoverable.

22.3 Trade receivable includes Rs. 20.56 crore (Rs. 59.23 crore) recoverable from one of the business associate for goods sold in the earlier years. The amount is secured by pledge of stocks of Rs. 4.17 crore. Additionally, company is also holding duly insured stock of coal valuing approx. Rs. 39 crore under CWC custody of a family concern of the associate. On dishonour of cheques, legal action u/s 138 of Negotiable Instrument Act, 1881 has been initiated for an amount of Rs. 85 crore wherein the summons has been issued. The company''s receivables are being monitored by court and the company has received Rs. 10.50 crore during the current year. Court has directed the company and the associate to submit their up to date account for recovery of balance dues. In view of above, no provision is considered necessary.

22.4 Trade receivables include an amount of Rs. 10.28 crore (Rs. 12.95 crore) recoverable from one of the business associates for sale of coal. The business associate has paid an amount of Rs. 0.10 crore during the year. The entire dues are secured by mortgage of free hold land. The business associate has undertaken to repay all dues along with interest on receipt of CDR package. The company has filed legal and criminal case against party which are being followed up vigorously. In view of this, no provision is considered necessary.

22.5 Trade receivable includes Rs. 96.99 Crore (Nil) being 3.5% of invoice value retained by one of the business associates as Performance Bank Guarantee (PBG) which is secured by corresponding credit balance available in sundry creditors.

25.1 Claims recoverable include Rs. 2.72 crore (Rs. 8.01 crore) towards import of pulses on behalf of different State Governments for sale under PDS scheme. This is towards carrying costs for delayed lifting of pulses by State Govts. (UP Govt. Rs. 2.61crore, Punjab Govt. Rs. 0.06 crore, HP Govt. Rs. 0.04 crore). Claim for the same was lodged during the year 2011-12 and the same is being followed up with the State Govt. Since, there is credit balance available from UP Govt. Rs. 8.64 crore, Punjab Govt. Rs. 0.20 crore, HP Govt. Rs. 0.06 crore, no provision is considered necessary.

27.1 Other income include interest of Rs. 224.33 crore (Rs. 203.61 crore) and prior period interest income includes Rs. 4.00 crore (Nil) recoverable from one of the business associates with whom conciliation agreement has been signed which has been held as final by Hon''ble Supreme Court. Dues are secured by corporate guarantee of its holding company and the personal guarantee of Chairman of its holding company. The business associate has confirmed on various occasions its commitment to repay the entire dues along with interest. The case for enforcement of decree is continuing with Hon''ble Supreme Court. During the year, the business associate remitted an amount of Rs. 144.90 crore on the direction of Hon''ble Supreme Court. Considering the financial strength of guarantors and status of case in the Hon''ble Supreme Court, the debt has been considered good and interest accrued thereon is recognised as income.

29.1 Exchange fluctuation-loss (net) of Rs. 28.20 crore (loss Rs. 26.20 crore) incudes loss Rs. 27.14 crore (loss Rs. 25.98 crore) on account of business associates for which necessary adjustment has been made in Purchases/ Sales Account and to that extent there is no impact on the profit for the year.

31.1 As per Accounting Standard-15(Revised) "Employee Benefits", the disclosure as defined in the Accounting Standard are given in Note No. 53.

31.2 Value of Bonus paid Rs. 18,531 (Rs. 5,306).

31.3 Whole time directors are allowed use of company car for non-duty journey up to 1000 km per month on payment of Rs. 2000 per month as per DPE OM dated 21st January, 2013.

31.4 Actual medical expenses incurred towards retired employees including retired directors is Rs. 9.91 crore (Rs. 8.67 crore) and provision for post-retirement medical benefits on actuarial basis is Rs. 2.37 crore (Rs. 0.61 crore).


Mar 31, 2015

1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

These financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on accrual basis. GAAP comprises mandatory accounting standards as prescribed under section 133 of the Companies Act, 2013 (''Act'') read with Rule 7 of the Companies (Accounts ) Rules, 2014, the provisions of the Act (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

2. REVENUE RECOGNITION - INCOME/EXPENSES

Income and expenses are accounted for on accrual basis except the following which are recognised on cash basis:

a) Claims for refund of excess insurance premium on open policies.

b) Interest on loans to subsidiaries and on delayed payments of sales/ trade finance where realization is doubtful.

c) Export benefits.

d) Interest realisable from the items handled on Government account.

e) Dividend on investments.

f) Liquidated damages.

g) Claims lodged with Insurance Companies.

3. USE OF ESTIMATES

The presentation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known/ materialized.

4. TRANSACTIONS IN FOREIGN CURRENCIES

a) Transactions denominated in foreign currencies are recorded at the exchange rate prevailing at the time of the transaction.

b) All monetary items denominated in foreign currencies at the year-end are translated at year-end rates. In case of monetary items where the closing rate is unrealistic, translation rate is estimated based on past trend and expected realization/ disbursement.

c) Non-monetary items other than fixed assets denominated in foreign currencies are reported on exchange rate at the transaction date. Fixed Assets are reported on exchange rate as at the transaction date as increased/reduced by the exchange difference arising on the corresponding foreign currency liability.

d) Income or expense on account of exchange difference on settlement or translation is recognized in the Statement of Profit & Loss. Premium or Discount on forward exchange contracts is recognized on pro-rata basis with reference to the life of the forward contract except for forward covers taken at the behest of Business Associates, in which case the premium or discount is recognized at the inception of the forward exchange contract on matching principles since the corresponding transactions with the Associate are carried out based on the forward rate.

5. FIXED ASSETS - TANGIBLE

Fixed Assets other than land & building are stated at historical cost less accumulated depreciation and impairment. Land & building are stated at revalued amount less amortization/depreciation.

6. INTANGIBLE ASSETS

Cost incurred on Intangible assets (computer software), resulting in future economic benefits are capitalized as Intangible Assets and amortized on straight-line method over a period of two and a half years beginning from the date of capitalization.

7. DEPRECIATION AND AMORTISATION

a. Depreciation on tangible fixed assets other than land is provided in accordance with useful life of assets specified in Schedule II of Companies Act, 2013 on straight-line method.

b. Leasehold land is amortised over the lease period. Land on perpetual lease is not amortised.

c. Depreciation on additions to/deductions from fixed assets during the year is charged on pro-rata basis from/up to the date the asset is available for use/disposed.

8. IMPAIRMENT OF ASSETS

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value and impairment loss is charged to Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

9. INVESTMENTS

a) Long term investments are carried at cost. When there is a decline (other than temporary) in the value of long term investments, the carrying amount is reduced to recognise the decline.

b) Current investments are carried at the lower of cost and fair value.

10. INVENTORIES

Inventories are carried at lower of cost and net realizable value. Cost is determined as (a) on weighted average method in respect of inventories pertaining to own business and items handled on Govt. account under PDS or otherwise, (b) on actual cost as per specific identification method in respect of items handled on back to back arrangement with business associates, (c) Goods–in-transit valued at CIF cost. Cost includes cost of procurement (excluding element of self-insurance, if any), duties, taxes and cess and all direct and indirect costs incurred to bring the stocks to the condition as at the time of valuation. Net realizable value is the estimated price realizable in the ordinary course of business less further costs to be incurred for completing the sale. Estimates of net realisable value are based on the most reliable evidence available at the time of estimation as to the amount the inventories are expected to realize and also take into consideration fluctuations of price or other factors affecting the realizable value including events occurring after the balance sheet date to the extent that such events confirm the conditions existing at the balance sheet date.

11. COST OF SALE AND SALES

a) Purchases and sales are recognised on the performance of contracts.

b) In cases where contracts provide for crystallization of price or for price adjustment on a subsequent date, corresponding purchases and sales are booked on the basis of expected settlement price and any differential determined subsequently is accounted for at the time of final settlement. Cost of Sale and Sales are accounted for considering all costs and elements including usance interest on supplier''s credit as provided for in the contract and incurred till the date of recognition including expenses incurred by and surplus accruing to Business Associates as per contract terms.

c) In respect of back-to-back / tripartite / joint-execution / third party arrangements, purchases and sales are booked on the basis of documents furnished by the Business Associate as adjusted for the fixed trade margin accruing to the Company.

d) Sales include transactions under third party arrangements and counter-trade obligations met by exports through the Company.

e) In case of dealings on behalf of the Government (including consignments under Government''s Gift / Grant Scheme), purchases and sales and incidental expenses or income thereof are accounted for under the respective head of accounts. Surplus or deficit to Government Account, after adjusting service margin accruing to the Company, is adjusted in Cost of Sales or Trade Income respectively.

12. CLAIMS

Claims are recognized in the Statement of Profit & Loss if there is no uncertainty relating to its ultimate realization. Claims recognized in the Statement of Profit & Loss but subsequently becoming doubtful are provided for through the Statement of Profit & Loss.

13. SELF INSURANCE

The Company covers certain commodities handled by it on selective basis under its self-insurance scheme. The surplus of premia realised to cover the risk of commodities over the related claims and reinsurance premia paid to outside agencies to cover the risk of claims is included under the head ''Other Income (Trade)''. No provision is made in respect of unexpired risks and claims are accounted as expenditure when reported.

14. EMPLOYEE BENEFITS

a) Short term employee benefits are recognized at their undiscounted amount in the accounting period in which they are incurred.

b) Employees'' benefit, under defined contribution plan comprising provident fund and pension fund are recognized based on the undiscounted obligation of the company to contribute to the plan. The same is paid to funds administered through separate Trust.

c) Retirement Benefits:

i) Company''s contributions to Gratuity Trust Fund and liability towards Leave Encashment and Half Pay Leave are provided on accrual basis. Gratuity, Leave Encashment and Half Pay Leave are determined on the basis of Actuarial Valuation undertaken as at the year end.

ii) Liability towards Post-retirement Medical Benefits is provided based on Actuarial Valuation as at the year end.

d) Other Long Term Benefits:

Other long term benefits i.e. Long Service Award are determined on the basis of Actuarial Valuation undertaken at the year end.

e) Termination Benefits:

Retirement benefits under voluntary retirement scheme is written off in the year in which opted.

15. PROVISION FOR DOUBTFUL DEBTS/ADVANCES/CLAIMS

Provision for doubtful debts / advances /claims is made where there is uncertainty of realization irrespective of the period of its dues. For outstanding over three years (except government dues), provision is made unless the amount is considered realizable as per management estimate.

16. RESERVES

a) Exchange Fluctuation Reserve represents exchange fluctuation gains on treasury operations set aside to meet future losses, if any.

b) Export/Import Contingency Reserve is appropriated out of profits to meet unforeseen losses in respect of export/import operations.

17. EXHIBITIONS AND FAIRS

The cost of samples and other items acquired for various exhibitions and fairs in India and abroad are charged to revenue in the year in which incurred.

18. EXPENSES ON COMMON SERVICES

Recovery of expenses in respect of certain common services between the Company and its erstwhile subsidiaries is based on turnover/contract concluded/occupancy/ utilisation of manpower as is considered appropriate to the nature of expense recovered.

19. BORROWING COSTS

Borrowing costs attributable to acquisition or construction of qualifying assets up to the date the assets are ready for their intended use are capitalized as part of cost of such asset. All other borrowing costs are recognized as expense of the year in which incurred.

20. TAXES ON INCOME

a) Current tax is provided on the basis of taxable income determined under the Income Tax Act, 1961.

b) Minimum Alternative Tax (MAT) paid in a year is charged to the Statement of Profit and Loss as current tax. The company recognizes MAT credit available as an asset only to the extent that there is convincing evidence that the company will pay normal income tax during the specified period i.e. the period for which MAT credit is allowed to be carried forward.

c) Deferred tax is recognized, subject to the consideration of prudence, on timing difference. Deferred Tax Assets and Liabilities are measured using tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date.

21. CASH FLOW STATEMENT

a) Cash Flows relating to trade finance provided by Business Associates or the Company for execution of trading contracts including utilization of the finance towards fixed deposits with banks for opening letters of credit in favour of suppliers and refund/payment/recovery of interest thereon as per the terms of Contract are treated as part of Operating Activities.

b) Cash Flow Statement is prepared in accordance with the on Indirect Method prescribed in Accounting Standard – 3 on Cash Flow Statement issued by ICAI.

22. PROVISONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:

Provisions are recognised for liabilities that can be measured only by using a substantial degree of estimation, if the following conditions are satisfied:

i) The company has a present obligation as a result of past event,

ii) A probable outflow of resources is expected to settle the obligation, and

iii) The amount of the obligation can be reliably estimated.

Contingent liability is disclosed, if

i) The company has a possible obligation as a result of past event,

ii) The Probability of out flow of resources is not remote and,

iii) No reliable estimation of such obligation is possible.

Contingent assets are neither recognized nor disclosed.

Provisions, contingent liabilities and contingent assets are reviewed at each balance sheet date.


Mar 31, 2014

1. FINANCIAL STATEMENTS

The financial statements are prepared under the historical cost basis and conform to generally accepted accounting practices and policies in India. These statements have been prepared in accordance with applicable mandatory Accounting Standards and relevant presentation requirements under the Companies Act, 1956 except specified otherwise.

2. BASIS OF ACCOUNTING

Income and expenses are accounted for on accrual basis except the following which are recognised on cash basis:

a) Claims for refund of excess insurance premium on open policies.

b) Interest on loans to subsidiaries and on delayed payments of sales/ trade finance where realization is doubtful.

c) Export benefits.

d) Interest realisable from the items handled on Government account.

e) Dividend on investment.

f) Liquidated damages

g) Claims lodged with Insurance Companies

3. USE OF ESTIMATES

The presentation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known/ materialized.

4. TRANSACTIONS IN FOREIGN CURRENCIES

a) Transactions denominated in foreign currencies are recorded at the exchange rate prevailing at the time of the transaction.

b) All monetary items denominated in foreign currencies at the year-end are translated at year-end rates. In case of monetary items where the closing rate is unrealistic, translation rate is estimated based on past trend and expected realization/ disbursement.

c) Non-monetary items other than fixed assets denominated in foreign currencies are reported on exchange rate at the transaction date. Fixed Assets are reported on exchange rate as at the transaction date as increased/reduced by the exchange difference arising on the corresponding foreign currency liability.

d) Income or expense on account of exchange difference on settlement or translation is recognized in the Profit & Loss Account. Premium or Discount on forward exchange contracts is recognized on pro-rata basis with reference to the life of the forward contract except for forward covers taken at the behest of Business Associates, in which case the premium or discount is recognized at the inception of the forward exchange contract on matching principles since the corresponding transactions with the Associate are carried out based on the forward rate.

5. FIXED ASSETS

Fixed Assets are stated at historical cost less accumulated depreciation and impairment.

6. INTANGIBLE ASSETS

Cost incurred on Intangible assets, resulting in future economic benefits are capitalized as Intangible Assets and amortized on straight-line method beginning from the date of capitalization.

7. DEPRECIATION AND AMORTISATION

Fixed Assets other than land are depreciated on straight-line method on pro-rata basis with reference to the month of acquisition/ disposal at rates approved by the Board of Directors based on technical evaluation of estimated useful life, which are equal to or higher than those provided in Schedule XIV to the Companies Act, 1956. Premium on Leasehold land is amortised over the lease period. Assets with cost/written down value at the beginning of the year upto Rs. 5000/- are depreciated at 100% retaining a nominal value of Re. 1/-.

Depreciation rates adopted by the Company are as under:

Rates adopted Rates as per Schedule by the XIV to the Assets Company Companies Act, 1956 (SLM basis) (SLM)

1.Building - Factory 3.34% 3.34% - Other than Factory 2.50% 1.63%

2.Road, Culverts, Sewerage and Water Supply System 2.50% 1.63%

i) Railway siding 12.5% 4.75%

ii) Plant & Machinery 10% 4.75%

iii) Furniture fittings 10% 6.33%

iv) Air-conditioning & Office Equipments 12.50% 4.75%

v) Computer, data processor and communication equipments 40% 16.21%

vi) Vehicle 20% 9.50%

vii) Warehouse 4% 1.63%

viii) Land-lease hold Over lease period -

ix) Capital items purchased upto Rs. 5000/- 100% 100% x) Assets having W.D.V upto Rs. 5000/-at the beginning of the year. 100% -

8. IMPAIRMENT OF ASSETS

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

9. INVESTMENTS

(i) Long term investments are carried at cost. When there is a decline (other than temporary) in the value of long term investments, the carrying amount is reduced to recognise the decline.

(ii) Current investments are carried at the lower of cost and fair value.

10. INVENTORIES

Inventories are carried at lower of cost and net realizable value. Cost is determined as (a) on weighted average method in respect of inventories pertaining to own business and items handled on govt. account under PDS or otherwise, (b) on actual cost as per specific identification method in respect of items handled on back to back arrangement with business associates. (c) Goods-in-transit valued at CIF cost. Cost includes cost of procurement (excluding element of self-insurance, if any), duties, taxes and cess and all direct and indirect costs incurred to bring the stocks to the condition as at the time of valuation. Net realizable value is the estimated price realizable in the ordinary course of business less further costs to be incurred for completing the sale. Estimates of net realisable value are based on the most reliable evidence available at the time of estimation as to the amount the inventories are expected to realize and also take into consideration fluctuations of price or other factors affecting the realizable value including events occurring after balance sheet date to the extent that such events confirm the conditions existing at the balance sheet date.

11. COST OF SALES AND SALES

a) Purchases and sales are recognised on the performance of contracts.

b) In cases where contracts provide for crystallization of price or for price adjustment on a subsequent date, corresponding purchase and sales are booked on the basis of expected settlement price and any differential determined subsequently is accounted for at the time of final settlement. Cost of Sales and Sales are accounted for considering all costs and elements including usance interest on supplier''s credit as provided for in the contract and incurred till the date of recognition including expenses incurred by and surplus accruing to Associates as per contract terms.

c) In respect of back-to-back / tripartite / joint-execution / third party arrangements, purchases and sales are booked on the basis of documents furnished by the Business Associate as adjusted for the fixed trade margin accruing to the Company.

d) Sales include transactions under third party arrangements and counter-trade obligations met by exports through the Company.

e) In case of dealings on behalf of the Government (including consignments under Government''s Gift / Grant Scheme), purchases and sales and incidental expenses or income thereof are accounted for under the respective head of accounts. Surplus or deficit to Government Account, after adjusting service margin accruing to the Company, is adjusted in Cost of Sales or Trade Income respectively.

12. CLAIMS

Claims are recognized in the Profit & Loss Account if there is no uncertainty relating to its ultimate realization. Claims recognized in Profit & Loss Account but subsequently becoming doubtful are provided for through the Profit & Loss Account.

13. SELF INSURANCE

The Company covers certain commodities handled by it on selective basis under its self-insurance scheme. The surplus of premia realised to cover the risk of commodities over the related claims and reinsurance premia paid to outside agencies to cover the risk of claims is included under the head ''Other Income (Trade)''. No provision is made in respect of unexpired risks and claims are accounted as expenditure when reported.

14. EMPLOYEE BENEFITS

a. Short term employee benefits are recognized at their undiscounted amount in the accounting period in which they are incurred.

b. Employees benefit under defined contribution plan comprising provident fund, recognized based on the undiscounted obligation of the company to contribute to the plan. The same is paid to a fund administered through a separate trust.

c. Retirement Benefits:

i) Company''s contributions to Gratuity Trust Fund and liability towards Leave Encashment and Half Pay Leave are provided on accrual basis. Gratuity, Leave Encashment and Half Pay Leave are determined on the basis of actuarial valuation undertaken as at the year end.

ii) Liability towards Post-retirement Medical Benefits is provided based on actuarial valuation as at the year end.

d. Other Long Term Benefits:

Other long term benefits i.e. Long Service Award are determined on the basis of actuarial valuation undertaken at the year end.

e. Termination Benefits:

Retirement benefits under voluntary retirement scheme is written off in the year in which opted.

15. PROVISION FOR DOUBTFUL DEBTS

Provision for doubtful debts / advances /claims is made where there is uncertainty of realization irrespective of the period of its dues. For outstanding over three years (except government dues), provision is made unless the amount is considered realizable as per management estimate.

16. RESERVES

a) Exchange Fluctuation Reserve represents exchange fluctuation gains on treasury operations set aside to meet future losses, if any.

b) Export/Import Contingency Reserve is appropriated out of the profits to meet unforeseen losses in respect of export/import operations.

17. EXHIBITIONS AND FAIRS

The cost of samples and other items acquired for various exhibitions and fairs in India and abroad are charged to revenue in the year in which incurred.

18. EXPENSES ON COMMON SERVICES

Recovery of expenses in respect of certain common services between the Company and its erstwhile subsidiaries is based on turnover/contract concluded/occupancy/ utilisation of manpower as is considered appropriate to the nature of expense recovered.

19. BORROWING COSTS

Borrowing costs attributable to acquisition or construction of qualifying assets upto the date the assets are ready for their intended use are capitalized as part of cost of such asset. All other borrowing costs are recognized as expense of the year in which incurred.

20. TAXES ON INCOME

a) Current tax is provided on the basis of taxable income determined under the Income Tax Act, 1961.

b) Deferred tax is recognised, subject to the consideration of prudence, on timing difference. Deferred Tax Assets and Liabilities are measured using tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date.

21. CASH FLOW FROM OPERATING ACTIVITIES

Cash Flows relating to trade finance provided by Business Associates or the Company for execution of trading contracts including utilization of the finance towards fixed deposits with banks for opening letters of credit in favour of suppliers and refund/ payment/recovery of interest thereon as per the terms of Contract are treated as part of Operating Activities.

22. PROVISONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:

Provisions are recognised for liabilities that can be measured only by using a substantial degree of estimation, if the following conditions are satisfied:

i) The company has a present obligation as a result of past event,

ii) A probable outflow of resources is expected to settle the obligation and

iii) The amount of the obligation can be reliably estimated.

Contingent liability is disclosed, if

i) The company has a possible obligation as a result of past event,

ii) The Probability of out flow of resources is not remote,

iii) No reliable estimation of such obligation is possible.

Contingent assets are neither recognized nor disclosed.

Provisions, contingent liabilities and contingent assets are reviewed at each balance sheet date.


Mar 31, 2013

1. FINANCIAL STATEMENTS

The financial statements are prepared under the historical cost basis and conform to generally accepted accounting practices and policies in India. These statements have been prepared in accordance with applicable mandatory Accounting Standards and relevant presentation requirements under the Companies Act, 1956 except specified otherwise.

2. BASIS OF ACCOUNTING

Income and expenses are accounted for on accrual basis except the following which are recognised on cash basis:

a) Claims for refund of excess insurance premium on open policies.

b) Interest on loans to subsidiaries and on delayed payments of sales/ trade finance where realization is doubtful.

c) Export benefits.

d) Interest realisable from the items handled on Government account.

e) Dividend on investment.

f) Liquidated Damages

g) Claims lodged with Insurance Companies

3. USE OF ESTIMATES

The presentation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known/ materialized.

4. TRANSACTIONS IN FOREIGN CURRENCIES

a) Transactions denominated in foreign currencies are recorded at the exchange rate prevailing at the time of the transaction.

b) All monetary items denominated in foreign currencies at the year-end are translated at year-end rates. In case of monetary items where the closing rate is unrealistic, translation rate is estimated based on past trend and expected realization/ disbursement.

c) Non-monetary items other than fixed assets denominated in foreign currencies are reported on exchange rate at the transaction date. Fixed Assets are reported on exchange rate as at the transaction date as increased/reduced by the exchange difference arising on the corresponding foreign currency liability.

d) Income or expense on account of exchange difference on settlement or translation is recognized in the Profit & Loss Account. Premium or Discount on forward exchange contracts is recognized on pro-rata basis with reference to the life of the forward contract except for forward covers taken at the behest of Business Associates, in which case the premium or discount is recognized at the inception of the forward exchange contract on matching principles since the corresponding transactions with the Associate are carried out based on the forward rate.

5. FIXED ASSETS

Fixed Assets are stated at historical cost less accumulated depreciation and impairment.

6. INTANGIBLE ASSETS

Cost incurred on Intangible assets, resulting in future economic benefits are capitalized as Intangible Assets and amortized on straight-line method beginning from the date of capitalization.

7. DEPRECIATION AND AMORTISATION

Fixed Assets other than land are depreciated on straight-line method on pro-rata basis with reference to the month of acquisition/ disposal at rates approved by the Board of Directors based on technical evaluation of estimated useful life, which are equal to or higher than those provided in Schedule XIV to the Companies Act, 1956. Premium on Leasehold land is amortised over the lease period. Assets with cost/written down value at the beginning of the year upto Rs.5000/- are depreciated at 100% retaining a nominal value of Re. 1/-.

8. IMPAIRMENT OF ASSETS

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

9. INVESTMENTS

(i) Long term investments are carried at cost. When there is a decline (other than temporary) in the value of long term investments, the carrying amount is reduced to recognise the decline.

(ii) Current investments are carried at the lower of cost and fair value.

10. INVENTORIES

Inventories are carried at lower of cost and net realizable value. Cost is determined as (a) on weighted average method in respect of inventories pertaining to own business and items handled on govt. account under PDS or otherwise, (b) on actual cost as per specific identification method in respect of items handled on back to back arrangement with business associates. (c) Goods-in-transit valued at CIF cost. Cost includes cost of procurement (excluding element of self-insurance, if any), duties, taxes and cess and all direct and indirect costs incurred to bring the stocks to the condition as at the time of valuation. Net realizable value is the estimated price realizable in the ordinary course of business less further costs to be incurred for completing the sale. Estimates of net realisable value are based on the most reliable evidence available at the time of estimation as to the amount the inventories are expected to realize and also take into consideration fluctuations of price or other factors affecting the realizable value including events occurring after balance sheet date to the extent that such events confirm the conditions existing at the balance sheet date.

11. COST OF SALES AND SALES

a) Purchases and sales are recognised on the performance of contracts.

b) In cases where contracts provide for crystallization of price or for price adjustment on a subsequent date, corresponding purchase and sales are booked on the basis of expected settlement price and any differential determined subsequently is accounted for at the time of final settlement. Cost of Sales and Sales are accounted for considering all costs and elements including usance interest on supplier''s credit as provided for in the contract and incurred till the date of recognition including expenses incurred by and surplus accruing to Associates as per contract terms.

c) In respect of back-to-back / tripartite / joint-execution / third party arrangements, purchases and sales are booked on the basis of documents furnished by the Business Associate as adjusted for the fixed trade margin accruing to the Company.

d) Sales include transactions under third party arrangements and counter-trade obligations met by exports through the Company.

e) In case of dealings on behalf of the Government (including consignments under Government''s Gift / Grant Scheme), purchases and sales and incidental expenses or income thereof are accounted for under the respective head of accounts. Surplus or deficit to Government Account, after adjusting service margin accruing to the Company, is adjusted in Cost of Sales or Trade Income respectively.

12. CLAIMS

Claims are recognized in the Profit & Loss Account if there is no uncertainty relating to its ultimate realization. Claims recognized in Profit & Loss Account but subsequently becoming doubtful are provided for through the Profit & Loss Account.

13. SELF INSURANCE

The Company covers certain commodities handled by it on selective basis under its self-insurance scheme. The surplus of premia realised to cover the risk of commodities over the related claims and reinsurance premia paid to outside agencies to cover the risk of claims is included under the head ''Other Income (Trade)''. No provision is made in respect of unexpired risks and claims are accounted as expenditure when reported.

14. EMPLOYEE BENEFITS

a. Short term employee benefits are recognized at their undiscounted amount in the accounting period in which they are incurred.

b. Employees benefit under defined contribution plan comprising provident fund, recognized based on the undiscounted obligation of the company to contribute to the plan. The same is paid to a fund administered through a separate trust.

c. Retirement Benefits:

i) Company''s contributions to Gratuity Trust Fund and liability towards Leave Encashment and Half Pay Leave are provided on accrual basis. Gratuity, Leave Encashment and Half Pay Leave are determined on the basis of actuarial valuation undertaken as at the year end.

ii) Liability towards Post-retirement Medical Benefits is provided based on actuarial valuation as at the year end.

d. Other Long Term Benefits:

Other long term benefits i.e. Long Service Award are determined on the basis of actuarial valuation undertaken at the year end.

e. Termination Benefits:

Retirement benefits under voluntary retirement scheme is written off in the year in which opted.

15. PROVISION FOR DOUBTFUL DEBTS

Provision for doubtful debts / advances / claims is made where there is uncertainty of realisation irrespective of the period of its dues. For outstanding over three years (except government dues), provision is made unless the amount is considered realisable as per management estimate.

16. RESERVES

a) Exchange Fluctuation Reserve represents exchange fluctuation gains on treasury operations set aside to meet future losses, if any.

b) Export/Import Contingency Reserve is appropriated out of the profits to meet unforeseen losses in respect of export/import operations.

17. EXHIBITIONS AND FAIRS

The cost of samples and other items acquired for various exhibitions and fairs in India and abroad are charged to revenue in the year in which incurred.

18. EXPENSES ON COMMON SERVICES

Recovery of expenses in respect of certain common services between the Company and its erstwhile subsidiaries is based on turnover/contract concluded/occupancy/ utilisation of manpower as is considered appropriate to the nature of expense recovered.

19. BORROWING COSTS

Borrowing costs attributable to acquisition or construction of qualifying assets upto the date the assets are ready for their intended use are capitalized as part of cost of such asset. All other borrowing costs are recognized as expense of the year in which incurred.

20. TAXES ON INCOME

a) Current tax is provided on the basis of taxable income determined under the Income Tax Act, 1961.

b) Deferred tax is recognised, subject to the consideration of prudence, on timing difference. Deferred Tax Assets and Liabilities are measured using tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date.

21. CASH FLOW FROM OPERATING ACTIVITIES

Cash Flows relating to trade finance provided by Business Associates or the Company for execution of trading contracts including utilization of the finance towards fixed deposits with banks for opening letters of credit in favour of suppliers and refund/ payment/recovery of interest thereon as per the terms of Contract are treated as part of Operating Activities.

22. PROVISONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:

Provisions are recognised for liabilities that can be measured only by using a substantial degree of estimation, if the following conditions are satisfied:

i) The company has a present obligation as a result of past event,

ii) A probable outflow of resources is expected to settle the obligation and

iii) The amount of the obligation can be reliably estimated.

Contingent liability is disclosed, if

i) The company has a possible obligation as a result of past event,

ii) The Probability of out flow of resources is not remote,

iii) No reliable estimation of such obligation is possible.

Contingent assets are neither recognized nor disclosed.

Provisions, contingent liabilities and contingent assets are reviewed at each balance sheet date.


Mar 31, 2012

1. FINANCIAL STATEMENTS

The financial statements are prepared under the historical cost basis and conform to generally accepted accounting practices and policies in India. These statements have been prepared in accordance with applicable mandatory Accounting Standards and relevant presentation requirements under the Companies Act, 1956 except specified otherwise.

2. BASIS OF ACCOUNTING

Income and expenses are accounted for on accrual basis except the following which are recognised on cash basis:

a) Claims for refund of excess insurance premium on open policies.

b) Interest on loans to subsidiaries and on delayed payments of sales/ trade finance where realization is doubtful.

c) Export benefits.

d) Interest realisable from the items handled on Government account.

e) Dividend on investment.

3. USE OF ESTIMATES

The presentation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known/ materialized.

4. TRANSACTIONS IN FOREIGN CURRENCIES

a) Transactions denominated in foreign currencies are recorded at the exchange rate prevailing at the time of the transaction.

b) All monetary items denominated in foreign currencies at the year-end are translated at year-end rates. In case of monetary items where the closing rate is unrealistic, translation rate is estimated based on past trend and expected realization/ disbursement.

c) Non-monetary items other than fixed assets denominated in foreign currencies are reported on exchange rate at the transaction date. Fixed Assets are reported on exchange rate as at the transaction date as increased/reduced by the exchange difference arising on the corresponding foreign currency liability.

d) Income or expense on account of exchange difference on settlement or translation is recognized in the Profit & Loss Account. Premium or Discount on forward exchange contracts is recognized on pro-rata basis with reference to the life of the forward contract except for forward covers taken at the behest of Business Associates, in which case the premium or discount is recognized at the inception of the forward exchange contract on matching principles since the corresponding transactions with the Associate are carried out based on the forward rate.

5. FIXED ASSETS

Fixed Assets are stated at historical cost less accumulated depreciation and impairment.

6. INTANGIBLE ASSETS

Cost incurred on Intangible assets, resulting in future economic benefits are capitalized as Intangible Assets and amortized on straight-line method beginning from the date of capitalization.

7. DEPRECIATION AND AMORTISATION

Fixed Assets other than land are depreciated on straight-line method on pro-rata basis with reference to the month of acquisition/ disposal at rates approved by the Board of Directors based on technical evaluation of estimated useful life, which are equal to or higher than those provided in Schedule XIV to the Companies Act, 1956. Premium on Leasehold land is amortised over the lease period. Assets with cost/written down value at the beginning of the year upto Rs.5000/- are depreciated at 100% retaining a nominal value of Rs.1/-.

8. IMPAIRMENT OF ASSETS

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

9. INVESTMENTS

(i) Long term investments are carried at cost. When there is a decline (other than temporary) in the value of long term investments, the carrying amount is reduced to recognise the decline.

(ii) Current investments are carried at the lower of cost and fair value.

10. INVENTORIES

Inventories are carried at lower of cost and net realizable value. Cost is determined as (a) on weighted average method in respect of inventories pertaining to own business and items handled on govt. account under PDS or otherwise, (b) on actual cost as per specific identification method in respect of items handled on back to back arrangement with business associates. (c) Goods-in- transit valued at CIF cost. Cost includes cost of procurement (excluding element of self-insurance, if any), duties, taxes and cess and all direct and indirect costs incurred to bring the stocks to the condition as at the time of valuation. Net realizable value is the estimated price realizable in the ordinary course of business less further costs to be incurred for completing the sale. Estimates of net realisable value are based on the most reliable evidence available at the time of estimation as to the amount the inventories are expected to realize and also take into consideration fluctuations of price or other factors affecting the realizable value including events occurring after balance sheet date to the extent that such events confirm the conditions existing at the balance sheet date.

11. COST OF SALES AND SALES

a) Purchases and sales are recognised on the performance of contracts.

b) In cases where contracts provide for crystallization of price or for price adjustment on a subsequent date, corresponding purchase and sales are booked on the basis of expected settlement price and any differential determined subsequently is accounted for at the time of final settlement. Cost of Sales and Sales are accounted for considering all costs and elements including usance interest on supplier's credit as provided for in the contract and incurred till the date of recognition including expenses incurred by and surplus accruing to Associates as per contract terms.

c) In respect of back-to-back / tripartite / joint-execution / third party arrangements, purchases and sales are booked on the basis of documents furnished by the Business Associate as adjusted for the fixed trade margin accruing to the Company.

d) Sales include transactions under third party arrangements and counter-trade obligations met by exports through the Company.

e) In case of dealings on behalf of the Government (including consignments under Government's Gift / Grant Scheme), purchases and sales and incidental expenses or income thereof are accounted for under the respective head of accounts. Surplus or deficit to Government Account, after adjusting service margin accruing to the Company, is adjusted in Cost of Sales or Trade Income respectively.

12. CLAIMS

Claims are recognized in the Profit & Loss Account if there is no uncertainty relating to its ultimate realization. Claims recognized in Profit & Loss Account but subsequently becoming doubtful are provided for through the Profit & Loss Account.

13. SELF INSURANCE

The Company covers certain commodities handled by it on selective basis under its self-insurance scheme. The surplus of premia realised to cover the risk of commodities over the related claims and reinsurance premia paid to outside agencies to cover the risk of claims is included under the head 'Other Income (Trade)'. No provision is made in respect of unexpired risks and claims are accounted as expenditure when reported.

14. EMPLOYEE BENEFITS

a. Short term employee benefits are recognized at their undiscounted amount in the accounting period in which they are incurred.

b. Employees benefit under defined contribution plan comprising provident fund, recognized based on the undiscounted obligation of the company to contribute to the plan. The same is paid to a fund administered through a separate trust.

c. Retirement Benefits:

i) Company's contributions to Gratuity Trust Fund and liability towards Leave Encashment and Half Pay Leave are provided on accrual basis. Gratuity, Leave Encashment and Half Pay Leave are determined on the basis of actuarial valuation undertaken as at the year end.

ii) Liability towards Post-retirement Medical Benefits is provided based on actuarial valuation as at the year end.

d. Other Long Term Benefits:

Other long term benefits i.e. Long Service Award are determined on the basis of actuarial valuation undertaken at the year end.

e. Termination Benefits:

Retirement benefits under voluntary retirement scheme is written off in the year in which opted.

15. PROVISION FOR DOUBTFUL DEBTS

Debtors, Loans and Advances wherever considered doubtful are fully provided for.

16. RESERVES

a) Exchange Fluctuation Reserve represents exchange fluctuation gains on treasury operations set aside to meet future losses, if any.

b) Export/Import Contingency Reserve is appropriated out of the profits to meet unforeseen losses in respect of export/import operations.

17. EXHIBITIONS AND FAIRS

The cost of samples and other items acquired for various exhibitions and fairs in India and abroad are charged to revenue in the year in which incurred.

18. EXPENSES ON COMMON SERVICES

Recovery of expenses in respect of certain common services between the Company and its erstwhile subsidiaries is based on turnover/contract concluded/occupancy/ utilisation of manpower as is considered appropriate to the nature of expense recovered.

19. BORROWING COSTS

Borrowing costs attributable to acquisition or construction of qualifying assets upto the date the assets are ready for their intended use are capitalized as part of cost of such asset. All other borrowing costs are recognized as expense of the year in which incurred.

20. TAXES ON INCOME

a) Current tax is provided on the basis of taxable income determined under the Income Tax Act, 1961.

b) Deferred tax is recognised, subject to the consideration of prudence, on timing difference. Deferred Tax Assets and Liabilities are measured using tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date.

21. CASH FLOW FROM OPERATING ACTIVITIES

Cash Flows relating to trade finance provided by Business Associates or the Company for execution of trading contracts including utilization of the finance towards fixed deposits with banks for opening letters of credit in favour of suppliers and refund/ payment/recovery of interest thereon as per the terms of Contract are treated as part of Operating Activities.

22. PROVISONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:

Provisions are recognised for liabilities that can be measured only by using a substantial degree of estimation, if the following conditions are satisfied:

i) The company has a present obligation as a result of past event,

ii) A probable outflow of resources is expected to settle the obligation and

iii) The amount of the obligation can be reliably estimated.

Contingent liability is disclosed, if

i) The company has a possible obligation as a result of past event,

ii) The Probability of out flow of resources is not remote,

iii) No reliable estimation of such obligation is possible.

Contingent assets are neither recognized nor disclosed.

Provisions, contingent liabilities and contingent assets are reviewed at each balance sheet date.


Mar 31, 2011

1. FINANCIAL STATEMENTS

The financial statements are prepared under the historical cost basis and conform to generally accepted accounting practices and policies in India. These statements have been prepared in accordance with applicable mandatory Accounting Standards and relevant presentation requirements under the Companies Act, 1956 except specified otherwise.

2. BASIS OF ACCOUNTING

Income and expenses are accounted for on accrual basis except the following which are recognised on cash basis:

a) Claims for refund of excess insurance premium on open policies.

b) Interest on loans to subsidiaries and on delayed payments of sales/ trade finance where realization is doubtful.

c) Export benefits.

d) Interest realisable from the items handled on Government account.

e) Dividend on investment.

3. USE OF ESTIMATES

The presentation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known/ materialized.

4. TRANSACTIONS IN FOREIGN CURRENCIES

a) Transactions denominated in foreign currencies are recorded at the exchange rate prevailing at the time of the transaction.

b) All monetary items denominated in foreign currencies at the year-end are translated at year-end rates. In case of monetary items where the closing rate is unrealistic, translation rate is estimated based on past trend and expected realization/ disbursement.

c) Non-monetary items other than fixed assets denominated in foreign currencies are reported on exchange rate at the transaction date. Fixed Assets are reported on exchange rate as at the transaction date as increased/reduced by the exchange difference arising on the corresponding foreign currency liability.

d) Income or expense on account of exchange difference on settlement or translation is recognized in the Profit & Loss Account. Premium or Discount on forward exchange contracts is recognized on pro-rata basis with reference to the life of the forward contract except for forward covers taken at the behest of Business Associates, in which case the premium or discount is recognized at the inception of the forward exchange contract on matching principles since the corresponding transactions with the Associate are carried out based on the forward rate.

5. FIXED ASSETS

Fixed Assets are stated at historical cost less accumulated depreciation and impairment.

6. INTANGIBLE ASSETS

Cost incurred on Intangible assets, resulting in future economic benefits are capitalized as Intangible Assets and amortized on straight-line method beginning from the date of capitalization.

7. DEPRECIATION AND AMORTISATION

Fixed Assets other than land are depreciated on straight-line method on pro-rata basis with reference to the month of acquisition/ disposal at rates approved by the Board of Directors based on technical evaluation of estimated useful life, which are equal to or higher than those provided in Schedule XIV to the Companies Act, 1956. Premium on Leasehold land is amortised over the lease period. Assets with cost/written down value at the beginning of the year upto Rs. 5000/- are depreciated at 100% retaining a nominal value of Re. 1/-.

8. IMPAIRMENT OF ASSETS

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

9. INVESTMENTS

(i) Long term investments are carried at cost. When there is a decline (other than temporary) in the value of long term investments, the carrying amount is reduced to recognise the decline.

(ii) Current investments are carried at the lower of cost and fair value.

10. INVENTORIES

Inventories are carried at lower of cost and net realizable value. Cost is determined as (a) on weighted average method in respect of inventories pertaining to own business and items handled on govt. account under PDS or otherwise, (b) on actual cost as per specific identification method in respect of items handled on back to back arrangement with business associates. (c) Goods-in- transit valued at CIF cost. Cost includes cost of procurement (excluding element of self-insurance, if any), duties, taxes and cess and all direct and indirect costs incurred to bring the stocks to the condition as at the time of valuation. Net realizable value is the estimated price realizable in the ordinary course of business less further costs to be incurred for completing the sale. Estimates of net realisable value are based on the most reliable evidence available at the time of estimation as to the amount the inventories are expected to realize and also take into consideration fluctuations of price or other factors affecting the realizable value including events occurring after balance sheet date to the extent that such events confirm the conditions existing at the balance sheet date.

11. COST OF SALES AND SALES

a) Purchases and sales are recognised on the performance of contracts.

b) In cases where contracts provide for crystallization of price or for price adjustment on a subsequent date, corresponding purchase and sales are booked on the basis of expected settlement price and any differential determined subsequently is accounted for at the time of final settlement. Cost of Sales and Sales are accounted for considering all costs and elements including usance interest on supplier's credit as provided for in the contract and incurred till the date of recognition including expenses incurred by and surplus accruing to Associates as per contract terms.

c) In respect of back-to-back / tripartite / joint-execution / third party arrangements, purchases and sales are booked on the basis of documents furnished by the Business Associate as adjusted for the fixed trade margin accruing to the Company.

d) Sales include transactions under third party arrangements and counter-trade obligations met by exports through the Company.

e) In case of dealings on behalf of the Government (including consignments under Government's Gift / Grant Scheme), purchases and sales and incidental expenses or income thereof are accounted for under the respective head of accounts. Surplus or deficit to Government Account, after adjusting service margin accruing to the Company, is adjusted in Cost of Sales or Trade Income respectively.

12. CLAIMS

Claims are recognized in the Profit & Loss Account if there is no uncertainty relating to its ultimate realization. Claims recognized in Profit & Loss Account but subsequently becoming doubtful are provided for through the Profit & Loss Account.

13. SELF INSURANCE

The Company covers certain commodities handled by it on selective basis under its self-insurance scheme. The surplus of premia realised to cover the risk of commodities over the related claims and reinsurance premia paid to outside agencies to cover the risk of claims is included under the head 'Other Income (Trade)'. No provision is made in respect of unexpired risks and claims are accounted as expenditure when reported.

14. EMPLOYEE BENEFITS

a. Short term employee benefits are recognized at their undiscounted amount in the accounting period in which they are incurred.

b. Employees benefit under defined contribution plan comprising provident fund, recognized based on the undiscounted obligation of the company to contribute to the plan. The same is paid to a fund administered through a separate trust.

c. Retirement Benefits:

i) Company's contributions to Gratuity Trust Fund and liability towards Leave Encashment and Half Pay Leave are provided on accrual basis. Gratuity, Leave Encashment and Half Pay Leave are determined on the basis of actuarial valuation undertaken as at the year end.

ii) Liability towards Post-retirement Medical Benefits is provided based on actuarial valuation as at the year end.

d. Other Long Term Benefits:

Other long term benefits i.e. Long Service Award are determined on the basis of actuarial valuation undertaken at the year end.

e. Termination Benefits:

Retirement benefits under voluntary retirement scheme is written off in the year in which opted.

15. PROVISION FOR DOUBTFUL DEBTS

Debtors, Loans and Advances wherever considered doubtful are fully provided for.

16. RESERVES

a) Exchange Fluctuation Reserve represents exchange fluctuation gains on treasury operations set aside to meet future losses, if any.

b) Export/Import Contingency Reserve is appropriated out of the profits to meet unforeseen losses in respect of export/import operations.

17. EXHIBITIONS AND FAIRS

The cost of samples and other items acquired for various exhibitions and fairs in India and abroad are charged to revenue in the year in which incurred.

18. EXPENSES ON COMMON SERVICES

Recovery of expenses in respect of certain common services between the Company and its erstwhile subsidiaries is based on turnover/contract concluded/occupancy/ utilisation of manpower as is considered appropriate to the nature of expense recovered.

19. BORROWING COSTS

Borrowing costs attributable to acquisition or construction of qualifying assets upto the date the assets are ready for their intended use are capitalized as part of cost of such asset. All other borrowing costs are recognized as expense of the year in which incurred.

20. TAXES ON INCOME

a) Current tax is provided on the basis of taxable income determined under the Income Tax Act, 1961.

b) Deferred tax is recognised, subject to the consideration of prudence, on timing difference. Deferred Tax Assets and Liabilities are measured using tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date.

21. CASH FLOW FROM OPERATING ACTIVITIES

Cash Flows relating to trade finance provided by Business Associates or the Company for execution of trading contracts including utilization of the finance towards fixed deposits with banks for opening letters of credit in favour of suppliers and refund/ payment/recovery of interest thereon as per the terms of Contract are treated as part of Operating Activities.

22. PROVISONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:

Provisions are recognised for liabilities that can be measured only by using a substantial degree of estimation, if the following conditions are satisfied:

i) The company has a present obligation as a result of past event,

ii) A probable outflow of resources is expected to settle the obligation and

iii) The amount of the obligation can be reliably estimated.

Contingent liability is disclosed, if

i) The company has a possible obligation as a result of past event,

ii) The Probability of out flow of resources is not remote,

iii) No reliable estimation of such obligation is possible.

Contingent assets are neither recognized nor disclosed.

Provisions, contingent liabilities and contingent assets are reviewed at each balance sheet date.

 
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