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Accounting Policies of Tata Global Beverages Ltd. Company

Mar 31, 2014

1. General Information:

Tata Global Beverages Limited ("the holding company”) and its subsidiaries, joint ventures and associates (together, "the Group”) is a global beverages company engaged in the trading, production and distribution of Tea, Coffee and Water. The group has branded beverage business operations mainly in India, Europe, US, Canada and Australia, plantation business in India/Sri Lanka and extraction business mainly in India, US and China.

2. Significant Accounting Policies:

(a) Accounting Convention

The financial statements are prepared to comply in all material aspects with all the applicable accounting principles in India, the applicable accounting standards, notified u/s 211(3C) of the Companies Act, 1956 and the relevant provisions of the Companies Act,1956. The financial statements have been prepared in accordance with the historical cost convention.

The presentation of the accounts is based on the revised Schedule VI of the Companies Act 1956. All assets and liabilities are classified into current and non-current generally based on criteria of realisation/settlement within a twelve month period from the balance sheet date.

(b) Fixed Assets and Depreciation

i) Tangible:

Tangible Assets are carried at cost of acquisition less accumulated depreciation and accumulated impairment loss, if any. Subsequent expenditure related to an item of fixed asset are added to its book value only if they increase the future benefits from the existing asset beyond its previously assessed standard of performance. The cost of extension planting of cultivable land including cost of development is capitalised.

Assets acquired on hire purchase, for which ownership will vest at a future date, are capitalised at cash cost.

Subsidies receivable from government in respect of fixed assets are deducted from the cost of respective assets as and when they accrue.

Depreciation is provided on tangible assets including asset created on lands under lease on a monthly straight-line basis over the estimated useful life of the asset or at the rate prescribed in Schedule XIV to the Companies Act, 1956.

Renewal of land leases is assumed, consistent with past practice.

Estimated useful lives of Assets are as follows:

Desktop and Computers 4 years

Printers 4 years

Servers 4 years

Leashold improvements Over the life of lease

ii) Intangible:

Intangible Assets are stated at acquisition cost, net of accumulated amortisation and accumulated impairment loss, if any.

Expenditure on software and related implementation costs are capitalised where it is expected to provide enduring economic benefits and are amortised on a monthly basis over a period of five years.

Non-compete fees paid on acquisition of business is being amortised on monthly basis over a period of 10 years.

Product development Cost incurred on new products having enduring benefits is recognised as Intangible Assets and are amortised on a monthly basis over a period of 10 years.

(c) Impairment

At each balance sheet date, the management assess whether there is any indication that the assets are impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment loss. Recoverable amount is the higher of an asset''s net selling price and its value in use. In assessing value in use, the estimated future cash flows expected from the continuing use of the asset and from its disposal are discounted to their present value using a pre-tax discount rate that reflects the current market assessments of time value of money and the risks specific to the asset. Cash flows used to determine value in use are derived from the annual budgets and strategic plans of the cash generating units. For certain cash generating units, variable growth has been considered even beyond five years, given the maturity of the business and scope for geographical expansion.

Reversal of impairment loss is recognised as income in the statement of Profit and loss.

(d) Leases

Assets taken on lease by the Company in its capacity as lessee, where the Company has substantially assumed all risks and rewards of ownership are classified as finance lease. Such a lease is capitalised at the inception of the lease period at lower of fair value or present value of the minimum lease payments and a liability is recognised for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost, so as to obtain a constant periodic rate of interest on the outstanding liability for each year.

Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vests with the lessor, are recognised as operating leases. Lease rental under operating leases are recognised in the statement of Profit and loss on a straight- line basis over the period of lease.

(e) Borrowing Costs

Borrowing cost includes interest, ancillary costs incurred in connection with the arrangement of borrowings and exchange difference arising from foreign currency borrowings to the extent they are regarded as adjustment to the interest cost.

Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are capitalised. The other costs are charged to the statement of Profit and loss. Discount on Commercial Paper is amortised on straight line basis over its tenure.

(f) Investments

Investments of a long-term nature are stated at cost, less adjustment for any diminution, other than temporary, in the value thereof. Current investments are stated at lower of cost or fair value.

(g) Inventories

Inventories are stated at lower of cost or net realisable value. Cost is determined on weighted average method for all categories of inventories other than for auction bought teas in which case cost is considered as actual cost for each lot. Cost comprises expenditure incurred in the normal course of business in bringing such inventories to its present location and condition, where applicable, appropriate overheads based on normal level of activity. Provision is made for obsolescence and other anticipated losses wherever considered necessary.

(h) Foreign Currency Transactions

Transactions in foreign currencies are recorded at average fortnightly spot rates. The exchange difference resulting from settled transactions is recognised in the statement of Profit and loss. Year end balances of monetary items are restated at the yearend exchange rates and the resultant net gain or loss is recognised in the statement of Profit and loss.

Premium or discount on forward contracts where there are underlying assets/liabilities are amortised over the life of the contract. Such foreign exchange forward contracts are revalued at the balance sheet date and the exchange difference between the spot rate at the date of the contract and the spot rate on the balance sheet date is recognised as gain/loss in the statement of Profit and loss.

(i) Revenue Recognition

(i) Sales are recognised when the significant risks and rewards of ownership in the goods are transferred to the buyer as per terms of contract.

(ii) Income and fees from services are accounted as per terms of relevant contractual agreements/ arrangements.

(iii) Export incentives are accounted on accrual basis.

(j) Other Income

Interest income and income from investments are accounted on accrual basis.

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

(k) Replanting/Rejuvenation

Cost of replanting/ rejuvenating tea bushes/ fuel trees is charged to revenue. Related Tea Board subsidies are accrued as Other Income on obtaining approval from Tea Board.

(l) Compensation of Land

Compensation, if any, in respect of land surrendered/ vested in Governments under various State Land Legislations is accounted for as and when received.

(m) Employee Benefits

i) Post retirement employee benefits:

Post retirement benefits like Provident Fund which are in the nature of defined benefit plans and also Defined Contribution Superannuation schemes, in the nature of defined contribution plans, are maintained by the Company and for certain categories contributions are made to State Plans. In respect of PF contribution made to a Self Administered Trust, the Company is liable for annual contributions and any shortfall in the fund assets based on the Government specified minimum rates of return, such contribution and shortfall, if any is recognised as an expense in the year incurred.

Post retirement defined benefits including gratuity, superannuation and medical benefits for qualifying executives/Whole time directors as provided by the Company are determined through independent actuarial valuation at year end and charge recognised in the statement of Profit and loss. For schemes, where recognised funds have been set up, annual contributions determined as payable in the actuarial valuation report are contributed. Actuarial gains and losses are recognised in the statement of Profit and loss.

The Company recognizes in the statement of Profit and loss, gains or losses on settlement of a defined benefit plan as and when the settlement occurs.

ii) Other Employee Benefits:

Other employee benefits are accounted for on accrual basis. Liabilities for compensated absences are determined based on independent actuarial valuation at year end and charge is recognised in the statement of Profit and loss. Short-term Employee Benefits are recognised on an undiscounted basis whereas Long-term Employee Benefits are recognised on a discounted basis.

iii) Other Employee Termination Benefits:

Payments to employees on termination along with additional liabilities towards retirement benefits arising pursuant to the termination are charged to the statement of Profit and loss in the year in which it is incurred.

(n) Research and Development

Research and Development expenditure of revenue nature is charged to revenue and capital expenditure is included under fixed assets.

(o) Taxes on Income

Current Income Tax is measured at the amount expected to be paid to the tax authorities in accordance with Income Tax Act, 1961.

Deferred tax is recognised for all the timing differences, subject to the consideration of prudence in respect of deferred tax assets.

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

(p) Financial Instruments

The Company uses foreign currency forward contracts and options to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments and highly probable transactions. The Company designates these hedging instruments as cash flow hedges.

Hedging instruments are initially measured at fair value and are remeasured at subsequent reporting dates. Gain or loss on account of change in the fair value of hedging instruments in respect of effective portion of cash flow hedges are recognised in the hedging reserve account.

On occurrence of the underlying transactions the accumulated balance is transferred from hedging reserve and recognised in the statement of Profit and loss. The portion of the gain or loss on the hedging instruments if determined to be an ineffective cash flow hedge is recognised in the statement of Profit and loss. Fair value hedges are marked to market on balance sheet date and gain or loss recognised in the statement of Profit and loss.

(q) Cash and Cash Equivalents

Cash and Cash equivalents for the purpose of cash flow statement comprise of cash at bank and in hand and short term investments/bank deposits with an original maturity of three months or less.

(r) Provisions

Provisions are recognised when there is a present obligation as a result of past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the obligation at the reporting date and are not discounted to its present value. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.

(s) Contingent Liabilities

Contingent liabilities exist when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group, or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required or the amount cannot be reliably estimated. Contingent liabilities are appropriately disclosed unless the possibility of an outflow of resources embodying economic benefits is remote.


Mar 31, 2013

(a) Accounting Convention

The financial statements are prepared to comply in all material aspects with all the applicable accounting principles in India, the applicable accounting standards, notified u/s 211 (3C) of the Companies Act, 1956 and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared in accordance with the historical cost convention.

The presentation of the accounts is based on the revised Schedule VI of the Companies Act, 1956. All assets and liabilities are classified into current and non-current generally based on criteria of realisation/settlement within twelve months period from the balance sheet date.

(b) Fixed Assets and Depreciation

i) Tangible:

Tangible Assets are carried at cost of acquisition less accumulated depreciation, Impairment loss, if any, ascertained as per the Accounting Standard 28 (Impairment of Assets).The cost of extension planting of cultivable land including cost of development is capitalised.

Assets acquired on hire purchase, for which ownership will vest at a future date, are capitalised at cash cost.

Depreciation on tangible assets including assets created on lands under lease is provided on monthly basis in accordance with Schedule XIV to the Companies Act, 1956 (except as below). Renewal of land leases is assumed, consistent with past practice.

Management estimates the useful lives for other Ta ngible Assets as follows:

Desktop and Computers 4 years

Printers 4 years

Servers 4 years

Subsidies receivable from government in respect of fixed assets are deducted from the cost of respective assets as and when they accrue.

ii) Intangible:

Intangible Assets are stated at acquisition cost, net of accumulated amortisation and accumulated impairment loss, if any.

Expenditure on software and related implementation costs are capitalised where it is expected to provide enduring economic benefits and are amortised on a monthly basis over a period of five years.

Non-compete fees paid on acquisition of business is being amortised on monthly basis over a period of 10 years.

Product development cost incurred on new products having enduring benefits is recognised as Intangible Assets and are amortised on a monthly basis over a period of 10 years.

(c) Impairment

At each balance sheet date, the management reviews the carrying amounts of each cash generating unit to determine whether there is any indication that those assets were impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment loss. Recoverable amount is the higher of an asset''s net selling price and value in use.

In assessing value in use, the estimated future cash flows expected from the continuing use of the asset and from its disposal are discounted to their present value using a pre-tax discount rate that reflects the current market assessments of time value of money and the risks specific to the asset. Cash flows used to determine value in use are derived from the annual budgets and strategic plans of the cash generating units. For certain cash generating units, variable growth has been considered even beyond five years, given the maturity of the business and scope for geographical expansion.

Reversal of impairment loss is recognised as income in the statement of profit and loss.

(d) Borrowing Costs

Borrowing cost includes interest, ancillary costs incurred in connection with the arrangement of borrowings and exchange difference arising from foreign currency borrowings to the extent they are regarded as adjustment to the interest cost.

Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are capitalised. The other costs are charged to the statement of profit and loss. Discount on Commercial Paper is amortised on straight line basis over its tenure.

(e) Investments

Investments of a long-term nature are stated at cost, less adjustment for any diminution, other than temporary, in the value thereof. Current investments are stated at lower of cost and market value.

(f) Inventories

Inventories are stated at cost or net realisable value, whichever is lower. Cost is determined on weighted average method for all categories of inventories other than for auction bought teas in which case cost is considered as actual cost for each lot. Cost comprises expenditure incurred in the normal course of business in bringing such inventories to its location and includes, where applicable, appropriate overheads based on normal level of activity. Provision is made for obsolete, slow-moving and defective stocks, where necessary.

(g) Foreign Currency Transactions

Transactions in foreign currencies are recorded at average fortnightly spot rates. The exchange difference resulting from settled transactions is recognised in the statement of profit and loss. Year end balances of monetary items are restated at the year end exchange rates and the resultant net gain or loss is recognised in the statement of profit and loss.

Premium or discount on forward contracts where there are underlying assets/liabilities are amortised over the life of the contract. Such foreign exchange forward contracts are revalued at the balance sheet date and the exchange difference between the spot rate at the date of the contract and spot rate on the balance sheet date is recognised as gain/loss in the statement of profit and loss.

(h) Revenue Recognition

(i) Sales are recognised on when the substantial risks and rewards of ownership in the goods are transferred to the buyer i.e. delivery as per terms of sale or on completion of auction in case of auction sale.

(ii) Fees and income from services are accounted as per terms of relevant contractual agreements/arrangements.

(iii) Export incentives are accounted on accrual basis.

(i) Other Income

Interest income and income from investments are accounted on accrual basis.

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

(j) Replanting/Rejuvenation

Cost of replanting/rejuvenating tea bushes/fuel trees is charged to revenue. Related Tea Board subsidies are accrued as Other Income on obtaining approval from Tea Board.

(k) Compensation of Land

Compensation, if any, in respect of land surrendered/vested in Governments under various State Land Legislations is accounted for as and when received.

(l) Employee Benefits

i) Post retirement employee benefits:

Post retirement benefits like Provident Fund which are in the nature of defined benefit plans and also Defined Contribution Superannuation schemes, in the nature of defined contribution plans, are maintained by the Company and for certain categories contributions are made to State Plans. In respect of PF contribution made to a Self Administered Trust, the Company is liable for annual contributions and any shortfall in the fund assets based on the government specified minimum rates of return and recognises such contribution and shortfall, if any, as an expense in the year incurred.

Post retirement defined benefits including gratuity, superannuation and medical benefits for qualifying executives/wholetime directors as provided by the Company are determined through independent actuarial valuation at year end and charge recognised in the books. For schemes, where recognised funds have been set up, annual contributions determined as payable in the actuarial valuation report are contributed. Actuarial gains and losses are recognised in the statement of profit and loss.

The Company recognizes in the statement of profit and loss, gains or losses on settlement of a defined benefit plan as and when the settlement occurs.

ii) Other Employee Benefits:

Other employee benefits are accounted for on accrual basis. Liabilities for compensated absences are determined based on independent actuarial valuation at year end and charge is recognised in the statement of profit and loss. Short-term Employee Benefits are recognised on an undiscounted basis whereas Long-term Employee Benefits are recognised on a discounted basis.

iii) Other Employee Termination Benefits:

Payments to employees who have opted for the Employee Separation Scheme (ESS) along with additional liabilities towards retirement benefits arising pursuant to the ESS are charged to statement of profit and loss in the year in which it is incurred.

(m) Research and Development

Research and Development expenditure of revenue nature is charged to revenue and capital expenditure is included under fixed assets. (n) Taxes on Income

Current Income Tax is measured at the amount expected to be paid to the tax authorities in accordance with Income Tax Act, 1961.

Deferred tax is recognised for all the timing differences, subject to the consideration of prudence in respect of deferred tax assets.

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

(o) Financial Instruments

The Company uses foreign currency forward contracts and options to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments and highly probable transactions. The Company designates these hedging instruments as cash flow hedges.

Hedging instruments are initially measured at fair value, and are remeasured at subsequent reporting dates. Gain or loss on account of change in the fair value of hedging instruments in respect of effective portion of cash flow hedges are recognised in the hedging reserve account. On occurrence of the underlying transactions the accumulated balance is transferred from hedging reserve and recognised in the statement of profit and loss. The portion of the gain or loss on the hedging instruments if determined to be an ineffective cash flow hedge is recognised in the statement of profit and loss. Fair value hedges are marked-to-market on balance sheet date and gain or loss recognised in the statement of profit and loss.

(p) Leases

Assets taken on lease by the Company in its capacity as lessee, where the Company has substantially assumed all risks and rewards of ownership are classified as finance lease. Such a lease is capitalised at the inception of the lease period at lower of fair value or present value of the minimum lease payments and a liability is recognised for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost, so as to obtain a constant periodic rate of interest on the outstanding liability for each year.

Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vests with the lessor, are recognised as operating leases. Lease rentals under operating leases are recognised in the statement of profit and loss on a straightline basis.

(q) Cash and Cash Equivalent

Cash and Cash equivalents for the purpose of cash flow statement comprise of cash at bank and in hand and short-term investments/ bank deposits with an original maturity of three months or less.

(r) Provisions

A provision is recognised when the Company has a present obligation as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.

(s) Contingent Liabilities

Contingent liabilities exist and are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of company, unless the possibility of an outflow is remote. A present obligation that arises from past events where it is either not probable that an outflow of resources will be required or a reliable estimate of the amount cannot be made is termed as contingent liability.


Mar 31, 2012

(a) Accounting Convention

The financial statements are prepared to comply in all material aspects with all the applicable accounting principles in India, the applicable accounting standards, notified u/s 211(3C) of the Companies Act, 1956 and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared in accordance with the historical cost convention.

The presentation of the accounts is based on the revised Schedule VI of the Companies Act, 1956, applicable from the current financial year. Accordingly previous year figures are realigned to make it comparable with current year.

All assets and liabilities are classified into current and non-current generally based on criteria of realisation/settlement within twelve months period from the Balance Sheet date.

(b) Fixed Assets and Depreciation i) Tangible

Tangible Assets are carried at cost of acquisition less accumulated depreciation. Impairment loss, if any, ascertained as per the

Accounting Standard of the Companies (Accounting Standards) Rules, 2006 is recognised. The cost of extension planting of cultivable land including cost of development is capitalised.

Assets acquired on hire purchase, for which ownership will vest at a future date, are capitalised at cash cost.

Depreciation on tangible assets including assets created on lands under lease is provided on straight-line method in accordance with Schedule XIV to the Companies Act, 1956 based on useful life as estimated by the management. Renewal of land leases is assumed, consistent with past practice.

Subsidies receivable from government in respect of fixed assets are deducted from the cost of respective assets as and when they accrue.

ii) Intangible

Intangible Assets are stated at acquisition cost, net of accumulated amortisation and accumulated impairment loss, if any. Expenditure on software and related implementation costs are capitalised where it is expected to provide enduring economic benefits and are amortised on a straight-line basis over a period of five years.

Non-compete fees paid on acquisition of business is being amortised on straight-line basis over a period of ten years. Product development cost incurred on new products is recognised as Intangible Assets and are amortised over a period of ten years.

(c) Impairment

At each Balance Sheet date, the management reviews the carrying amounts of each cash generating unit to determine whether there is any indication that those assets were impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment loss. Recoverable amount is the higher of an asset's net selling price and value in use. In assessing value in use, the estimated future cash flows expected from the continuing use of the asset and from its disposal are discounted to their present value using a pre-tax discount rate that reflects the current market assessments of time value of money and the risks specific to the asset.

Reversal of impairment loss is recognised as income in the statement of profit and loss.

(d) Borrowing Costs

Borrowing cost includes interest, ancillary costs incurred in connection with the arrangement of borrowings and exchange difference arising from foreign currency borrowings to the extent they are regarded as adjustment to the interest cost.

Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are capitalised. The other costs are charged to the statement of profit and loss. Discount on Commercial Paper is amortised on straight line basis over its tenure.

(e) Investments

Investments of a long-term nature are stated at cost, less adjustment for any diminution, other than temporary, in the value thereof. Current investments are stated at lower of cost and market value.

(f) Inventories

Inventories are stated at cost or net realisable value, whichever is lower. Cost is determined on weighted average method for all categories of inventories other than for auction bought teas in which case cost is considered as actual cost for each lot. Cost comprises expenditure incurred in the normal course of business in bringing such inventories to its location and includes, where applicable, appropriate overheads based on normal level of activity. Provision is made for obsolete, slow-moving and defective stocks, where necessary.

(g) Foreign Currency Transactions

Transactions in foreign currencies are recorded at average fortnightly spot rates. The exchange difference resulting from settled transactions is recognised in the statement of profit and loss. Year end balances of monetary items are restated at the year end exchange rates and the resultant net gain or loss is recognised in the statement of profit and loss.

Premium or discount on forward contracts where there are underlying assets /liabilities are amortised over the life of the contract. Such foreign exchange forward contracts are revalued at the Balance Sheet date and the exchange difference between the spot rate at the date of the contract and spot rate on the Balance Sheet date is recognised as gain/loss in the statement of profit and loss.

(h) Revenue Recognition

(i) Sales are recognised on when the substantial risks and rewards of ownership in the goods are transferred to the buyer i.e. delivery as per terms of sale or on completion of auction in case of auction sale.

(ii) Fees and income from services are accounted as per terms of relevant contractual agreements/arrangements.

(iii) Export incentives are accounted on accrual basis.

(i) Other income

Interest income and income from investments are accounted on accrual basis.

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

(j) Replanting/Rejuvenation

Cost of replanting/rejuvenating tea bushes/fuel trees is charged to revenue. Related Tea Board subsidies are accrued as Other Income on obtaining approval from Tea Board.

(k) Compensation of Land

Compensation, if any, in respect of land surrendered/vested in Governments under various State Land Legislations is accounted for as and when received.

(l) Employee Benefits

i) Post retirement employee benefits:

Post retirement benefits like Provident Fund and Defined Contribution Superannuation schemes, in the nature of defined contribution plans, are maintained by the Company and for certain categories contributions are made to State Plans. In respect of PF contribution made to a Self Administered Trust, the Company is generally liable for annual contributions and any shortfall in the fund assets based on the government specified minimum rates of return and recognises such contribution and shortfall, if any, as an expense in the year incurred.

Defined Benefit plans like Gratuity and Superannuation schemes are also maintained by the Company. Post retirement medical benefits are provided by the Company for certain categories of employees. Liabilities under the defined benefit schemes are determined through independent actuarial valuation at year end and charge recognised in the books. For schemes, where recognised funds have been set up, annual contributions determined as payable in the actuarial valuation report are contributed. Actuarial gains and losses are recognised in the statement of profit and loss.

The Company recognises in the statement of profit and loss, gains or losses on settlement of a defined benefit plan as and when the settlement occurs.

ii) Other Employee Benefits:

Other employee benefits are accounted for on accrual basis. Liabilities for compensated absences are determined based on independent actuarial valuation at year end and charge is recognised in the statement of profit and loss. Short term Employee Benefits are recognised on an undiscounted basis whereas Long Term Employee Benefits are recognised on a discounted basis.

iii) Other Employee Termination Benefits:

Payments to employees who have opted for the Employee Separation Scheme (ESS) along with additional liabilities towards retirement benefits arising pursuant to the ESS are charged to Statement of profit and loss in the year in which it is incurred.

(m) Research and Development

Research and Development expenditure of revenue nature is charged to revenue and capital expenditure is included under fixed assets.

(n) Taxes on income

Current Income Tax is measured at the amount expected to be paid to the tax authorities in accordance with Income Tax Act, 1961.

Deferred tax is recognised for all the timing differences, subject to the consideration of prudence in respect of deferred tax assets.

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

(o) Financial instruments

The Company uses foreign currency forward contracts and options to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments and highly probable transactions. The Company designates these hedging instruments as cash flow hedges.

Hedging instruments are initially measured at fair value, and are remeasured at subsequent reporting dates. Gain or loss on account of change in the fair value of hedging instruments in respect of effective portion of cash flow hedges are recognised in the hedging reserve account. On occurrence of the underlying transactions the accumulated balance is transferred from hedging reserve and recognised in the statement of profit and loss. The portion of the gain or loss on the hedging instruments if determined to be an ineffective cash flow hedge is recognised in the statement of profit and loss. Fair value hedges are marked to market on Balance Sheet date and gain or loss recognised in the statement of profit and loss.

(p) Leases

Assets taken on lease by the Company in its capacity as lessee, where the Company has substantially assumed all risks and rewards of ownership are classified as finance lease. Such a lease is capitalised at the inception of the lease period at lower of fair value or present value of the minimum lease payments and a liability is recognised for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost, so as to obtain a constant periodic rate of interest on the outstanding liability for each year.

Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vests with the lessor, are recognised as operating leases. Lease rentals under operating leases are recognised in the statement of profit and loss on a straight-line basis.

(q) Cash and Cash Equivalent

Cash and Cash equivalents for the purpose of cash flow statement comprise of cash at bank and in hand and short term investments/ bank deposits with an original maturity of three months or less.

(r) Provisions

A provision is recognised when the Company has a present obligation as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.


Mar 31, 2011

A) Accounting Convention

The financial statements are prepared to comply in all material aspects with all the applicable accounting principles in India, the applicable accounting standards, notifed u/s 211(3C) of the Companies Act, 1956 and the relevant provisions of the Companies Act,1956. The financial statements have been prepared in accordance with the historical cost convention.

b) Fixed Assets and Depreciation

Fixed Assets are carried at cost of acquisition less depreciation. Impairment loss, if any, ascertained as per the Accounting Standard of the Companies (Accounting Standards) Rules, 2006 is recognised. The cost of extension planting of cultivable land, including cost of development, is capitalised.

Assets acquired on hire purchase, for which ownership will vest at a future date, are capitalised at cash cost. Depreciation on fixed assets, including assets created on lands under lease is provided on, straight-line method in accordance with Schedule XIV to the Companies Act, 1956 or on estimated useful life. Renewal of land leases is assumed, consistent with past practice. Expenditure on software and related implementation costs are capitalised where it is expected to provide enduring economic Benefits and are amortised on a straight-line basis over a period of fve years.

Subsidies receivable from government in respect of fixed assets are deducted from the cost of respective assets as and when they accrue.

Non-compete fees paid on acquisition of business is being amortised on straight-line basis over a period of 10 years.

c) Borrowing Costs

Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are capitalised. The other costs are charged to the profit and Loss Account. Discount on Commercial Paper is amortised on straight-line basis over its tenure.

d) Investments

Investments of a long-term nature are stated at cost, less adjustment for any diminution, other than temporary, in the value thereof. Current investments are stated at lower of cost and market value.

e) Inventories

Inventories are stated at cost or net realisable value, whichever is lower. Cost is determined on weighted average method for all categories of inventories other than for auction-bought teas, in which case cost is considered as actual cost for each lot. Cost comprises expenditure incurred in the normal course of business in bringing such inventories to its location and includes, where applicable, appropriate overheads based on normal level of activity. Provision is made for obsolete, slow-moving and deffective stocks, where necessary.

f) Foreign Currency Transactions

Transactions in foreign currencies relating to exports are recorded at average fortnightly spot rates. Other transactions in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction. The exchange diference resulting from settled transactions is recognised in the profit and Loss Account. Year end balances of monetary items are restated at the year end exchange rates and the resultant net gain or loss is recognised in the profit and Loss Account.

g) Sales and Services

i) Sales are recognised on passing of property in goods, i.e. delivery as per terms of sale or on completion of auction in case of auction sale.

ii) Fees and income from services are accounted as per terms of relevant arrangements.

h) Other Income

Export incentives, interest income and income from investments are accounted on accrual basis.

i) Replanting/Rejuvenation

Cost of replanting/rejuvenating tea bushes/fuel trees is charged to Revenue. Related Tea Board subsidies are accrued as Other Income on obtaining approval from Tea Board.

j) Compensation of Land

Compensation, if any, in respect of land surrendered/vested in governments under various State Land Legislations is accounted for as and when received.

k) Employee Benefits

i) Post-retirement employee Benefits: Post-retirement Benefits like Provident Fund and Defined Contribution Superannuation schemes, in the nature of Defined contribution plans, are maintained by the Company and, for certain categories, contributions are made to State Plans. Contributions required are recognised in the profit and Loss Account on an accrual basis and funded with recognised funds set up for the purpose. For certain Provident Fund Schemes, the interest rates are assured and the defcit is borne by the Company.

Defined benefit plans like Gratuity and Superannuation schemes are also maintained by the Company. Post-retirement medical Benefits are provided by the Company for certain categories of employees. Liabilities under the Defined benefit schemes are determined through independent actuarial valuation at year end and charge recognised in the books. For schemes, where recognised funds have been set up, annual contributions determined as payable in the actuarial valuation report are contributed. Actuarial gains and losses are recognised in the profit and Loss Account.

The Company recognises in the profit and Loss Account, gains or losses on settlement of a Defined benefit plan as and when the settlement occurs.

ii) Other Employee Benefits: Other employee Benefits are accounted for on accrual basis. Liabilities for compensated absences are determined based on independent actuarial valuation at year end and charge is recognised in the profit and Loss Account. Short Term Employee Benefits are recognised on an undiscounted basis whereas Long-Term Employee Benefits are recognised on a discounted basis.

iii) Other Employee Termination Benefits: Payments to employees who have opted for the Employee Separation Scheme (ESS) along with additional liabilities towards retirement Benefits arising pursuant to the ESS are charged to profit and Loss Account in the year in which it is incurred.

l) Research and Development

Research and Development expenditure of revenue nature is charged to revenue and capital expenditure is included under fixed assets.

m) Deferred Taxation

Deferred tax is recognised using the liability method, on all timing diferences to the extent that it is probable that a liability or asset will crystallise. As at the balance sheet date, unless there is evidence to the contrary, deferred tax assets pertaining to business loss are only recognised to the extent that there are deferred tax liabilities offsetting them.

n) Financial Instruments

Premium or discount on forward contracts where there are underlying assets/liabilities are amortised over the life of the contract. Such foreign exchange forward contracts are revalued at the balance sheet date and the exchange diference between the spot rate at the date of the contract and spot rate on the balance sheet date is recognised as gain/loss in the profit and Loss Account.

The Company also uses foreign currency forward contracts and options to hedge its risks associated with foreign currency fuctuations relating to certain frm commitments and highly probable transactions. The Company designates these hedging instruments as cash fow hedges.

Hedging instruments are initially measured at fair value, and are remeasured at subsequent reporting dates. Gain or loss on account of change in the fair value of hedging instruments in respect of effective portion of cash fow hedges are recognised in the hedging reserve account. On occurrence of the underlying transactions the accumulated balance is transferred from hedging reserve and recognised in the profit and Loss Account. The portion of the gain or loss on the hedging instruments if determined to be an ineffective cash fow hedge is recognised in the profit and Loss Account. Fair value hedges are marked to market on the balance sheet date and gain or loss recognised in the profit and Loss Account.

o) Leases

Rental in respect of operating leases are charged of to profit and Loss Account.


Mar 31, 2010

(a) Accounting Convention

The financial statements are prepared to comply in all material aspects with all the applicable accounting principles in India, the applicable accounting standards, notified u/s 211 (3C) of the Companies Act, 1956 and the relevant provisions of the Companies Act,1956. The financial statements have been prepared in accordance with the historical cost convention.

(b) Fixed Assets and Depreciation

Fixed Assets are carried at cost of acquisition less depreciation. Impairment loss, if any, ascertained as per the Accounting Standard of the Companies (Accounting Standards) Rules, 2006 is recognised. The cost of extension planting of cultivable land including cost of development is capitalised.

Assets acquired on hire purchase, for which ownership will vest at a future date, are capitalised at cash cost. Depreciation on fixed assets including assets created on lands under lease is provided on straight-line method in accordance with Schedule XIV to the Companies Act, 1956. Renewal of land leases is assumed, consistent with past practice. Expenditure on software and related implementation costs are capitalized where it is expected to provide enduring economic benefits and are amortised on a straight-line basis over a period of five years.

Subsidies receivable from government in respect of fixed assets are deducted from the cost of respective assets as and when they accrue.

Non-compete fees paid on acquisition of business is being amortised on straight-line basis over a period of 10 years.

(c) Borrowing Costs

Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are capitalised.The other costs are charged to the profit and loss account. Discount on Commercial Paper is amortised on straight line basis over its tenure.

(d) Investments

Investments of a long-term nature are stated at cost, less adjustment for any diminution, other than temporary, in the value thereof. Current investments are stated at lower of cost and market value.

(e) Inventories

Inventories are stated at cost or net realisable value, whichever is lower. Cost is determined on weighted average method for all categories of inventories other than for auction bought teas in which case cost is considered as actual cost for each lot. Cost comprises expenditure incurred in the normal course of business in bringing such inventories to its location and includes, where applicable, appropriate overheads based on normal level of activity. Provision is made for obsolete, slow-moving and defective stocks, where necessary.

(f) Foreign Currency Transactions

Transactions in foreign currencies relating to exports are recorded at average fortnightly spot rates. Other transactions in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction. The exchange difference resulting from settled transactions is adjusted in the profit and loss account. Year end balances of monetary items are restated at the year end exchange rates and the resultant net gain or loss is adjusted in the profit and loss account.

(g) Sales and Services

(i) Sales are recognised on passing of property in goods i.e. delivery as per terms of sale or on completion of auction in case of auction sale.

(ii) Fees and income from services are accounted as per terms of relevant arrangements.

(h) Other Income

Export incentives, interest income and income from investments are accounted on accrual basis.

(i) Replanting/Rejuvenation

Cost of replanting/ rejuvenating tea bushes/fuel trees is charged to Revenue. Related Tea Board subsidies are accrued as Other Income on obtaining approval from Tea Board.

(j) Compensation of Land

Compensation, if any, in respect of land surrendered/vested in Governments under various State Land Legislations is accounted for as and when received.

Schedule 22 (Continued) (k) Employee Benefits

(i) Post retirement employee benefits:

Post retirement benefits like Provident Fund and Defined Contribution Superannuation schemes, in the nature of defined contribution plans, are maintained by the Company. Contributions required are recognised in the profit and loss account on an accrual basis and funded with recognised funds set up for the purpose. For certain Provident Fund Schemes, the interest rates are assured and the deficit is borne by the Company.

Defined Benefit plans like Gratuity and Superannuation schemes are also maintained by the Company. Post retirement medical benefits are provided by the Company for certain categories of employees. Liabilities under the defined benefit schemes are determined through independent actuarial valuation at year end and charge recognised in the books. For schemes, where recognised funds have been set up, annual contributions determined as payable in the actuarial valuation report are contributed. Actuarial gains and losses are recognised in the profit and loss account.

The Company recognizes in the profit and loss account, gains or losses on settlement of a defined benefit plan as and when the settlement occurs.

(ii) Other Employee Benefits:

Other employee benefits are accounted for on accrua basis. Liabilities for Compensated absences are determined based on independent actuarial valuation at year end and charge recognised in the profit and loss account. Short-term Employee Benefits are recognised on an undiscounted basis whereas Long Term Employee Benefits are recognised on a discounted basis.

(I) Miscellaneous Expenditure to the extent not written off or adjusted

Payments to employees who have opted for the Employee Separation Schemes (ESS) of the Company along with additional liabilities towards retirement benefits arising pursuant to the ESS are being amortised over a period of sixty months but not later than 1 st April 2010.

(m) Research and Development

Research and Development expenditure of revenue nature is charged to revenue and capital expenditure is treated as fixed assets.

(n) Deferred Taxation

Deferred tax is recognised using the liability method, on all timing differences to the extent that it is probable that a liability or asset will crystallise. As at the balance sheet date, unless there is evidence to the contrary, deferred tax assets pertaining to business loss are only recognised to the extent that there are deferred tax liabilities offsetting them.

(o) Financial Instruments

Premium or discount on forward contracts where there are underlying assets/liabilities are amortised over the life of the contract. Such foreign exchange forward contracts are revalued at the balance sheet date and the exchange difference between the spot rate at the date of the contract and spot rate on the balance sheet date is recognised as gain/loss in the profit and loss account.

The Company also uses foreign currency forward contracts and options to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments and highly probable transactions. The Company designates these hedging instruments as cash flow hedges.

Hedging instruments are initially measured at fair value, and are remeasured at subsequent reporting dates. Gain or loss on account of change in the fair value of hedging instruments in respect of effective portion of cash flow hedges are recognised in the hedging reserve account. On occurrence of the underlying transactions the accumulated balance is transferred from hedging reserve and recognised in the profit and loss account. The portion of the gain or loss on the hedging instruments if determined to be an ineffective cash flow hedge is recognised in the profit and loss account. Fair value hedges are marked to market on balance sheet date and gain or loss recognised in the profit and loss account.

(p) Leases

Rental in respect of operating leases are charged off to profit and loss account.

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