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Torrent Cables Ltd. Accounting Policies | Accounting Policy of Torrent Cables Ltd.
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Accounting Policies of Torrent Cables Ltd. Company

Mar 31, 2014

A) Basis of Preparation of Financial Statements:

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under Section 211(3C) of the Companies Act, 1956 ("the 1956 Act") (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 ("the 2013 Act") in terms of General Circular 15/2013 dated 13 September, 2013 of the Ministry of Corporate Affairs) and the relevant provisions of the 1956 Act/ 2013 Act, as applicable. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.

b) Use of Estimates:

The preparation of financial statements, in conformity with the generally accepted accounting principles in India requires that the management makes estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities as at the date of financial statements and the reported amounts of revenue and expenses during the reporting period. The management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from those estimates and the difference between and actual results and the estimates are recognised in the period in which the results are known / materialized.

c) Fixed Assets:

Fixed assets are carried at cost less accumulated depreciation. The cost of fixed assets comprises its purchase price net of any trade discounts and rebates and any other taxes (other than those subsequently recoverable from the tax authorities), any direcdy attributable expenditure on making the asset ready for its intended use, other incidental expenses and interest on borrowings attributable to acquisition of qualifying fixed assets up to the date the asset is ready for its intended use.

Fixed assets acquired in exchange or in part exchange for another asset are recorded at the net book value of the assets given up, adjusted for any balancing payment or receipt of cash or other consideration.

Capital Work in Progress:

Projects under which tangible fixed assets are not yet ready for their intended use are carried at cost comprising direct cost, related incidental expenses and attributable interest.

d) Borrowing Cost:

Borrowing cost, allocated to and utilized for qualifying assets, pertaining to the period from commencement of activities relating to construction / development of the qualifying asset upto the date of capitalisation of such asset are added to die cost of the assets. Qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use.

Other borrowing cost are charged as an expense to the Statement of Profit and Loss.

e) Depreciation:

Depreciation on Plant and Machinery acquired after 1st April, 1990 is provided on Straight Line Method at the rates and in the manner prescribed in Schedule XIV of the Companies Act, 1956.

Depreciation on all other assets is provided on Written Down Value Method at the rates and in the manner prescribed in Schedule XIV of the Companies Act, 1956.

f) Investments:

Long term investments are stated at cost less provision for diminution, odier than temporary, in the value of such investments

g) Inventories:

Inventories are valued at lower of cost and net realizable value after providing for obsolescence and other losses, where considered necessary. Cost is determined on first-in-first-out (FIFO) basis. The cost of work-in-progress and finished goods is determined on full absorption costing method and comprises of raw materials and other direct costs and related production overheads and, where applicable, excise duty.

Scrap is valued at net realisable value.

h) Revenue Recognition:

Sale of goods:

Sales are recognised, net of returns and trade discounts, on transfer of significant risks and rewards of ownership to the buyer. Sales includes excise duty but excludes sales-tax and value added tax.

Income from services:

Revenues from cable laying services are recognised when the services are rendered and related costs are incurred.

i) Other Income:

Interest income is accounted on accrual basis.

j) Employee Benefits:

Defined contribution plans

The Company''s contribution to provident fund and employee state insurance scheme are considered as defined contribution plans and are charged as an expense based on the amount of contribution required to be made and when services are rendered by the employees.

Defined benefit plans

For defined benefit plan in the form of gratuity the cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses are recognised in the Statement of Profit and Loss in the period in which they occur. Past service cost is recognised immediately to the extent that the benefits are already vested and otherwise is amortised on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognised in the Balance Sheet represents the present value of the defined benefit obligation as adjusted for unrecognised past service cost, as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the present value of available refunds and reductions in future contributions to the schemes.

Short-term employee benefits

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised during the year when the employees render the service. These benefits include compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service.

The cost of short-term compensated absences is accounted as under :

(a) in case of accumulated compensated absences, when employees render the services that increase their entitlement of future compensated absences; and

(b) in case of non-accumulating compensated absences, when the absences occur. Long-term employee benefits

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognised as a liability at the present value of the defined benefit obligation as at the balance sheet date less the fair value of the plan assets out of which the obligations are expected to be setded. k) Foreign Currency Transactions:

i) Foreign currency transactions are recorded at the exchange rates prevailing on the date of the transaction.

ii) The net gain or loss on account of exchange differences arising on setdement of foreign currency transactions are recognized as income or expense of die period in which they arise.

iii) Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date are translated at closing rate. The resultant exchange differences are recognized in the Statement of Profit and Loss.

iv) In respect of the items covered by forward contracts, the premium or discount arising at the inception of the forward exchange contract is amortised as expense or income over die life of die contract.

1) Research & Development Expenditure:

Expenditure on purchase of Fixed Assets for Research and Development purpose are capitalised and depreciation is charged on such additions as per die accounting policy for fixed assets.

Expenditure of revenue nature is charged to die Statement of Profit and Loss.

m) Taxes on Income:

Current tax is die amount of tax payable on die taxable income for die year as determined in accordance widi die provisions of die Income Tax Act, 1961.

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognised as an asset in the Balance Sheet only when it is probable that future economic benefit associated with it will flow to the Company

Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax liabilities are recognised for all timing differences. Deferred tax assets are recognised for timing differences of items other than unabsorbed depreciation and carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realised. However, if there are unabsorbed depreciation and carry forward of losses, deferred tax assets are recognised only if there is virtual certainty that there will be sufficient future taxable income available to realise the assets. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each balance sheet date for their realisability.

n) Derivative Contracts:

The Company enters into forward contracts in Copper and Aluminium to hedge itself against fluctuations in the prices of these commodities. The income/loss from these transactions is accrued at the time of settlement of the contract. Pursuant to the announcement on accounting for derivatives issued by the Institute of Chartered Accountants of India, the Company, in accordance with the principle of prudence as enunciated in AS — 1, "Disclosure of Accounting Policies", provides for losses in respect of all outstanding derivative contracts at the Balance Sheet date by marking them to market. Any net unrealized gains arising on such mark to market are not recognized as income, until realised on grounds of prudence.

o) Provisions, Contingent Liabilities and Contingent Assets:

A provision is recognised when the Company has a present obligation as a result of past events, for which 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. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the balance sheet date. Provisions are reviewed regularly and are adjusted where necessary to reflect the current best estimate of the obligation. Contingent liabilities are disclosed in the Notes. Contingent assets are not recognised in the financial statements.

p) Earnings per share:

Basic earnings per share is computed by dividing the profit / loss after tax by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit / loss after tax as adjusted for the effects dividend, interest and other charges relating to the dilutive potential equity shares.

q) Impairment of Assets

The carrying values of assets / cash generating units are reviewed for impairment at each balance sheet date. If any indication of impairment exists, the recoverable amount is estimated. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor. An asset is treated as impaired when its carrying cost exceeds its recoverable value. An impairment loss is charged to the Statement of Profit and Loss in the period in which an asset is identified as impaired. The impairment loss, if any, recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.


Mar 31, 2013

A) Basis of Preparation of Financial Statements:

The financial statements are prepared under the historical cost convention on accrual basis in accordance with the requirements of the Companies Act, 1956, including the accounting standards notified by the Central Government of India under Section 211(3C) of the Companies Act, 1956.

b) Use of Estimates:

The preparation of financial statements, in conformity with the generally accepted accounting principles requires that the management makes estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities as at the date of financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.

c) Fixed Assets:

Fixed assets are capitalised at cost inclusive of expenses and interest wherever applicable and net of cenvat.

Fixed assets acquired in exchange or in part exchange for another asset are recorded at the net book value of the assets given up, adjusted for any balancing payment or receipt of cash or other consideration.

Capital Assets under erection/installation are reflected in the Balance sheet as "Capital Work-in-Progress".

d) Borrowing Cost:

Borrowing cost specifically identifiable to the acquisition of qualifying assets are capitalized. Qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use.

Other borrowing cost are charged as an expense to the Statement of Profit and Loss.

e) Depreciation:

Depreciation on Plant and Machinery acquired after 1st April, 1990 is provided on Straight Line Method at the rates and in the manner prescribed in Schedule XIV of the Companies Act, 1956.

Depreciation on all other assets is provided on Written Down Value Method at the rates and in the manner prescribed in Schedule XIV of the Companies Act, 1956.

f) Investments:

Long term investments are stated at cost. Provision for diminution in value of investments is made, if other than temporary in nature.

g) Inventories:

Inventories are valued at lower of cost or net realizable value. Cost is determined on first-in-first-out (FIFO) basis. The c ost of work-in-progress and finished goods is determined on full absorption costing method and comprises of raw materials and other direct costs and related production overheads.

Scrap is valued at net realisable value.

h) Revenue Recognition:

Revenue is recognized when no significant uncertainty as to the measurability or collectability exists. Sales are recognized when significant risks and rewards of ownership in the goods are passed on to the customers. Excise duty and sales-tax collected on sales are shown by way of deduction from sales.

i) Employee Benefits:

Retirement benefits to employees comprise of gratuity, superannuation, provident fund, and encashment of leave.

Contributions to the superannuation and provident funds are charged as an expense to the Statement of Profit and Loss as incurred.

Gratuity and Leave Encashment liabilities are determined as per Actuarial Valuation done using the Projected Unit Credit Method.

Gratuity scheme in respect of the employees of the Company is administered through Life Insurance Corporation of India (LIC). Annual contributions as determined by LIC are charged to the Statement of Profit and Loss. The additional liability, if any, arising out of the difference between the actuarial valuation as at the balance sheet date, and the fund balance, is accrued and provided for at the year end.

Liability for employee leave encashment benefits, in accordance with the rules of the Company, is provided on the basis of actuarial valuation, as at the balance sheet date.

j) Foreign Currency Transactions:

i) Foreign currency transactions are recorded at the exchange rates prevailing on the date of the transaction.

ii) The net gain or loss on account of exchange differences arising on settlement of foreign currency transactions are recognized as income or expense of the period in which they arise.

iii) Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date are translated at closing rate. The resultant exchange differences are recognized in the Statement of Profit and Loss.

iv) In respect of the items covered by forward contracts, the premium or discount arising at the inception of the forward exchange contract is amortised as expense or income over the life of the contract.

k) Research & Development Expenditure:

Expenditure on purchase of Fixed Assets for Research and Development purpose are capitalised and depreciation is charged on such additions as per the accounting policy in respect thereof.

Expenditure of revenue nature is charged to the Statement of Profit and Loss.

l) Taxes on Income:

Current taxation:

Provision for current tax is made in accordance with the Income-tax laws prevailing for the relevant assessment years.

Deferred tax:

Deferred tax resulting from "timing differences" between book and taxable profit is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. The deferred tax asset is recognized and carried forward only to the extent that there is a reasonable or virtual certainty, as the case may be that the asset will be realized in future.

m) Derivative Contracts:

The Company enters into forward contracts in Copper and Aluminium to hedge itself against fluctuations in the prices of these commodities. The income/loss from these transactions is accrued at the time of settlement of the contract. The net loss or gain in respect of all outstanding commodity hedging contracts is determined as at the Balance Sheet date by marking them to market and having regard to the principle of "prudence" losses are provided for and gains are ignored.

n) Provisions, Contingent Liabilities and Contingent Assets:

A provision is recognised when the Company has a present obligation as a result of past events, for which 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. Provisions are reviewed regularly and are adjusted where necessary to reflect the current best estimate of the obligation.

A disclosure for contingent liabilities is made where there is a possible obligation or a present obligation that probably will not require an outflow of resources. When there is a possible or a present obligation for which the likelihood of outflow of resources is remote, no provision or disclosure is made.

Contingent assets are neither recognised nor disclosed in the financial statements.


Mar 31, 2012

A) Basis of Preparation of Financial Statements:

The financial statements are prepared under the historical cost convention on accrual basis in accordance with the requirements of the Companies Act, 1956, including the accounting standards notified by the Central Government of India under Section 211(3C) of the Companies Act, 1956.

b) Use of Estimates:

The preparation of financial statements, in conformity with the generally accepted accounting principles requires that the management makes estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities as at the date of financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.

c) Fixed Assets:

Fixed assets are capitalised at cost inclusive of expenses and interest wherever applicable and net of cenvat.

Fixed assets acquired in exchange or in part exchange for another asset are recorded at the net book value of the assets given up, adjusted for any balancing payment or receipt of cash or other consideration.

Capital Assets under erection/installation are reflected in the Balance sheet as "Capital Work-in-Progress".

d) Borrowing Cost:

Borrowing cost specifically identifiable to the acquisition of qualifying assets are capitalized. Qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use.

Other borrowing cost are charged to the Profit & Loss Account.

e) Depreciation: :

Depreciation on Plant and machinery acquired after 1st April, 1990 is provided on Straight Line Method at the rates and in the manner prescribed in Schedule XIV of the Companies Act, 1956.

Depreciation on all other assets is provided on Written Down Value Method at the rates and in the manner prescribed in Schedule XIV of the Companies Act, 1956.

f) Investments:

Long term investments are stated at cost. Provision for diminution in value of investments is made, if other than temporary in nature.

g) Inventories:

Inventories are valued at lower of cost and net realizable value. Cost is determined on first-in-first-out (FIFO) basis. The cost of work-in-progress and finished goods is determined on full absorption costing method and comprises of raw materials and other direct costs and related production overheads.

Scrap is valued at net realizable value.

h) Revenue Recognition:

Revenue (income) is recognized when no significant uncertainty as to the measurability or collectability exists. Sales are recognized when significant risks and rewards of ownership in the goods are passed on to the customers. Excise duty and sales-tax collected on sales are shown by way of deduction from sales.

i) Employee Benefits:

Retirement benefits to employees comprise of gratuity, superannuation, provident fund, and encashment of leave. Contributions to the superannuation and provident funds are charged to the profit and loss account as incurred.

Gratuity and Leave Encashment liabilities are determined as per Actuarial Valuation done using the Projected Unit Credit Method. Gratuity scheme in respect of the employees of the Company is administered through Life Insurance Corporation of India (LIC). Annual contributions as determined by LIC are charged to the profit and loss account. The additional liability, if any, arising out of the difference between the actuarial valuation as at the balance sheet date, and the fund balance, is accrued and provided for at the year end.

Liability for employee leave encashment benefits, in accordance with the rules of the Company, is provided on the basis of actuarial valuation, as at the balance sheet date.

j) Foreign Currency Transactions:

i) Income and expenditure in foreign currency is converted into Indian rupees at the rate of exchange prevailing on the date of transaction.

ii) Exchange rate difference is charged to the profit and loss account on final payment of the liability.

iii) Unsettled transactions at the close of the year are considered taking into account the exchange rate prevailing at the year end and difference is charged to the profit and loss account.

iv) In respect of the items covered by forward contracts, the premium or discount arising at the inception of such a forward exchange contract is antortised as expense or income over the life of the contract.

k) Research & Development Expenditure:

Expenditure on purchase of Fixed Assets for Research and Development purpose are capitalised and depreciation is charged on such additions as per the accounting policy in respect thereof.

Expenditure of revenue nature are charged to the profit and loss account.

l) Taxes on Income:

Current taxation:

Provision for current tax is made in accordance with the Income-tax laws prevailing for the relevant assessment years.

Deferred tax:

Deferred tax resulting from "timing differences" between book and taxable profit is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. The deferred tax asset is recognized and carried forward only to the extent that there is a reasonable or virtual certainty, as the case may be that the asset will be realized in future

m) Derivative Contracts:

The Company enters into forward contracts in Copper and Aluminium to hedge itself against fluctuations in the prices of these commodities. The income/loss from these transactions is accrued at the time of settlement of the contract. The net loss or gain in respect of all outstanding commodity hedging contracts is determined as at the Balance Sheet date by marking them to market and having regard to the principle of "prudence" losses are provided for and gains are ignored,

n) Provisions, Contingent Liabilities and Contingent Assets:

A provision is recognised when the Company has a present obligation as a result of past events, for which it is probable that an outflow of resources embodying ecotjoriiic benefits will be required to settle the obligation and a reliable estimate can be made. Provisions are reviewed regularly and are adjusted where nccessary to reflect the current best estimate of the obligation.

A disclosure for contingent liabilities is made where there is a possible obligation or a present obligation that probably will not require an outflow of resources. When there is a possible or a present obligation for which the likelihood of outflow of resources is remote, no provision or disclosure is made.

Contingent assets are neither recognised nor disclosed in the financial statements.


Mar 31, 2011

1. The accounts are maintained on historical cost basis and the current assets, loans & advances are approximately of the value stated, if realised, in the ordinary course of business.

2. The Company follows accrual method of accounting. The accounts are prepared on the going concern basis and in accordance with the accounting principles generally accepted in India and the relevant provisions of the Companies Act, 1956 including the mandatory Accounting Standards notified by the Central Government of India under Section 211(3C) of the Companies Act, 1956. Except where otherwise stated, the accounting principles have been consistently applied.

3. Fixed Assets:

Fixed assets are capitalised at cost inclusive of expenses and interest wherever applicable and net of cenvat.

Fixed assets acquired in exchange or in part exchange for another asset are recorded at the net book value of the assets given up, adjusted for any balancing payment or receipt of cash or other consideration.

Capital Assets under erection/installation are reflected in the Balance sheet as "Capital Work-in-Progress".

4. Borrowing Cost:

Borrowing cost specifically identifiable to the acquisition of qualifying assets are capitalized. Qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use.

Other borrowing cost are charged to the Profit & Loss Account.

5. Depreciation:

Depreciation on Plant and machinery acquired after 1st April, 1990 is provided on Straight Line Method at the rates and in the manner prescribed in Schedule XIV of the Companies Act, 1956.

Depreciation on all other assets is provided on Written Down Value Method at the rates and in the manner prescribed in Schedule XIV of the Companies Act, 1956.

6. Investments:

Long term investments are stated at cost. Provision for diminution in value of investments is made, if other than temporary in nature.

7. Inventories:

Inventories are valued at lower of cost and net realizable value. Cost is determined on first-in-first-out (FIFO) basis. The cost of work-in-progress and finished goods is determined on full absorption costing method and comprises of raw materials and other direct costs and related production overheads.

Scrap is valued at net realizable value.

8. Revenue Recognition:

Revenue (income) is recognized when no significant uncertainty as to the measurability or collectability exists. Sales are recognized when significant risks and rewards of ownership in the goods are passed on to the customers. Excise duty and sales-tax collected on sales are shown by way of deduction from sales.

9. Employee Benefits:

Retirement benefits to employees comprise of gratuity, superannuation, provident fund, and encashment of leave.

Contributions to the superannuation and provident funds are charged to the profit and loss account as incurred.

Gratuity and Leave Encashment liabilities are determined as per Actuarial Valuation done using the Projected Unit Credit Method.

Gratuity scheme in respect of the employees of the Company is administered through Life Insurance Corporation of India (LIC). Annual contributions as determined by LIC are charged to the profit and loss account. The additional liability, if any, arising out of the difference between the actuarial valuation as at the balance sheet date, and the fund balance, is accrued and provided for at the year end.

Liability for employee leave encashment benefits, in accordance with the rules of the Company, is provided on the basis of actuarial valuation, as at the balance sheet date.

10. Foreign Currency Transactions:

i) Income and expenditure in foreign currency is converted into Indian rupees at the rate of exchange prevailing on the date of transaction.

ii) Exchange rate difference is charged to the profit and loss account on final payment of the liability.

iii) Unsettled transactions at the close of the year are considered taking into account the exchange rate prevailing at the year end and difference is charged to the profit and loss account.

iv) In respect of the items covered by forward contracts, the premium or discount arising at the inception of such a forward exchange contract is amortised as expense or income over the life of the contract.

11. Research & Development Expenditure:

Expenditure on purchase of Fixed Assets for Research and Development purpose are capitalised and depreciation is charged on such additions as per the accounting policy in respect thereof.

Expenditure of revenue nature are charged to the profit and loss account.

12. Taxes on Income:

Current taxation:

Provision for current tax is made in accordance with the Income-tax laws prevailing for the relevant assessment years.

Deferred taxation:

Deferred tax resulting from "timing differences" between book and taxable profit is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. The deferred tax asset is recognized and carried forward only to the extent that there is a reasonable or virtual certainty, as the case may be that the asset will be realized in future

13. Provisions, Contingent Liabilities and Contingent Assets:

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources.

Liabilities which are of contingent nature are not provided but are disclosed at their estimated amount in the notes on accounts.

Contingent assets are neither recognized nor disclosed in the financial statements.


Mar 31, 2010

1. The accounts are maintained on historical cost basis and the current assets, loans & advances are approximately of the value stated, if realised, in the ordinary course of business.

2. The Company follows accrual method of accounting. The accounts are prepared on the going concern basis and in accordance with the accounting principles generally accepted in India and the relevant provisions of the Companies Act, 1956 including the mandotary Accounting Standards notified by the Central Government of India under section 211(3C) of the Companies Act, 1956. Except where otherwise stated, the accounting principles have been consistendy applied.

3. Fixed Assets:

Fixed assets are capitalised at cost inclusive of expenses and interest wherever applicable and net of cenvat.

Fixed assets acquired in exchange or in part exchange for another asset are recorded at the net book value of the assets given up, adjusted for any balancing payment or receipt of cash or other consideration.

Capital Assets under erection/installation are reflected in the Balance sheet as "Capital Work-in-Progress".

4. Borrowing Cost:

Borrowing cost specifically identifiable to the acquisition of qualifying assets are capitalized. Qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use.

Other borrowing cost are charged to the Profit & Loss Account.

5. Depreciation:

Depreciation on Plant and Machinery acquired after 1st April, 1990 is provided on Straight Line Method at the rates and in the manner prescribed in Schedule XIV of the Companies Act, 1956.

Depreciation on all other assets is provided on Written Down Value Method at the rates and in the manner prescribed in Schedule XIV of the Companies Act, 1956.

6. Investments:

Long term investments are stated at cost. Provision for diminution in value of investments is made, if other than temporary in nature.

7. Inventories:

Inventories are valued at lower of cost and net realizable value. Cost is determined on first-in-first-out (FIFO) basis. The cost of work-in-progress and finished goods is determined on full absorption costing method and comprises of raw materials and other direct cost and related production overheads. Scrap is valued at net realizable value.

8. Revenue Recognition:

Revenue (income) is recognized when no significant uncertainty as to the measurability or collectability exists. Sales are recognized when significant risks and rewards of ownership in the goods are passed on to the customers. Excise duty and sales-tax collected on sales are shown by way of deduction from sales.

9. Employee Benefits:

Retirement benefits to employees comprise of gratuity, superannuation, provident fund and encashment of leave. Contributions to the superannuation and provident funds are charged to the profit and loss account as incurred. Gratuity and Leave Encashment liabilities are determined as per Actuarial Valuation done using the Projected Unit Credit Method.

Gratuity scheme in respect of the employees of the Company is administered through Life Insurance Corporation of India (LIC). Annual contributions as determined by LIC are charged to the profit and loss account. The additional liability, if any, arising out of the difference between the actuarial valuation as at the balance sheet date and the fund balance, is accrued and provided for at the year end.

Liability for employee leave encashment benefits, in accordance with the rules of the Company, is provided on the basis of actuarial valuation, as at the balance sheet date.

10. Foreign Currency Transactions:

i) Income and expenditure in foreign currency is converted into Indian rupees at the rate of exchange prevailing on the date of transaction.

ii) Exchange rate difference is charged to the profit and loss account on final payment of the liability.

iii) Unsetded transactions at the close of the year are considered taking into account the exchange rate prevailing at the year end and difference is charged to the profit and loss account.

iv) In respect of the items covered by forward contracts, the premium or discount arising at the inception of such a forward exchange contract is amortised as expense or income over the life of the contract.

11. Research & Development Expenditure:

Expenditure on purchase of Fixed Assets for Research and Development purpose are capitalised and depreciation is charged on such additions as per the accounting policy in respect thereof.

Expenditure of revenue nature are charged to the profit and loss account.

12. Taxes on Income: Current taxation:

Provision for current tax is made in accordance with the Income-tax laws prevailing for the relevant assessment years. Deferred taxation:

Deferred tax resulting from "timing differences" between book and taxable profit is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. The deferred tax asset is recognized and carried forward only to the extent that there is a reasonable or virtual certainty, as the case may be that the asset will be realized in future

 
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