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Accounting Policies of Varun Industries Ltd. Company

Mar 31, 2012

1.1) ACCOUNTING CONVENTION

The Company prepares its Financial Statements on accrual basis in accordance with Generally Accepted Accounting Principles and complies with the applicable Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provision of the Companies Act, 1956.

1.2) FIXED ASSETS

Fixed Assets are stated at cost of acquisition or construction, which comprise all related expenses upto acquisition and installation of the fixed assets or at revalued amounts wherever such assets have been revalued less accumulated depreciation.

1.3) DEPRECIATION

Depreciation on fixed assets except Leasehold Land and Wind Power Projects have been provided on Written- Down Value method, at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956. Amount paid on Leasehold Land has been amortised over the period of lease. Depreciation on Wind Power Projects have been spread over to 20 years period and written off proportionately for the year. Depreciation on addition and deduction of fixed assets is calculated on Pro- Rata basis. Depreciation related to revaluation amount of fixed assets has been calculated at the same rate of depreciation of the asset and deducted from Revaluation Reserve.

1.4) INVESTMENTS

(a) Long term investments are stated at cost. In case, there is a permanent diminution in the value of any investment, a provision for the same is made in the accounts.

(b) Quoted current investments are stated at the lower of cost or market value.

1.5) INVENTORIES

Inventories are carried at the lower of cost (including tax, if any) or net realizable value. The methods of determination of cost for various categories are as under:

(i) Raw Material First In First Out basis

(ii) Packing Goods, Stores & Spares First In First Out basis

(iii) Work-in-process At Works Cost basis

(iv) Finished Goods First In First Out basis

1.6) REVENUE RECOGNITION

a. Sale of Goods is recognized at the same time of dispatch of goods to customers.

b. Export Incentives i.e. Duty Draw Back or DEPB is recognized on accrual basis.

c. Purchase cost of Finished Goods and Packing Goods has been arrived at after deducting returns, discount etc.

d. Interest Income is recognised on time proportion basis.

1.7) FOREIGN EXCHANGE TRANSACTION / TRANSLATION

The Company has complied with AS-11 issued by ICAI as regards the provisions in respect of its Foreign Exchange Transactions. Transactions in foreign currency are recorded at the exchange rate in force at the time transactions are effected. Exchange differences arising on settlement of foreign currency transactions are recognised in the Profit & Loss Account.

Monetary items denominated in foreign currency are restated using the exchange rate prevailing at the date of the Balance Sheet and the resulting net exchange difference is recognised in the Profit & Loss Account.

Forward Contracts are accounted on the basis of their settlement and the resultant realised gain/loss on settlement is recognised in the Profit & Loss Account.

The Company has opted for accounting the exchange difference of long term foreign currency monetary items in line with Companies (Accounting Standards) Amendment Rules 2009 notified on 31st March 2009. Accordingly, the exchange gain/loss relating to long term foreign currency monetary items has been deducted / added to the cost of fixed assets.

1.8) DEFERRED TAX

The Deferred Tax for timing differences between the book and tax profits for the year is accounted for, using the tax rates and laws enacted or subsequently enacted as of the Balance Sheet date. Deferred Tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

1.9) RETIREMENT BENEFITS

(a) Under Provident Fund and E.S.I. Scheme, Company's contribution accruing during the accounting year has been charged to Profit & Loss Account.

(b) Encashment of leave lying to the credit of employees is not provided for on actuarial basis. It is accounted on cash basis. Therefore, it is not possible to ascertain the liability at the end of the accounting year.

(c) Liabilities in respect of gratuity of employees are funded under the employees' group gratuity scheme with the LIC.

1.10) BORROWING COST

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets in accordance with the Accounting Standard 16 on "Borrowing Costs'. All other borrowing costs are charged to revenue.


Mar 31, 2011

1) ACCOUNTING CONVENTION

The Company prepares its Financial Statements on accrual basis in accordance with Generally Accepted Accounting Principles and complies with the applicable Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provision of the Companies Act, 1956.

2) FIXED ASSETS

Fixed Assets are stated at cost of acquisition or construction, which comprise all related expenses upto acquisition and installation of the fixed assets or at revalued amounts wherever such assets have been revalued less accumulated depreciation.

3) DEPRECIATION

Depreciation on fixed assets except Leasehold Land and Wind Power Projects have been provided on Written- Down Value method, at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956. Amount paid on Leasehold Land has been amortised over the period of lease. Depreciation on Wind Power Projects have been spread over to 20 years period and written off proportionately for the year. Depreciation on addition and deduction of fixed assets is calculated on Pro-Rata basis. Depreciation related to revaluation amount of fixed assets has been calculated at the same rate of depreciation of the asset and deducted from Revaluation Reserve.

4) INVESTMENTS

a) Long term investments are stated at cost. In case, there is a permanent diminution in the value of any investment, a provision for the same is made in the accounts.

b) Quoted current investments are stated at the lower of cost or market value.

5) INVENTORIES

Inventories are carried at the lower of cost (including tax, if any) or net realizable value. The methods of determination of cost for various categories are as under:

i) Raw Material : First In First Out basis

ii) Packing Goods, Stores & Spares : First In First Out basis

iii) Work-in-process : At Works Cost basis

iv) Finished Goods : First In First Out basis

6) REVENUE RECOGNITION

a. Sale of Goods is recognized at the same time of dispatch of goods to customers.

b. Export Incentives i.e. Duty Draw Back or DEPB is recognized on accrual basis.

c. Purchase cost of Finished Goods and Packing Goods has been arrived at after deducting returns, discount etc.

d. Interest Income is recognised on time proportion basis.

7) FOREIGN EXCHANGE TRANSACTION / TRANSLATION

The Company has complied with AS-11 issued by ICAI as regards the provisions in respect of its Foreign Exchange Transactions. Transactions in foreign currency are recorded at the exchange rate in force at the time transactions are effected. Exchange differences arising on settlement of foreign currency transactions are recognised in the Profit & Loss Account.

Monetary items denominated in foreign currency are restated using the exchange rate prevailing at the date of the Balance Sheet and the resulting net exchange difference is recognised in the Profit & Loss Account.

Forward Contracts are accounted on the basis of their settlement and the resultant realised gain/loss on settlement is recognised in the Profit & Loss Account.

The Company has opted for accounting the exchange difference of long term foreign currency monetary items in line with Companies (Accounting Standards) Amendment Rules 2009 notified on 31st March 2009. Accordingly, the exchange gain/ loss relating to long term foreign currency monetary items has been deducted / added to the cost of fixed assets.

8) DEFERRED TAX

The Deferred Tax for timing differences between the book and tax profits for the year is accounted for, using the tax rates and laws enacted or subsequently enacted as of the Balance Sheet date. Deferred Tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

9) RETIREMENT BENEFITS

(a) Under Provident Fund and E.S.I. Scheme, Company's contribution accruing during the accounting year has been charged to Profit & Loss account.

(b) Encashment of leave lying to the credit of employees is not provided for on actuarial basis. It is accounted on cash basis. Therefore, it is not possible to ascertain the liability at the end of the accounting year.

(c) Liabilities in respect of gratuity of employees are funded under the employees' group gratuity scheme with the LIC.

10) BORROWING COST

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets in accordance with the Accounting Standard 16 on "Borrowing Costs". All other borrowing costs are charged to revenue.


Mar 31, 2010

1) ACCOUNTING CONVENTION

The Company prepares its Financial Statements on accrual basis in accordance with generally accepted Accounting Principles and complies with the applicable Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provision of the Companies Act, 1956.

2) FIXED ASSETS

Fixed Assets are stated at cost of acquisition or construction, which comprise all related expenses upto acquisition and installation of the fixed assets or at revalued amounts wherever such assets have been revalued less accumulated depreciation.

3) DEPRECIATION

Depreciation on fixed assets except Leasehold Land and Wind Power Projects have been provided on Written- Down Value method, at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956. Amount paid on Leasehold Land has been amortised over the period of lease. Depreciation on Wind Power Projects have been spread over to 20 years period and written off proportionately for the year. Depreciation on addition and deduction of fixed assets is calculated on Pro-Rata basis. Depreciation related to revaluation amount of Fixed Assets has been calculated at the same rate of depreciation of the asset and deducted from Revaluation Reserve.

4) INVESTMENTS

a) Long term investments are stated at cost. In case, there is a permanent diminution in the value of any investment, a provision for the same is made in the accounts.

b) Quoted current investments are stated at the lower of cost or market value.

5) INVENTORIES

Inventories are carried at the lower of cost (including tax, if any) or net realizable value. The methods of determination of cost for various categories are as under:

i) Raw Material : First In First Out basis

ii) Packing Goods, Stores & Spares : First In First Out basis

iii) Work-in-process : At Works Cost basis

iv) Finished Goods : First In First Out basis

6) REVENUE RECOGNITION

a. Sale of Goods is recognized at the same time of dispatch of goods to customers.

b. Export Incentives i.e. Duty Draw Back or DEPB is recognized on accrual basis.

c. Purchase cost of Finished Goods and Packing Goods has been arrived at after deducting Returns, discount etc.

d. Interest Income is recognised on time proportion basis.

7) FOREIGN EXCHANGE TRANSACTION / TRANSLATION

The Company has complied with AS-11 issued by ICAI as regards the provisions in respect of its Foreign Exchange Transactions. Transactions in foreign currency are recorded at the exchange rate in force at the time transactions are effected. Exchange differences arising on settlement of foreign currency transactions are recognised in the Profit & Loss Account.

Monetary items denominated in foreign currency are restated using the exchange rate prevailing at the date of the Balance Sheet and the resulting net exchange difference is recognised in the Profit & Loss Account.

Forward Contracts are accounted on the basis of their settlement and the resultant realised gain/loss on settlement is recognised in the Profit & Loss Account.

The Company has opted for accounting the exchange difference of long term foreign currency monetary items in line with Companies (Accounting Standards) Amendment Rules 2009 notified on 31 st March 2009. Accordingly, the exchange gain/loss relating to long term foreign currency monetary items has been deducted / added to the cost of fixed assets.

8) DEFERRED TAX

The Deferred Tax for timing differences between the book and tax profits for the year is accounted: for, using the tax rates and laws enacted or subsequently enacted as of the Balance Sheet date. Deferred Tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

9) RETIREMENT BENEFITS

(a) Under Provident Fund and E.S.I. Scheme, Companys contribution accruing during the accounting year has been charged to Profit & Loss account.

(b) Encashment of leave lying to the credit of employees is not provided for on actuarial basis. It is accounted on cash basis. Therefore, it is not possible to ascertain the liability at the end of the accounting year.

(c) Liabilities in respect of gratuity of employees are funded under the employees group gratuity scheme with the LIC.

10) BORROWING COST

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets in accordance with the Accounting Standard 16 on "Borrowing Costs". All other borrowing costs are charged to revenue.