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Accounting Policies of Varun Shipping Company Ltd. Company

Mar 31, 2014

A. CONVENTION:

The accounts are prepared under the historical cost convention and as a going concern. Fixed assets are included at the cost incurred at the date of acquisition.

b. FOREIGN EXCHANGE TRANSACTIONS:

Loans in foreign currency from banks and financial institutions for acquisition of fixed assets are converted at the rate of exchange prevailing on the date of Balance Sheet. However, where there are outstanding forward cover contracts, loans are translated at the rate under the said covers.

Government of India, Ministry of Corporate Affairs vide Notification No.GSR 225(E) dated 31st March, 2009 issued Companies (Accounting Standards) Amendment Rule 2009 as amended on 29th December,2011, with effect from Accounting Year commencing on or after 7th December, 2006.

In terms of the notification referred above, exchange differences arising on reporting of long term foreign currency loans, so far as they relate to acquisition of depreciable capital assets, is added to or deducted from the cost of the asset and depreciated over the balance life of the asset and in other cases it is accumulated in a "Foreign Currency Monetary Items Translation Difference Account" and amortized over balance period of such long term liability but not beyond 31st March, 2020. Current assets and current liabilities are converted at the rate prevailing on the Balance Sheet date and the net result is taken into Statement of Profit & Loss account.

Gains or Losses on other foreign exchange transactions during the year are credited / debited to Statement of Profit & Loss Account.

c. Impairment of Assets

The Company reviews the carrying values of tangible assets for any possible impairment at each balance sheet date. Impairment loss, if any, is recognised in the year in which impairment takes place.

d. CAPITALISATION OF EXPENSES

i. Interest and other expenses incurred on amounts borrowed for the company's expansion programme are carried forward and allocated to the cost of assets acquired.

ii. In addition operating costs of newly acquired ships till the first load port or commencement of first commercial voyage in case of offshore assets are added to the cost of assets. These expenses include initial bunkers, stores, spares, interest, floating staff salaries and wages, travelling of personnel and other incidental expenses.

e. DEPRECIATION

Depreciation is provided on ships on straight line basis at the rates provided in Schedule XIV to the Companies Act, 1956, or such higher rates as have been determined by technical evaluation of the balance useful life for each ship. Depreciation on other assets is provided on the written down value method at the rates specified in Schedule XIV to the Companies Act, 1956.

f. TREATMENT OF MAJOR REPAIRS

All major repairs including special survey expenses carried out on vessels are written off to the revenue in the year of incurring the expenses. However, where such expenses are in the nature of capital expenses, the same are added to the cost of the vessel concerned.

g. LEASE RENTALS AND BAREBOAT CHARTER EXPENSES

Assets acquired under finance lease from 1st April 2001 are accounted in accordance with Accounting Standard 19 issued by the Institute of Chartered Accountants of India. Similarly assets given on long term bare boat charter basis is considered as finance lease for the purpose of accounts.

h. STORES AND SPARES

Stores and spares purchased are directly issued to ships and the values of such purchases are charged to the expenses account as consumed.

i. REVENUE RECOGNITION

Income from time and voyage charters is recorded on the basis of rates contracted with charterers. For voyages in progress at the year end, the estimated net earnings are divided . proportionately over the total number of days taken to complete the voyage and credit is taken for the net earnings falling within the accounting period.

Claims receivable on account of Insurance are accounted for to the extent the Company is reasonably certain of the ultimate collection.

i. EMPLOYEE BENEFITS

For defined benefit plans, in case of shore staff and ships' officers on Company's roster, 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 recognized in full in the Statement of Profit and Loss account for the period in which they occur.

in the case of ships' crew members, gratuity is accounted for on cash basis and is insignificant in value.

k. PROVISION FOR DOUBTFUL DEBTS/ADVANCES

Specific provisions for doubtful debts are made by provisions charged to current revenue. The determination of the balance of the provision is based on evaluation of individual advances.

l. SHARE ISSUE EXPENSES:

the Company follows the practice of adjusting expenses in connection with the issue of shares / convertible debentures against Securities premium.

m. CONTINGENT LIABILITIES

The following are considered as contingent liabilities by the company and disclosed by way of Notes to the accounts: -

i. Guarantees executed by the company's bankers

ii. Demands received from statutory authorities but not accepted by the company.

iii. Claims against the company not acknowledged as debts.

iv. Estimated amount of contracts remaining to be executed on capital account and not provided for.

v. Corporate guarantee issued by the company on behalf of Subsidiary/Associate companies.




Mar 31, 2011

(a) CONVENTION

The accounts are prepared under the historical cost convention and as a going concern. Fixed assets are included at the cost incurred at the date of acquisition.

(b) FOREIGN EXCHANGE TRANSACTIONS

Loans in foreign currency from banks and financial institutions for acquisition of fixed assets are converted at the rate of exchange prevailing on the date of Balance Sheet. However, where there are outstanding forward cover contracts, loans are translated at the rate under the said covers.

Government of India, Ministry of Corporate Affairs vide Notification No.GSR 225(E) dated 31 st March, 2009 issued Companies (Accounting Standards) Amendment Rules 2009 as amended on 1 1 th May, 201 1, with effect from Accounting Year commencing on or after 7th December, 2006.

In terms of the notification referred above, exchange differences arising on reporting of long term foreign currency loans, so far as they relate to acquisition of depreciable capital assets, is added to or deducted from the cost of the asset and depreciated over the balance life of the asset and in other cases it is accumulated in a "Foreign Currency Monetary Items Translation Difference Account" and amortized over balance period of such long term liability but not beyond 31st March, 2012. Current assets and current liabilities are converted at the rate prevailing on the Balance Sheet date and the net result is taken into Profit & Loss account.

Gains or Losses on other foreign exchange transactions during the year are credited / debited to Profit & Loss Account.

(c) IMPAIRMENT OF ASSETS

The Company reviews the carrying values of tangible assets for any possible impairment at each balance sheet date. Impairment loss, if any, is recognised in the year in which impairment takes place.

(d) CAPITALISATION OF EXPENSES

i) Interest and other expenses incurred on amounts borrowed for the company's expansion programme are carried forward and allocated to the cost of assets acquired.

ii) In addition operating costs of newly acquired ships till the first load port or commencement of first commercial voyage in case of offshore assets are added to the cost of assets. These expenses include initial bunkers, stores, spares, interest, floating staff salaries and wages, travelling of personnel and other incidental expenses.

(e) DEPRECIATION

Depreciation is provided on ships on straight line basis at the rates provided in Schedule XIV to the Companies Act, 1956, or such higher rates as have been determined by technical evaluation of the balance useful life for each ship. Depreciation on other assets is provided on the written down value method at the rates specified in Schedule XIV to the Companies Act, 1956.

(f) TREATMENT OF MAJOR REPAIRS

All major repairs including special survey expenses carried out on vessels are written off to the revenue in the year of incurring the expenses. However, where such expenses are of the nature of capital expenses, the same are added to the cost of the vessel concerned.

(g) LEASE RENTALS AND BAREBOAT CHARTER EXPENSES

Assets acquired under finance lease from 1st April, 2001 are accounted in accordance with Accounting Standard 19 issued by the Institute of Chartered Accountants of India. Similarly assets given on long term bare boat charter basis is considered as finance lease for the purpose of accounts.

(h) STORES AND SPARES

Stores and spares purchased are directly issued to ships and the values of such purchases are charged to the expenses account as consumed.

(i) REVENUE RECOGNITION

Income from time and voyage charters is recorded on the basis of rates contracted with charterers. For voyages in progress at the year end, the estimated net earnings are divided proportionately over the total number of days taken to complete the voyage and credit is taken for the net earnings falling within the accounting period.

Claims receivable on account of Insurance are accounted for to the extent the Company is reasonably certain of the ultimate collection.

(j) EMPLOYEE BENEFITS

For defined benefit plans, in case of shore staff and ships' officers on Company's roster, 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 recognized in full in the profit and loss account for the period in which they occur.

In the case of ships' crew members, gratuity is accounted for on cash basis and is insignificant in value.

(k) PROVISION FOR DOUBTFUL DEBTS/ADVANCES

Specific provisions for doubtful debts are made by provisions charged to current revenue. The determination of the balance of the provision is based on evaluation of individual advances.

(l) SHARE ISSUE EXPENSES

The Company follows the practice of adjusting expenses in connection with the issue of shares/ convertible debentures against share premium.

(m) CONTINGENT LIABILITIES

The following are considered as contingent liabilities by the company and disclosed by way of Notes to the accounts: -

i) Guarantees executed by the company's bankers.

ii) Demands received from statutory authorities but not accepted by the company.

iii) Claims against the company not acknowledged as debts.

iv) Estimated amount of contracts remaining to be executed on capital account and not provided for.

v) Corporate guarantee issued by the company on behalf of associate companies.


Mar 31, 2010


The accounts are prepared under the historical cost convention and as a going concern.Fixed assets are included at the cost incurred at the date of acquisition.

(b)Foreign Exchange Transactions

Loans in foreign currency from banks and financial institutions for acquisition of fixed assets are converted at the rate of exchange prevailing on the date of Balance Sheet.However,where there are outstanding forward cover contracts,loans are translated at the rate under the said covers. Government of India,Ministry of Corporate Affairs vide Notification No.GSR 225CE)dated 31st March,20O9 issued Companies (Accounting Standards)Amendment Rule 2OO9 with effect from Accounting Year commencing on or after 7th December,2006.

In terms of the notification referred above,exchange differences arising on reporting of long term foreign currency loans,so far as they relate to acquisition of depreciable capital assets,is added to or deducted from the cost of the asset and depreciated over the balance life of the asset and in other cases it is accumulated in a "Foreign Currency Monetary Items Translation Difference Account"and amortized over balance period of such long term liability but not beyond 31st March,2011 .

Current assets and Current liabilities are converted at the rate prevailing on the Balance Sheet date and the net result is taken into Profit &Loss account.

Gains or Losses on other foreign exchange transactions during the year are credited /debited Profit &Loss Account.

(c)Impairment of Assets

The Company reviews the carrying values of tangible assets for any possible impairment at each balance sheet date.Impairment loss,if any,is recognised in the year in which impairment takes place.

(d)Capitalisation of Expenses

i)Interest and other expenses incurred on amounts borrowed for the companys expansion programme are carried forward and allocated to the cost of assets acquired,

ii)In addition operating costs of newly acquired ships till the first load port or commencement of first commercial voyage in case of offshore assets are added to the cost of assets. These expenses include initial bunkers,stores,spares,interest,floating staff salaries and wages,travelling of personnel and other incidental expenses.

(e)Depreciation

Depreciation is provided on ships on straight line basis at the rates provided in Schedule XIV to the Companies Act,1 956,or such higher rates as have been determined by technical evaluation of the balance useful life for each ship.Depreciation on other assets is provided on the written down value method at the rates specified in Schedule XIV to the Companies Act,1 956.

(f)Treatment of Major Repairs

All major repairs including special survey expenses carried out on vessels are written off to the revenue in the year of incurring the expenses.However,where such expenses are of the nature of capital expenses,the same are added to the cost of the vessel concerned.

(g)Lease Rentals and Bareboat Charter Expenses

Assets acquired under finance lease from 1st April 2OO1 are accounted in accordance with Accounting Standard 19 issued by the Institute of Chartered Accountants of India.Similarly assets given on long term bare boat charter basis is considered as finance lease for the purpose of accounts.

(h)Stores and Spares

Stores and spares purchased are directly issued to ships and the values of such purchases are charged to the expenses account as consumed.

(D Revenue Recognition

Income from time and voyage charters is recorded on the basis of rates contracted with charterers.For voyages in progress at the year end,the estimated net earnings are divided proportionately over the total number of days taken to complete the voyage and credit is taken for the net earnings falling within the accounting period.

(j)Employee Benefits

For defined benefit plans,in case of shore staff and shipsofficers on Companys roster,the cost of providing benefits is determined using the projected unit credit method,with actuarial

(k)Provision For Doubtful Debts/Advances

Specific provisions for doubtful debts are made by provisions charged to current revenue.The determination of the balance of the provision is based on evaluation of individual advances.

(l)Share Issue Expenses

The Company follows the practice of adjusting expenses in connection with the issue of shares /convertible debentures against share premium.


The following are considered as contingent liabilities by the company and disclosed by way of Notes to the accounts:-Guarantees executed by the companys bankers.

Demands received from statutory authorities but not accepted by the company. Claims against the company not acknowledged as debts.

Estimated amount of contracts remaining to be executed on capital account and not provided for.

v)Corporate guarantee issued by the company on behalf of erstwhile subsidiary.

 
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