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Accounting Policies of Cheviot Company Ltd. Company

Mar 31, 2017

1. SIGNIFICANT ACCOUNTING POLICIES

a. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The financial statements are prepared under the historical cost convention, except for freehold land which has been revalued, on an accrual basis, in accordance with the applicable mandatory Accounting Standards and as per the applicable provisions of the Companies Act, 2013. The accounting policies, unless specifically stated to be otherwise, have been consistently applied by the Company.

b. FIXED ASSETS

I. Tangible Assets (Property, Plant and Equipment)

i. Property, plant and equipment are stated at cost and/or book value less capital subsidy, accumulated depreciation/amortization and impairment losses, if any, except freehold land which is stated at revalued amounts.

ii. Cost comprises purchase price, non-refundable taxes, duties, freight and incidental expenses after deducting trade discounts and rebates related to the acquisition and installation of the assets as well as finance charges wherever applicable relating to borrowed funds attributable to construction/ acquisition of assets for the period up to commencement of commercial production/assets put to use.

iii. Subsequent costs are included in the carrying amount of the asset or recognized as a separate asset, as considered appropriate, only when it is probable that future economic benefits associated with such item will flow to the entity and the costs can be measured reliably.

iv. The cost of assets not put to use as at the date of Balance Sheet are disclosed under capital work-in-progress.

v. In respect of freehold land, the difference between carrying amount of such land as on the date of revaluation and the then replacement value is transferred to revaluation reserve.

vi. Depreciation and amortization on property, plant and equipment are charged on the following basis:

a) On assets added up to 30th November, 1975, on assets pertaining to Falta Special Economic Zone (SEZ) Unit and on assets added on and after 1st April, 1999 except land and building - written down value method on cost / substituted cost less residual value based on useful lives, as specified in Schedule II of the Companies Act, 2013.

b) On assets added from 1st December, 1975 to 31st March, 1999 and on land and building excluding leasehold land and assets pertaining to Falta SEZ Unit- straight line method on cost/substituted cost less residual value based on useful lives, as specified in Schedule II of the Companies Act, 2013.

c) Cost of leasehold land is being amortized over the period of lease.

d) Depreciation on amounts capitalized on account of foreign exchange fluctuation is provided prospectively over the residual life of the assets.

vii. The cost and related accumulated depreciation are eliminated from the financial statements upon sale or retirement of the assets and the resultant gains/losses are recognized in the Statement of Profit and Loss.

II. Intangible Assets

i. Intangible assets comprise of computer software, expected to provide future enduring economic benefits, are stated at cost less accumulated amortization and impairment, if any.

ii. Cost comprises purchase price, non-refundable taxes, duties, and incidental expenses after deducting trade discounts and rebates related to the acquisition and installation of the assets.

iii. Subsequent costs are included in the carrying amount of the asset or recognized as a separate asset, as considered appropriate, only when it is probable that future economic benefits associated with such item will flow to the entity and the costs can be measured reliably.

iv. Intangible assets are amortized over a period of ten years under straight line method.

v. The cost and related accumulated amortization are eliminated from the financial statements upon sale or retirement of the assets and the resultant gains/losses are recognized in the Statement of Profit and Loss

c. IMPAIRMENT OF ASSETS

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is to be charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss, if recognized in any accounting period, is reversible if there is any change in the estimate of recoverable amount.

d. INVESTMENTS

Investments are classified into current and long-term investments. Current investments, except for current maturities of long-term investments, are stated at the lower of cost and fair value. Long-term investments are stated at cost less provision, if any, for diminution other than temporary diminution in the value of such investments.

Market value of quoted mutual funds is arrived at by considering Net Asset Value (NAV).

e. FOREIGN CURRENCY TRANSACTIONS

i. Transactions in foreign currency, other than those relating to fixed assets, are recorded in equivalent rupee value at rates existing at the time at which transactions take place. Year end balances in current assets and liabilities are restated at the yearend exchange rate and the resultant translation gains/losses, if any, arising thereon are credited/charged to the Statement of Profit and Loss.

ii. In respect of transactions covered by forward exchange contracts, premium or discount, where there are underlying assets / liabilities, is amortized as income or expense in the Statement of Profit and Loss over the life of the contract. Further, exchange difference on such contracts i.e. difference between the exchange rate at the reporting/settlement date and the exchange rate on the date of inception/the last reporting date, is recognized as income or expense for the period.

iii. Outstanding forward contracts for firm commitment and highly probable forecast transactions are marked to market and the resultant translation gains/losses, if any, arising thereon are credited/charged to the Statement of Profit and Loss in accordance with guidance note on Accounting for Derivatives Contracts issued by the Institute of Chartered Accountants of India effective from 1st April, 2016.

f. INVENTORIES

i. Raw materials, stores and spares and loose tools are valued at lower of cost and net realizable value. However, items held for use in the production of inventories are not written down below cost, if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost is computed on weighted average basis.

ii. Work-in-progress and finished goods are valued at lower of cost and net realizable value. Finished goods and work-in-progress include cost of conversion, cess and other costs incurred in bringing the inventories to their present location and condition. Cost is computed on weighted average basis.

Adequate provision is made for obsolete and slow-moving stocks, wherever necessary.

g. CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise cash balances on hand, cash balances with banks and highly liquid and readily convertible financial instruments with original maturities, at the date of purchase/investment, of three months or less.

h. BORROWING COSTS

Borrowing costs that are directly attributable to the acquisition or construction of a qualifying asset is capitalized as part of the cost of such asset till such time the asset is ready for its intended use. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use. All other borrowing costs are charged to Statement of Profit and Loss in the period in which they are incurred.

i. RETIREMENT BENEFITS

i. Defined Contribution Plans

Contributions to Provident Fund, Pension Scheme and Employees'' State Insurance Scheme are defined contribution schemes and are charged to the Statement of Profit and Loss of the year. The Company makes specified monthly contributions towards employees provident fund to a trust administered by the Company as well as to provident fund plan operated by the Regional Provident Fund Commissioner. The interest which is payable every year by the trust to the beneficiaries is notified by the Government. The Company has an obligation to make good the shortfall, if any, between the return from the investments of the trust and the notified interest rate.

ii. Defined Benefit Plans

Gratuity liability is a defined benefit obligation and is provided for on the basis of actuarial valuation made at the end of each financial year using projected unit credit method.

Short term compensated absences are recognized on an undiscounted, accrual basis during the period when the employee renders service. Long-term compensated absences are provided for based on actuarial valuation.

Actuarial gains/losses are recognized immediately in the Statement of Profit and Loss. j. REVENUE RECOGNITION

i. Sales are recognized on transfer of significant risks and rewards of ownership of the goods to the buyer for a consideration. Sales are net of sales tax, VAT and returns. Cess recovered from buyers separately is shown as reduction from sales, whereas cess on other sales which is not recovered is charged to the Statement of Profit and Loss.

ii. Interest Income is accounted for on time proportion basis taking into account the amount outstanding and rate applicable.

iii. Dividend income is accounted for in the year in which the right to receive the same is established.

iv. Revenue generated out of and related to Company''s normal operations is considered as other operating revenue.

k. GOVERNMENT GRANTS

Grants from Government are recognized on compliance of conditions and on reasonable assurance of the same being received. Capital incentives are shown as deduction from the gross value of the specific fixed assets. Revenue grants related to export incentives are shown under the head of other operating revenue and other grants are deducted from the related expense.

l. DIVIDEND

Proposed dividend on ordinary shares is recognized as liability on date of approval by shareholders and interim dividends are recognized as liability on date of declaration by the Board of directors of the Company.

m. PROVISIONS FOR CURRENT TAX AND DEFERRED TAX

Provision for current tax is computed after taking into consideration benefits admissible under the provisions of the Income Tax Act, 1961. Deferred tax resulting from timing difference between book profits and taxable profits is accounted for using the tax rates and laws that are enacted or substantively enacted as on the Balance Sheet date. Deferred tax asset is recognized and carried forward if there is a reasonable certainty that the asset will be realised in future.

n. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provisions involving substantial degree of estimation in measurement are recognized when there is present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognized nor disclosed in the financial statements.

Secured by hypothecation of all movable fixed assets on first charge basis and all current assets on second charge basis and by mortgage of specific immovable properties both present and future by deposit of title deeds on first charge basis.

Current maturities of long-term loan amounting to Rs, 14.81 (Previous year Rs, Nil ) are disclosed under Rs,Other current liabilities,-(Refer Note 9).

Outstanding amount including current maturities is repayable in 4 equal quarterly installments of Rs, 3.70 each and balance amount of Rs, 2.78 by May, 2018.

Secured by hypothecation of stocks, book debts and certain other assets on first charge basis and all movable fixed assets on second charge basis and by mortgage of specific immovable properties both present and future by deposit of title deeds, subject to prior charge created in favour of Export Import Bank of India.


Mar 31, 2013

A. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The financial statements are prepared under the historical cost convention, except for certain fixed assets which have been revalued, on an accrual basis, in accordance with the applicable mandatory Accounting Standards and as per the applicable provisions of the Companies Act, 1956. The accounting policies, unless specifically stated to be otherwise, have been consistently applied by the Company.

b. FIXED ASSETS

i. Fixed assets, other than those revalued, are stated at cost/book value less capital subsidy, accumulated depreciation/amortisation and impairment losses, if any.

ii. Cost comprises purchase price, non refundable taxes, duties, freight and incidental expenses related to the acquisition and installation of the assets as well as finance charges wherever applicable relating to borrowed funds attributable to construction/acquisition of fixed assets for the period up to commencement of commercial production/assets put into use.

iii. Intangible assets comprise of software, expected to provide future enduring economic benefits are stated at cost less accumulated amortisation. Cost comprises purchase price and directly attributable expenditure on making the asset ready for its intended use.

iv. In respect of revalued assets, the difference between written down value of the assets as on the date of revaluation and the then replacement value is transferred to revaluation reserve.

c. DEPRECIATION AND AMORTISATION

Depreciation/amortisation on the Company''s fixed assets has been charged on the following basis :

i. On assets added up to 30th November, 1975, on assets pertaining to Falta Special Economic Zone (SEZ) Unit and on assets added on and after 1st April, 1999 except land and building - written down value method at the applicable rates specified in Schedule XIV of the Companies Act, 1956.

ii. On assets added from 1st December, 1975 to 31st March, 1999 and on land and building excluding leasehold land and assets pertaining to Falta SEZ Unit - straight line method under Section 205 (2) (b) of the Companies Act, 1956 at the applicable rates specified in Schedule XIV of the Companies Act, 1956.

iii. Cost of leasehold land is being amortised over the period of lease.

iv. In respect of revalued assets, the difference of depreciation on revalued amount and on written down value, is withdrawn from revaluation reserve.

v. Software is being amortised over a period of ten years under straight line method.

vi. Depreciation on amounts capitalised on account of foreign exchange fluctuation is provided prospectively over the residual life of the assets.

vii. On assets individually costing less than Rs. 0.05, depreciation at the rate of 100% is being provided, subject to aggregate actual cost of individual item of plant and machinery costing Rs. 0.05 or less being less than 10% of total cost of plant and machinery.

d. IMPAIRMENT OF ASSETS

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is to be charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss, if recognised in any accounting period, is reversible if there is any change in the estimate of recoverable amount.

e. INVESTMENTS

Investments are classified into current and long-term investments. Current investments, except for current maturities of long-term investments, are stated at the lower of cost and fair value. Long-term investments are stated at cost less provision, if any, for diminution other than temporary diminution in the value of such investments.

Market value of quoted mutual funds is arrived at by considering Net Asset Value (NAV).

f. FOREIGN CURRENCY TRANSACTIONS

Transactions in foreign currency, other than those relating to fixed assets, are recorded in equivalent rupee value at rates existing at the time at which transactions take place. Year end balances in current assets and liabilities are restated at the year end exchange rate and the resultant translation gains/losses, if any, arising thereon are credited/charged to the Statement of Profit and Loss. In respect of transactions covered by forward exchange contracts, the difference between the contract rate and the rate on the date of the transaction is amortised as income or expense in the Statement of Profit and Loss over the life of the contract. Further, exchange difference on such contracts i.e. difference between the exchange rate at the reporting/settlement date and the exchange rate on the date of inception/the last reporting date, is recognised as income or expense for the period.

g. INVENTORIES

i. Raw materials, stores and spares and loose tools are valued at lower of cost and net realisable value. However, items held for use in the production of inventories are not written down below cost, if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost is computed on weighted average basis.

ii. Work-in-progress and finished goods are valued at lower of cost and net realisable value. Finished goods and work- in-progress include cost of conversion, cess and other costs incurred in bringing the inventories to their present location and condition. Cost is computed on weighted average basis.

Adequate provision is made for obsolete and slow-moving stocks, wherever necessary.

h. CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise cash balances on hand, cash balances with banks and highly liquid and readily convertible financial instruments with original maturities, at the date of purchase/investment, of three months or less.

i. RETIREMENT BENEFITS

i. Defined Contribution Plans

Contributions to Provident Fund, Pension Scheme and Employees'' State Insurance Scheme are defined contribution schemes and are charged to the Statement of Profit and Loss of the year. The Company makes specified monthly contributions towards employees provident fund to a trust administered by the Company as well as to provident fund plan operated by the Regional Provident Fund Commissioner. The interest which is payable every year by the trust to the beneficiaries is notified by the Government. The Company has an obligation to make good the shortfall, if any, between the return from the investments of the trust and the notified interest rate.

ii. Defined Benefit Plans

Gratuity liability is a defined benefit obligation and is provided for on the basis of actuarial valuation made at the end of each financial year using projected unit credit method.

Short term compensated absences are recognised on an undiscounted, accrual basis during the period when the employee renders service. Long-term compensated absences are provided for based on actuarial valuation.

Actuarial gains/losses are recognised immediately in the Statement of Profit and Loss.

j. REVENUE RECOGNITION

i. Sales include exchange gain or loss arising thereon, and are net of cess, sales tax and vat invoiced to customers. Sale of goods is recognised at the time of transfer of substantial risk and rewards of ownership to the buyer for a consideration.

ii. Dividend income is accounted for in the year in which the right to receive the same is established.

iii. Revenue generated out of and related to Company''s normal operations is considered as other operating revenue.

k. GOVERNMENT GRANTS

Grants from Government are recognised on compliance of conditions and on reasonable assurance of the same being received. Capital subsidies are shown as deduction from the gross value of the specific fixed assets. Revenue grants related to export incentives are shown under the head of other operating revenue and other grants are deducted from the related expense.

I. PROVISIONS FOR CURRENT TAX AND DEFERRED TAX

Provision for current tax is computed after taking into consideration benefits admissible under the provisions of the Income Tax Act 1961. Deferred tax resulting from timing difference between book profits and taxable profits is accounted for using the tax rates and laws that are enacted or substantively enacted as on the Balance Sheet date. Deferred tax asset is recognised and carried forward if there is a reasonable certainty that the asset will be realised in future.

m. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provisions involving substantial degree of estimation in measurement are recognised when there is present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognised but are disclosed in the notes. 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, except for certain fixed assets which have been revalued, on an accrual basis, in accordance with the applicable mandatory Accounting Standards and as per the applicable provisions of the Companies Act, 1956. The accounting policies, unless specifically stated to be otherwise, have been consistently applied by the Company.

b. FIXEDASSETS

i. Fixed assets, other than those revalued, are stated at cost/book value less capital subsidy, accumulated depreciation/amortisation and impairment losses, if any.

ii. Cost comprises purchase price, non refundable taxes, duties, freight and incidental expenses related to the acquisition and installation of the assets as well as finance charges wherever applicable relating to borrowed funds attributable to construction/acquisition of fixed assets for the period up to commencement of commercial production/assets put into use.

iii. Intangible assets comprise of software, expected to provide future enduring economic benefits are stated at cost less accumulated amortisation. Cost comprises purchase price and directly attributable expenditure on making the asset ready for its intended use.

iv. In respect of revalued assets, the difference between written down value of the assets as on the date of revaluation and the then replacement value is transferred to revaluation reserve.

c. DEPRECIATION AND AMORTISATION

Depreciation/amortisation on the Company's fixed assets has been charged on the following basis :

i. On assets added up to 30th November, 1975, on assets pertaining to Falta Special Economic Zone (SEZ) Unit and on assets added on and after 1st April, 1999 except land and building - written down value method at the applicable rates specified in Schedule XIV of the Companies Act, 1956.

ii. On assets added from 1st December,1975 to 31st March,1999 and on land and building excluding leasehold land and assets pertaining to Falta SEZ Unit- straight line method under Section 205 (2) (b) of the Companies Act,1956 at the applicable rates specified in Schedule XIV of the Companies Act,1956.

iii. Cost of leasehold land is being amortised over the period of lease.

iv. In respect of revalued assets, the difference of depreciation on revalued amount and on written down value, is withdrawn from revaluation reserve.

v. Software is being amortised over a period of ten years under straight line method.

vi. Depreciation on amounts capitalised on account of foreign exchange fluctuation is provided prospectively over the residual life of the assets.

vii. On assets individually costing less than Rs 0.05, depreciation at the rate of 100% is being provided, subject to aggregate actual cost of individual item of plant and machinery costing Rs 0.05 or less being less than 10% of total cost of plant and machinery.

d. INVESTMENTS

Investments are classified into current and long-term investments. Current investments, except for current maturities of long-term investments, are stated at the lower of cost and fair value. Long-term investments are stated at cost less provision, if any, for diminution other than temporary diminution in the value of such investments.

Market value of quoted mutual funds is arrived at by considering Net Asset Value (NAV).

e. FOREIGNCURRENCYTRANSACTIONS

Transactions in foreign currency, other than those relating to fixed assets, are recorded in equivalent rupee value at rates existing at the time at which transactions take place. Year end balances in current assets and liabilities are restated at the year end exchange rate and the resultant translation gains/losses, if any, arising thereon are credited/charged to the Statement of Profit and Loss.

In respect of transactions covered by forward exchange contracts, the difference between the contract rate and the rate on the date of the transaction is amortised as income or expense in the Statement of Profit and Loss over the life of the contract. Further, exchange difference on such contracts i.e. difference between the exchange rate at the reporting/settlement date and the exchange rate on the date of inception/the last reporting date, is recognised as income or expense for the period.

f. INVENTORIES

i. Raw materials, stores and spares and loose tools are valued at lower of cost and net realisable value. However, items held for use in the production of inventories are not written down below cost, if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost is computed on weighted average basis.

ii. Work-in-progress and finished goods are valued at lower of cost and net realisable value. Finished goods and work-in- progress include cost of conversion, cess and other costs incurred in bringing the inventories to their present location and condition. Cost is computed on weighted average basis.

Adequate provision is made for obsolete and slow-moving stocks, wherever necessary.

g. CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise cash balances on hand, cash balances with banks and highly liquid and readily convertible financial instruments with original maturities, at the date of purchase/investment, of three months or less.

h. RETIREMENT BENEFITS

i. Defined Contribution Plans

Contributions to Provident Fund, Pension Scheme and Employees' State Insurance Scheme are defined contribution schemes and are charged to the Statement of Profit and Loss of the year. The Company makes specified monthly contributions towards employees provident fund to a trust administered by the Company as well as to provident fund plan operated by the Regional Provident Fund Commissioner. The interest which is payable every year by the trust to the beneficiaries is notified by the Government. The Company has an obligation to make good the shortfall, if any, between the return from the investments of the trust and the notified interest rate.

ii. Defined Benefit Plans

Gratuity liability is a defined benefit obligation and is provided for on the basis of actuarial valuation made at the end of each financial year using projected unit credit method.

Short term compensated absences are recognised on an undiscounted, accrual basis during the period when the employee renders service. Long term compensated absences are provided for based on actuarial valuation.

Actuarial gains/losses are recognised immediately in the Statement of Profit and Loss.

i. REVENUE RECOGNITION

i. Sales include exchange gain or loss arising thereon, and are net of cess, sales tax and vat invoiced to customers. Sale of goods is recognised at the time of transfer of substantial risk and rewards of ownership to the buyer for a consideration.

ii. Dividend income is accounted for in the year in which the right to receive the same is established.

iii. Revenue generated out of and related to Company's normal operations is considered as other operating revenue.

j. GOVERNMENT GRANTS

Grants from Government are recognised on compliance of conditions and on reasonable assurance of the same being received. Capital subsidies are shown as deduction from the gross value of the specific fixed assets. Revenue grants related to export incentives are shown under the head of other operating revenue and other grants are deducted from the related expense.

k. PROVISIONS FOR CURRENT TAX AND DEFERRED TAX

Provision for current tax is computed after taking into consideration benefits admissible under the provisions of the Income Tax Act, 1961. Deferred tax resulting from timing difference between book profits and taxable profits is accounted for using the tax rates and laws that are enacted or substantively enacted as on the Balance Sheet date. Deferred tax asset is recognised and carried forward if there is a reasonable certainty that the asset will be realised in future.

I. IMPAIRMENT OF ASSETS

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is to be charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss, if recognised in any accounting period, is reversible if there is any change in the estimate of recoverable amount.

m. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provisions involving substantial degree of estimation in measurement are recognised when there is present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognised but are disclosed in the notes. Contingent assets are neither recognised nor disclosed in the financial statements.


Mar 31, 2011

A. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The financial statements are prepared under the historical cost convention, except for certain fixed assets which have been revalued, on an accrual basis, in accordance with the applicable mandatory Accounting Standards and as per the applicable provisions of the Companies Act, 1956. The accounting policies, unless specifically stated to be otherwise, have been consistently applied by the Company.

b. FIXED ASSETS

i. Fixed assets, other than those revalued, are stated at cost/book value less capital subsidy, accumulated depreciation and impairment losses, if any.

ii. Cost comprises purchase price, non refundable taxes, duties, freight and incidental expenses related to the acquisition and installation of the assets as well as finance charges wherever applicable relating to borrowed funds attributable to construction/acquisition of fixed assets for the period up to commencement of commercial production/assets put into use.

iii. Intangible assets comprise of software, expected to provide future enduring economic benefits are stated at cost less accumulated amortisation. Cost comprises purchase price and directly attributable expenditure on making the asset ready for its intended use.

iv. In respect of revalued assets, the difference between written down values of the assets as on the date of revaluation and the then replacement value is transferred to revaluation reserve.

c. DEPRECIATION

Depreciation on the Companys fixed assets has been charged on the following basis :

i. On assets added up to 30th November, 1975, on assets pertaining to Falta, Special Economic Zone (SEZ) Unit and on assets added on and after 1 st April, 1999 except land & building - written down value method at the applicable rates specified in Schedule XIV of the Companies Act, 1956.

ii. On assets added from 1st December,1975 to 31st March,1999 and on land & building excluding leasehold land & assets pertaining to Falta, SEZ Unit-straight line method under Section 205 (2) (b) of the Companies Act,1956 at the applicable rates specified in Schedule XIV of the Companies Act,1956.

iii. Cost of leasehold land is being amortised over the period of lease.

iv. In respect of revalued assets, the difference of depreciation on revalued amount and on written down value, is withdrawn from revaluation reserve.

v. Software is being amortised over a period often years under straight line method.

vi. Depreciation on amounts capitalised on account of foreign exchange fluctuation is provided prospectively over the residual life of the assets.

vii. On assets individually costing less than Rs. 0.05, depreciation at the rate of 100% is being provided, subject to aggregate actual cost of individual item of plant and machinery costingRs. 0.05 or less being less than 10% of total cost of plant and machinery.

d. INVESTMENTS

Investments are classified into current and long-term investments. Current investments are stated at the lower of cost and fair value. Long term investments are stated at cost less provision, if any, for diminution other than temproary diminution in the value of such investments.

Market value of quoted mutual funds is arrived at by considering Net Asset Value (NAV).

e. FOREIGN CURRENCYTRANSACTIONS

Transactions in foreign currency, other than those relating to fixed assets, are recorded in equivalent rupee value at rates existing at the time at which transactions take place. Year end balances in current assets and liabilities are restated at the year end exchange rate and the resultant translation gains/losses, if any, arising thereon are credited/charged to the Profit & Loss account. In respect of transactions covered by forward exchange contracts, the difference between the contract rate and the rate on the date of the transaction is amortised as income or expense in the Profit & Loss account over the life of the contract. Further, exchange difference on such contracts i.e. difference between the exchange rate at the reporting/settlement date and the exchange rate on the date of inception/the last reporting date, is recognised as income or expense for the period.

f. INVENTORIES

i. Raw materials, stores and spare parts and loose tools are valued at lower of cost and net realisable value. However, items held for use in the production of inventories are not written down below cost, if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost is computed on weighted average basis.

ii. Work-in-progress and finished goods are valued at lower of cost and net realisable value. Finished goods and work- in-progress include cost of conversion, cess and other costs incurred in bringing the inventories to their present location and condition. Cost is computed on weighted average basis.

Adequate provision is made for obsolete and slow-moving stocks, wherever necessary.

g. RETIREMENT BENEFITS

i. Defined Contribution Plans

Contributions to Provident Fund, Pension Scheme and EmployeesState Insurance Scheme are defined contribution schemes and are charged to the Profit & Loss account of the year. The Company makes specified monthly contributions towards employees provident fund to a Trust administered by the Company as well as to provident fund plan operated by the Regional Provident Fund Commissioner. The interest which is payable every year by theTrust to the beneficiaries is notified by the Government. The Company has an obligation to make good the shortfall, if any, between the return from the investments of the trust and the notified interest rate.

ii. Defined Benefit Plans

Gratuity liability is a defined benefit obligation and is provided for on the basis of actuarial valuation made at the end of each financial year using projected unit credit method.

Short term compensated absences are recognised on an undiscounted, accrual basis during the period when the employee renders service. Long term compensated absences are provided for based on actuarial valuation.

Actuarial gains/losses are recognised immediately in the statement of Profit & Loss account.

h. REVENUE RECOGNITION

i. Sales include exchange gain or loss arising thereon, and are net of cess, sales tax and vat invoiced to customers. Sale of goods is recognised at the time of transfer of substantial risk and rewards of ownership to the buyer for a consideration.

ii. Dividend income is accounted for in the year in which the right to receive the same is established.

iii. Income generated out of and related to Companys normal operations is considered as related income.

i. GOVERNMENT GRANTS

Grants from Government are recognised on compliance of conditions and on reasonable assurance of the same being received. Capital subsidies are shown as deduction from the gross value of the specific fixed assets. Revenue grants related to export incentives are shown under the head of related income and other grants are deducted from the related expense.

j. PROVISIONS FOR CURRENTTAX & DEFERRED TAX

Provision for current tax is computed after taking into consideration benefits admissible under the provisions of the IncomeTax Act, 1961. Deferred tax resulting from timing difference between book profits and taxable profits is accounted for using the tax rates and laws that are enacted or substantively enacted as on the Balance Sheet date. Deferred tax asset is recognised and carried forward if there is a reasonable certainty that the asset will be realised in future.

k. IMPAIRMENT OF ASSETS

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is to be charged to the Profit & Loss account in the year in which an asset is identified as impaired. The impairment loss, if recognised in any accounting period, is reversible if there is any change in the estimate of recoverable amount.


Mar 31, 2010

A. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The financial statements are prepared under the historical cost convention, except for certain fixed assets which have been revalued, on an accrual basis, in accordance with the applicable mandatory Accounting Standards and as per the applicable provisions of the Companies Act, 1956. The accounting policies, unless specifically stated to be otherwise, have been consistently applied by the Company.

b. FIXED ASSETS

i. Fixed Assets, other than those revalued, are stated at cost/book value less depreciation and capital subsidy.

ii. Cost includes incidental expenses of acquisition/installation and financial cost relating to borrowed funds attributable to construction/acquisition of fixed assets for the period up to commencement of commercial production/assets put into use.

iii. In respect of revalued assets, the difference between written down values of the assets as on the date of revaluation and the then replacement value is transferred to revaluation reserve.

iv. Intangible assets comprising of specialised software is stated at cost less accumulated amortisation.

c. DEPRECIATION

Depreciation on the companys fixed assets has been charged on the following basis :

i. On assets added up to 30th November, 1975, on assets pertaining to Falta, Special Economic Zone (SEZ) Unit and on assets added on and after 1 st April,1999 except Land & Building - written down value method at the applicable rates specified in Schedule XIV of the Companies Act, 1956.

ii. On assets added from 1st December,1975 to 31st March,1999 and on Land & Building excluding Leasehold Land & assets pertaining to Falta, SEZ Unit - Straight Line Method under Section 205 (2) (b) of the Companies Act,1956 at the applicable rates specified in Schedule XIV of the Companies Act,1956.

iii. Cost of Leasehold Land is being amortised over the period of lease.

iv. In respect of revalued assets, the difference of depreciation on revalued amount and on written down value, is withdrawn from revaluation reserve.

v. Specialised software is being amortised over a period often years under Straight Line Method.

vi. Depreciation on amounts capitalised on account of foreign exchange fluctuation is provided prospectively over the residual life of the assets.

vii. On assets individually costing less than Rs. 0.05, depreciation at the rate of 100% is being provided, subject to aggregate actual cost of individual item of plant and machinery costing Rs.0.05 or less being less than 10% of total cost of plant and machinery.

d. INVESTMENTS

Long term investments are valued at cost less permanent diminution in value, if any. Current investments are valued at lower of cost and fair value.

e. FOREIGN CURRENCY TRANSACTIONS

Transactions in foreign currency, other than those relating to fixed assets, are recorded in equivalent rupee value at rates existing at the time at which transactions take place. Year end balances in current assets and liabilities are restated at the year end exchange rate and the resultant translation gains/losses, if any, arising thereon are credited/charged to the profit and loss account. In respect of transactions covered by forward exchange contracts, the difference between the contract rate and the rate on the date of the transaction is recognised as income or expense in the profit and loss account over the life of the contract.

f. INVENTORIES

i. Raw materials, stores and spare parts and loose tools are valued at lower of cost and net realisable value. However, items held for use in the production of inventories are not written down below cost, if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost is computed on a weighted average basis.

ii. Work-in-progress and finished goods are valued at lower of cost and net realisable value. Finished goods and work- in-progress include cost] of conversion, cess and other costs incurred in bringing the inventories to their present location and condition. Cost is computed on weighted average basis.

Adequate provision is made for obsolete and slow-moving stocks, wherever necessary.

g. RETIREMENT BENEFITS

i. Defined Contribution Plans

Contributions to Provident Fund, Pension Scheme and EmployeesState Insurance Scheme are defined contribution schemes and are charged to the Profit & Loss account of the year. The Company makes specified monthly contributions towards employees provident fund to a Trust administered by the Company as well as to provident fund plan operated by the Regional Provident Fund Commissioner. The interest which is payable every year by the Trust to the beneficiaries is notified by the Government. The Company has an obligation to make good the shortfall, if any, between the return from the investments of the Trust and the notified interest rate. ii. Defined Benefit Plans

Gratuity liability is a defined benefit obligation and is provided for on the basis of actuarial valuation made at the end of each financial year using projected unit credit method.

Short term compensated absences are recognised on an undiscounted, accrual basis during the period when the employee renders service. Long term compensated absences are provided for based on actuarial valuation. Actuarial gains / losses are recognised immediately in the statement of profit and loss account. h. SALES AND RELATED INCOME

i. Sales include exchange gain or loss arising thereon, and are net of cess, sales tax and vat invoiced to customers. Sale of goods is recognisedat the time of transfer of substantial risk and rewards of ownership to the buyer for a consideration. ii. Income generated out of and related to Companys normal operations is considered as related income. i. GOVERNMENT GRANTS

Grants from Government afe recognised on compliance of conditions and on reasonable assurance of the same being received. Capital subsidies are shown as deduction from the gross value of the specific fixed assets. Revenue grants related to export incentives are shown under the head of related income and other grants are deducted from the related expense. j. PROVISIONS FOR CURRENT TAX & DEFERRED TAX

Provision for current tax is computed after taking into consideration benefits admissible under the provisions of the Income Tax Act, 1961. Referred tax resulting from timing difference between book profits and taxable profits is accounted for using the ^ax rates and laws that are enacted or substantively enacted as on the Balance Sheet date. Deferred tax asset is recognised and carried forward to the extent that there is a reasonable certainty that the asset will be realised in future. k. IMPAIRMENT OF ASSETS

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is to be charged to the profit and loss account in the year in which an asset is identified as impaired. The impairment loss, if recognised in any accounting period, is reversible if there is any change in the estimate of recoverable amount.

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