Accounting Policies of Classic Diamonds (India) Ltd. Company

Mar 31, 2014

A Basis of Preparation of Financial Statements

The accounts have been prepared on the accrual basis of accounting, under historical cost convention and in accordance with the generally accepted accounting principles, Companies Accounting Standards notified by the Central Government of India under the Companies (Accounting Standards) Rules, 2006 and the provisions of Companies Act, 1956, except where otherwise stated.

B Use of Estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognised in the period in which the results are known/ materialised.

C Fixed Assets

Fixed Assets are carried on at cost of acquisition less accumulated depreciation. Cost includes other direct/indirect and incidental expenses incurred upto the date the asset is ready for its intended use but excludes Cenvat availed on such assets. Depreciation has been provided on written down value method of depreciation at the rates prescribed under Schedule XIV to the Companies Act, 1956.

Depreciation is provided on pro-rata basis with reference to the date of addition / installation / deletion except in case of assets costing Rs 5,000/- or less, which are depreciated at 100% in the year of acquisition.

D Impairment of Assets

An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. An impairment loss is charged to the Profit and Loss Account in the year in which an asset is identified as impaired. The impairment loss recognised in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.

E Foreign Currency Transactions

Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction or that approximates the actual rate at the date of the transaction. Any income or expense on account of exchange difference either on settlement is recognised in the Profit and Loss account except in case of long term liabilities, where they relate to acquisition of fixed assets, in which case they are adjusted to the carrying cost of such assets. Monetary items denominated in foreign currencies at the year end are not restated at year end rates.

In respect of foreign exchange transactions covered by forward exchange / options contracts, the difference between the contract rate and the exchange rate at date of the transaction is recognized as income or expense over the life of the contract, except in respect of liabilities incurred for acquiring fixed assets where such difference is adjusted in carrying amount of respective fixed assets. Gains or losses on cancellation or renewal of contracts are recognized as income or expenses, except in respect of fixed assets where such gains or losses are adjusted in carrying amount of the respective fixed assets.

F Inventories

Due to the short period of processing and / or manufacturing, difficulty in identifying the stages of process and the insignificant impact on valuation, goods in process, including polished diamonds, are classified as raw materials for the purpose of classification and valuation.

Valuation Raw Materials:

Rough diamonds are valued at the lower of cost and net realizable value. The cost is determined on specific identification basis by adding purchase price, commission on purchase and clearing charges and by reducing the sale value of raw materials sold. Other items of raw material are valued at cost on FIFO basis.

Finished Goods:

Polished diamonds are valued at estimated cost or estimated net realizable value whichever is lower. cost is based on technical estimate by the management to avoid distortion in valuation. In view of the nature of variation in the values of individual diamonds and the differential in their processing costs, it is not practicable to compute the cost of polished diamonds using either FIFO or Weighted average cost. In view of the numerous grades, it is not practicable to use specific costs. The basis of computing cost used on consistent basis though in line with generally accepted industry practice, is a deviation from the method prescribed by Accounting Standard (AS) – 2 ''Valuation of Inventories''.

Jewellery is valued at lower of cost on weighted average basis or net realized value.

Rough Rejection:

Rough Rejection Diamonds are valued at estimated realizable value.

Stores & Spares:

Stores and Spares are valued at the lower of cost or net realizable value. Cost is determined on FIFO basis.

The impact on loss for the year, reserves and surplus and inventories as at 31 March 2014, if any, due to the above deviations is not ascertainable.

G Revenue Recognisition

The Company recognizes revenue on the sale of products, inclusive of freight and insurance, if any, when the products are delivered to the dealer / customer or when delivered to the carrier for export sales, which is when risks and rewards of ownership pass to the dealer / customer. Interest income is accounted on accrual basis.

Dividend income is accounted for when the right to receive is established. Insurance claims and refund from governments are accounted on realization basis.

H Employee Benefits

Short-term employee benefits are recognised as an expense in the Profit and Loss Account of the year in which the related service is rendered. Increamental gratuity liability calculated on the basis of 15 days last drawn salary for each completed year of service is recognised as an expense in the Profit and Loss Account. Liability for leave encashment to staff and workers for the year is paid / provided in the year of accrual.

I Investments

Long Term Investments are c arried at cost after deducting provision, in cases where the fall in market value has been considered of permanent nature. Current Investments are stated at lower of cost and fair value. Net asset value of units declared by mutual funds is considered as market value for non-exchange traded Mutual Funds.

J Provision for Taxation

Tax expense comprises of current and deferred tax. Current income taxes are measured at the amount expected to be paid to the tax authorities in accordance with the requirements of domestic laws of the respective countries.

Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income and reversal of timing differences of earlier years.

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized only to the extent that there is reasonable/virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

At each balance sheet date the Company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax assets to the extent that it has become reasonably/virtually certain that sufficient future taxable income will be available against which such deferred tax assets can be realized.

K Borrowing Costs

Borrowing costs directly attributable to the acquisition or construction of qualifying assets, as defined in AS – 16 on "Borrowing Cost" are capitalized as cost of the assets, up to the date the asset is put to use. Other borrowing costs are charged to the Profit and Loss Account in the year in which they are incurred.

L Earnings per share

The basic earnings per share ("EPS") is computed by dividing the net profit after tax for the year available for the equity shareholders by the weighted average number of equity shares outstanding during the year. For the purpose of calculating diluted earnings per share, net profit/(loss) after tax for the year available for equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

M Impairment

At each balance sheet date, the Group determines whether a provision should be made for impairment loss on fixed assets (including intangible assets), by considering the indications that an impairment loss may have occurred in accordance with Accounting Standard (AS) - 28 ''Impairment of Assets''. Where the recoverable amount of any fixed assets is lower than its carrying amount, a provision for impairment loss on fixed assets is made. At the balance sheet date there is an indication that previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the assets is reflected at the recoverable amount subject to a minimum of depreciated historical cost.

N Provisions, Contingent Liabilities and Contingent Assets

The Company recognizes a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made . Contingent Assets are neither recognized nor disclosed in the financial statements.

b) Terms/ rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs.2 per share. Each holder of equity shares is entitled to one vote per share. Due to the losses incurred by the company, the Board of Directors have not proposed any dividend in Current Year.

In the event of liquidation of the Company, the holders of the equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

Working capital loans - from banks

Working capital loans from banks are secured by hypothecation of entire current assets (first pari passu) of the Company, equitable mortgage by deposit of title deeds of Land and factory building at Mumbai and surat and office premises of the Company at various locations in mumbai and office premises of two firms in which directors have significant influence, corporate guarantee of two firms in which directors have significant influence, personal guarantee of directors and lien on fixed deposits.

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Mar 31, 2013

A. Basis of Preparation of Financial Statements

The accounts have been prepared on the accrual basis of accounting, under historical cost convention and in accordance with the generally accepted accounting principles, Companies Accounting Standards notified by the Central Government of India under the Companies (Accounting Standards) Rules, 2006 and the provisions of Companies Act, 1956, except where otherwise stated.

b. Use of Estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known/ materialized.

c. Fixed Assets

Fixed Assets are carried on at cost of acquisition less accumulated depreciation. Cost includes other direct/indirect and incidental expenses incurred up to the date the asset is ready for its intended use but excludes Cenvat availed on such assets. Depreciation has been provided on written down value method of depreciation at the rates prescribed under Schedule XIV to the Companies Act, 1956.

Depreciation is provided on pro-rata basis with reference to the date of addition / installation / deletion except in case of assets costing Rs 5,000/- or less, which are depreciated at 100% in the year of acquisition.

d. Impairment of Assets

An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. An impairment loss is charged to the Profit and Loss Account in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.

e. Foreign Currency Transactions

Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction or that approximates the actual rate at the date of the transaction. Any income or expense on account of exchange difference either on settlement is recognised in the Profit and Loss account except in case of long term liabilities, where they relate to acquisition of fixed assets, in which case they are adjusted to the carrying cost of such assets. Monetary items denominated in foreign currencies at the year end are not restated at year end rates.

In respect of foreign exchange transactions covered by forward exchange / options contracts, the difference between the contract rate and the exchange rate at date of the transaction is recognized as income or expense over the life of the contract, except in respect of liabilities incurred for acquiring fixed assets where such difference is adjusted in carrying amount of respective fixed assets. Gains or losses on cancellation or renewal of contracts are recognized as income or expenses, except in respect of fixed assets where such gains or losses are adjusted in carrying amount of the respective fixed assets.

f. Inventories ,

Due to the short period of processing and / or manufacturing, difficulty in identifying the stages of process and the insignificant impact on valuation, goods in process, including polished diamonds, are classified as raw materials for the purpose of classification and valuation.

Valuation Raw Materials:

Rough diamonds are valued at the lower of cost and net realizable value. The cost is determined on specific identification basis by adding purchase price, commission on purchase and clearing charges and by reducing the sale value of raw materials sold. Other items of raw material are valued at cost on FIFO basis.

Finished Goods:

Polished diamonds are valued at estimated cost or estimated net realizable value whichever is lower, cost is based on technical estimate by the management to avoid distortion in valuation. In view of the nature of'' variation in the values of individual diamonds and the differential in their processing costs, it is not practicable to compute the cost of polished diamonds using either FIFO or Weighted average cost. In view of the numerous grades, it is not practicable to use specific costs. The basis of computing cost used on consistent basis though in line with generally accepted industry practice, is a deviation from the method prescribed by Accounting Standard (AS)-2 ''Valuation of Inventories''.

Jewellery is valued at lower of cost on weighted average basis or net realized value.

Rough Rejection:

Rough Rejection Diamonds are valued at estimated realizable value.

Stores & Spares:

Stores and Spares are valued at the lower of cost or net realizable value. Cost is determined on FIFO basis.

The impact on loss for the year, reserves and surplus and inventories as at 31 March 2013, if any, due to the above deviations is not ascertainable. .

g. Revenue Recognition

The Company recognizes revenue on the sale of products, inclusive of freight and insurance, if any, when the products are delivered to the dealer / customer or when delivered to the carrier for export sales, which is when risks and rewards of ownership pass to the dealer / customer. Interest income is accounted on accrual basis. Dividend income is accounted for when the right to receive is established. Insurance claims and refund from governments are accounted on realization basis.

h. Employee Benefits

Short-term employee benefits are recognized as an expense in the Profit and Loss Account of the year in which the related service is rendered. Incremental gratuity liability calculated on the basis of 15 days last drawn salary for each completed year of service is recognized as an expense in the Profit and Loss Account. Liability for leave encashment to staff and workers for the year is paid / provided in the year of accrual.

i. Investments

Long Term Investments are carried at cost after deducting provision, in cases where the fall in market value has been considered of permanent nature. Current Investments are stated at lower of cost and fair value. Net asset value of units declared by mutual funds is considered as market value for non-exchange traded Mutual Funds.

j. Provision for Taxation

Tax expense comprises of current and deferred tax. Current income taxes are measured at the amount expected to be paid to the tax authorities in accordance with the requirements of domestic laws of the respective countries. Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income and reversal of timing differences of earlier years.

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized only to the extent that there is reasonable/virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

At each balance sheet date the Company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax assets to the extent that it has become reasonably/virtually certain that sufficient future taxable income will be available against which such deferred tax assets can be realized.

k. Borrowing Costs

Borrowing costs directly attributable to the acquisition or construction of qualifying assets, as defined in AS -16 on "Borrowing Cost" are capitalized as cost of the assets, up to the date the asset is put to use. Other borrowing costs are charged to the Profit and Loss Account in the year in which they are incurred.

I. Earnings per share

The basic earnings per share ("EPS") is computed by dividing the net profit after tax for the year available for the equity shareholders by the weighted average number of equity shares outstanding during the year. For the purpose of calculating diluted earnings per share, net profit/(loss) after tax for the year available for equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

m. Impairment

At each balance sheet date, the Group determines whether a provision should be made for impairment loss on fixed assets (including intangible assets), by considering the indications that an impairment loss may have occurred in accordance with Accounting Standard (AS) - 28 ''Impairment of Assets''. Where the recoverable amount of any fixed assets is lower than its carrying amount, a provision for impairment loss on fixed assets is made. At the balance sheet date there is an indication that previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the assets is reflected at the recoverable amount subject to a minimum of depreciated historical cost.

n. Provisions, Contingent Liabilities and Contingent Assets

The Company recognizes a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made. Contingent Assets are neither recognized nor disclosed in the financial statements.

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Mar 31, 2011

1. GENERAL

1.1 The Accounts have been prepared on historical cost basis ignoring changes, if any, in the purchasing power of money.

1.2 All revenues and expenses are accounted on accrual basis except to the extent stated otherwise. Insurance claims and refund from governments are accounted for on realization basis.

2. FIXED ASSETS AND DEPRECIATION:

2.1 Fixed assets are stated at cost of acquisition and include other direct/indirect and incidental expenses incurred to put them into use, but excludes Cenvat availed on such assets.

2.2 Depreciation on fixed assets has been provided on Written Down Value basis at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956.

2.3 Depreciation is provided on pro-rata basis with reference to the date of addition / installation / deletion except in case of assets costing Rs 5,000/- or less, which are depreciated at 100% in the year of acquisition.

3. INVENTORIES:

3.1 Due to the short period of processing and / or manufacturing, difficulty in identifying the stages of process and the insignificant impact on valuation, goods in process, including polished diamonds, are classified as raw materials for the purpose of classification and valuation.

3.2 VALUATION:

a) RAW MATERIALS:

Diamonds (including in process) are valued at cost on specific identification basis. Other items of raw material are valued at cost on FIFO basis.

b) FINISHED GOODS:

Polished diamonds are valued at estimated cost or estimated net realizable value whichever is lower. In view of the nature of variation in the values of individual diamonds and the differential in their processing costs, it is not practicable to compute the cost of polished diamonds using either FIFO or Weighted average cost. In view of the numerous grades, it is not practicable to use specific costs. The method of valuation is therefore in compliance with "AS-2" issued by the Institute of Chartered Accountants of India to the extent practicable.

Jewellery is valued at lower of cost on weighted average basis or net realized value.

c) ROUGH REJECTION:

Rough Rejection Diamonds are valued at estimated realizable value.

d) STORES AND SPARES:

Stores and Spares are valued at cost.

4. SUNDRY DEBTORS AND RECEIVABLES:

Sundry debtors, loans and advances are stated at the value if realised in the ordinary course of business. Irrecoverable amounts, if any, are accounted and / or provided for as per management's judgement or only upon final settlement of accounts with the parties.

5. INVESTMENT:

5.1 Long Term Investments are carried at cost after deducting provision, in cases where the fall in market value has been considered of permanent nature.

5.2 Current Investments are stated at lower of cost and fair value.

6. FOREIGN CURRENCY TRANSACTIONS:

6.1 Transactions in foreign currency are accounted at the exchange rate prevailing on the date the transactions have taken place.

6.2 Gain or loss upon settlement of transaction during the year is recognized in Profit and Loss account except in respect of foreign exchange liabilities in relation to fixed assets where such gains or losses are adjusted in carrying amount of respective fixed assets.

6.3 Assets and Liabilities denominated in foreign currency are restated at the year-end rates. Gains or losses arising as a result of above are recognized in Profit and Loss account except in respect of foreign exchange liabilities in relation to fixed assets where such gains or losses are adjusted in carrying amount of respective fixed assets.

6.4 In respect of foreign exchange transactions covered by forward exchange / options contracts:

- The difference between the contract rate and the exchange rate at date of the transaction is recognized as income or expense over the life of the contract, except in respect of liabilities incurred for acquiring fixed assets where such difference is adjusted in carrying amount of respective fixed assets.

- The difference between the exchange rate at date of the transaction and year-end exchange rate is recognized as income or expense in Profit and Loss account, except in respect of liabilities incurred for acquiring fixed assets where such difference is adjusted in carrying amount of respective fixed assets.

- Gains or losses on cancellation or renewal of contracts are recognized as income or expenses, except in respect of fixed assets where such gains or losses are adjusted in carrying amount of the respective fixed assets.

7. RETIREMENT BENEFITS:

7.1 Liability for gratuity on retirement is accounted based on the assumption that such benefits are payable to all eligible employees at the end of the accounting year.

7.2 Liability for leave encashment to staff and workers for the year is paid / provided in the year of accrual.

8. SALES:

Sales are inclusive of freight and insurance, if any.

9. BORROWING COST:

Borrowing costs directly attributable to the acquisition or construction of qualifying assets, as defined in AS—16 on "Borrowing Cost" are capitalized as cost of the assets, up to the date the asset is put to use. Other borrowing costs are charged to the Profit and Loss Account in the year in which they are incurred.

10. IMPAIRMENT OF ASSETS:

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. Where there is an indication that an assets is impaired, the recoverable amount, if any, is estimated and impairment loss is recognized to the extent of carrying amount exceed recoverable amount.

11. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:

Provisions involving substantial degree of estimation in measurement are recognized when there is a 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.

12. TAXATION:

12.1 Provision for current Income -Tax is made on the basis of the estimated Taxable Income for the current year in accordance with the provisions of the Income Tax Act, 1961.

12.2 Deferred Tax resulting from timing differences between book and tax profits is accounted for under the liability method, at the current rate of tax, to the extent that the timing differences are expected to crystallize. Deferred Tax Assets are recognized for all deductible timing differences and carried forward to the extent there is reasonable certainty that sufficient future taxable profit will be available against which such deferred tax assets can be realized.

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Mar 31, 2010

1. GENERAL

1.1 The Accounts have been prepared on historical cost basis ignoring changes, if any, in the purchasing power of money.

1.2 All revenues and expenses are accounted on accrual basis except to the extent stated otherwise. Insurance claims and refund from governments are accounted for on realization basis.

2. FIXED ASSETS AND DEPRECIATION:

2.1 Fixed assets are stated at cost of acquisition and includes other direct/indirect and incidental expenses incurred to put them into use, but excludes Cenvat availed on such assets.

2.2 Depreciation on fixed assets has been provided on Written Down Value basis at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956.

2.3 Depreciation is provided on pro-rata basis with reference to the date of addition / installation / deletion except in case of assets costing Rs 5,000/- or less, which are depreciated at 100% in the year of acquisition.

3. INVENTORIES:

3.1 Due to the short period of processing and / or manufacturing, difficulty in identifying the stages of process and the insignificant impact on valuation, goods in process, including polished diamonds, are classified as raw materials for the purpose of classification and valuation.

3.2 VALUATION:

a) RAW MATERIALS:

Diamonds (including in process) are valued at cost on specific identification basis. Other items of raw material are valued at cost on FlFO basis.

b) FINISHED GOODS:

Polished diamonds are valued at estimated cost or estimated net realizable value whichever is lower. In view of the nature of variation in the values of individual diamonds and the differential in their processing costs, it is not practicable to compute the cost of polished diamonds using either FIFO or Weighted average cost. In view of the numerous grades, it is not practicable to use specific costs. The method of valuation is therefore in compliance with "AS-2" issued by the Institute of Chartered Accountants of India to the extent practicable.

Jewellery is valued at lower of cost on weighted average basis or net realized value.

c) ROUGH REJECTION:

Rough Rejection Diamonds are valued at estimated realizable value.

d) STORES AND SPARES:

Stores and Spares are valued at cost.

4. SUNDRY DEBTORS AND RECEIVABLES:

Sundry debtors, loans and advances are stated at the value if realised in the ordinary course of business. Irrecoverable amounts, if any, are accounted and / or provided for as per managements judgement or only upon final settlement of accounts with the parties.

5. INVESTMENT:

5.1 Long Term Investments are carried at cost after deducting provision, in cases where the fall in market value has been considered of permanent nature.

5.2 Current Investments are stated at lower of cost and fair value.

6. FOREIGN CURRENCY TRANSACTIONS:

6.1 Transactions in foreign currency are accounted at the exchange rate prevailing on the date the transactions have taken place.

6.2 Gain or loss upon settlement of transaction during the year is recognized in Profit and Loss account except in respect of foreign exchange liabilities in relation to fixed assets where such gains or losses are adjusted in carrying amount of respective fixed assets.

6.3 Assets and Liabilities denominated in foreign currency are restated at the year-end rates. Gains or losses arising as a result of above are recognized in Profit and Loss account except in respect of foreign exchange liabilities in relation to fixed assets where such gains or losses are adjusted in carrying amount of respective fixed assets.

6.4 In respect of foreign exchange transactions covered by forward exchange / options contracts:

* The difference between the contract rate and the exchange rate at date of the transaction is recognized as income or expense over the life of the contract, except in respect of liabilities incurred for acquiring fixed assets where such difference is adjusted in carrying amount of respective fixed assets.

* The difference between the exchange rate at date of the transaction and year-end exchange rate is recognized as income or expense in Profit and Loss account, except in respect of liabilities incurred for acquiring fixed assets where such difference is adjusted in carrying amount of respective fixed assets.

* Gains or losses on cancellation or renewal of contracts are recognized as income or expenses, except in respect of fixed assets where such gains or losses are adjusted in carrying amount of the respective fixed assets.

7. RETIREMENT BENEFITS:

7.1 Liability for gratuity on retirement is accounted based on the assumption that such benefits are payable to all eligible employees at the end of the accounting year.

7.2 Liability for leave encashment to staff and workers for the year is paid / provided in the year of accrual.

8. SALES:

Sales are inclusive of freight and insurance, if any.

9. BORROWING COST:

Borrowing costs directly attributable to the acquisition or construction of qualifying assets, as defined in AS -16 on "Borrowing Cost" are capitalized as cost of the assets, up to the date the asset is put to use. Other borrowing costs are charged to the Profit and Loss Account in the year in which they are incurred.

10. IMPAIRMENT OF ASSETS:

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. Where there is an indication that an assets is impaired, the recoverable amount, if any, is estimated and impairment loss is recognized to the extent of carrying amount exceed recoverable amount.

11. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:

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

12. TAXATION:

12.1 Provision for current Income - Tax is made on the basis of the estimated Taxable Income for the current year in accordance with the provisions of the Income Tax Act, 1961.

12.2 Deferred Tax resulting from timing differences between book and tax profits is accounted for under the liability method, at the current rate of tax, to the extent that the timing differences are expected to crystallize. Deferred Tax Assets are recognized for all deductible timing differences and carried forward to the extent there is reasonable certainty that sufficient future taxable profit will be available against which such deferred tax assets can be realized.