Notes to Accounts of Gloster Ltd.[Old]

Mar 31, 2016

(b) Rights, preferences & restrictions attached to equity shares

The Company has only one class of equity shares having a par value of '' 10 per share. Each shareholder is eligible for one vote per share held. The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of shareholders in the ensuing Annual General Meeting, except in case of interim dividend.

In the event of liquidation of the Company, the holders of equity shares are eligible to receive the remaining assets of the Company after distribution of all the preferential amounts, in proportion to their shareholding.

(e) Issue of bonus share

The Board of Directors of the Company at their meeting held on 29.03.2016 have proposed the issue of Bonus share in the ratio 1:1 i.e. one bonus share for every one fully paid-up equity share and the share holders of the Company have approved the same through Postal Ballot, result of which has been announced on 11.05.2016. Subsequent to allotment of the Bonus Shares, the Share Capital of the Company would stand at 1,04,66,880 equity shares of '' 10/- each aggregating to '' 10,46,68,800/-.

(a) The Company had revalued all of its Land, Buildings and Plant & Machinery at its factory at Bauria, Howrah at current replacement value as at 31st March, 2010 and 31st March, 2013 as per valuation report of an approved valuer.

Revaluation Reserve balance of Rs. 5,399.27 lakhs attributable to the depreciable tangible assets (Buildings and Plant & Machinery) has been reversed during the year with corresponding reduction in the book value of such assets with effect from 1st April, 2015.

b) Adjustment to Plant & Machinery includes Subsidy received Rs.16.93 lakhs (2014-15: Rs.41.48 lakhs)

(c) Pursuant to notification of Schedule II of the Companies Act, 2013 (the Act),with effect from April 1, 2014, the Company had reviewed and revised the useful lives of its Fixed Assets. In respect of assets whose useful life are exhausted as at April 1, 2014, the related carrying amount aggregating to Rs. 217.97 lakhs (Net of Deferred Tax of Rs. 112.24 lakhs) and revalued amount of such exhausted assets of Rs. 2,501.87 lakhs has been adjusted against the opening balance of Surplus and Revaluation Reserve respectively as at April 1, 2014 [Refer Note 4 and Note 27]. Further revision of useful life has resulted in additional depreciation of Rs. 145.33 lakhs in previous year''s Statement of Profit and Loss.

(a) Purchases is net of discount received on prompt payment of supplier''s bills amounting to Rs. 425.98 lakhs (2014-15 : Rs.290.37 lakhs)

The Provident Fund is managed by the Company in line with the Provident Fund and Miscellaneous Provision Act,1952. The Fund is exempted under section 17 of Employees'' Provident Fund and Miscellaneous Provision Act, 1952. Condition for grant of exemption stipulate that the employer shall make good deficiency, if any, in the interest declared by the trust vis-a-vis statutory rate. The contribution by the Employer and Employees together with the interest accumulated there on are payable to the employees at the time of their separation from the company or retirement, whichever is earlier.

(b) Defined Benefit Plans

(i) Gratuity : The employees'' gratuity fund scheme managed by a Trust and is a defined benefit plan. The funds of the trust is managed by approved insurance companies. Every employee is entitled to a benefit equivalent to fifteen day''s salary last drawn for each completed year of service in line with Payment of Gratuity Act,1972. The same is payable at the time of separation from the Company or retirement, whichever is earlier. This benefits vest after five year of continuous service. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

a) The estimates of future salary increases, considered in actuarial valuations, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. The expected return on plan assets is based on actuarial expectation of the average long term rate of return expected on investment of funds during the estimated term of the obligation.

b) The Company made annual contributions to the insurer of an amount as determined by actuarial valuation. Company was not informed of the investments made by the insurer or the break-down of plan assets by investment type.

(c) Corporate Social Responsibility (CSR)

As per the provisions of Companies Act, 2013, the Company is required to spend at least 2% of its average net profits of immediately three preceding years on CSR activities eligible under the Act. Further pursuant to the requirement of the Companies Act, 2013 the Company has constituted a CSR committee which has approved the CSR policy.

The details regarding CSR expenditure for the year is given below:

Gross Amount required to be spent by the Company during the year : Rs. 55.27 lakhs (2014-15 Rs. 59.24 lakhs)

1. The Company''s Board of Directors at its meeting held on March 29, 2016 has approved the Scheme of Arrangement between "the Company" and Kettlewell Bullen & Company Limited in terms of the provisions of Section 391 to 394 and other applicable provisions of the Companies Act, 1956 & Companies Act, 2013, to the extent applicable, to enable better realization of potential of the businesses of the Companies and yield beneficial results & enhanced value creation for stakeholders. Upon the coming into effect of the Scheme and with effect from the Appointed Date i.e. 1st January, 2015, the Undertaking of Gloster Limited will be and shall stand transferred to and vested in and/or be deemed to have been transferred to and vested in Kettlewell Bullen & Company Limited, as a going concern, in accordance with Section 2(1B) of the Income Tax Act.

2. Previous year''s figure have been rearranged and / or regrouped wherever necessary to make them comparable with that of current year.

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Mar 31, 2015

1. Related Party Disclosures pursuant to requirements of Accounting Standard 18

Names of Related Parties and nature of relationship:

a) Subsidiary Companies Gloster Lifestyle Limited Gloster Specialties Limited Gloster Gujrat Limited (upto 27th March, 2015)

b) Key Management Personnel ShriGDBangur

Shri DC Baheti

c) Relatives of Key Management Personnel with whom transactions took place during the year ShriHemantBangur

d) Enterprise over which Key Management Personnel & relatives of Key Management Personnel have significant influence Joonktollee Tea & Industries Limited

Kettlewell Bullen & Company Limited

2. Previous year's figure have been rearranged and / or regrouped wherever necessary to make them comparable with that of current year.

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Mar 31, 2014

1. Corporate Information

Gloster Limited is a public company incorporated on 18th February, 1992 under the provisions of the Companies Act, 1956. Gloster is a leading manufacturer & exporter of all types of Jute & Jute allied products, Woven & Non-Woven Jute Geotextiles, Treated Fabric- Rot Proof, Fire Retardant, Jute Products for Interior Decoration & Packaging of Industrial & Agricultural Produce. The Company also produces Jute & Cotton Shopping Bags & Made Ups. Gloster exports Jute goods to various countries spread over the World. The Company''s manufacturing facilities are located at Bauria on the banks of Holy Ganges in West Bengal. The Equity shares of the Company are listed on The Calcutta Stock Exchange Ltd. (CSE). BSE Ltd. (BSE) has permitted the Equity shares of the Company for trading under the "B" group.

(a) Rights, preferences & restrictions attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 10 per share. Each shareholder is eligible for one vote per share held. The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of shareholders in the ensuing Annual General Meeting, except in case of interim dividend.

In the event of liquidation of the Company, the holders of equity shares are eligible to receive the remaining assets of the Company after distribution of all the preferential amounts, in proportion to their shareholding.

Notes 2

(a) Loan repayable on demand amounting to Rs. 5,100.56 lakhs (31.03.2013 Rs. 4,978.38 lakhs) are secured by hypothecation of stock of raw material, stock-in-process, finished goods, stores & consumables, book debts and other current assets of the Company.

(b) Loans repayable on demand to bank amounting to Rs. 4,293.52 lakhs (31.03.2013 Rs. 4,978.38 lakhs) is also covered by Corporate Guarantee of Kettlewell Bullen & Company Limited.

(c) Loan from Life Insurance Corporation of India amounting to Rs. nil lakhs (31.03. 2013- Rs. 450.24 lakhs) secured against Keyman insurance policies.

Notes 3

1) The estimates of future salary increases, considered in actuarial valuations, take account of inflation, seniority, promotion and other relevent factors, such as supply and demand in the employment market. The expected return on plan assets is based on actuarial expectation of the average long term rate of return expected on investment of funds during the estimated term of the obligation.

2) The Company made annual contributions to the insurer of an amount as determined by actuarial valuation. Company was not informed of the investments made by the insurer or the break-down of plan assets by investment type.

4. Contingent liabilities

As at As at 31st March, 31st March, 2014 2013

a) Claims against the Company not acknowledged as debts

Sales tax matter 407.12 368.27

ESI matter 45.57 45.57

b) Export bills discounted with bank 89.80 239.36

3. Related Party Disclosures

Names of Related Parties and nature of relationship

a) Subsidiary Companies

Gloster Lifestyle Limited Gloster Specialities Limited Gloster Gujrat Limited

b) Key Management Personnel

Shri G D Bangur Shri D C Baheti

c) Relatives of Key Management Personnel with whom transactions took place during the year

Shri Hemant Bangur

d) Enterprise over which Key Management Personnel & relatives of Key Management Personnel have significant influence

Joonktollee Tea & Industries Limited Kettlewell Bullen & Company Limited The Cochin Malabar Estates & Industries Limited (upto 6th October 2013)

5. The Company had sought permission for filing of return under Urban Land (Ceiling and Regulation) Act 1976, upon the demerger of and vesting into Gloster Limited (Formerly : Gloster Jute Mills Limited) of the erstwhile Jute Division of Fort Gloster Industries Limited. Such permission was granted and the Company has filed its return in respect of the same. The Company has claimed exemption under Section 20(1) of the said Act and has also offered to transfer part of the Company property to the Government of West Bengal, decision in respect of which is still pending.

6. Previous year''s figure have been rearranged and / or regrouped wherever necessary to make them comparable with that of current year.

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Mar 31, 2013

1 Corporate Information

Gloster Limited is a public company incorporated on 18th February, 1992 under the provisions of the Companies Act, 1956. Gloster is a leading manufacturer & exporter of all types of Jute & Jute allied products, Woven & Non-Woven Jute Geotextiles, Treated Fabric- Rot Proof, Fire Retardant, Jute Products for Interior Decoration & Packaging of Industrial & Agricultural Produce. The Company also produces Jute & Cotton Shopping Bags & Made Ups. Gloster exports Jute goods to various countries spread over the World. The Company''s manufacturing facilities are located at Bauria on the banks of Holy Ganges in West Bengal. The Equity shares of the Company are listed on The Calcutta Stock Exchange Ltd. (CSE). BSE Ltd. (BSE) has permitted the Equity shares of the Company for trading under the "B” group.

2. Contingent liabilities

As at As at 31st March, 2013 31st March, 2012 Rs. lakhs Rs. lakhs

a) Claims against the Company not acknowledged as debts :

Sales tax matter 368.27 141.05

ESI matter 45.57 45.57

b) Export bills discounted with bank 239.36 352.44

3. Commitments As at As at 31st March, 2013 31st March, 2012 Rs. lakhs Rs. lakhs

Estimated amounts of contracts remaining to be executed on capital account and not provided for tangible assets 42.31 100.62

Partly Paid investment 150.00 -

4. Information in accordance with Accounting Standard 17 on Segment Reporting:

The Company is engaged in the business of manufacturing Jute goods and is managed organisationally as a single unit. Accordingly the Company has only one business segment . However, it has customers in India as well as outside India and thus segment reporting based on the Geographical location of its customers is as follows.

5. Related Party Disclosures

Names of Related Parties and nature of relationship

a) Subsidiary Companies

Gloster Lifestyle Limited Gloster Specialities Limited Gloster Gujrat Limited

b) Key Management Personnel

Shri G D Bangur Shri D C Baheti

c) Relatives of Key Management Personnel with whom transactions took place during the year

Shri Hemant Bangur

d) Enterprise over which Key Management Personnel have significant influence

Joonktollee Tea & Industries Limited Kettlewell Bullen & Company Limited

6. The Company had sought permission for filing of return under Urban Land (Ceiling and Regulation) Act 1976, upon the demerger of and vesting into Gloster Limited ( Formerly : Gloster Jute Mills Limited) of the erstwhile Jute Division of Fort Gloster Industries Limited. Such permission was granted and the Company has filed its return in respect of the same. The Company has claimed exemption under Section 20(1) of the said Act and has also offered to transfer part of the Company property to the Government of West Bengal, decision in respect of which is still pending.

7. Previous year''s figure have been rearranged and / or regrouped wherever necessary to make them comparable with that of current year.

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Mar 31, 2012

1. Corporate Information

Gloster Limited is a public company incorporated on 18th February, 1992 under the provisions of the Companies Act, 1956. Gloster is a leading manufacturer & exporter of all types of Jute & Jute allied products, Woven & Non-Woven Jute Geotextiles, Treated Fabric-Rot Proof, Fire Retardant, Jute Products for Interior Decoration & Packaging of Industrial & Agricultural Produce. The Company also produces Jute & Cotton Shopping Bags & Made Ups. Gloster exports Jute goods to various countries spread over the World. The Company's manufacturing facilities are located at Bauria on the banks of Holy Ganges in West Bengal. The Equity shares of the Company are listed on The Calcutta Stock Exchange Ltd. (CSE). Bombay Stock Exchange Ltd. (BSE) has permitted the Equity shares of the Company for trading under the "B" group.

(b) Rights attached to equity shares --

The company has only one class of equity shares having a par value of Rs 10 per share. Each shareholder is eligible for one vote per share held. The company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of shareholders in the ensuing Annual General Meeting, except in case of interim dividend.

In the event of liquidation of the company, the holders of equity shares are eligible to receive the remaining assets of the company after distribution of all the preferential amounts, in proportion to their shareholding.

Notes:

(a) Cash Credit and Working Capital Loan amounting to Rs 2,778.99 lakhs (31.03.2011 Rs 3,047.07 lakhs) and Rs 950 lakhs (31.03.2011 Rs 500 lakhs) respectively are secured by hypothecation of stock of raw material, stock-in- process, finished goods, stores & consumables, book debts and other current assets of the Company.

(b) Cash Credit amouting Rs 2,778.99 lakhs (31.03.2011 Rs 2,375.86 lakhs) is also guaranteed by Kettlewell Bullen & Company Limited.

(c) Loan from Life Insurance Corporation of India amounting to Rs 491.01 lakhs (31.03.2011- Rs 339.09 lakhs) is secured against insurance policies.

The Provident Fund is managed by the Company in line with the Provident Fund and Miscellaneous Provision Act,1952.The Fund is exempted under section 17 of Employees' Provident Fund and Miscellaneous Provision Act, 1952. Condition for grant of exemption stipulate that the employer shall make good deficiency, if any, in the interest declared by the trust vis-a-vis statutory rate. The contribution by the Employer and Employees toghether with the interest accumulated are payable to the employees at the time of their separation from the company or retirement, whichever is earlier.

(b)Defined Benefit Plans

(i) Gratuity : The employees' gratuity fund scheme managed by a Trust Birla Sun Life Insurance Company Limited) is a defined benefit plan. Every employee is entitled to a benefit equivalent to fifteen day's salary last drawn for each completed year of service in line with Payment of Gratuty Act,1972. The same is payable at the time of separation from the company or retirement, whichever is earlier. This benefits vest after five year of continuous service. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

Notes:

1) The estimates of future salary increases, considered in actuarial valuations, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.The expected return on plan assets is based on actuarial expectation of the average long term rate of return expected on investment of funds during the estimated term of the obligation

2) The Company made annual contributions to the insurer of an amount as determined by actuarial valuation. Company was not informed of the investments made by the insurer or the break-down of plan assets by investment type.

3) The table below illustrates experience adjustment disclosure as per para 120 (n) (ii) of Accounting Standard 15 - Employee Benefits.

b) Includes Excise Duty and Research & Development Cess ("R & D Cess") related to the difference between the closing stock and opening stock of finished goods Rs 0.46 lakh (31st March, 2011 Rs 5.97 lakhs)

2. Earnings per share (EPS)

Net profit for the year has been used as the numerator and number of shares have been used as denominator for calculating the basic and diluted earnings per share.

As at As at

3. Contingent liabilities 31st March, 2012 31st March, 2011

Rs.lakhs Rs.lakhs

a) Claims against the company not acknowledged as debts :

Sales tax matter 141.05 94.93

ESI matter 45.57 45.57

b) Export bills discounted with bank 352.44 143.81

4. Information in accordance with Accounting Standard 17 on Segment Reporting

The Company is engaged in the business of manufacturing Jute goods and is managed organisationally as a single unit. Accordingly the company has only one business segment. However, it has customers in India as well as outside India and thus segment reporting based on the Geographical location of its customers is as follows.

5. Related Party Disclosures

Names of Related Parties and nature of relationship

a) Subsidiary Companies Gloster Lifestyle Limited Gloster Specialities Limited Gloster Gujrat Limited

b) Key Management Personnel Shri G D Bangur

Shri D C Baheti

c) Relatives of Key Management Personnel with whom transactions took place during the year Shri Hemant Bangur

d) Enterprise over which Key Management Personnel have significant influence.

Joonktollee Tea & Industries Limited

Kettlewell Bullen & Company Limited

(e) Associate Company

Gloster Ultimo Limited (upto 30.03.2012)

Included in Sl No 1 above is Rs 0.24 lakh (31.03.2011-Rs 0.09 lakh) being interest on principal amount remaining unpaid as at the beginning of the accounting year.

Note: The information has been given in respect of such vendors to the extent they could be identified as Micro, Small & Medium enterprises on the basis of information available with the company.

6. The Company had sought permission for filing of return under Urban Land (Ceiling and Regulation) Act, 1976, upon the demerger of and vesting into Gloster Limited ( Formerly : Gloster Jute Mills Limited) of the erstwhile Jute Division of Fort Gloster Industries Limited. Such permission was granted and the Company has filed its return in respect of the same. The Company has claimed exemption under Section 20(1) of the said Act and has also offered to transfer part of the Company property to the Government of West Bengal, decision in respect of which is still pending.

7. The financial statement for the Year ended 31st March, 2011 had been prepared as per the then applicable, pre-revised Schedule VI to the Companies Act,1956. Consequent to the notification of Revised Schedule VI under the Companies Act 1956, the financial statement for the year ended 31st March, 2012 are prepared as per Revised Schedule-VI. Accordingly, the previous year figures have also been reclassified to confirm to this year's classification. The adoption of Revised Schedule VI for previous year figures does not impact the recognition and measurement principles followed for preparation of Financial Statement.

8. Previous year's figures have been rearranged and/ or regrouped wherever necessary to make them comparable with that of current year.

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Mar 31, 2011

As at As at

31.03.2011 31.03.2010

1 Contingent Liabilities :

a) Sales Tax related to non submission of Declaration forms 94,92,802 96,99,539

b) Export Bills Discounted with Bank 1,43,81,302 70,39,975

c) For ESI Matter 45,57,291 45,57,291

The future cash outflow on account of the above can not be determined at this stage.

2 The Company had sought permission for filing of return under Urban Land (Ceiling and Regulation) Act 1976, upon the demerger of and vesting into Gloster Limited (Formerly Gloster Jute Mills Limited) of the erstwhile Jute Division of Fort Gloster Industries Limited. Such permission was granted and the Company has filed its return in respect of the same. The Company has claimed exemption under Section 20(1) of the said Act and has also offered to transfer part of the Company property to the Government of West Bengal, decision in respect of which is still pending.

3 Information in accordance with Accounting Standard 17 on Segment Reporting :

The Company is engaged in the business of manufacturing Jute goods and is managed organisationally as a single unit. Accordingly the company has only one business segment. However, it has customers in India as well as outside India and thus segment reporting based on the Geographical location of its customers is as follows.

4 Consumption of raw materials in schedule 14 is net of discount received on prompt payment of suppliers bills amounting to Rs. 1,61,76,602/- ( Previous year-Rs. 1,34,66,788/-).

5 Related party disclosures:-

a) Key Management Personnel

Shri G D Bangur

Shri D C Baheti

b) Relatives of Key Management Personnel Shri Hemant Bangur

Smt.Pushpa Devi Bangur

Smt.Vinita Bangur

Master Pranov Bangur

c) Enterprise over which Key Management Personnel have significant influence- Joonktollee Tea & Industries Limited

Kettlewell Bullen & Company Limited

The Phospate Company Limited

Port Shipping Company Limited*

The Oriental Company Limited

The Kamla Company Limited

Laxmi Asbestos Products Limited*

Marwar Textile (Agency) Limited*

PD GD Investments & Trading Pvt Limited*

Jagdishpur Company Limited*

The Cochin Malabar Estates & Industries Limited*

Madhav Trading Corporation Limited

The Cambay Investment Corporation Limited

Bombay Agency Company Pvt Limited*

Credwyn Holdings (I) Pvt Limited

Cochin Estates Limited*.

Devendra Finvest & Holding (P) Limited.*

Kherapati Vanijya Limited*

Wind Power Vinimay (P) Limited

d) Associate

Gloster Ultimo Limited*

*No transaction during the year

6) Comparative values of defined benefit plans for the past three years instead of four financial years as required by Accounting Standard - 15 (Revised 2005) on Employees Benefits are provided, this being only the fourth year of adoption of the Standard

7) Amount recognized as an expense:

(i) Salaries, Wages and Bonus in Schedule 16 includes Provision for Leave encashment Rs. 36,18,857 (2009-10 Rs. 25,16,726)

(ii) Contribution to Provident and other funds in Schedule 16 includes Gratuity Fund contribution ofRs. 1,24,42,000 (2009-10Rs. 2,10,17,000)

(iii) Workmen & Staff Welfare Expenses in Schedule 16 includes Provision for Sick Leave Rs. 3,22,000 (2009-10 Rs. 73,762)

(iv) Contribution to provident and other funds in Schedule 16 includes Rs. 3,28,01,122 (2009-10 Rs. 2,49,09,184) towards contribution to defined contribution plans viz. Provident Fund, Pension Fund, Superanuation Fund.

(v) Directors Remuneration in Schedule 18 includes Gratuity Fund Contribution Rs. 16,03,000 ( 2009-10 nil ) & Provision for Leave Encashment Rs. 6,00,000 (2009-10 nil )

8 During the year three companies have been formed which eventually on issue of Share Capital would remain subsidiaries of the Company. The Company has currently paid Rs. 1,01,400 in aggregate as advance to these Companies and intends to investRs. 5,00,000 in each company.

9 Previous year's figures have been rearranged and / or regrouped wherever necessary to make them comparable with that of current year.

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Mar 31, 2010

EMPLOYEE BENEFITS

Defined Contribution Plans

The Company contributes to Provident Funds which are administered by duly constituted and approved independent Trust / Government and such contributions are charged against revenue every year. In respect of Provident Fund Contributions made to an independent Trust administered by the Company, the interest rate payable to the members of the Trust shall not be lower than the statutory rate of interest declared by the Central Government under the Employees Provident Funds and Miscellaneous Provisions Act,1952 and shortfall if any shall be made good by the Company.

The Company operates a Superannuation Scheme for certain employees and contributions by the Company under the scheme, is charged against revenue every year.

Defined Benefit Plans

Accrued liability determined based on actuarial valuation as at the year end in respect of future payment of gratuities are charged against revenue every year.

Accrued liability in respect of leave encashment benefit on retirement is accounted for on the basis of actuarial valuation as at the year end and charged to revenue every year.

Long Term Employee Benefits

Accrued liability in respect of leave encashment benefit on retirement is accounted for on the basis of actuarial valuation as at the year end and charged to revenue every year.

Other long term employee benefits comprising of entitlement to accumulation of Sick Leave is provided for based on actuarial valuation carried out in accordance with revised Accounting Standard 15 as at the end of the year

Short Term Employee Benefits

Short Term Employee Benefits are recognised as an expense as per the Companys schemes based on expected obligation on an undiscounted basis.

Actuarial gains and losses are recognized immediately in the Profit and Loss Account.

RESEARCH & DEVELOPMENT CESS

Research & Development Cess on manufactured goods are accounted for at the time of their clearance from the factory. Research and Development Cess in respect of manufactured goods lying at the year end are included in inventory after creating suitable provision for the same.

SALES

Turnover is stated net of sales tax. Sale is recognised on transfer of property in goods to the buyer.

FOREIGN CURRENCY TRANSACTION

Transactions in foreign currency are recorded at exchange rates prevailing on the date of the transaction. Monetary items denominated in foreign currency are restated at the exchange rate prevailing on the Balance Sheet date. Foreign currency nonmonetary items carried in terms of historical cost are reported using the exchange rate at the date of the transactions. Exchange differences arising on settlement of transactions and/or restatements are dealt with in the Profit and Loss Account.

Derivative Instruments

The Company uses derivative financial instruments such as forward exchange contracts, currency swaps etc. to hedge its risks associated with foreign currency fluctuations relating to the underlying transactions, highly probable forecast transactions and firm commitments. In respect of Forward Exchange Contracts with underlying transactions, the premium or discount arising at the inception of such contract is amortised as expense or income over the life of contract. Other Derivative contracts outstanding at the Balance Sheet date are marked to market and resulting loss, if any, is provided for in the financial statements. Any profit or losses arising on cancellation of derivative instruments are recognised as income or expenses for the period.

TAXATION

Current tax is determined as the amount of tax payable in respect of taxable income for the year based on applicable tax rates and laws.

Deferred tax is recognized, on timing differences, being the difference between taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets are not recognized unless there is reasonable certainty and virtual certainty in case of unabsorbed loss and depreciation, that sufficient future taxable income will be available against which such deferred tax assets will be realized. Deferred tax Assets is reviewed at each Balance Sheet date to reassess its realization.

Fringe benefit tax is determined as the amount of tax payable in respect of value of fringe benefits for the year based on applicable tax rates and laws.

BORROWING COSTS

Borrowing costs are capitalized as part of the cost of qualifying assets when it is probable that they will result in future economic benefits to the enterprise and the costs can be measured reliably. Other borrowing costs are recognized as an expense in the period in which they are incurred.

PROVISIONS AND CONTINGENT LIABILITIES

The Company recognises 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 and the likelihood of outflow of resources is remote, no provision or disclosure for contingent liability is made.