a) Fixed Assets :
i. Fixed Assets are stated at their original cost of acquisition /
installation (net of Modvat / Cenvat credit availed), net of
accumulated depreciation, amortization and impairment losses, except
freehold non mining land which is carried at cost less impairment
ii. Capital work in progress is stated at the amount expended up to
the date of Balance Sheet,
iii. Machinery spares which can be used only in connection with a
particular item of fixed asset and the use of which is irregular, are
capitalized at cost net of Modvat / Cenvat.
iv. Expenditure during construction period (including financing cost
relating to borrowed funds for construction or acquisition of
qualifying fixed assets) incurred on projects under implementation are
treated as Pre-operative expenses, pending allocation to the assets, and
are included under Capital Work in Progress. These expenses are
apportioned to fixed assets on commencement of commercial production.
b) Depreciation and Amortization :
i. Tangible Assets :
I. Premium on leasehold land is amortized over the period of lease.
II. Depreciation on assets, other than Vehicles and Captive Power
Plant related assets consisting of Building, Plant and Machinery and
Electric Installation (CPP assets), is provided on the Straight Line
Method in accordance with the provisions of Section 205(2)(b) of the
Companies Act, 1956, and on Vehicles and CPP assets on the Written
Down Value Method in accordance with the provisions of Section
205(2)(a) of the Companies Act, 1956, in the manner and at the rates
specified in Schedule XIV to the Companies Act, 1956, except in respect
of certain assets at higher rates consequent to management estimate of
useful life. Continuous process plants, are identified based on
technical assessment and depreciated at the specified rate as per
Schedule XIV to the Companies Act, 1956. Depreciation on additions to
fixed assets is provided on a pro-rata basis from the date of
acquisition or installation, and in the case of a new project, from the
date of commencement of commercial production. Depreciation on assets
sold, discarded, demolished or scrapped, is provided up to the date on
which they said asset is sold, discarded, demolished or scrapped.
In respect of an asset for which impairment loss is recognized,
depreciation is provided on the revised carrying amount of the assets
over its remaining useful life.
III. Machinery spares, which are capitalized, are depreciated over the
useful life of the related fixed asset. The written down value of such
spares is charged to the statement of profit and loss, on issue for
IV. Cost of mineral reserve embedded in the cost of freehold mining
land is depreciated in proportion of actual quantity of minerals
extracted to the estimated quantity of extractable mineral reserves.
V. Fixed assets, constructed by the Company, but ownership of which
belongs to Government / Local Authorities :
a) Expenditure on Power Lines, ownership of which belongs to the state
electricity boards, is amortized over the period as permitted in the
Electricity Supply Act, 1948 / 2003 as applicable.
b) Expenditure on Marine Structures, ownership of which belongs to the
maritime boards, is amortized over the period of agreement.
c) Expenditure on other fixed assets, is amortized at the rate of
depreciation specified in Schedule XIV to the Companies Act, 1956.
ii. Intangible Assets :
I. Expenditure to acquire Water Drawing Rights from Government / Local
Authorities / other parties is amortized on straight line method over
the period of rights to use the facilities ranging from ten to thirty
II. Expenditure on computer software is amortized on straight line
method over the period of expected benefit not exceeding five years.
c) Impairment of assets :
The carrying amounts of assets are reviewed at each Balance Sheet date
if there is any indication of impairment based on internal / external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
greater of the asset''s net selling price and value in use. In assessing
value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and risks
specific to the assets. A previously recognized impairment loss is
increased or reversed depending on changes in circumstances.
d) Investments :
i. Recognition and Measurement
Investments that are intended to be held for more than a year, from the
date of acquisition, are classified as long-term investments and are
carried at cost. However, provision for diminution in value of
investments is made to recognize a decline, other than temporary, in
the value of the investments. Investments other than long-term
investments being current investments are valued at cost or fair value
whichever is lower, determined on an individual basis.
ii. Presentation and Disclosure
Investments, which are readily realizable and intended to be held for
not more than one year from balance sheet date, are classified as
current investments. All other investments are classified as
e) Inventories :
Inventories are valued as follows
i. Coal, fuel, packing materials, raw materials, stores and spares :
Lower of cost less provision for slow and non-moving inventory, if any,
and net realizable value. However, materials and other 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 determined on a moving weighted
ii. Work-in-progress, finished goods and trial run inventories :
Lower of cost and net realizable value. Cost includes direct materials
and labor and a proportion of manufacturing overheads based on normal
operating capacity. Cost of finished goods includes excise duty. Cost
is determined on a monthly moving weighted average basis.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
f) Provisions / Contingencies :
A provision is recognized for a present obligation as a result of past
events if it is probable that an outflow of resources will be required
to settle the obligation and in respect of which a reliable estimate
can be made. Provisions are not discounted to its present value and are
determined based on best estimate of the amount required to settle the
obligation at the Balance Sheet date. A contingent liability is
disclosed, unless the possibility of an outflow of resources is remote.
g) Foreign Currency Conversion :
Foreign currency transactions are recorded at the rates of exchange
prevailing on the date of transaction. Foreign currency monetary items
are reported using the closing rate. Non-monetary items which are
carried in terms of historical cost denominated in a foreign currency
are reported using the exchange rate at the date of the transaction.
Exchange differences arising on the settlement of monetary items or on
reporting Company''s monetary items at rates different from those at
which they were initially recorded during the year, or reported in
previous financial statements, are recognized as income or as expenses
in the year in which they arise.
h) Revenue recognition :
Revenue is recognized to the extent it is probable that the economic
benefits will flow to the Company and the revenue can be reliably
i. Revenue is recognized when the significant risks and rewards of
ownership of the goods have passed to the buyer. Accordingly, domestic
sales are accounted on dispatch of products to customers and Export
sales are accounted on the basis of date of Bill of Lading. Sales are
disclosed net of sales tax / VAT, discounts and returns, as applicable.
Sales exclude self consumption of cement.
ii. Benefit on account of entitlement to import goods free of duty
under the Duty Entitlement Pass Book under Duty Exemption Scheme is
recognized in the year of export.
iii. Sales include the amount of remission and subsidy due in
accordance with the respective incentive schemes.
iv. Interest income is recognized on a time proportion basis taking
into account the amount outstanding and the rate applicable. Dividend
income is recognized when right to receive the payment is established
by the Balance Sheet date.
i) Mines Reclamation Expenses :
The Company provides for the expenses to reclaim the quarries used for
mining. The total estimate of reclamation expenses is apportioned over
the estimate of mineral reserves and a provision is made based on the
minerals extracted during the year.
Mines reclamation expenses are incurred on an ongoing basis and until
the closure of the mine. The actual expenses may vary based on the
nature of reclamation and the estimate of reclamation expenditure. j)
Employee Benefits :
i. Defined Contribution Plan
Employee benefits in the form of contribution to Superannuation Fund,
Provident Fund managed by Government Authorities, Employees State
Insurance Corporation and Labor Welfare Fund are considered as defined
contribution plan and the same is charged to the statement of profit
and loss for the year when the contributions to the respective funds
ii. Defined Benefit Plan
Retirement benefits in the form of gratuity, shipping staff gratuity,
post retirement medical benefit and death and disability benefit are
considered as defined benefit obligations and are provided for on the
basis of an actuarial valuation, using the projected unit credit
method, as at the date of the Balance Sheet. Actuarial gains / losses,
if any, are immediately recognized in the statement of profit and loss.
Employee Benefit, in form of contribution to Provident Fund managed by
a Trust set up by the Company, is charged to statement of profit and
loss as and when the contribution is due. The deficit, if any, in the
accumulated corpus of the Trust at the period end for which the Company
is liable, is recognized as a provision in the statement of profit and
iii. Other long-term benefits
Long-term compensated absences are provided for on the basis of an
actuarial valuation, using the projected unit credit method, as at the
date of the Balance Sheet. Actuarial gains / losses, if any, are
immediately recognized in the statement of profit and loss.
k) Miscellaneous Expenditure :
Expenses included under the head ''Miscellaneous Expenditure'' are
amortized over the period of estimated future benefits not exceeding
l) Employee Stock Compensation cost :
The Company measures compensation cost relating to employee stock
option using the fair value method. Discount on Equity Shares as
compensation expenses under the Employee Stock Option Scheme, is
amortized in accordance with Employee Stock Option Scheme and Employee
Stock Purchase Scheme Guidelines, 1999 issued by Securities and
Exchange Board of India (SEBI) and the Guidance Note on Accounting for
Employee Share-based payments, issued by the Institute of Chartered
Accountants of India. m) Borrowing Costs and Share Issue Expenses :
i. Borrowing cost attributable to acquisition and construction of
assets that necessarily takes substantial period of time are
capitalised as part of the cost of such assets up to the date when such
assets are ready for intended use.
ii. Expenses on issue of Shares, Debentures and Bonds as well as
Premium on Redemption of Debentures are adjusted to Securities Premium
Account in accordance with Section 78 of the Companies Act, 1956.
iii. Borrowing cost such as discount or premium and ancillary costs in
connection with arrangement of borrowings are amortized over the period
iv. Other borrowing costs are charged as expense in the year in which
these are incurred.
n) Taxation :
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Income-tax Act, 1961. Deferred income tax reflects
the impact of current year timing differences between taxable income
and accounting income for the year 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 there is
reasonable certainty that sufficient future taxable income will be
available against which these assets can be realized in future whereas
in case of existence of carry forward of losses or unabsorbed
depreciation, deferred tax assets are recognized only if there is
virtual certainty of realization backed by convincing evidence.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The Company writes-down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realized. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
o) Leases :
Where the Company is the lessee
Leases where the less or effectively retains substantially all the risks
and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the statement of profit and loss on a straight-line basis over the
Where the Company is the less or
i. Assets given under finance lease are recognized as a receivable at
an amount equal to the net investment in the lease. Lease rentals are
apportioned between principal and interest on the Internal rate of
return (IRR) method. The principal amount received reduces the net
investment in the lease and interest is recognized as revenue. Initial
direct costs such as legal costs, brokerage costs, etc. are recognized
immediately in the statement of profit and loss.
ii. Assets subject to operating leases are included in fixed assets.
Lease income is recognized in the statement of profit and loss on a
straight-line basis over the lease term. Costs, including depreciation,
are recognized as an expense in the statement of profit and loss.
Initial direct costs such as legal costs, brokerage costs, etc. are
recognized immediately in the statement of profit and loss.
p) Segment Reporting Policies :
i. Identification of segments
The Company has only one business segment ''Cementations Materials'' as
its primary segment. The analysis of geographical segment is based on
the areas in which major operating divisions of the Company operate.
ii. Segment Policies
The Company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the Company as a whole. q) Cash and Bank balances :
i. Cash and Bank balances in the Balance Sheet comprise cash at bank
including fixed deposits, cheques in hand and cash in hand.
ii. Cash and cash equivalents for the purposes of cash flow statement
comprise cash at bank and in hand and short-term investments with an
original maturity of three months or less.
r) Government grants and subsidies :
i. Grants and subsidies from the Government are recognized when there
is reasonable certainty that the grant / subsidy will be received and
all attaching conditions will be complied with.
ii. When the grant or subsidy relates to an expense item, it is
recognized as income over the periods necessary to match them on a
systematic basis to the costs, which it is intended to compensate.
iii. Where the grant or subsidy relates to an asset, its value is
deducted from the gross value of the asset concerned in arriving at the
carrying amount of the related asset.
iv. Government grants of the nature of Promoters'' contribution are
credited to capital reserve and treated as a part of Shareholders''
s) Earnings Per Share :
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.