a) Basis for preparation of Accounts
The financial statements are prepared under the historical cost
convention, in accordance with applicable mandatory accounting
standards prescribed under the Companies (Accounting Standards), Rules,
2006 and the relevant provisions of the Companies Act, 1956.
All assets and liabilities have been classified as current or
non-current as per the Company''s normal operating cycle and the
criteria set out in Revised Schedule VI to the Companies Act, 1956. The
Company has ascertained its operating cycle as 12 months for the
purpose of current/ non current classification of assets and
b) Fixed Assets
i) Fixed assets are carried at the cost of acquisition less accumulated
depreciation. The cost of fixed assets include taxes (net of tax
credits as applicable), duties, freight and other incidental expenses
related to the acquisition and installation of the respective assets.
Interest on borrowed funds attributable to the qualifying assets up to
the period such assets are put to use, is included in the cost of fixed
ii) Capital work in progress includes expenditure during construction
period incurred on projects under implementation.
iii) Project expenses are allocated to respective fixed assets on
completion of the project i.e. when it is ready for commercial
production. Specific items of expenditure that can be identified for
any particular asset are allocated directly to related assets head.
Where such direct allocation is not possible, allocation is made on the
basis of method most appropriate to a particular case. Sales and other
income earned before the completion of the project are reduced from
iv) Assets identified and evaluated technically as obsolete and held
for disposal are stated at lower of book value and estimated net
realisable value/salvage value.
c) Depreciation/Amortisation Tangible Assets
i) Depreciation on fixed assets is provided on Straight Line Method
(SLM) at the rates and in the manner provided in Schedule XIV of the
Companies Act, 1956 except building on leasehold land depreciated over
the period of lease.
ii) Leasehold land is depreciated over the period of lease.
iii) Assets costing upto Rs. 5000/- each are depreciated fully in the
year of purchase.
iv) Fixed assets not represented by physical assets owned by the
Company are amortised over a period of five years.
Computer Software and E-mark charges are amortised over a period of
five years proportionately when such assets are available for use.
Inventories are valued at lower of cost or net realisable value except
waste which is valued at estimated realisable value as certified by the
Management. The basis of determining
Investments that are readily realisable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long term investments. Current
investments are carried at the lower of cost or fair value. Long term
investments are carried at cost less permanent diminution in value, if
f) Revenue Recognition
Sale of goods is recognised at the point of dispatch to the customer.
Sales are stated gross of excise duty as well as net of excise duty;
excise duty being the amount included in the amount of gross turnover.
Sales exclude VAT/Sales Tax and are net of returns and transit
insurance claims short received. Earnings from investments, are
accrued or taken into revenue in full on declaration or receipts.
Profit/Loss on sale of raw materials and stores stand adjusted in their
g) Government Grants
Central Investment Subsidy and DG Set Subsidy is treated as Capital
Reserve. Export incentives are credited to the Statement of Profit and
Lease arrangements, where the risks and rewards incidental to ownership
of an asset substantially vest with the lessor, are recognised as an
operating lease and lease rentals thereon are charged to the Statement
of Profit and Loss.
i) Employee Benefits
Contribution to Defined Contribution Scheme such as Provident Fund etc.
are charged to the Statement of Profit and Loss as incurred. The
Company has a scheme of Superannuation Fund in Float SBU towards
retirement benefits where the Company has no liability other than its
The Gratuity Fund benefits are administered by a Trust recognised by
Income Tax Authorities through the Group Gratuity Schemes. The
liability for gratuity at the end of each financial year is determined
on the basis of actuarial valuation carried out by the Insurer''s
actuary on the basis of projected unit credit method as confirmed to
the Company. Company''s contributions are charged to the Statement of
Profit and Loss. Profits and losses arising out of actuarial valuations
are recognised in the Statement of Profit and Loss as income or
The Company provides for the encashment of leave as per certain rules.
The employees are entitled to accumulated leave subject to certain
limits, for future encashment/availment. In Float SBU the liability is
provided based on the number of days of unutilised leave at each
balance sheet date on the basis of actuarial valuation using projected
unit credit method.
Liability on account of short term employee benefits comprising largely
of compensated absences, bonus and other incentives is recognised on an
undiscounted accrual basis.
Termination benefits are recognised as an expense in the Statement of
Profit and Loss. j) Foreign Exchange Transactions
Transactions in foreign currency are recorded on initial recognition at
the exchange rate prevailing at the time of the transaction.
Transactions outstanding at the year end are translated at exchange
rates prevailing at the year end and the profit/loss so determined is
recognised in the Statement of Profit and Loss. The Company has opted
for accounting the exchange differences, arising on reporting of long
term foreign currency monetary items as per Notification dated 31st
March, 2009 further amended by Notifications dated 11th May, 2011 and
29th December, 2011 issued by the Ministry of Corporate Affairs,
Government of India. k) Derivative Instruments
The Company uses derivative financial instruments such as forward
exchange contracts, currency swaps etc. to hedge its risk associated
with foreign currency fluctuations relating to the firm commitment. The
premium or discount arising at the inception of such contracts is
amortised as expense or income over the life of the contract.
Derivative contracts outstanding at the balance sheet date are marked
to market and resulting loss/profit, if any, is provided for in the
Any profit or loss arising on cancellation of instrument is recognised
as income or expense for the period.
Current tax is determined as the amount of tax payable in respect of
taxable income in accordance with relevant tax rates and tax laws.
Deferred tax is recognised, subject to the consideration of prudence,
on timing differences, being the difference between taxable income and
accounting income that originate in one period and are capable of
reversal in one or more subsequent periods. Deferred tax assets are
recognised only to the extent there is virtual certainty and convincing
evidence that there will be sufficient future taxable income available
to realise such assets.
m) Impairment of Assets
Regular review is done to determine whether there is any indication of
impairment of the carrying amount of the Company''s fixed assets. If any
such indication exists, impairment loss i.e. the amount by which the
carrying amount of an asset exceeds its recoverable amount is provided
in the books of accounts. In case there is any indication that an
impairment loss recognised for an asset in prior accounting periods no
longer exists or may have decreased, the recoverable value is
reassessed and the reversal of impairment loss is recognised as income
in the Statement of Profit and Loss.
n) Provisions and Contingencies
A provision is recognised when the Company has a present obligation as
a result of a past event and it is probable that an outflow of
resources would be required to settle the obligation and in respect of
which a reliable estimate can be made.
A disclosure of contingent liability is made when there is a possible
obligation or a present obligation that will probably not require
outflow of resources or where a reliable estimate of the obligation
cannot be made.