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-13.3 (-2.83%)
-8.45 (-1.81%) | Accounting Policy | Year : Mar '12 | ||||
1.01 System of Accounting: (a) In compliance with the accounting standards referred to in Section 211(3C) and the other relevant provisions of the Companies Act, 1956 to the extent applicable, the Company follows the accrual system of accounting in general and the historical cost convention in accordance with the Generally Accepted Accounting Principles [GAAP], (b) The preparation of accounting statements in conformity with GAAP requires the management to make assumption and estimates that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as at the date of the financial statement and the amounts of income and expenses during the period reported under the financial statements. Any revision to the accounting estimates are recognised prospectively when revised. (c) All the assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in the Schedule VI to the Companies Act, 1956. 1.02 Revenue Recognition (a) Revenue from sale of products are recognised on transfer of all significant risk and rewards of ownership of the product on to the customers, which is generally on despatch of goods. (b) Revenue from Construction Contracts is recognised based on the stage of completion determined with reference to the costs incurred on contracts and the estimated total costs. When it is estimated that the total contract cost will exceed total contract revenue, expected loss is recognised as an expense immediately. Total contract cost is determined based on the technical and other assessment of cost to be incurred. (c) Sales are stated exclusive of Value Added Tax/Sales Tax, Returns and Discounts for the year. (d) Service income is recognised, net of service tax, when the related services are provided. (e) Dividend income is recognised on establishment of the right to receive the same. (f) Interest income is recognised on the time proportion basis. (g) Insurance and other claims are accounted as and when unconditionally admitted by the appropriate authorities. (h) Eligible export incentives are recognised in the year of export. 1.03 Fixed Assets and Depreciation: Fixed assets are stated at historical cost net of Cenvat, other setoffs and accumulated depreciation. Depreciation is provided on straight line basis at the rates and in the manner prescribed in Schedule XIV to the Companies'' Act, 1956. Leasehold land is stated at historical cost less amounts written off proportionate to expired lease period. Spares of the nature of capital spares/insurance spares are added to the cost of the assets. The total cost of such spares is depreciated over a period not exceeding the useful life of the fixed asset to which they relate. 1.04 Intangible Assets: (a) Expenditure on technical know-how is amortised over the lower of the contract period and the period as per Accounting Standard (AS) 26 - Intangible Assets. (b) Expenditure on application software is amortised over a period of three years. 1.05 Investments: Long term investments are carried at cost of acquisition. Provision for diminution in value of investments is made to recognise a decline, other than temporary, in the value of Long term investments. Current investments are carried at lower of cost and fair value. 1.06 Inventories: Inventories include raw materials and components, packing materials, stores, spare parts, work-in-progress and manufactured and traded finished goods. Cost of inventories comprises of all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Raw materials and components, packing materials, stores, spare parts and traded finished goods are valued at the lower of cost and net realisable value. Cost is determined on the basis of weighted average method. Work-in-progress and manufactured finished goods are valued at the lower of cost and net realisable value. Materials in transit and materials in bonded warehouse are valued at Cost-to-date. Excise duty is included in the value of finished goods inventory and Custom duty is provided on the materials lying in bonded warehouse. 1.07 Foreign Currency Transactions: (i) Foreign currency transactions are accounted for at the exchange rates prevailing at the date of the transaction. Gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognised in the Statement of Profit and Loss. (ii) In case of transactions covered by forward exchange contracts, which are not intended for trading or speculation purposes, premium on discounts are amortised as expense or income over the life of the forward contract. Exchange difference on such forward contracts are recognised in the Statement of Profit and Loss in the year in which exchange rate changes. Profit or Loss arising on cancellation or renewal of such forward contracts are recognised as income or expense for that year. 1.08 Employee Benefits: A. Short Term Employee Benefits are recognised as an expense at the undiscounted amount in the Statement of Profit and Loss of the year in which the related service is rendered. B. Retirement Benefits: (a) Retirement benefits in the form of Provident Fund/Family Pension Fund and Superannuation Fund, which are Defined Contribution Plans, are accounted on accrual basis and charged to the Statement of Profit and Loss of the year. (b) Retirement benefits in the form of Gratuity which is a defined benefit plan and the long term employee benefit in the form of Leave Encashment, are determined and accrued on the basis of an independent actuarial valuation applying the Projected Unit Credit Method. (c) The actuarial gains/losses arising during the year are recognised in the Statement of Profit and Loss of the year. 1.09 Borrowing Costs: Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalised as part of the cost of such assets. All other borrowing costs are recognised as an expense in the period in which they are incurred. 1.10 Taxation: Current Tax is determined at the amount of tax payable at the applicable tax rate in respect of the estimated taxable income for the year. Deferred Tax is determined using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred Tax Assets are recognised and carried forward only if there is reasonable certainty of its realisation. However in case of carried forward losses and unabsorbed depreciation under the Income Tax Act, 1961, the Deferred Tax Asset is recognised if and only if there is a virtual certainty backed by convincing evidence of its realisation. Such assets are reviewed at each Balance Sheet date to reassess its realisation. Minimum Alternative Tax (MAT) Credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. Such asset is reviewed at each Balance Sheet date and the carrying amount of the MAT credit/asset is written down to the extent there is no longer a convincing evidence to the effect that the Company will pay normal tax during the specified period. 1.11 Leases: Operating Leases For premises/vehicles, taken/given on lease, lease rentals payable/receivable are charged/credited to the revenue. 1.12 Impairment of Assets: (a) The carrying amount of assets, other than inventories is reviewed at each balance sheet date to assess whether there is any indication of impairment in respect of such asset or group of assets (cash generating unit). If such indication exists, the recoverable amount of such asset or group of assets is estimated. (b) If such recoverable amount of the asset or the group of assets is less than its carrying amount, an impairment loss is reckoned by reducing the carrying amount to its recoverable amount. If there is an indication at the balance sheet date that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount, subject to a maximum of depreciable historical cost. 1.13 Provisions, Contingent Liabilities and Contingent Assets: The Company recognises a provision when there is a present obligation as a result of a past event on which it is probable that there will be outflow of resources to settle the obligation in respect of which reliable estimates can be made. |
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| Source : Dion Global Solutions Limited | |||||
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