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-17.35 (-2.08%)
-16.5 (-1.98%) | Accounting Policy | Year : Mar '12 | ||||
1 Basis of Accounting: The financial statements are prepared under the historical cost convention on the Accrual Concept of accountancy in accordance with the accounting principles generally accepted in India and they comply with the Accounting Standards prescribed in the Companies [Accounting Standards] Rules, 2006 issued by the Central Government and other pronouncement issued by Institute of Chartered Accountants of India to the extent applicable and with the applicable provisions of the Companies Act, 1956. 2 Use of Estimates: The preparation of Financial Statements in conformity with the Accounting Standards generally accepted in India requires, the management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as at the date of the financial statements and reported amounts of revenues and expenses for the reporting period while actual results could differ from these estimates. Any revision to accounting estimates is recognised prospectively in current and future periods. 3 Fixed Assets and Depreciation: A Fixed Assets are stated at historical cost of acquisition/ construction less accumulated depreciation and impairment loss. Cost [Net of Input tax credit received/ receivable] includes related expenditure and pre-operative & project expenses for the period up to completion of construction/assets are put to use. The loss or gain on exchange rates on long term foreign currency loans attributable to fixed assets, effective from April 1, 2007 is adjusted to the cost of respective fixed assets. B Depreciation is provided on straight line method as per Section 205 (2) (b) of the Companies Act,1956 at the rates prescribed in Schedule XIV thereto. C Depreciation on impaired assets is calculated on its residual value, if any, on a systematic basis over its remaining useful life. D Leasehold land is amortized over the period of the lease. E Trade Marks, Technical Know-how Fees and other similar rights are amortised over their estimated economic life of ten years. F Capitalised costs incurred towards purchase/ development of software are amortised using straight line method over its useful life of four years as estimated by the management at the time of capitalisation. G Depreciation on additions/ disposals of the fixed assets during the year is provided on pro-rata basis according to the period during which assets are put to use. H Where the actual cost of purchase of an asset is below Rs. 10,000/-, the depreciation is provided @ 100 %. 4 Impairment of Assets: The Company, at each balance sheet date, assesses whether there is any indication of impairment of any asset and/ or cash generating unit. If such indication exists, assets are impaired by comparing carrying amount of each asset and/ or cash generating unit to the recoverable amount being higher of the net selling price or value in use. Value in use is determined from the present value of the estimated future cash flows from the continuing use of the assets. 5 Borrowing Costs: A Borrowing costs that are directly attributable to the acquisition/ construction of a qualifying asset are capitalised as part of the cost of such assets, up to the date, the assets are ready for their intended use. B Other borrowing costs are recognised as an expense in the period in which they are incurred. C Borrowing costs also include exchange rate differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs. 6 Expenditure during the Construction Period: The expenditure incidental to the expansion/ new projects are allocated to Fixed Assets in the year of commencement of the commercial production. 7 Investments: A Long term and strategic investments are stated at cost, less any diminution in the value other than temporary. B Current investments are stated at lower of cost and fair value determined on individual investment basis. C Investments in shares of foreign subsidiary and other Companies are expressed in Indian currency at the rates of exchange prevailing at the time when the original investments were made. 8 Inventories: A Raw Materials, Stores & Spare Parts, Packing Materials, Finished Goods, Stock-in-Trade and Work-in-progress are valued at lower of cost and net realisable value. B Cost [Net of Input tax credit availed] of Raw Materials, Stores & Spare Parts, Packing Materials, Finished Goods & Stock-in-Trade is determined on Moving Average Method. C Cost of Finished Goods and Work-in-progress is determined by taking material cost [Net of Input tax credit availed], labour and relevant appropriate overheads. 9 Revenue Recognition: A Revenue from Sale of goods is recognised when significant risks and rewards of ownership of the goods have been passed to the buyer. B Service income is recognised as per the terms of contracts with the customers when the related services are performed or the agreed milestones are achieved and are net of service tax wherever applicable. C Dividend income is recognised when the unconditional right to receive the income is established. D Interest income is recognised on time proportionate method. E Revenue in respect of other income is recognised when no significant uncertainty as to its determination or realisation exists. 10 Foreign Currency Transactions: A The transactions in foreign currencies are stated at the rates of exchange prevailing on the dates of transactions. B The net gain or loss on account of exchange rate differences either on settlement or on translation of short term monetary items is recognised in the statement of Profit and Loss. C The net gain or loss on account of exchange rate differences either on settlement or on translation of long term monetary items including long term forward contracts is recognised under Foreign Currency Monetary Items Translation Difference Account [FCMITDA], except in case of foreign currency loans taken for funding of fixed assets, where such difference is adjusted to the cost of respective fixed assets. The FCMITDA is amortised during the tenure of loans but not beyond March 31, 2020. D Investments in foreign subsidiaries are recorded in Indian currency at the rates of exchange prevailing at the time when the investments were made. E The foreign currency assets and liabilities including forward contracts are restated at the prevailing exchange rates at the period end. The premium in respect of forward contracts is accounted over the period of the contract. 11 Derivative Instruments and Hedge Accounting: A Pursuant to ICAI Announcement Accounting for Derivatives on the early adoption of Accounting Standard 30 Financial Instruments: Recognition and Measurement which contains accounting for derivatives, the Company has voluntarily adopted the Standard with effect from October 1, 2011, to the extent that the adoption does not conflict with existing mandatory accounting standards and other authoritative pronouncements, Company law and other regulatory requirements in respect of accounting for derivatives and hedge accounting. B The company uses derivative instruments, such as foreign currency forward contracts, other non-derivative financial liabilities and interest rate swaps to hedge its foreign currency risks associated with probable forecasted sales and interest rate fluctuations. The company designates these hedging instruments as cash flow hedge in applying the recognition and measurement principles set out in the Accounting Standard 30. C Hedging instruments are initially measured at fair value, and are remeasured at subsequent reporting dates. Changes in the fair value of these derivatives that are designated and effective as hedges of future cash flows are recognised directly in Hedge Reserves [under Reserves & Surplus] and the ineffective portion is recognised immediately in the statement of Profit and Loss. D Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting are recognised in the statement of Profit and Loss as they arise. E Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. At that time for forecasted transactions, any cumulative gain or loss on the hedging instrument recognised in Hedge Reserve is retained until the forecasted transaction occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in Hedge Reserve is transferred to the statement of Profit and Loss for the period. 12 Research and Development Cost: A Expenditure on research and development is charged to the statement of Profit and Loss of the period in which it is incurred. B Capital expenditure on research and development is given the same treatment as Fixed Assets. 13 Excise Duty: Excise Duty is accounted gross of Cenvat benefit availed on inputs, fixed assets and eligible services. 14 Employee Benefits: A Defined Contribution Plans: The Company contributes on a defined contribution basis to Employees'' Provident Fund towards post employment benefits, all of which are administered by the respective Government authorities, and has no further obligation beyond making its contribution, which is expensed in the period to which it pertains. B Defined Benefit Plans: The gratuity scheme is administered through the Life Insurance Corporation of India [LIC]. The liability for the defined benefit plan of Gratuity is determined on the basis of an actuarial valuation by an independent actuary at the reporting period end, which is calculated using projected unit credit method. Actuarial gains and losses which comprise experience adjustment and the effect of changes in actuarial assumptions are recognised in the statement of Profit and Loss. C Leave Liability: The leave encashment scheme is administered through Life Insurance Corporation of India''s Employees'' Group Leave Encashment cum Life Assurance [Cash Accumulation] scheme. The employees of the company are entitled to leave as per the leave policy of the company. The liability on account of accumulated leave as on last day of the accounting year is recognised [net of the fair value of plan assets as at the balance sheet date] at present value of the defined obligation at the balance sheet date based on the actuarial valuation carried out by an independent actuary using projected unit credit method. D Employee Separation Costs: The compensation paid to the employees under Voluntary Retirement Scheme is expensed in the year of payment. 15 Provision for Bad and Doubtful Debts/ Advances: Provision is made in accounts for bad and doubtful debts/ advances which in the opinion of the management is considered doubtful of recovery. 16 Taxes on Income: A Tax expenses comprise of current and deferred tax. B Current tax is measured at the amount expected to be paid on the basis of reliefs and deductions available in accordance with the provisions of the Income Tax Act, 1961. C Deferred tax reflects the impact of current year timing differences between accounting and taxable income and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and laws that have been enacted or substantively enacted as of the balance sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised and are reviewed at each balance sheet date. 17 Provision for Product Expiry Claims: Provision for product expiry claims in respect of products sold during the reporting period is made based on the management''s estimates. 18 Leases: Leases are classified as operating leases where the lessor effectively retains substantially all the risks and benefits of the ownership of the leased assets. Operating lease payments are recognised as expenses in the statement of Profit and Loss as and when paid. 19 Government Grants: A Government grants are recognised in accordance with the terms of the respective grant on accrual basis considering the status of compliance of prescribed conditions and ascertainment that the grant will be received. B Government grants related to revenue are recognised on a systematic and gross basis in the statement of Profit and Loss over the period during which the related costs intended to be compensated are incurred. C Government grants in the nature of incentive provided by the government without related costs are credited to capital reserve. 20 Provisions, Contingent Liabilities and Contingent Assets: Provision is recognised when the company has a present obligation as a result of past events and it is probable that the outflow of resources will be required to settle the obligation and in respect of which reliable estimates can be made. A disclosure for contingent liability is made when there is a possible obligation, that may, but probably will not require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision/ disclosure is made. Contingent assets are not recognised in the financial statements. Provisions and contingencies are reviewed at each balance sheet date and adjusted to reflect the correct management estimates. |
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| Source : Dion Global Solutions Limited | |||||
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