SENSEX NIFTY India | Accounting Policy > Dyes & Pigments > Accounting Policy followed by Clariant Chemicals India - BSE: 506390, NSE: CLNINDIA

Clariant Chemicals India

BSE: 506390|NSE: CLNINDIA|ISIN: INE492A01029|SECTOR: Dyes & Pigments
Dec 06, 15:19
-2.65 (-0.37%)
VOLUME 1,187
Dec 06, 15:19
-0.45 (-0.06%)
VOLUME 5,315
« Dec 13
Accounting Policy Year : Dec '14
(a) Basis of preparation of financial statements
 These financial statements have been prepared in accordance with
 generally accepted accounting principles in India under the historical
 cost convention on accrual basis. Pursuant to Circular 15/ 2013 dated
 13th September, 2013 read with Circular 08/ 2014 dated 4th April, 2014,
 till the standards of Accounting or any addendum thereto are prescribed
 by Central Government in consultation and recommendation of the
 National Financial Reporting Authority, the existing Accounting
 Standards notified under the Companies Act, 1956 (the Act) shall
 continue to apply. Consequently, these financial statements have been
 prepared to comply in all material aspects with the accounting
 standards notified under Section 211(3C) [Companies (Accounting
 Standards) Rules, 2006, as amended] and other relevant provisions of
 the Act.
 All 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 Revised Schedule VI to the Companies Act, 1956.
 Based on the nature of products and the time between acquisition of
 assets for processing and their realisation in cash and cash
 equivalents, the Company has ascertained its operating cycle as 12
 months for the purpose of current/ non-current classification of assets
 and liabilities.
 (b) Revenue recognition
 The Company recognises sale of goods on transfer of significant risks
 and rewards of ownership of the goods to the buyer as per the terms of
 contract. Sales are net of excise duty, sales tax and trade discounts,
 wherever applicable.
 Income from services rendered is recognised based on agreements/
 arrangements with the customers as the service is performed using the
 proportionate completion method and is recognised net of service tax,
 as applicable.
 Interest Income is accounted on time proportion basis taking into
 account the amounts invested and the rate of interest. Dividend income
 on investments is accounted for when the right to receive the dividend
 is established.
 Income from export incentives such as duty drawback etc. are recognised
 on accrual basis to the extent the ultimate realisation is reasonably
 Indenting commission is recognised based on the terms of agreement,
 when the right to receive the commission is established. 
 Rental income is recognised on accrual basis.
 (c) Excise duty
 Excise duty payable on products is accounted for at the time of
 despatch of goods from the factories and is accrued for stocks held at
 the year end.
 Excise Duty related to the difference between the closing stock and
 opening stock of finished goods has been recognised separately in Note
 28 Other expenses.
 (d) Employee benefits
 (i) Post employment benefits and other long term employee benefits:
 Defined contribution plans :
 Company''s contribution to provident fund, superannuation fund, employee
 state insurance and other funds are determined under the relevant
 schemes and / or statute and charged to the Statement of Profit and
 Loss. The Company has no further obligation under such plans.
 Defined benefit plans and compensated absences :
 In respect of certain employees, provident fund contributions are made
 to a 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 liability in respect of
 the shortfall of interest earnings of the Fund is determined on the
 basis of an actuarial valuation. The Company''s liability towards
 gratuity, ex-gratia gratuity and compensated absences are actuarially
 determined at each balance sheet date using the projected unit credit
 method. Actuarial gains and losses are recognised in the Statement of
 Profit and Loss. The classification of the company''s net obligation
 into current and non- current is as per the actuarial valuation report.
 (ii) Voluntary retirement scheme:
 Expenditure incurred on voluntary retirement scheme is charged to the
 Statement of Profit and Loss in the year in which it is incurred.
 (e) Tangible Assets
 (i) All tangible assets are stated at acquisition cost net of
 accumulated depreciation and impairment losses, if any.
 (ii) Subsequent expenditures related to an item of fixed asset are
 added to its book value only if they increase the future benefits from
 the existing asset beyond its previously assessed standard of
 (iii) Items of tangible assets that have been retired from active use
 and are held for disposal are stated at the lower of their net book
 value and net realisable value and are shown separately in the
 financial statements under Other Current Assets. Any expected loss is
 recognised immediately in the Statement of Profit and Loss.
 (iv) Losses arising from the retirement of, and gains or losses from
 disposal of fixed assets which are carried at cost are recognised in
 the Statement of Profit and Loss.
 (v) The cost of leasehold land is amortised over the primary period of
 the lease.
 (vi) Depreciationis provided on a pro-rata basis on the straight line
 method over the estimated useful lives of the assets or at the rates
 prescribed under Schedule XIV to the Companies Act, 1956, whichever is
 higher, as follows :
 Factory Buildings             30 Years
 Office Buildings              60 Years
 Plant and Equipment           10 to 21 Years
 Furniture and Fixtures        5 to 16 Years
 Office Equipment              5 to 10 Years
 Vehicles                      4 Years
 (f) Intangible Assets
 Intangible assets are stated at acquisition cost, net of accumulated
 amortisation and accumulated impairment losses, if any. Intangible
 assets are amortised on a straight line basis over their estimated
 useful lives, as follows:
 Goodwill               10 Years
 Trademarks             10 Years
 (g) Impairment of assets
 The carrying amounts of assets are reviewed at each Balance Sheet date
 to assess whether there is any indication of impairment based on
 internal / external factors. An impairment loss is recognised wherever
 the carrying amount of an asset exceeds its estimated recoverable
 amount. The recoverable amount is greater of the asset''s net selling
 price and value in use. In assessing the value in use, the estimated
 future cash flows are discounted to the present value using the
 weighted average cost of capital. Previously recognised impairment loss
 is further provided or reversed depending on changes in circumstances.
 (h) Inventories
 Inventories are valued at the lower of cost and net realisable value.
 Cost is computed on a weighted average basis. The net realisable value
 is the estimated selling price in the ordinary course of business less
 the estimated costs of completion and estimated costs necessary to make
 the sale. Finished goods and work-in-progress include all costs of
 purchases, conversion costs and other costs incurred in bringing the
 inventories to their present location and condition.
 (i) Trade receivables / Loans and advances
 Trade receivables and loans and advances are stated after making
 adequate provision for doubtful debts / advances.
 ( j) Investments
 Investments that are readily realisable and are intended to be held for
 not more than one year from the date on which such investments are
 made, are classified as current investments. All other investments are
 classified as non-current investments.
 Non-current investments are stated at cost less provision for
 diminution in value, other than temporary. Current investments are
 stated at the lower of cost and fair value.
 (k) Operating Leases
 Leases in which a significant portion of the risks and rewards of
 ownership are retained by the lessor are classified as operating
 leases. The company is both a lessee and a lessor under such
 arrangements. Payments and receipts under such leases are charged or
 credited to the Statement of Profit and Loss on a systematic basis over
 the primary period of the lease.
 (l) Foreign currency translations
 (i) Foreign currency transactions are accounted at the rate prevailing
 on the date of the transaction. Monetary items denominated in foreign
 currency outstanding as at year end are translated at the exchange rate
 prevailing on the last day of the accounting year. In respect of items
 covered by forward contracts, the premium or discount arising at the
 inception of such a forward exchange contract is amortised as expense
 or income over the life of the contract. Any profit or loss arising on
 cancellation of such a forward exchange contract is recognised as
 income or expense for the period.
 (ii) 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 transaction.
 (iii) Gain or loss arising out of settlement of such transactions or
 from translation/conversion is taken credit for or charged to the
 Statement of Profit and Loss.
 (m) Income Tax
 Income-tax expense comprises current tax and deferred tax charge or
 credit. The current tax is determined as the amount of tax payable in
 respect of the estimated taxable income for the year. The deferred tax
 charge or credit is recognised using prevailing enacted or
 substantively enacted tax rates at the Balance Sheet date. Where there
 is unabsorbed depreciation or carry forward losses, deferred tax assets
 are recognised only if there is virtual certainty of realization. Other
 deferred tax assets are recognised only to the extent there is
 reasonable certainty of realisation in future. The carrying amount of
 deferred tax assets/liabilities are reviewed at each Balance Sheet date
 for any write-down or reversal, as considered appropriate.
 (n) Provisions and Contingent Liabilities
 Provisions are recognised when there is a present obligation as a
 result of a past event, it is probable that an outflow of resources
 embodying economic benefits will be required to settle the obligation
 and there is a reliable estimate of the amount of the obligation.
 Provisions are measured at the best estimate of the expenditure
 required to settle the present obligation at the balance sheet date and
 are not discounted to its present value. These are reviewed at each
 year end date and adjusted to reflect the best current estimate.
 Contingent liabilities are disclosed when there is a possible
 obligation arising from past events, the existence of which will be
 confirmed only by the occurrence or non occurrence of one or more
 uncertain future events not wholly within the control of the company or
 a present obligation that arises from past events where it is either
 not probable that an outflow of resources will be required to settle
 the obligation or a reliable estimate of the amount cannot be made.
 (o) Cash and cash equivalents
 In the cash flow statement, cash and cash equivalents include cash in
 hand, term deposits with banks and other short-term highly liquid
 investments with original maturities of three months or less.
 (p) Earnings per share
 Basic earnings per share is calculated by dividing the net profit for
 the period attributable to equity shareholders by the weighted average
 number of equity shares outstanding during the period. The weighted
 average number of equity shares outstanding during the period and for
 all periods presented is adjusted for events, such as bonus shares,
 other than the conversion of potential equity shares, that have changed
 the number of equity shares outstanding, without a corresponding change
 in resources. For the purpose of calculating diluted earnings per
 share, the net profit for the period attributable to equity
 shareholders and the weighted average number of shares outstanding
 during the period is adjusted for the effects of all dilutive potential
 equity shares.
 (q) Use of estimates
 The presentation of the financial statements in conformity with the
 generally accepted accounting principles requires that the management
 makes certain estimates and assumptions. These estimates and
 assumptions affect the reported amount of assets and liabilities on the
 date of the financial statements and the reported amount of revenues
 and expenses during the reporting period. Difference between the actual
 results and estimates if any, is recognised in the period in which the
 results are known / materialised.
Source : Dion Global Solutions Limited
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