SENSEX NIFTY India | Accounting Policy > Cables - Power & Others > Accounting Policy followed by Diamond Power Infrastructure - BSE: 522163, NSE: DIAPOWER
Diamond Power Infrastructure
BSE: 522163|NSE: DIAPOWER|ISIN: INE989C01012|SECTOR: Cables - Power & Others
Nov 30, 16:01
2.15 (5.3%)
VOLUME 389,497
Nov 30, 16:01
1.65 (4.09%)
VOLUME 1,861,013
« Mar 14
Accounting Policy Year : Mar '15
1.  Method of Accounting:
 The Financial Statements have been prepared on historical cost
 convention. The Company follows the accrual basis of accounting. The
 Financial Statements are prepared in accordance with the accounting
 standards specified in the Companies (Accounting Standards) Rules, 2006
 notified by the Central Government in terms of Section 211(3C) of the
 Companies Act, 1956.
 2.  Revenue Recognition:
 Sales includes inter-divisional transfers, sale of scrap, Sales
 Outsource Products, Sales related to Engineering Procurement and
 Contract Services, Excise duty Paid, Value Added tax and Invoices for
 price escalation as per Contracts with the relevant customers on
 accrual basis.
 3.  Fixed Assets:
 Fixed Assets are stated at cost less accumulated depreciation up to the
 year. Expenditure incurred on improvement or replacement, which in the
 opinion of the management is likely to substantially increase the life
 of the assets and future benefits from it, is capitalized. Capital
 expenditure includes advances for assets under erection/installation
 are being grouped under capital work in progress.
 4.  Depreciation:
 Depreciation was charged on Straight Line basis at rates specified in
 Schedule XIV the Companies Act.1956. from the year 2014-15 after the
 amendment of the company''s Act 2013 the Depreciation on the assets are
 being calculated based on the useful life of the asset. The impact of
 Such change is to the tune of Rs.17.93 Crs.  Additional depreciation
 debited to P&L account as per the new companies Act 2013.
 In the Block of asset of the company, the original asset Block was Put
 to use in the year 1993, as per the Amended company''s act the useful
 life of the P&M are over as to the affliction of time, however,
 regarding the usefulness of the P&M into the production and the present
 performance of the P&M are yet to be decided by the project Director of
 the company.
 5.  Expenditure during construction period:
 All pre-operative project expenditure (net of income accrued),
 including interest on borrowings incurred up to the date of
 installation is capitalized are added pro-rata to the cost of fixed
 assets.  Foundation costs are allocated as certified by management.
 6.  Investment:
 Long-term investments are valued at cost.  however the investments in
 the Non
 - Quoted Shares of the other companies are considered at their original
 cost, further being the Non
 - Quoted investments the Market prices are not readily available and
 due to non-intention of sales of the shares, and based on the tests and
 assumptions of the management as to the No diminution
 In the current value of the same, they are shown in the accounts at
 their original cost
 7.  Inventories:
 a) Inventories of finished goods are valued at lower of costs or net
 realizable value inclusive of excise duty. Work in process (including
 finished stock pending QC inspection) is valued at cost representing
 material, labour and apportioned overheads as certified by the
 management. Other inventories are valued at cost. Materials related to
 Projects under implementation are valued at standard cost.
 b) Cost of work-in-progress and finished goods includes material cost,
 labour cost, and manufacturing overheads absorbed on the basis of
 normal capacity of production.
 8.  Provident Fund and Retirement Benefits:
 Contribution to Provident Fund is accounted on actual liability basis.
 Provision for Gratuity and Leave Encashment is made based on actuarial
 9.  Excise Duty:
 Excise Duty payable on finished goods held as stock in the works is
 included in the expenditure and in such stocks as per the provisions of
 Section 145 of the Income tax Act, 1961.
 There was an inquiry under section 14 of the Central Excise Act, 1944
 in the premises of the Company on 15-09-2014. Pursuant to such inquiry
 the Central Excise Department has alleged that the Company has wrongly
 availed the CENVAT credit to the extent of Rs.40.00 crores
 approximately during the period 2012-13, 2013-14 and 2014-15 (till
 July, 2014). No show-cause notice under the provisions of section 11(a)
 of the Central Excise Act, 1944 has been served upon the Company till
 date which is sine qua non for the recovery of demand of any short
 payment or non-payment or wrong availment of CENVAT credit. Since the
 company holds all the material and evidences to justify its claim of
 CENVAT credit it is of view that the allegations made by the Excise
 Department are not tenable in law.
 Thus, in absence of such show cause notice as well as
 non-quantification of the Demand by the Central Excise Department, the
 company has not acknowledged the said approximate demand and
 accordingly no provision has been made in the books of account for the
 10.  Amortisation:
 Expenditure on Fire Resistant Low Smoke Project (FRLS) & High
 Sensitivity & High Conductivity Conductors (HSHC) have been amortized
 over a period of five years. One- fifth portion of the expenses
 deferred on Aerial Bunch Cable Project (ABC Project) have been charged
 to the revenue for the financial period.
 11.  Foreign Currency Transactions:
 The Company has no Branch offices outside India.  The Foreign currency
 transaction are recorded on initial recognition in the reporting
 currency by applying the exchange rate prevailing at the date of
 transaction .Any Income or Expense on account of exchange rate
 difference is recognized in the Income and Expenditure Account. The
 company has an ECB Exposure of USD 17.62 MN the interest on which has
 been hedged till March 2015; subsequently the Axis Bank has transferred
 the exposure of USD 8 MN to Bank of India. Further foreign exchange
 Gain/Loss on the re-statement of the current Assets and Liabilities are
 calculated based on the RBI exchange rate as of 31/3/2015.
 12.  Borrowing Costs:
 Borrowing costs that are attributable to the acquisition, construction
 or Production of qualifying assets is capitalized as part of the cost
 of such assets. A qualifying asset is one that necessarily takes a
 substantial period of time to get ready for its intended use. All other
 borrowing costs are charged to revenue.
 13.  Income Tax:
 Provision for Current Income Tax is made after considering Company''s
 claims under the Income Tax Act, 1961 .This Liability is calculated at
 the applicable tax rate or Minimum Alternate Rate under Section 115JB
 of the Income Tax Act 1961 as the case may be.
 14.  Deferred Tax :
 Deferred Tax is Calculated at the tax rates and Laws that have been
 enacted or substantially enacted as of Balance Sheet date and is
 recognized on timing differences that originated in one period and are
 capable of reversal in one or more subsequent periods. Deferred tax
 assets, subject to consideration of prudence are recognized and carried
 forward only to the extent that they can be released.
 15.  Impairment of Assets:
 The Company has examined carrying cost of its identified Cash
 Generating Units (CGU) by comparing present value of estimated future
 cash flows from such CGUs, in terms of Accounting Standard-28 on
 impairment of Assets, and in absence of any indication of being
 potential impairment of Assets, no provision for impairment is required
 as assets of none of CGUs are impaired during the financial year under
 16 Uses of Estimates:
 The preparation of financial statements requires estimates and
 assumptions to be made that affect the reported amount of assets and
 liabilities on the date of financial statements and the reported amount
 of revenue and expenses during the reporting period. Difference between
 the actual results and estimates are recognised in the period in which
 results are known/materialized.
 17.  Derivative Contracts:
 Company as such in the current financial year has not entered into any
 such Derivative Contracts except the interest on the ECB Loan exposure
 has been covered by the Interest Rate SWAP contract
 18.  Operating Cycle:
 Assets and liabilities other than those relating to long-term contracts
 (i.e. supply or turnkey contracts) are classified as current if it is
 expected to realise or settle within 12 Months after the balance sheet
 date. In case of long-term contracts, the time between acquisition of
 assets for processing and realisation of the entire proceeds under the
 contracts in cash or cash equivalent exceeds one year. Accordingly for
 classification of assets and liabilities related to such contracts as
 current, duration of each contract is considered as its operating cycle
 19 Financial Restructuring and Rephasement of Debt:
 The Company has re-negotiated its entire Debt @ 11 % instead of the
 existing average cost of borrowings at 13.50%, the lenders have funded
 all interests cost up to June 2016.The Terms loans & NCD Payments have
 also been rephrased for payment from June 2016, lenders have provided
 adequate working capital limits for the current years and have fully
 funded the expansion project of the company,
 20.  Legal cases:
 The Company has outstanding legal cases wherein there are claim of Rs
 1.77 crores against the company, however on same parties the company
 has claims of Rs 3 crores, in our opinion the companies matters are on
 strong ground & no financial repercussions on the company.
 21.  Corporate Guarantee:
 The Company has extended a Corporate Guarantees aggregating Rs 1200
 Million to the lenders of companies wholly owned subsidiary Diamond
 Power Transformers Ltd.  Part b notes to accounts
Source : Dion Global Solutions Limited
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