A Basis of accounting and preparation of financial statements
The financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards notified under
the Companies (Accounting Standards) Rules, 2006 (as amended) and the
relevant provisions of the Companies Act, 1956. The financial
statements have been prepared on accrual basis under the historical
cost convention. The accounting policies adopted in the preparation of
the financial statements are consistent with those followed in the
previous year unless stated otherwise.
B Use of estimates
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognised in the periods in which
the results are known I materialise.
Inventories are valued at the lower of cost (on FIFO / weighted average
basis) and the net realisable value after providing for obsolescence
and other losses, where considered necessary. Cost includes cost of
purchase, cost of conversion and all other costs incurred in bringing
the goods to their respective present location and condition.
Work-in-progress and finished goods include appropriate proportion of
overheads and, where applicable, excise duty.
D Cash and Bank Balances
Cash and Bank Balances also include fixed deposits, margin money
deposits, earmarked balances with bank, other bank balances and cash on
hand. Cash equivalents are short-term balances (with an original
maturity of three months or less from the date of acquisition), highly
liquid investments that are readily convertible into known amounts of
cash and which are subject to insignificant risk of changes in value.
E Cash flow statement
Cash flows are reported using the indirect method, whereby profit /
(loss) before extraordinary items and tax is adjusted for the effects
of transactions of non-cash nature and any deferrals or accruals of
past or future cash receipts or payments. The cash flows from
operating, investing and financing activities of the Company are
segregated based on the available information.
F Depreciation and amortisation .
Depreciation has been provided on the straight-line method as per the
rates prescribed in Schedule XIV to the Companies Act, 1956. The
Vitrified Ceramic Tile Plant and the allied Machineries have been
classified as a continuous process plant on technical assessment &
depreciation has been provided accordingly.
G Revenue recognition
Sales are recognised, net of returns and trade discounts, on transfer
of significant risks and rewards of ownership to the buyer, which
generally coincides with the delivery of goods to customers. Sales
include excise duty but exclude sales tax and value added tax.
Export Incentives on Advance Licenses are recognized on accrual basis.
Interest Income is recognized on accrual basis and dividend income is
accounted for when the right to receive the same is established.
H Tangible fixed assets
Fixed assets are stated at cost net of tax /duty credits availed if any
less accumulated depreciation and impairment losses, if any.
The cost of fixed assets includes interest on borrowings attributable
to acquisition of qualifying fixed assets upto the date the asset is
ready for its intended use and other incidental expenses incurred up to
Exchange differences arising on restatement/ settlement of long-term
foreign currency borrowings relating to acquisition of
depreciable fixed assets are adjusted to the cost of the respective
assets and depreciated over the remaining useful life of such assets.
Subsequent expenditure relating to fixed assets is capitalised only if
such expenditure results in an increase in the future benefits from
such asset beyond its previously assessed standard of performance.
Tangible Assets which are not ready for their intended use comprising
direct cost, related incidental expenses and attributable interest are
disclosed under capital work-in-progress.
I Foreign currency transactions and translations
Transactions in foreign currency are accounted at the exchange rate
prevailing on the date of transaction or the rate approximate to the
actual rate at the date of transaction. Exchange Rate fluctuation
between the transaction date and the settlement date in respect of
revenue transactions are recognized in Statement of Profit and Loss and
in respect of acquisition of the fixed assets are adjusted to the cost
of the respective assets.
Non-monetary foreign currency items are carried at cost.
All export proceeds / import payables not realized at the year end are
restated at the rate prevailing at the year end. The exchange
difference arising there on has been recognized as income / expenses in
the current year''s Statement of Profit and Loss
Monetary Assets & Liabilities denominated in Foreign Currency are
translated at year end exchange rates and the Profit/Loss so determined
is recognized in the Profit & Loss account.
The profit/loss on cancellation or renewal of derivative instruments
such as forward contract and option contract undertaken to hedge
exchange fluctuation/price risks are recognized as income/expenses in
the Statement of Profit and Loss for the year.
Long-term investments are carried individually at costless provision
for diminution, other than temporary, in the value of such investments.
Current investments are carried individually, at the lower of cost and
fair value. Cost of investments include acquisition charges such as
brokerage, fees and duties.
K Employee benefits
Short-term employee benefits
All employee benefits falling due wholly within twelve months of
rendering service are classified as short term employee benefits. The
benefits like salary, wages, short term compensated absences etc. and
the expected cost of bonus / performance incentives are recognised in
the period in which the employee renders the related service.
Defined contribution plans
The Company''s contribution to provident fund and employees state
insurance scheme and other welfare funds are considered as defined
contribution plans and are charged as an expense as they fall due based
on the amount of contribution required to be made.
Defined benefit plans
The employees gratuity fund scheme managed by the trust is the
company''e defined benefit plan. The present value of the obligation
under such plan is determined based on acturial valuation using the
projected unit credit method. In case such of funded plan, the fair
value of the plan assets is reduced from the gross obligation to
recognise such obligation on a net basis.
L Borrowing costs
Borrowing costs include interest, amortisation of ancillary costs
incurred and exchange differences arising from foreign currency
borrowings to the extent they are regarded as an adjustment to the
interest cost. Borrowing Costs attributable to acquisition and
construction of qualifying asset are capitalized as a part of the cost
of such asset up to the date when such asset is ready for its intended
use or sale. A qualifying asset is the one that necessarily takes a
substantial period to get ready for intended use. All other borrowing
costs are recognised as an expense in the period in which they are
M Segment reporting
The Company identifies primary segments based on the dominant source,
nature of risks and returns and the internal organisation and
management structure. The operating segments are the segments for which
separate financial information is available and for which operating
profit/loss amounts are evaluated regularly by the executive Management
in deciding how to allocate resources and in assessing performance.
The accounting policies adopted for segment reporting are in line with
the accounting policies of the Company. Segment revenue, segment
expenses, segment assets and segment liabilities have been identified
to segments on the basis of their relationship to the operating
activities of the segment.
Inter-segment revenue is accounted on the basis of transactions which
are primarily determined based on market/fair value factors.
Revenue, expenses, assets and liabilities which relate to the Company
as a whole and are not allocable to segments on reasonable basis have
been included under unallocated revenue / expenses / assets /
N Earning Per Share
In determining the earnings per share, the Company considers the net
profit/loss after tax and post tax effect of any extra-
ordinary/exceptional item is shown separately. The number of shares
considered in computing basic earnings per share is the weighted
average number of shares outstanding during the year. The number of
shares considered for computing diluted earnings per share comprises
the weighted average number of shares used for deriving the basic
earnings per share and also the weighted average number of equity
shares that could have been issued on the conversion of all dilutive
potential equity shares which includes potential CCD conversions. The
number of shares and potentially dilutive equity shares are adjusted
for any stock splits and bonus shares issues.
O Taxes on income
Provision for taxation comprises of Current tax and Deferred Tax.
Current tax Provision has been made in accordance with the Income Tax
Act, 1961 .Deferred tax for timing differences between the book and tax
profits for the period is accounted for, using the tax rates and laws
that have been substantively enacted as of the balance sheet date.
Deferred tax assets arising from timing differences are recognized to
the extent there is reasonable certainty that these would be realized
in future. Deferred tax assets are recognized on unabsorbed losses
only if there is virtual certainty that such deferred tax asset can be
realized against future taxable profit.
P Impairment of assets
An asset is treated as impaired when the carrying cost of such asset
exceeds its recoverable value. An impairment loss is charged to
Statement of Profit and Loss in the year in which an asset is
identified as impaired. The impairment loss recognised in prior
accounting period is reversed if there has been a change in the
estimate of recoverable amount.
Q Provisions, contingent liabilities and contingent assets
A provision is recognised when the Company has a present obligation as
a result of past events and it is probable that an outflow of resources
will be required to settle the obligation in respect of which a
reliable estimate can be made. Provisions (excluding retirement
benefits) are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
Balance Sheet date. These are reviewed at each Balance Sheet date and
adjusted to reflect the current best estimates. Contingent liabilities
are disclosed in the Notes. Contingent assets are neither recognised
nor disclosed in the financial statements.
R Derivative contracts
The Company enters into derivative contracts in the nature of foreign
currency swaps, currency options, forward contracts with an intention
to hedge its existing assets and liabilities, firm commitments and
highly probable transactions. Derivative contracts which are closely
linked to the existing assets and liabilities are accounted as per the
policy stated for Foreign Currency Transactions and Translations.
Derivative contracts designated as a hedging instrument for highly
probable forecast transactions are accounted as per the policy stated
for Hedge Accounting. All other derivative contracts are marked-
to-market and losses are recognised in the Statement of Profit and
Loss. Gains arising on the same are not recognised, until realised, on
grounds of prudence.