SENSEX NIFTY
Moneycontrol.com India | Accounting Policy > Personal Care > Accounting Policy followed by Godrej Industries - BSE: 500164, NSE: GODREJIND
YOU ARE HERE > MONEYCONTROL > MARKETS > PERSONAL CARE > ACCOUNTING POLICY - Godrej Industries
Godrej Industries
BSE: 500164|NSE: GODREJIND|ISIN: INE233A01035|SECTOR: Personal Care
SET ALERT
|
ADD TO PORTFOLIO
|
WATCHLIST
LIVE
BSE
Oct 31, 17:00
300.55
7.25 (2.47%)
VOLUME 51,476
LIVE
NSE
Oct 31, 17:00
301.65
8 (2.72%)
VOLUME 462,141
« Mar 13
Accounting Policy Year : Mar '14
1.1 Accounting Convention
 
 The financial statements are prepared under the historical cost
 convention, on accrual basis, in accordance with the generally accepted
 accounting principles in India, the applicable Accounting Standards
 notifed under Section 211(3c) of the Companies Act, 1956 and specifed
 in the Companies (Accounting Standard) Rules read with the General
 Circular No. 15/2013 dated September 12, 2013 issued by the Ministry of
 Corporate Affairs in respect of Section 133 of the Companies Act, 2013,
 pronouncements of the Institute of Chartered Accountants of India, and
 the provisions of the Companies Act, 1956 and the applicable sections
 of the Companies Act, 2013.
 
 2.2 Use of Estimates
 
 The preparation of financial statements in conformity with generally
 accepted accounting principles requires the Management to make
 estimates and assumptions that affect the reported balances of assets
 and liabilities as of the date of the financial statements and reported
 amounts of income and expenses during the period. Management believes
 that the estimates used in the preparation of financial statements are
 prudent and reasonable. Actual results could differ from the estimates.
 
 2.3 Fixed Assets
 
 Fixed Assets are stated at cost of acquisition or construction, less
 accumulated depreciation and impairment, if any. Cost includes expenses
 related to acquisition and any directly attributable cost of bringing
 the assets to it''s intended working condition and excludes any duties /
 taxes recoverable. Subsequent expenditure incurred on existing fixed
 assets is expensed out except where such expenditure increases the
 future economic benefts from the existing assets.
 
 Borrowing costs that are directly attributable to the acquisition /
 construction of the qualifying asset are capitalised as a part of the
 cost of such asset, upto the date of acquisition / completion of
 construction.
 
 Fixed assets acquired under finance lease are capitalised at the lower
 of their fair value and the present value of the minimum lease
 payments.
 
 2.4 Asset Impairment
 
 The Company reviews the carrying amounts of tangible and intangible
 assets for any possible impairment at each balance sheet date. An
 impairment loss is recognized when the carrying amount of an asset
 exceeds its recoverable amount. Impairment loss, if any, is recognised
 in the period in which impairment takes place.
 
 2.5 Operating Leases
 
 Leases of assets under which all the risks and rewards of ownership are
 effectively retained by the lessor are classified as operating leases.
 Lease payments under operating leases are recognized as an expense on a
 straight line basis over the lease term.
 
 2.6 Investments
 
 Investments are classified into current and non-current investments.
 Investments intended to be held for a period less than twelve months or
 those maturing within twelve months from the balance sheet date are
 classified as ''Current Investments''. Current Investments are stated at
 lower of cost and fair value.
 
 Investments other than Current Investments are classified as
 ''Non-current Investments''. Non-Current Investments are carried at cost
 of acquisition which includes all costs directly incurred on the
 acquisition of the investment.  Provision for diminution, if any, in
 the value of each Non-Current investments is made to recognize a
 decline, other than of a temporary nature. The fair value of a
 Non-Current investment is ascertained with reference to its market
 value, the investee''s assets and results and the expected cash flows
 from the investment.
 
 2.7 Inventories
 
 Inventories are valued at lower of cost and net realisable value. Cost
 is computed on weighted average basis and is net of cenvat. Finished
 goods and work in progress includes cost of conversion and other costs
 incurred in bringing the inventories to their present location and
 condition. Finished goods valuation also includes excise duty, wherever
 applicable. Provision is made for the cost of obsolescence and other
 anticipated losses, wherever considered necessary.
 
 2.8 Provisions and Contingent Liabilities
 
 Provisions are recognized when the Company has a present obligation as
 a result of a past event; it is probable that an outflow of resources
 embodying economic benefts will be required to settle the obligation
 and when a reliable estimate of the amount of the obligation can be
 made.
 
 No Provision is recognized for :
 
 (i) Any possible obligation that arises from past events and the
 existence of which will be confrmed only by the occurrence or
 non-occurrence of one or more uncertain future events not wholly within
 the control of the Company; or
 
 (ii) Any present obligation that arises from past events but is not
 recognized because :
 
 (a) It is not probable that an outflow of resources embodying economic
 benefts will be required to settle the obligation; or
 
 (b) A reliable estimate of the amount of obligation cannot be made.
 Such obligations are recorded as Contingent Liabilities.
 
 Contingent Assets are not recognized in the financial statements since
 this may result in the recognition of income that may never be
 realized.
 
 2.9 Revenue Recognition
 
 Sales are recognised when goods are supplied and signifcant risks and
 rewards of ownership in the goods are transferred to the buyer. Sales
 are recorded net of returns, trade discounts, rebates, sales taxes and
 excise duties.
 
 Income from processing operations is recognised on completion of
 production / dispatch of the goods, as per the terms of contract.
 
 Dividend income is recognised when the right to receive the same is
 established.
 
 Interest income is recognised on a time proportion basis.
 
 Income on assets given on operating lease is recognised on a straight
 line basis over the lease term.
 
 2.10 Research and Development Expenditure
 
 Revenue expenditure on Research & Development is charged to the
 Statement of Profit and Loss of the year in which it is incurred.
 Capital expenditure incurred during the year on Research & Development
 is included under additions to fixed assets.
 
 2.11 Borrowing Costs
 
 Borrowing costs that are directly attributable to the acquisition of an
 asset that necessarily takes a substantial period of time to get ready
 for its intended use are capitalised as part of the cost of that asset
 till the date it is put to use. Other borrowing costs are recognised as
 an expense in the period in which they are incurred.
 
 2.12 Foreign Exchange Transactions
 
 (i) Transactions in foreign currency are recorded at exchange rates
 prevailing on the day of the transaction.  Monetary assets and
 liabilities denominated in foreign currency, remaining unsettled at the
 period end are translated at closing rates. The difference in
 translation of monetary assets and liabilities and realised gains and
 losses on foreign currency transactions are recognised in the Statement
 of Profit and Loss.
 
 (ii) Forward exchange contracts other than those entered into to hedge
 foreign currency risk of frm commitments or highly probable forecast
 transactions are translated at period end exchange rates. Premium or
 discount on such forward exchange contracts is amortised as income or
 expense over the life of the contract.
 
 (iii) Realised gain or losses on cancellation of forward exchange
 contracts are recognised in the Statement of Profit and Loss of the
 period in which they are cancelled.
 
 (iv) Exchange differences in respect of other unexpired foreign
 currency derivative contracts, which have been entered into to hedge
 foreign currency risks are marked to market and losses, if any, are
 recognised in the Statement of Profit and Loss.
 
 (v) Exchange differences arising on reporting of long term foreign
 currency monetary items at rates different from those at which they
 were initially recorded during the year in so far as they relate to the
 acquisition of a depreciable capital asset, are added to or deducted
 from the cost of the asset and are depreciated over the balance life of
 the asset, and in other cases, are accumulated in a Foreign Currency
 Monetary Item Translation Difference Account and amortised over the
 balance period of such long term asset or liability, by recognising as
 income or expense in each such period.
 
 2.13 Hedging
 
 The company uses forward exchange contracts to hedge it''s foreign
 exchange exposures and commodity futures contracts to hedge the
 exposure to oil price risks. Gains or losses on settled contracts is
 recognized in the Statement of Profit and Loss. Futures contracts not
 settled as on the Balance Sheet date are marked to market and losses,
 if any, are recognized in the Statement of Profit and Loss, whereas, the
 unrealized Profit is ignored.  Gains or losses on the commodity futures
 contracts is recorded in the Statement of Profit and Loss under cost of
 materials consumed.
 
 2.14 Employee Benefts
 
 (i) Short-Term Employee Benefts
 
 All employee benefts payable wholly within twelve months of rendering
 the service are classified as short term employee benefts. Benefts such
 as salaries, performance incentives, etc., are recognized as an expense
 at the undiscounted amount in the Statement of Profit and Loss of the
 year in which the employee renders the related service.
 
 The Company has a scheme of Performance Linked Variable Remuneration
 (PLVR) which rewards its employees based on Economic Value Added (EVA).
 The PLVR amount is related to actual improvement made in EVA over the
 previous year when compared with expected improvements.
 
 (ii) Post Employment Benefts
 
 (a) Defined Contribution Plans
 
 Payments made to a Defined contribution plan such as Provident Fund and
 Family Pension maintained with Regional Provident Fund Office are
 charged as an expense in the Statement of Profit and Loss as they fall
 due.
 
 (b) Defined Beneft Plans
 
 Gratuity Fund
 
 The Company''s liability towards gratuity to past employees is
 determined using the Projected Unit Credit Method which considers each
 period of service as giving rise to an additional unit of beneft
 entitlement and measures each unit separately to build up the fnal
 obligation. Past services are recognized on a straight line basis over
 the average period until the amended benefts become vested. Actuarial
 gain and losses are recognized immediately in the Statement of Profit
 and Loss as income or expense.  Obligation is measured at the present
 value of estimated future cash flows using a discounted rate that is
 determined by reference to market yields at the Balance Sheet date on
 Government Securities where the currency and terms of the Government
 Securities are consistent with the currency and estimate terms of the
 Defined beneft obligations.
 
 Provident Fund
 
 Provident Fund Contributions other than those made to the Regional
 Provident Fund Office of the Government which are made to the Trust
 administered by the Company are considered as Defined Beneft Plans. 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.
 
 Pension
 
 Pension plan for eligible employees are considered as Defined beneft
 obligations and are provided for on the basis of an actuarial
 valuation, using the projected unit credit method, as at the date of
 the Balance Sheet.
 
 (iii) Other Long-Term Employee Benefts
 
 Long-term Compensated Absences and Long Service Awards are provided for
 on the basis of an actuarial valuation, using the projected unit credit
 method, as at the date of the Balance Sheet. Actuarial gains / losses
 comprising of experience adjustments and the effects of changes in
 actuarial assumptions are immediately recognized in the Statement of
 Profit and Loss.
 
 2.15 Consolidation of Employee Stock Option Plan Trust
 
 For the purpose of administration of Employee Stock Option Plan of the
 Group, the Company has established GIL ESOP Trust. In accordance with
 the opinion issued by the Expert Advisory Committee of the ICAI on
 Consolidation of the ESOP Trust in the standalone financial statements,
 the Company has included the financial statements of the ESOP trust for
 preparation of the standalone financial statements to portray the
 picture as if the Company itself is administering the ESOP Scheme.
 Consequently, the operations of the ESOP Trust, in so far as the ESOP
 is concerned and the assets and liabilities of the Trust have been
 included in the financial statements of the Company. The loans to the
 ESOP Trust in the books of the Company are eliminated against the loans
 from the Company as appearing in the books of the Trust and investments
 in the equity shares of the Company held by the Trust have been reduced
 from Share Capital to the extent of the face value of the shares and
 the balance has been adjusted in ESOP Trust Adjustments under
 Reserves and Surplus. Balances arising from transactions between the
 Company and the Trust have been appropriately eliminated. The opening
 excess of expenditure over income of the Trust has been adjusted in
 ESOP Trust Adjustments under Reserves and Surplus.
 
 2.16 Depreciation and Amortisation Tangible Assets
 
 (i) Leasehold land and Leasehold improvements are amortised equally
 over the lease period.
 
 (ii) Depreciation is provided, pro rata to the period of use, under the
 Straight Line Method at the rates specifed in Schedule XIV to the
 Companies Act, 1956 except for computer hardware which is depreciated
 over its estimated useful life of 4 years.
 
 (iii) Assets costing less than Rs. 5,000 are depreciated at 100% in the
 year of acquisition.
 
 (iv) Depreciation on the revalued component is provided on the straight
 line method based on the balance useful life of the assets as certifed
 by the valuers. Such depreciation is withdrawn from Revaluation Reserve
 and credited to the Statement of Profit and Loss.
 
 Intangible Assets
 
 Intangible assets are amortised on straight line basis as given below :
 (i) Trade marks are amortised equally over a period of ten years.  (ii)
 Computer software is amortised over a period of six years.
 
 2.17 Taxes on Income
 
 Current tax is the amount of tax payable on the taxable income for the
 year determined in accordance with the provisions of the Income-tax
 Act, 1961.
 
 Deferred tax subject to consideration of prudence, is recognised on
 timing differences; being the difference between taxable income and
 accounting income that originate in one period and are capable of
 reversal in one or more subsequent periods. Deferred tax asset /
 liabilities in respect of timing differences which originate and
 reverse during the tax holiday period are not recognized. Deferred tax
 assets / liabilities in respect of timing differences that originate
 during the tax holiday period but reverse after the tax holiday period
 are recognized.  Deferred tax assets on unabsorbed tax losses and tax
 depreciation are recognised only to the extent that there is virtual
 certainty supported by convincing evidence of their realisation and on
 other items when there is reasonable certainty of realisation. The tax
 effect is calculated on the accumulated timing differences at the year
 end based on the tax rates and laws enacted or substantially enacted on
 the balance sheet date.
 
 Minimum Alternate Tax (MAT) paid in a year is charged to the Statement
 of Profit and Loss as current tax. The Company recognizes MAT credit
 available as an asset only to the extent there is reasonable
 possibility that the Company will pay normal income tax during the
 specifed period for which MAT Credit is allowed to be carried forward.
 The Company recognizes MAT Credit as an asset by way of credit to the
 statement of Profit and Loss and is disclosed as MAT Credit
 Entitlement. under Long Term Loans and Advances.
 
 2.18 Cash and Cash Equivalents
 
 In the Cash Flow Statement, Cash and Cash Equivalents includes cash in
 hand, bank balances and term deposits with bank having maturity term of
 less than three months.
 
 2.19 Earnings Per Share
 
 Basic Earnings per share is calculated by dividing the net Profit for
 the period attributable to the equity shareholders by the weighted
 average number of equity shares outstanding during the period. For the
 purpose of calculating diluted earnings per share, the net Profit for
 the period attributable to the equity shareholders and the weighted
 average number of equity shares outstanding during the period is
 adjusted for the effects of all dilutive potential equity shares.
 
 2.20 Segment Reporting
 
 The Accounting Policies adopted for segment reporting are in line with
 the Accounting Policies of the Company.  Segment assets include all
 operating assets used by the business segments and consist principally
 of fixed assets, trade receivables and inventories. Segment liabilities
 include the operating liabilities that result from the operating
 activities of the business. Segment assets and liabilities that cannot
 be allocated between the segments are shown as part of unallocated
 corporate assets and liabilities respectively. Income / Expenses
 relating to the enterprise as a whole and not allocable on a reasonable
 basis to business segments are refected as unallocated corporate income
 / expenses.
Source : Dion Global Solutions Limited
Quick Links for godrejindustries
Explore Moneycontrol
Stocks     A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z | Others
Mutual Funds     A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z
Copyright © e-Eighteen.com Ltd. All rights reserved. Reproduction of news articles, photos, videos or any other content in whole or in part in any form or medium without express written permission of moneycontrol.com is prohibited.