A. The financial statements are prepared under the historical cost
convention (except for revaluation of certain Fixed Assets), on the
accounting principles ofa going concern, in accordance with the
applicable accounting standards and on accrual basis except
specifically stated here below.
All income and expenses to the extent considered receivable / payable
with reasonable certainty are accounted for on accrual basis except
specifically stated here below.
B. USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles (GAAP) requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and the disclosures of contingent liabilities on the
date of financial statements and reported amounts of revenue and
expenses for that year. Actual result may some time differ from these
estimates. Any revision to accounting estimates is recognized
C. FIXED ASSETS
I. a) Certain Land & Buildings and Plant & Equipment were revalued
from time to time and are stated at updated book values less
depreciation, where applicable.
b) Other assets are stated at cost less depreciation/amortisation. Cost
comprises of all expenses incurred upto commissioning/putting the
assets to use.
II. IMPAIRMENT OF ASSETS
The Company assesses at each Balance Sheet date whether there is any
indication that any asset may be impaired. If any such indication
exists, the carrying value of such asset is reduced to its recoverable
amount and the impairment loss is charged to the statement of profit
and loss. If at the Balance Sheet date, there is any indication that a
previously assessed impairment loss no longer exists, than such loss is
reversed and the asset is restated to that effect.
a) Depreciation on Fixed Assets is provided for on written down value
method in accordance with Schedule XIV to the Companies Act, 1956
(hereinafter referred to as the ''Act''). In respect of assets whose
actual cost does not exceed Rupees Five thousand and acquired before
01.04.1993, depreciation is continued to be provided for at the general
rates applicable to them under the said Schedule and those acquired
thereafter, at the rate of 100% in the year of acquisition.
b) Depreciation on the revalued Fixed Assets is provided for on
straight line method on the increased book value of the assets (Net of
scrap/ salvage value) based on the balance life of the said assets as
estimated by the valuer. Out of the depreciation so calculated, the
amount of depreciation as stated in (a) above is charged to the
Statement of profit and loss and the balance is adjusted against a like
amount transferred from Revaluation Reserve.
c) Depreciation on spares purchased subsequently for specific machinery
and having irregular use is provided prospectively over the residual
life of the specific machinery.
Non current investments are carried at cost less write offs, if any,
for diminution other than temporary in the value of such investments,
determined for each investment individually.
F. VALUATION OF INVENTORIES
a) (i) Stock in Trade-Immovable Properties is valued at estimated
market value as per the expert opinion received in the matter.
(ii) Other Inventories are valued at lower of cost and estimated net
realisable value. Obsolete, defective and unserviceable stocks are
b) Cost of Inventories is computed on moving weighted average /FIFO
c) Cost of finished goods, work-in-progress and other materials
includes conversion and other costs incurred in bringing the
inventories to their present location and condition.
d) Advertisement and Sales promotion materials/items are charged to
revenue as and when purchased.
G. REVENUE RECOGNITION
a) Sale of goods is recognised when the property and all the
significant risks and rewards of ownership are transferred to the buyer
and no significant uncertainty exists regarding the amount of
consideration that is derived from the sale of goods. Sales include
Excise Duty and are net of Discounts / Margins (as considered
appropriate by the management), Value Added Tax and Damaged & Dented
stocks. Damaged & Dented stocks are accounted/ provided for as and when
inspected and destroyed.
b) Export sales are accounted for on the basis of the date of Bill of
Lading / Mates Receipt.
c) Export Benefit Claims are accounted in the year of export.
H. EMPLOYEE BENEFITS
(a) Contributions towards provident fund and superannuation fund are
made under defined contribution retirement benefit plans for qualifying
employees. The provident fund plan is operated by the Regional
Provident Fund Commissioner. The superannuation fund is administered by
the Trustees of the GTL Management Staff Superannuation Scheme and is
funded under Group Superannuation Scheme of Life Insurance Company
Limited. The Company is required to contribute a specific percentage of
payroll cost towards retirement benefits. The contributions are charged
to Statement of profit and loss in the respective year.
(b) Leave entitlement liability is provided for on the basis of
actuarial valuation carried out at the year-end. Actuarial gains and
losses are recognized immediately in the statement of profit and loss.
(c) Gratuity liability is paid in accordance to a defined benefit plan
but is accounted for as and when employees retire and the amount is
I. RESEARCH AND DEVELOPMENT EXPENSES
Research & Development expenses of revenue nature are charged to the
Statement of profit and loss and that of capital nature are shown as an
addition to the respective Fixed Assets.
J. TRANSLATION OF FOREIGN CURRENCY ITEMS
a) Transactions in foreign currency are recorded at the rate of
exchange in force on the date of the transaction.
b) Assets, liabilities and capital commitments denominated in foreign
currency are restated at the rate of exchange prevailing at the
c) In case of forward contracts, the premium/discount is dealt with in
the Statement of profit and loss over the period of the contracts.
d) The exchange differences are adjusted to Statement of profit and
K. BORROWING COSTS
Borrowing Costs attributable to acquisition or construction of
qualifying assets are capitalised as part of the cost of such assets up
to the date when such asset is ready for its intended use. Other
borrowing costs are charged to the Statement of profit and loss.
Provision for current tax is made on the basis of estimated taxable
income for the current accounting year in accordance with the Income
Tax Act, 1961. The deferred tax for timing differences between the book
and tax profits for the year 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 recognised to
the extent there is reasonable/virtual certainty that these would be
realized in future.
M. PROVISIONS, CONTIGENT LIABILITIES AND CONTINGENT ASSETS
A provision is made based on a reliable estimate when it is probable
that an outflow of resources embodying economic benefits will be
required to settle an obligation. Contingent liabilities, if material,
are disclosed by way of notes to accounts. Disputed show cause notices
/ show cause-cum-demand notices are not considered as contingent
liabilities. Contingent assets are not recognized or disclosed in the