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-0.5 (-0.67%)
-0.65 (-0.87%) | Accounting Policy | Year : Mar '12 | ||||
A. BASIS OF PREPARATION These financial statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis. 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 the other relevant provisions of the Companies Act, 1956 (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 Schedule VI to the Companies Act, 1956. Based on the nature of products and the time between the 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. CHANGE IN ACCOUNTING POLICY The Company has exercised the option as set out in paragraph 46A of the Accounting Standard 11 on ''The Effects of Changes in Foreign Exchange Rates'' (AS 11), pursuant to the Notification dated 29th December, 2011. Accordingly, exchange differences arising on restatement of long-term foreign currency loans obtained for the purpose of acquisition of depreciable capital assets, which were until now being recognised in the Profit and Loss Statement, is adjusted in the cost of depreciable asset, which would be depreciated over the balance life of the asset.[Refer Note 1(F) below] Had the Company continued to follow the earlier accounting policy, net loss on foreign currency transactions / translation would have been higher by Rs.1,665.98 Lakhs and depreciation on tangible fixed assets would have been lower by Rs.5.87 Lakhs, with corresponding decrease in profit before tax for the year by Rs.1,660.11 Lakhs. Also, Net Block of Tangible Fixed Assets and Capital Work-in-Progress relating to Graphite and Carbon Segment as at 31st March, 2012 would have been lower by Rs. 898.93 Lakhs and Rs.761.18 Lakhs respectively. C. FIXED ASSETS: (a) Fixed Assets (comprising both tangible and intangible assets) are stated at cost of acquisition including taxes, duties, freight and other incidental expenses related to acquisition and installation, and inclusive of borrowing cost, where applicable, and adjustments for exchange differences referred to in Note 1(F) below. Pre-operative expenses for major projects are also capitalised, where appropriate. Subsequent expenditure related to an item of fixed assets are added to its book value only if they increase the future benefits from the existing asset beyond its previously assessed standard of performance. (b) Depreciation includes amortisation. Depreciation on tangible fixed assets including those utilised in Research and Development activities, is provided on straight-line basis in accordance with Schedule XIV to the Companies Act, 1956. Leasehold Land is amortised on straight-line basis over the primary lease period. Intangible assets (Computer Software) are amortised on a straight-line basis over a period of five years. (c) Machinery Spares, which are irregular in use and associated with particular asset, are treated as fixed asset and the cost is amortised over its utility period. (d) Impairment Loss, if any, is recognised wherever the carrying amount of the fixed assets exceeds the recoverable amount (i.e. the higher of the assets'' net selling price and value in use). D. INVESTMENTS: (a) 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 long-term investments. Long-term Investments are stated at cost less write down for any diminution, other than temporary, in carrying value. Current Investments are stated at lower of cost and fair value. Fair value is determined on the basis of realisable or market value. (b) Earnings from Investments, where appropriate, are accrued or taken into revenue in full on declaration or receipts. E. INVENTORIES Inventories are valued at lower of cost and net realisable value. The costs are ascertained under weighted average formula. The cost of finished goods and work-in-progress comprises raw materials, direct labour, other direct costs and related production overheads. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale. F. FOREIGN CURRENCY TRANSACTIONS Transactions in foreign currencies are recorded at exchange rates prevailing on the date of the transaction. Monetary items denominated in foreign currency are restated at the exchange rate prevailing on the Balance Sheet date. Foreign currency non-monetary items carried in terms of historical cost are reported using the exchange rate at the date of transactions. With regard to long-term foreign currency monetary items obtained for the purpose of acquisition of depreciable capital assets, exchange differences are adjusted in the cost of depreciable asset, which would be depreciated over the balance life of the asset and in other cases, such difference is accumulated in a Foreign Currency Monetary Item Translation Difference Account and amortised over the balance period of such long term asset/liability. Exchange differences arising on settlement of transactions and/or restatements of all other monetary items are recognised in the Profit and Loss Statement. G. DERIVATIVE INSTRUMENTS The Company uses derivative financial instruments such as forward exchange contracts, currency swaps etc. to hedge its risks associated with foreign currency fluctuations relating to the underlying transactions, highly probable forecast transactions and firm commitments. In respect of Forward Exchange Contracts, covered under AS 11, the premium or discount arising at the inception of such contract is amortised as expense or income over the life of contract. Other derivative contracts outstanding at the Balance Sheet date are marked to market and resulting loss, if any, is provided for in the financial statements. Any profit or losses arising on cancellation of instruments are recognised as income or expenses for the period. H. REVENUE Revenue is recognised on completion of sale of goods and rendering of services. Sales are inclusive of excise duty less discounts as applicable. Export entitlements are recognised after completion of related exports on prudent basis. I. CONSTRUCTION CONTRACTS Revenue in respect of construction contracts is recognised on the basis of percentage of completion method. Stages of completion are determined based on completion of a physical proportion of the contract work. Anticipated loss on such contracts is provided for in the period of incurrence. J. BORROWING COSTS Borrowing costs, if any, attributable to the acquisition and construction of qualifying assets are added to the cost up to the date when such assets are ready for their intended use. Other borrowing costs are recognised as expense in the period in which these are incurred. K. RESEARCH AND DEVELOPMENT EXPENDITURE (R & D) Revenue expenditure on R & D is expensed in the period in which it is incurred. Capital expenditure on R & D is capitalised. L. EMPLOYEE BENEFITS: (a) Short-term Employee Benefits The undiscounted amount of Short-term Employee Benefits expected to be paid in exchange for the services rendered by employees is recognised during the period when the employee renders the service. (b) Post Employment Benefit Plans Contributions under Defined Contribution Plans payable in keeping with the related schemes are recognised as expense for the year. For Defined Benefit Plans, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at each Balance Sheet date. Actuarial gains and losses are recognised in full in the Profit and Loss Statement for the period in which they occur. Past service cost is recognised immediately to the extent that the benefits are already vested, and otherwise is amortised on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognised in the Balance Sheet represents the present value of the defined benefit obligation as adjusted for unrecognised past service cost, and as reduced by the fair value of Plan Assets. Any asset resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan. (c) Other Long-term Employee Benefits (unfunded) The cost of providing Other Long-term Employee Benefits is determined using Projected Unit Credit Method, with actuarial valuation being carried out at each Balance Sheet date. Actuarial gains and losses and past service cost are recognised immediately in the Profit and Loss Statement for the period in which they occur. Other long-term employee benefit obligation recognised in the Balance Sheet represents the present value of related obligation. M. PROVISIONS AND CONTINGENT LIABILITIES The Company recognises a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that probably will not require an outflow of resources or a present obligation where reliable estimate of which cannot be made. Where there is a possible obligation or a present obligation and the likelihood of outflow of resources is remote, no provision or disclosure for contingent liability is made. N. TAXATION Current tax is provided as the amount of tax payable in respect of taxable income for the year, measured using the applicable tax rules and laws. Deferred tax is provided on timing differences between taxable income and accounting income measured using tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred tax assets are recognised only if there is a virtual/reasonable certainty, as applicable, in keeping with Accounting Standard 22 on ''Accounting for Taxes on Income'' that there will be sufficient future taxable income available to realise such assets. Deferred tax assets are reviewed for the appropriateness of their respective carrying amount at each Balance Sheet date. Minimum Alternative Tax credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. Such assets is reviewed at each Balance Sheet date and the carrying amount of the MAT credit asset is written down to the extent there is no longer a convincing evidence to the effect that the Company will pay normal income tax during the specified period. |
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| Source : Dion Global Solutions Limited | |||||
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