A. FIXED ASSETS:
(a) FIXED ASSETS (comprising both tangible and intangible items) are
stated at cost of acquisition and subsequent improvements thereto
including taxes, duties, freight and other incidental expenses related
to acquisition and installation. Pre-operative expenses for major
projects are also capitalised, where appropriate.
(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
Softwares) are amortised 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.
B. INVESTMENTS:
(a) LONG TERM INVESTMENTS are stated at cost less write down for any
permanent diminution 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.
C. INVENTORIES:
Inventories are valued at lower of cost and estimated net realisable
value. The costs are in general ascertained under weighted average
formula.
D. 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. Exchange differences arising on settlement of
transactions and/or restatements are dealt with in the Profit and Loss
Account.
E. 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 transaction covered by Forward Exchange
Contracts, the premium or discount arising at the inception of such
contract are 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.
F. 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.
G. 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.
H. 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.
I. 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.
J. 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 Account 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 scheme assets. Any asset resulting from
this calculation is limited to past service cost, plus the present
value of available refunds and reductions in future contributions to
the scheme.
(c) Other Long-term Employee Benefits (unfunded):
The cost of providing 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 Account 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.
K. 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 may, but probably
will not, require an outflow of resources. 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.
L. TAXATION:
Current tax is determined as the amount of tax payable in respect of
taxable income for the period based on applicable tax rate and laws.
Deferred tax is recognised subject to consideration of prudence in
respect of deferred tax asset, on timing difference, being the
difference between taxable income and accounting income that originates
in one period and are capable of reversal in one or more subsequent
periods and is measured using tax rate and laws that have been enacted
or substantively enacted by the Balance Sheet date. Deferred tax
assets are reviewed at each Balance Sheet date to re-assess
realisation.
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