a) Change in accounting policy
Presentation and disclosure of financial statement :
During the year ended 31 December 2012, the revised Schedule VI
notified under the Companies Act 1956, has become applicable to the
Company, for preparation and presentation of its financial statements.
The adoption of revised Schedule VI does not impact recognition and
measurement principles followed for preparation of financial
statements. However, it has significant impact on presentation and
disclosures made in the financial statements. The Company has also
reclassified the previous year figures in accordance with the
requirements applicable in the current year.
b) Use of Estimates
The preparation of financial statements in conformity with Indian GAAP
requires the management to make judgments, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities, at the end of
the reporting period. Although these estimates are based on the
management''s best knowledge of current events and actions, uncertainty
about these assumptions and estimates could result in the outcomes
requiring a material adjustment to the carrying amounts of assets or
liabilities in future periods.
c) Fixed Assets
Fixed assets are stated at cost or revalued amounts, as the case may
be, less accumulated depreciation and impairment losses (if any). Cost
comprises the purchase price and any attributable cost of bringing the
asset to its working condition for its intended use. Borrowing costs
relating to acquisition of fixed assets which takes substantial period
of time to get ready for its intended use are also included to the
extent they relate to the period till such assets are ready to be put
d) Depreciation on fixed assets
(i) Depreciation on all fixed assets is provided on Straight Line
Method as per Schedule XIV of the Companies Act, 1956 on pro-rata basis
with reference to the month of addition/ sale. The management of the
Company is of the view that this depreciation rate fairly represents
the useful life of the assets.
(ii) Ropeways are depreciated over an estimated useful life of 2-8
(iii) Motor Cars are depreciated over an estimated useful life of 5
(iv) Assets costing less than Rs. 5,000 are fully depreciated in the
year of purchase.
(v) In respect of the revalued assets, the difference between the
depreciation calculated on the revalued amount and that calculated on
the original cost is recouped from the Revaluation Reserve Account.
(vi) Leasehold Land is amortized over the period of initial lease term
ranging from 5 to 20 years.
Costs incurred on acquisition of intangible assets are capitalized and
amortized on a straight-line basis over their technically assessed
useful lives, as mentioned below:
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/ external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the asset''s net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value at the weighted average cost of capital. For the
purpose of accounting of impairment, due consideration is given to
revaluation reserve, if any.
After impairment, depreciation is provided on the revised carrying
amount of the assets over its remaining useful life.
Inventories are valued as follows:
Net realisable value is the estimated selling price in the ordinary
course of business less estimated costs of completion and estimated
costs necessary to make the sale.
h) Revenue Recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
(i) Sale of Goods
Revenue is recognised when the significant risks and rewards of
ownership of the goods is passed to the buyer. Excise Duty deducted
from turnover (gross) is the amount that is included in the amount of
turnover (gross) and not the entire amount of liability arose during
the year. Sales are reported net of sales tax, incentives and rebates.
Revenue is recognised on a time proportion basis taking into account
the amount outstanding and the rate applicable.
i) Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale are capitalized as
part of the cost of the respective asset. All other borrowing costs are
expensed in the period they occur. Borrowing costs consist of interest
and other costs that an entity incurs in connection with the borrowing
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased item are classified as
Operating Leases. Operating Lease payments are recognised as an expense
in the Statement of Profit & Loss on a straight line basis over the
k) Foreign Currency Transactions
(i) Initial Recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction; and non-monetary items which are
carried at fair value or other similar valuation denominated in a
foreign currency are reported using the exchange rates that existed
when the values were determined.
(iii) Exchange Differences
Exchange differences arising on settlement of monetary items or on
reporting Company''s monetary items at rates different from those at
which they were initially recorded during the year, or reported in
previous financial statements, are recognised as income or as expenses
in the year in which they arise.
l) Derivative financial instruments and hedge accounting
The Company uses derivative financial instrument such as cross currency
interest rate swaps to hedge its foreign currency risks and interest
rate risks. Such derivative financial instruments are initially
recognised at fair value on the date on which a derivative contract is
entered into and are subsequently remeasured at fair value. Derivatives
are carried as financial assets when the fair value is positive and as
financial liabilities when the fair value is negative.
Any gains or losses arising from changes in the fair value of
derivatives are taken directly to the statement of profit and loss,
except for the effective portion of cash flow hedge, which is
recognised in Hedging Reserve Account included in the Reserves and
Surplus while any ineffective portion is recognised immediately in the
statement of profit and loss.
For the purpose of hedge accounting, hedges are classified as:
- Fair value hedges when hedging the exposure to changes in the fair
value of a recognised asset or liability
- Cash flow hedges when hedging exposure to variability in cash flows
that is either attributable to a particular risk associated with a
recognised asset or liability
At the inception of a hedge relationship, the Company formally
designates and documents the hedge relationship to which the Company
wishes to apply hedge accounting and the risk management objective and
strategy for undertaking the hedge. The documentation includes
identification of the hedging instrument, the hedged item or
transaction, the nature of the risk being hedged and how the entity
will assess the effectiveness of changes in the hedging instrument''s
fair value in offsetting the exposure to changes in the hedged item''s
fair value or cash flows attributable to the hedged risk. Such hedges
are expected to be highly effective in achieving offsetting changes in
fair value or cash flows and are assessed on an ongoing basis to
determine that they actually have been highly effective throughout the
financial reporting periods for which they were designated.
Hedge accounting is discontinued from the last testing date when the
hedging instrument expires or is sold, terminated, or exercised, or no
longer qualifies for hedge accounting. Cumulative gain or loss on such
hedging instrument recognised in shareholder''s funds is retained there
until the forecasted transaction occurs. If a hedged transaction is no
longer expected to occur, the net cumulative gain or loss recognised in
shareholders'' funds is transferred to statement of profit and loss for
m) Employee Benefits
(i) Superannuation Fund (being administered by Trusts) and Employees''
State Insurance Corporation (ESIC) are defined contribution schemes and
the contributions are charged to the Statement of Profit and Loss of
the year when the contributions to the respective funds are due. There
are no other obligations other than the contribution payable to the
(ii) Retirement benefits in the form of Provident Fund contributed to
Statutory Provident Fund is a defined contribution scheme and the
payments are charged to the Statement of Profit and Loss of the year
when the payments to the respective funds are due. There are no
obligations other than contribution payable to Provident Fund
(iii) Retirement benefits in the form of Provident Fund contributed to
Trust set up by the employer is a defined benefit scheme and the
payments are charged to the statement of Profit and Loss of the year
when the payments to the Trust are due. Shortfall in the funds, if any,
is adequately provided for by the Company.
(iv) Gratuity liability (being administered by a Trust) is a defined
benefit obligation and is provided for on the basis of an actuarial
valuation done using projected unit credit method at the end of each
financial year. The Company presents its gratuity liability as current
and non-current based on actuarial valuation.
(v) Actuarial gains and losses for defined benefit plans are recognized
in full in the period in which they occur in the statement of profit
(vi) Accumulated leave, which is expected to be utilized within the
next 12 months, is treated as short-term employee benefit. The Company
measures the expected cost of such absences as the additional amount
that it expects to pay as a result of the unused entitlement that has
accumulated at the reporting date.
(vii) The Company treats accumulated leave expected to be carried
forward beyond twelve months, as long-term employee benefit for
measurement purposes. Such long-term compensated absences are provided
for based on the actuarial valuation using the projected unit credit
method at the year-end. Actuarial gains/losses are immediately taken to
the statement of profit and loss and are not deferred. The Company
presents the entire leave as a current liability in the balance sheet,
since it does not have an unconditional right to defer its settlement
for 12 months after the reporting date.
n) Income Taxes
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Indian Income-tax Act, 1961. Deferred income taxes
reflect the impact of current year timing differences between taxable
income and accounting income for the year and reversal of timing
differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date. Deferred
tax assets and deferred tax liabilities are offset, if a legally
enforceable right exists to set off current tax assets against current
tax liabilities and the deferred tax assets and deferred tax
liabilities relate to the taxes on income levied by same governing
taxation laws. Deferred tax assets are recognised only to the extent
that there is reasonable certainty that sufficient future taxable
income will be available against which such deferred tax assets can be
realised. In situations where the Company has unabsorbed depreciation
or carry forward tax losses, all deferred tax assets are recognised
only if there is virtual certainty supported by convincing evidence
that they can be realised against future taxable profits.
At each balance sheet date, the Company re-assesses unrecognised
deferred tax assets. It recognizes unrecognised deferred tax assets to
the extent that it has become reasonably certain or virtually certain,
as the case may be that sufficient future taxable income will be
available against which such deferred tax assets can be realised.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The Company writes-down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realised. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
MAT 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. In the year in which the Minimum
Alternative tax (MAT) credit becomes eligible to be recognized as an
asset in accordance with the recommendations contained in Guidance Note
issued by the Institute of Chartered Accountants of India, the said
asset is created by way of a credit to the statement of profit and loss
and shown as MAT Credit Entitlement. The Company reviews the same at
each balance sheet date and writes down the carrying amount of MAT
Credit Entitlement to the extent there is no longer convincing evidence
to the effect that Company will pay normal Income Tax during the
o) Segment Reporting Policies
(i) Identification of segments:
The Company''s operating businesses are organized and managed according
to the nature of products and predominant source of the risk for the
Company is business product, therefore business segment has been
considered as primary segment. The analysis of geographical segments is
based on the areas in which the Company operates.
(ii) Segment Policies:
The Company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the Company as a whole.
A provision is recognized when an enterprise has a present obligation
as a result of past event 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 are not discounted to
its present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and are adjusted to reflect the current best
q) Earnings per Share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders after deducting
preference dividends and attributable taxes by the weighted average
number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares, if
r) Cash and Cash Equivalents
Cash and cash equivalents in the cash flow statement comprise cash at
bank and in hand and short-term investments with an original maturity
of three months or less.
s) Measurement of EBITDA
As permitted by the Guidance Note on the Revised Schedule VI to the
Companies Act, 1956, the Company has elected to present earnings before
interest, tax, depreciation and amortization (EBITDA) as a separate
line item on the face of the statement of profit and loss. The Company
measures EBITDA on the basis of profit/ (loss) from continuing
operations. In its measurement, the Company does not include
depreciation and amortization expense, finance costs and tax expense.