a) ACCOUNTING POLICIES
During the year ended 31 March 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. Adoption of
revised Schedule VI does not materially impact recognition and
measurement principles followed for preparation of financial
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 judgements, 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) TANGIBLE FIXED ASSETS :
Fixed Assets are stated at cost, less accumulated depreciation (other
than ''Freehold Land'' where no depreciation is charged) and impairment
loss, if any. Cost comprises the purchase price, including duties and
other non-refundable taxes or levies any directly attributable cost of
bringing the asset to its working condition and indirect costs
specifically attributable to construction of a project or to the
acquisition of a fixed asset.
In the event of the same having been revalued, they are stated at the
revalued figures. Expenditure relating to fixed assets is added to
costs only when the same involved modification work whereby it
increases the life of the assets. Fixed assets acquired from ships
during the course of scrapping operation are capitalised at value
estimated by the management.
d) DEPRECIATION ON TANGIBLE ASSETS :
I Depreciation is provided on the straight line method, pro-rata basis
to the period of use, so as to write off the original cost of the asset
over the remaining estimated useful life (as per technical evaluation
by the Management at the time of acquisition) or at rates prescribed
under the Schedule XIV to the Companies Act, 1956, whichever is higher,
on the following basis :
Tangibale Fixed Assets Method Estimated useful
Factory Shed & Building Straight line Not Estimated
Other Buildings Straight line Not Estimated
Plant & Machinery Straight line 3 to 10 Years
Furniture & Fixtures,
Office Equipments, etc Straight line 5 Years
Vehicle Straight line 4 Years
Computers Straight line 3 Years
Leasehold improvements 25% or the rate based on lease
period, whichever is higher
II No depreciation is provided for assets sold during the year whereas
pro-rata depreciation is provided on assets acquired during the year.
e) IMPAIRMENT OF ASSTES :
The Company assesses on each balance sheet date whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount of the asset. If
such recoverable amount of the asset is less than its carrying amount,
the carrying amount is reduced to its recoverable amount. The amount
so reduced is treated as an impairment loss and is recognised in the
Statement of Profit and Loss, except in case of revalued assets, where
it is first adjusted against the related balance in fixed assets
If at the balance sheet date, there is an indication that a previously
assessed impairment loss no longer exists, the recoverable amount is
reassessed and the asset is carried at the recoverable amount subject
to a maximum of depreciated historical cost.
f) BORROWING COSTS :
Borrowing costs that are directly attributable to the acquisition,
construction/ development of a qualifying asset are capitalized as a
part of cost of such asset. A qualifying asset is one that necessarily
takes substantial period of time to get ready for its intended use.
Costs in connection with borrowing of funds to the extent not directly
related to the acquisition of fixed assets are amortised and charged to
the Statement of Profit and Loss, over the tenure of the loan.
Investments, which are readily realizable and 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.
Investment in Partnership Firm as M/s. Jai Maa Durge Associates, as
trade investment which shown at their book value at cost.
h) VALUATION OF INVENTORIES :
The weight of the ship purchased is accounted in terms of LDT of the
ship at the time of its construction. Ascertaining of weight of ship at
the time of purchase is not possible due to its nature and size. There
is loss of weight on account of corrosion and other factors during the
usage of the ship and its voyage for about 20 to 25 years.
Inventory at the close of the year is ascertained by reducing the
weight of the scrap sold together with the estimated wastage of the
Stores & Spares are written off at the time of purchase itself and no
inventory is maintained.
The inventory is valued at cost.
i) RECOGNITION OF INCOME AND EXPENDITURE :
Revenue is recognised only when it can be reliably measured and it is
reasonable to expect ultimate collection. Turnover include sale of
goods, services, sales tax, service tax, excise duty and sales during
trial run period, adjusted for discounts (net) , Value Added Tax and
gain/loss corresponding hedge contracts.
Dividend income is recognized when right to receive is established.
Interest income is recognized on time proportion basis taking into
account the amount outstanding and rate applicable.
j) FOREIGN CURRENCY TRANSACTIONS :
Purchase in respect of raw materials are accounted for on actual
payment basis if the same are made before the year end and/or at the
rate of foreign exchange booking are made. In all other cases, the
purchases and also the liability in respect of said foreign exchange
are stated as converted at the exchange rate prevalent at the last day
of the financial year.
k) EXCISE DUTY & CENVAT :
Excise duty is chargeable on production but is payable on clearance of
goods. Accordingly excise duty on the goods manufactured by the
company is accounted for at the time of their clearance. Excise duty
payable is adjusted against the Cenvat credits, to the extent it is
available and balance duty is paid and debited to Revenue.
I) PROVISION FOR TAXATION :
Tax expense comprises both current and deferred tax.
Current income-tax is recognised at the amount expected to be paid to
the tax authorities, using the tax rates and tax laws, enacted or
substantially enacted as at the balance sheet date. Income from
shipping activities is assessed on the basis of deemed tonnage income
of the Company.
Deferred income-tax is recognised on timing differences, between
taxable income and accounting income which originate in one period and
are capable of reversal in one or more subsequent periods only in
respect of the non-shipping activities of the Company. The tax effect
is calculated on the accumulated timing differences at the year end
based on tax rates and laws, enacted or substantially enacted as of the
balance sheet date. Deferred Tax Assets are recognised and carried
forward 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.
Minimum Alternate Tax (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.
m) RETIREMENT BENEFITS:
The management is of the opinion that since none of the employees of
the company were in continuous service of more than five years, making
provision of gratuity does not arise. The Management is also of the
opinion that the payment of pension Act, is not applicable to the
n) EARNING PER SHARE :
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period. The
weighted average number of equity shares outstanding during the period
is adjusted for events such as bonus issue, bonus element in a rights
issue, share split, and reverse share split (consolidation of shares)
that have changed the number of equity shares outstanding, without a
corresponding change in resources.
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.
o) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS :
A provision is recognized when the company has a present obligation as
a result of past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation
and - a reliable estimate can be made of the amount of the obligation.
Provisions are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
reporting date. These estimates are reviewed at each reporting date and
adjusted to reflect the current best estimates.
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be
required to settle the obligation. A contingent liability also arises
in extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably. The company does not
recognize a contingent liability but discloses its existence in the
Contingent assets are neither recognised nor disclosed in the financial
p) CASH & CASH EQUIVALENTS :
For the purpose of presentation in the statement of cash flows, cash
and cash equivalents include cash on hand, cash at bank and short-term
fixed deposits with maturity period not more than three months.
q) 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 current year
operations. In its measurement, the company does not include
depreciation and amortization expense, finance costs and tax expense.