Basis of Accounting
To prepare financial statements in accordance with the historical cost
convention modified by revaluation of certain Fixed Assets as and when
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 revised 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
To state Fixed Assets at cost of acquisition inclusive of inward
freight, duties and taxes and incidental expenses related to
acquisition. In respect of major projects involving construction,
related pre-operational expenses form part of the value of assets
capitalised. Expenses capitalised also include applicable borrowing
costs, if any.
To capitalise software where it is expected to provide future enduring
economic benefits. Capitalisation costs include licence fees and costs
of implementation / system integration services. The costs are
capitalised in the year in which the relevant software is implemented
To charge off as a revenue expenditure all upgradation/ enhancements
unless they bring similar significant additional benefits.
To calculate depreciation on Fixed Assets, Tangible and Intangible, in
a manner that amortises the cost of the assets after commissioning,
over their estimated useful lives or, where specified, lives based on
the rates specified in Schedule XIV to the Companies Act, 1956,
whichever is lower, by equal annual instalments. Leasehold properties
are amortised over the period of the lease.
To amortise capitalised software costs over a period of five years.
Revaluation of Assets
As and when Fixed Assets are revalued, to adjust the provision for
depreciation on such revalued Fixed Assets, where applicable, in order
to make allowance for consequent additional diminution in value on
considerations of age, condition and unexpired useful life of such
Fixed Assets; to transfer to Revaluation Reserve the difference between
the written up value of the Fixed Assets revalued and depreciation
adjustment and to charge Revaluation Reserve Account with annual
depreciation on that portion of the value which is written up.
Impairment of Assets
To provide for impairment loss, if any, to the extent, the carrying
amount of assets exceed their recoverable amount. Recoverable amount
is higher of an asset''s net selling price and its value in use. Value
in use is the present value of estimated future cash flows expected to
arise from the continuing use of an asset and from its disposal at the
end of its useful life.
Impairment losses recognised in prior years are reversed when there is
an indication that the impairment losses recognised no longer exist or
have decreased. Such reversals are recognised as an increase in
carrying amounts of assets to the extent that it does not exceed the
carrying amounts that would have been determined (net of amortisation
or depreciation) had no impairment loss been recognised in previous
To state Current Investments at lower of cost and fair value; and Long
Term Investments, including in Joint Ventures and Associates, at cost.
Where applicable, provision is made to recognise a decline, other than
temporary, in valuation of Long Term Investments.
To state inventories including work-in-progress at lower of cost and
net realisable value. The cost is calculated on weighted average
method. Cost comprises expenditure incurred in the normal course of
business in bringing such inventories to its location and includes,
where applicable, appropriate overheads based on normal level of
activity. Obsolete, slow moving and defective inventories are
identified at the time of physical verification of inventories and,
where necessary, provision is made for such inventories.
Revenue from sale of products and services
To recognise Revenue at the time of delivery of goods and rendering of
services net of trade discounts to customers and Sales tax/ Value added
tax recovered from customers but including excise duty on goods payable
by the Company. Net revenue is stated after deducting such excise
To account for Income from Investments on an accrual basis, inclusive
of related tax deducted at source. To account for Income from
Dividends when the right to receive such dividends is established.
To provide for Dividends (including income tax thereon) in the books of
account as proposed by the Directors, pending approval at the Annual
To make regular monthly contributions to various Provident Funds which
are in the nature of defined contribution schemes and such paid/payable
amounts are charged against revenue. To administer such Funds through
duly constituted and approved independent trusts with the exception of
Provident Fund and Family Pension contributions in respect of Unionised
Staff which are statutorily deposited with the Government.
To administer through duly constituted and approved independent trusts,
various Gratuity and Pension Funds which are in the nature of defined
benefit/contribution schemes. To determine the liabilities towards such
schemes, as applicable, and towards employee leave encashment by an
independent actuarial valuation as per the requirements of Accounting
Standard - 15 on Employee Benefits. To determine actuarial gains or
losses and to recognise such gains or losses immediately in Statement
of Profit and Loss as income or expense.
To charge against revenue, actual disbursements made, when due, under
the Workers'' Voluntary Retirement Scheme.
To charge Rentals in respect of leased premises and equipment to the
Statement of Profit and Loss.
Research and Development
To write off all expenditure other than capital expenditure on Research
and Development in the year it is incurred.
Capital expenditure on Research and Development is included under
Taxes on Income
To provide Current tax as the amount of tax payable in respect of
taxable income for the period, measured using the applicable tax rates
and tax laws.
To provide Deferred tax on timing differences between taxable income
and accounting income subject to consideration of prudence, measured
using the tax rates and tax laws that have been enacted or
substantially enacted by the balance sheet date.
Not to recognise Deferred tax assets on unabsorbed depreciation and
carry forward of losses unless there is virtual certainty that there
will be sufficient future taxable income available to realise such
Foreign Currency Translation
To account for transactions in foreign currency at the exchange rate
prevailing on the date of transactions. Gains/Losses arising out of
fluctuations in the exchange rates are recognised in the Statement of
Profit and Loss in the period in which they arise.
To account for differences between the forward exchange rates and the
exchange rates at the date of transactions, as income or expense over
the life of the contracts.
To account for profit/loss arising on cancellation or renewal of
forward exchange contracts as income/expense for the period.
To account for premium paid on currency options in the Statement of
Profit and Loss at the inception of the option.
To account for profit/loss arising on settlement or cancellation of
currency option as income/expense for the period.
To recognise the net mark to market losses in the Statement of Profit
and Loss on the outstanding portfolio of options/forwards/swaps as at
the Balance Sheet date, and to ignore the net gain, if any.
To account for gains/losses in the Statement of Profit and Loss on
foreign exchange rate fluctuations relating to monetary items at the
To disclose claims against the Company not acknowledged as debts after
a careful evaluation of the facts and legal aspects of the matter
To identify segments based on the dominant source and nature of risks
and returns and the internal organisation and management structure.
To account for inter-segment revenue on the basis of transactions which
are primarily market led.
To include under Unallocated Corporate Expenses revenue and
expenses which relate to initiatives/costs attributable to the
enterprise as a whole and are not attributable to segments.
Financial and Management Information Systems
To practise an Accounting System which unifies Financial and Cost
Records and is designed to comply with the relevant provisions of the
Companies Act, provide financial and cost information appropriate to
the businesses and facilitate Internal Control.